Hawaiian Paradise Park Corp. v. Friendly Broadcasting Co.

• Citation: 414 F.2d 750
• Decision Date: 24 July 1969
• Docket Number: No. 22394.,22394.
• Parties: HAWAIIAN PARADISE PARK CORPORATION, a Hawaii corporation, Appellant, v. FRIENDLY BROADCASTING CO., Inc., an Ohio corporation, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

414 F.2d 750 (1969)

HAWAIIAN PARADISE PARK CORPORATION, a Hawaii corporation, Appellant, v. FRIENDLY BROADCASTING CO., Inc., an Ohio corporation, Appellee.

No. 22394.

United States Court of Appeals Ninth Circuit.

July 24, 1969.

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John Jubinsky (argued), and Galen C. K. Leong of Stephenson, Ashford & Wriston, Honolulu, Hawaii, for appellant.

William H. Dodd (argued), of Fong, Miho, Coy & Robinson, Honolulu, Hawaii, for appellee.

Before HAMLEY, MERRILL and ELY, Circuit Judges.

HAMLEY, Circuit Judge:

Hawaiian Paradise Park Corporation (Hawaiian) entered into a contract with United Broadcasting Company, Inc. (United) for the sale of Hawaiian's Honolulu television station. United subsequently assigned its interest in the contract to Friendly Broadcasting Co., Inc. (Friendly). Hawaiian later declined to consummate the sale. Friendly then brought this diversity action against Hawaiian for injunctive relief and specific performance. Following a trial, judgment was entered for plaintiff and defendant appeals.

We are confronted at the outset with Friendly's motion to dismiss the appeal on the ground that Hawaiian has waived its right to appeal by reason of its course of conduct after entry of the judgment.

Pending appeal, Hawaiian did not attempt to stay the district court judgment by filing a supersedeas bond or otherwise. Instead, acting through its counsel, it proceeded diligently to prepare and approve all necessary documents and to assist with all other details necessary to effect closing of the sale. In this connection a number of supplemental agreements were entered into which, at least in Friendly's view, were not required of Hawaiian under the judgment.

A failure to move for a stay of judgment pending an appeal does not ordinarily affect the right to appeal. See O'Hara v. MacConnell, 93 U.S. 150, 154, 23 L.Ed. 840; Holcomb v. Holcomb, 93 U.S.App.D.C. 242, 209 F.2d 794. Both of these cases involved the transfer of property by deed and reversal would have presented, as our case would present, difficult problems in restoring the parties to their former positions.

However, when a party accepts the benefits of a judgment under circumstances which indicate an intention to finally compromise and settle a disputed claim, an appeal may be foreclosed. In such a case, it is "* * * the mutual manifestation of an intention to bring the litigation to a definite conclusion upon a basis acceptable to all parties" which bars a subsequent appeal, and not the fact, standing alone, that benefits under the judgment were accepted. Gadsden v. Fripp, 4 Cir., 330 F.2d 545, 548.

It seems to us that, throughout all of the negotiations between the parties in closing the sale, there was enough indication of Hawaiian's purpose to reserve its right to appeal, and of Friendly's knowledge of that purpose, to negate any mutual manifestation of an intention to bring this litigation to a conclusion. Accordingly, the motion to dismiss the appeal is denied.

A statement of background facts will be helpful in discussing the merits of the appeal.

Under the contract of sale, dated January 7, 1966, Hawaiian agreed to sell to United all of the fixed and tangible assets of Hawaiian used or useful in the operation of station KTRG-TV, Honolulu. As a part of the contract, Hawaiian also agreed to assign to United certain leases, contracts and agreements, and licenses issued by the Federal Communications Commission (FCC) for the operation of the station.

Hawaiian could not assign its FCC licenses to the buyer without the written consent of the FCC. Accordingly, the contract provided that the buyer and seller would join in an application to the FCC for such consent. Paragraph 10 of the contract provides that the closing date of the contract shall be within forty-five days from the date the FCC approves the application. By agreement this forty-five-day period was later reduced to five days. Paragraph 11 provides that if the closing date does not occur within twelve months from the date of filing the application with the FCC, either party may terminate the agreement on five days written notice to the other, provided such notice of termination is given prior to Commission consent. This paragraph further provides that if FCC approval of the transfer is not obtained within fifteen months from the date of filing the application, the contract may be terminated at the option of either party.

The application for consent to transfer the license was filed with the FCC on February 3, 1966. Accordingly, under the contract, if the sale was not consummated by February 3, 1967, and if the FCC had not approved by that date, either party could terminate the transaction upon five days notice. The parties originally contemplated that it would be possible to complete the sale within from sixty to 120 days. However, Friendly soon encountered difficulties in satisfying the FCC requirements and, on September 30, 1966, the FCC ordered a hearing on the application.

The details of the transaction, including proceedings before the FCC, were handled in Washington, D.C., by Friendly's attorney, Paul Dobin, and by Hawaiian's attorney, A. Harry Becker. When the FCC application was designated for hearing, both Dobin and Becker came to doubt that FCC approval could be obtained prior to February 3, 1967.

In an effort to obtain agreement on an extension of the contract time for closing the sale, Dobin prepared a document entitled "Supplement to Agreement," which was signed by Richard Eaton, president of Friendly, and sent to Becker. Under this proposed agreement, the contract of sale would not be terminable until December 31, 1967, if a final decision by the FCC on the application had not been made before that date. In addition, the agreement provided that if the FCC approved the assignment and the sale were consummated, Friendly would indemnify Hawaiian for all net out-of-pocket losses up to $35,000 incurred in the operation of the television station from September 28, 1966, until the granting of the application. The $35,000 was to be paid upon execution of the supplement by way of a loan secured by a chattel mortgage on the physical assets of the television station.

Becker, in Washington, D.C., sent the supplemental agreement to David Watumull, president of Hawaiian, in Honolulu, for execution. Watumull rejected the proposed agreement and so informed Becker in a telephone conversation on December 7, 1966.

The hearings before the FCC examiner commenced on December 8, 1966, and concluded on January 13, 1967. In the meantime, following several conversations with Becker, Dobin wrote a letter to Becker, dated December 16, 1966, setting out the terms of a proposed agreement for extending the contract time for closing the sale. Becker indicated agreement on behalf of Hawaiian by signing the letter and returning it to Dobin.¹

Dobin filed the letter with the FCC as part of the application. Neither he nor Becker sent a copy of the letter to Watumull in Honolulu, and Hawaiian contends that Watumull was not otherwise informed of the existence of the letter at that time. FCC approval was not obtained by February 3, 1967, and therefore, under the terms of the original contract, Hawaiian's right to terminate the transaction matured on that date, contingent upon the giving of five days notice.

Watumull made no immediate effort to terminate. Two and a half months later, however, on April 17, 1967, Watumull wrote to Friendly, giving five days notice that the agreement of January 7, 1966 was terminated pursuant to paragraph 11 of the agreement. Dobin replied for Friendly on April 19, 1967, calling attention to the December 16, 1966 letter-agreement and stating that Hawaiian had no right to terminate at that time. According to Hawaiian, this was the first time Watumull had heard of the December 16, 1966 letter-agreement.

This suit was commenced by Friendly on May 3, 1967, while the FCC application was still pending. Friendly initially sought only injunctive relief since the contract was not yet ripe for closing.

On May 24, 1967, Friendly amended its complaint to pray for specific performance of the contract. A trial was had, beginning May 31, 1967. Thereafter, on June 30, 1967, the district court entered findings of fact, conclusions of law, and a judgment amounting to a preliminary injunction, enjoining Hawaiian from interfering with the proceedings before the FCC or otherwise interfering with Friendly's rights under the contract of sale. In its findings and conclusions, the district court specifically determined that Hawaiian was bound by the letter-agreement of December 16, 1966. Hawaiian appealed from that judgment but that appeals was dismissed by agreement of the parties.

The initial decision of the FCC examiner, consenting to the transfer of the license, was rendered on July 27, 1967. The decision became final on September 15, 1967. On that same day, and as soon as it was known that FCC approval had become final, Hawaiian filed in this case a copy of a registered air mail letter addressed to Friendly, dated September 15, 1967, giving notice of termination of the contract of sale, as amended by the letter of December 16, 1966. In this letter Hawaiian asserted that it did not agree with the court's prior decision that Hawaiian was bound by the December 16, 1966 letter. However, inasmuch as the court had so ruled, Hawaiian stated that it gave notice of termination under what it regarded as the "clear terms" of the December 16 letter.

Hawaiian thereupon orally moved in the district court for an order vacating the preliminary injunction and dismissing the action. This motion was renewed in writing on September 18, 1967. A hearing took place on this motion and other matters, including Friendly's prayer for specific performance. On September 19, 1967, the district court entered a final judgment denying Hawaiian's motion, continuing in effect relevant...