Foster v. Colorado Radio Corporation, 8689.
| Decision Date | 06 July 1967 |
| Docket Number | No. 8689.,8689. |
| Citation | 381 F.2d 222 |
| Parties | Rosemary FOSTER, Appellant, v. COLORADO RADIO CORPORATION, a corporation, Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
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Charles C. Spann, of Grantham, Spann, Sanchez & Rager, Albuquerque, N. M., for appellant.
Stanley C. Sager, of Menig & Sager, Albuquerque, N. M., for appellee.
Before MURRAH, Chief Judge, HICKEY, Circuit Judge, and CHRISTENSEN, District Judge.
Colorado Radio Corporation brings this diversity suit for damages resulting from Mrs. Foster's alleged breach of promise to purchase certain of the assets of a New Mexico radio station. On trial to the court Colorado Radio prevailed, and Mrs. Foster appeals raising questions concerning breach and the proper measure of damages, if any. We affirm with modification.
On the breach issue Mrs. Foster first disputes the court's finding that she breached the contract on the ground that the contract provision requiring her to "make satisfactory arrangements" for the payment of two notes she was to assume established a condition precedent to her duty to purchase. The contention is that satisfactory arrangements were not made, and this being so there could be no breach. We think it sufficient to say that the responsibility for making arrangements was placed by the contract on Mrs. Foster, and that with respect to one of the notes the evidence falls far short of showing a reasonably diligent effort on her part to make arrangements. A party may not raise nonperformance of a condition as a bar to liability where his own inaction is the cause of the nonperformance. See Gibbs, v. Whelan, 56 N. M. 38, 239 P.2d 727.
Mrs. Foster also attacks the finding of breach on the theory that no "demand of performance" as required by Sec. 50-7-3, N.M.Stat., 1953,1 was made by Colorado Radio prior to initiation of this suit. The contention is that if no demand was made, the contract could not be "converted into a money demand". The trial court found "That notice was given to * * * Mrs. Foster, demanding that she perform the said contract, but that she failed to do so and was entirely in default." This finding was based on uncontroverted evidence that Mrs. Foster failed to make application to the Federal Communications Commission for transfer of the radio license as she was required to do under the contract,2 and that Colorado Radio sent her a telegram on November 18, 1964, (about two weeks before suit was filed) stating that * * *" The record also contains transcriptions of two telephone calls made after the wire was sent in which Colorado Radio sought to find out if and when Mrs. Foster was going to file the application. Mrs. Foster concedes that a demand that she file the application was made, but argues that the statute required Colorado Radio to go further and demand payment of the contract price before initiation of suit. We find nothing in the statute and no case is cited which requires such a further demand.
The manifest purpose of 50-7-3 is to give a party one last chance to perform his contract obligations prior to suit. Here transfer of the license was clearly a condition precedent to Mrs. Foster's duty to purchase, but she had failed to even file an application for transfer. By demanding that she file the application Colorado Radio was insisting that she take the first step necessary to an orderly performance of her obligations, and we think this is what the statute envisions in the context of our case.
We turn then to the matter of damages. Shortly after suit was filed Colorado Radio negotiated a private resale of the station to one Walton. The trial court found that the resale covered the same items sold under the Foster Contract. It was stipulated at the trial that, aside from incidental damages, "* * * the measure of damages is the difference between the resale price and the contract price * * *". Applying this formula the court granted an award of $15,750, plus $500 attorney's fees as incidental damages. No complaint is made of the award of attorney's fees.
Mrs. Foster first contests the court's award on the theory that since Colorado Radio admittedly did not give notice of the intended resale, it is barred by Secs. 50A-2-706(1) and (3), N.M.Stat., 1953,3 from recovering the contract price less the resale price. These provisions, part of the Uniform Commercial Code, permit a seller of goods to utilize the contract price less resale price remedy, but require reasonable notice to the buyer where the intended resale is to be private. There is no contention by Colorado Radio that consideration of this issue is foreclosed by the stipulation. The parties thus interpreted the stipulation to mean that if Colorado Radio properly resold, its damages were to be computed on the basis of the resale price.
The trial court concluded that "The contract * * * did not fall within the Uniform Commercial Code." The apparent basis for this conclusion, and the reasoning which Colorado here offers in support of it, is that the subject matter of this contract is not "goods" and therefore this sale contract was not governed by Article 2 of the Code. We agree that the evidence is clearly sufficient to support a finding that the license, good will, real estate, studios and transmission equipment were not movables and hence not "goods" within the meaning of Secs. 50A-2-105 (1) and 50A-2-107(2), N.M.Stat., 1953.4
It is conceded by Colorado Radio, however, that the remaining assets sold under the contract, i. e., office equipment and furnishings, were movables. As to these "goods" Colorado Radio argues that their sale was incidental to the contract's main purpose of transferring the station as a going concern, and therefore citing Epstein v. Giannattasio, 25 Conn. Sup. 109, 197 A.2d 342, the Code should not apply to their sale. We cannot agree. We find nothing in the pertinent Code provisions or comments to indicate that it is not to apply to all sales of goods. Instead we think that the clear language of Sec. 50A-2-102 to the effect that "Unless the context otherwise requires, this article applies to transactions in goods * * *", makes Article 2 and specifically Sec. 50A-2-706(3) applicable to the sale of these goods. The Epstein case is, we think, distinguishable on its facts. It involved the sale of beauty services, during the course of which a product was applied to the purchaser of the service. The question was whether the use of the beauty product constituted a sale of goods so as to bring the action within the warranty sections of the Code. The court held that there was no sale of goods on the theory that the predominant feature of the transaction was the sale of the service. But, in our case there was no sale of a service but instead the sale of a group of assets, some of which are non-goods but others of which concededly are statutory goods. The principle of the Epstein case is thus inapplicable. Nor do we think that because the primary purpose of the parties was to transfer the station as a going concern, the Code should not apply to the goods that were sold as part of the deal. It happens in this case that the uncontradicted testimony is to the effect that the value of the goods constituted some five to ten per cent of the contract price.5 It is quite conceivable, however, that a business could be sold in which all the assets aside from good will would be goods. Nonapplication of the Code to the sale of goods in such a case, and in our case, is we think, plainly contrary to the intention of the drafters.
But, what we have said does not require a reversal in toto. We see no reason not to view the Foster contract in two parts as...
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