George H. Finlay & Co. v. Swirsky

• Decision Date: 04 April 1923
• Citation: 120 A. 561,98 Conn. 666
• Parties: GEORGE H. FINLAY & CO. v. SWIRSKY ET AL.
• Court: Connecticut Supreme Court

120 A. 561

98 Conn. 666

GEORGE H. FINLAY & CO. v. SWIRSKY ET AL.

Supreme Court of Errors of Connecticut.

April 4, 1923

Appeal from Superior Court, New Haven County; George E. Hinman Judge.

Action by George H. Finlay & Co. against Isaac Swirsky and others for damages for breach of two contracts. Facts found and judgment for plaintiffs, and defendants appeal. No error.

On April 14, 1920, the plaintiffs and the defendants entered into two contracts for the sale by the plaintiffs to the defendants of 800 long tons of sugar at 20 cents a pound, to be shipped from Java to New York during the next July August, or September, at the sellers' option. By one of the terms of the contracts it was stipulated that the buyers to secure the payment of the agreed price of the sugar, should immediately open a credit in favor of the plaintiffs with an approved bank or banker for an amount sufficient to cover the invoice price of the shipments with disbursements and advances. The invoice price of both shipments was $358,400. On April 20, 1920, the defendants opened a credit of $150,000 only in a bank in New Haven, which was limited to expire on September 10, 1920. They did not at any time open credit in any other bank, although they were frequently requested, and they as often assured the plaintiffs that they were about to do so. The plaintiffs purchased in Java sufficient sugar to fill these contracts, and on August 11th and August 17th they notified the defendants that their sugar had been shipped. Shipments from Java to New York usually took from 60 to 90 days in passage. To these letters the defendants made no reply. On September 9, 1920, the plaintiffs owned and were able to deliver to the defendants 255 tons of Java sugar for $114,240, the price fixed in their contracts; but the defendants refused to accept and pay for this sugar, claiming that there was some irregularity in the papers attached to the draft presented at the New Haven bank, but they did not indicate then that they did not intend to perform their contracts. On October 9, 1920, the plaintiffs caused notice to be served on the defendants declaring that they had failed to open bank credits in accordance with the terms of the contracts, and that, unless they should do so immediately, the sugar they had bought would be disposed of elsewhere for their account, and they would be held responsible for any damages or losses. To this notice the defendants gave no attention. On October 11, 1920, the plaintiffs caused another notice to be served on the defendants, reciting the substance of the contracts and stating that they had failed to open the stipulated credits, and concluding in these words:

" Please take notice that, as you have repudiated said agreements, have manifested your inability to perform your obligations under said agreements, and have committed a material breach thereof, said G. H. Finlay & Co. hereby give you notice that they rescind both of said agreements."

At the same time process in this suit was served on the defendants.

On October 7 and 29 and November 5, 1920, the plaintiffs sold all the sugar mentioned in these contracts at a fair and reasonable price under then existing market conditions, acting in good faith and judgment. Their losses in these transactions were $217,100.80, which, with interest to date of judgment, amounts to $237,735.30. The plaintiffs at all times acted in good faith, and were able, ready, and willing to perform their obligations under the contracts.

Philip Pond, Walter J. Walsh, and Bernard Greenberg, all of New Haven, for appellants.

Edmund Zacher, Frederick H. Wiggin, and David L. Daggett, all of New Haven, for appellees.

BURPEE, J. (after stating the facts as above).

The facts stated above are the material facts in this case, and they are not disputed. The defendants concede also that their contracts were broken by their failure to establish the stipulated credits, and that the resulting losses amounted to the sum for which judgment was rendered. The court below has found that this breach was designed and the defendants' refusal to perform and their intention to repudiate their contracts were first definitely and unquestionably made known to the plaintiffs when the defendants evaded and ignored the written demands that they open the required credits, and that all this occurred before the time had arrived when the plaintiffs had agreed to deliver any sugar under the contracts, and that the defendants formed their intention and attempted to make this breach because of the great decline in the market price of sugar after the contracts were executed and before the time for delivery. These facts the defendants desire to eliminate from the finding; but we think they were reasonable and proper deductions from the evidence, and therefore should not be disturbed.

In this appeal the defendants contend in the first place that the plaintiffs, by using the word " rescind" in their notice served on the defendants on October 11, 1920 then " finally put an end to both contracts as completely as if they had never existed." They argue that the unqualified meaning of the word " rescind" in this connection is to wipe out or annihilate totally, so that the contracts could not thereafter be the basis of any action whatever. We do not agree that this is the proper meaning of that word or the effect of its use in the circumstances which surrounded the parties in this case. The word " rescind" does not always and necessarily mean strictly the same as revoke, annul, or blot out. It is often employed to convey the idea of cutting off a contract and leaving the parties in the exact conditions then existing. This court has used the word with that meaning. In Trowbridge v. Jefferson Auto Co., 92 Conn. 569, 573, 103 A. 843, 844, which, like this, was a suit to recover damages for breach of contract, it was said that the repudiation of the agreement by the defendant " authorized the plaintiff to rescind the contract upon his part and bring an action for his damages." In Wetkopsky v. New Haven Gaslight Co., 90 Conn. 286, 290, 291, 96 A. 950, 952, an action similar to this, we said that it was for the jury to determine whether one party had repudiated a contract under such circumstances as to justify the other party " in rescinding it," and that, under the terms of our Sales Act (Pub. Acts 1907, c. 212), under the circumstances stated, " the vendor may elect to accept such repudiation as an anticipatory breach by rescinding the agreement." In the present case the court was construing the language of the same statute, under which the plaintiffs are suing and which the defendants are citing in support of their argument. Moreover, it is evident from the facts of this case that neither the plaintiffs nor the defendants reasonably could, or in fact did, use and understand this word in the sense which the appellants would now give to it. The notices served on the defendants on October 9th and 11th, followed immediately by the summons in this suit, and considered under the light of the antecedent facts, indicate plainly the fair interpretation of the words and conduct of the parties. From all the evidence before it the trier must determine what the intention was. Intention is an inference of fact, and the conclusion is not reviewable unless it was one which the trier could not reasonably make. McDermott v. McDermott, 97 Conn. 31, 34, 115 A. 638. Here the trial court has reached the conclusion that the plaintiffs did not intend and that the defendants did not understand that the contracts were extinguished by the use of the word " rescind" in the notice of October 11, 1920, and that thereupon and consequently all claims for damages for their breach were abandoned. This conclusion is not questioned in this appeal. The purport and unmistakable effect of the language of the notices of October 9th and 11th was to make known to the defendants the plaintiffs' election to accept their repudiation of the contracts as putting them to an end, and to enforce their claims for damages for the breach thus made. This it was their right to do. Churchill Grain & Seed Co. v. Newton, 88 Conn. 130, 134, 89 A. 1121; Neuschtat v. Rosenthal, 87 Conn. 400, 404, 87 A. 741; Cherry Valley Iron Works v. Florence Co., 64 F. 569, 12 C.C.A. 306; Philadelphia, etc., R. Co. v. Howard, 13 How. 307, 310, 340, 14 L.Ed. 157. An executory contract may be terminated at some stage in its performance, or may be abandoned as a live and enforceable obligation, while the party declaring its abandonment still retains the right " to look to the contract to determine the compensation he may be entitled to under its terms for the breach which gave him the right of abandonment." Taft, J., in Hayes v. City of Nashville, 80 F. 641, 26...