Hendler v. Cuneo Eastern Press, Inc.

• Decision Date: 18 May 1960
• Docket Number: 284,Dockets 25975-25976.,No. 283,283
• Parties: Stanley B. HENDLER, as Trustee in Bankruptcy of Farrell Publishing Corporation, Appellant, v. CUNEO EASTERN PRESS, INC., Appellee.
• Court: U.S. Court of Appeals — Second Circuit

279 F.2d 181 (1960)

Stanley B. HENDLER, as Trustee in Bankruptcy of Farrell Publishing Corporation, Appellant, v. CUNEO EASTERN PRESS, INC., Appellee.

Nos. 283, 284, Dockets 25975-25976.

United States Court of Appeals Second Circuit.

Argued April 8, 1960.

Decided May 18, 1960.

Benedict Ginsberg, New York City, for appellant.

Samuel J. Silverman, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for appellee.

Before LUMBARD, Chief Judge, and HAND and HINCKS, Circuit Judges.

HAND, Circuit Judge.

This appeal is from an order of Levet, J. (165 F.Supp. 40), in the Southern District of New York, modifying an order of the referee, and dismissing a claim in bankruptcy of the bankrupt against the defendant, Cuneo Eastern Press, Inc., arising in tort.¹ The facts were as follows: The bankrupt was engaged in publishing two magazines known as "The Woman," and "Everybody's Digest." It had a contract with the defendant to print both of these for thirty-six (36) consecutive months, beginning in September, 1953, under which the parties had continued to work until January, 1954, at which time the contract had over two years still to run. The bankrupt had complained about the defendant's defective printing and late delivery and on January 22, 1954 it sent a letter to the defendant, the important part of which is as follows:

"We hereby give you notice, because of multiple breaches of this contract on your part, and your repeated failure to perform in accordance with the terms of the contract, we are rescinding such contract effective with your completing all necessary work on the May 1954 issue of The Woman.

* * * * * *

"Because of your failure to perform in accordance with the terms of the contract existing between us we have suffered and are suffering very severe damages. We hold you fully responsible for such damages."

The defendant answered on January 26th, as follows:

"We deny emphatically that we have been guilty of any breach of this contract and are unaware of the nature of the alleged breaches which are unspecified. * * *

"Under the circumstances, we cannot recognize your attempted rescission of this contract and hereby notify you that we stand ready to fulfill the performance thereof.

"We shall, of course, hold you fully accountable for any damages and loss of profit that may be sustained in case you persist in this repudiation."

A short time before it posted this letter to the defendant the bankrupt entered into negotiations with another printing company, The Rumford Press of Concord, New Hampshire to print the future issues of the two magazines. The defendant must have learned of these negotiations, for on February 3 its attorney in Philadelphia posted a letter to The Rumford Press which contained the following passage: "We are * * * writing to inform you that any action on your part which induces, or which would induce, a breach of our client's contracts with the above named corporations will be actionable interference with our client's contractual rights. In such event our client would hold your Company accountable for the damage and loss of profits that would inevitably result from such breach." It is not clear from the record whether the bankrupt and The Rumford Press had entered into a firm contract for the printing of the magazines by The Rumford Press before it received the letter of February 3. Judge Levet held that the plaintiff had failed to prove the existence of a binding and valid contract at that time, and had at most no more than a temporary working agreement. This conclusion is borne out by the letter of February 15 of The Rumford Press's lawyer to the bankrupt saying that there were still matters which constituted a condition precedent upon any obligation of his client. However, we shall decide the appeal on the assumption that the bankrupt and The Rumford Press had concluded a firm contract at the time the defendant's letter of February 3 was received, since this is the assumption most favorable to the bankrupt's claim.

As a preliminary issue we must decide whether the defendant had at any time withdrawn its repudiation of January 26 of the bankrupt's attempted "rescission" of the printing contract. (Incidentally it may be noticed that both the referee and the judge found that the bankrupt's charges were not substantiated that the defendant had not adequately performed this contract.) At some time, which the record does not definitely fix, the defendant sent back to the bankrupt the "plates" and other equipment that it had received for printing the magazines, as well as the "copy" to be printed. The plaintiff argues that this return of the bankrupt's property proves that the defendant acceded to the "rescission" of January 22, and that therefore it had no interest to protect in interfering with the bankrupt's contract with The Rumford Press. We do not think that the return, the reason for which is nowhere explained, was proof that the defendant assented to the bankrupt's rescission of the original contract. Its letter of January 26 could not have been a more categorical repudiation of such a position. It continued to be "ready to fulfill the performance of the contract"; it would hold the bankrupt "fully accountable for any damages * * * in case you persist in this repudiation." Its lawyer's letter to The Rumford Press on February 3 declared that for the addressee to print the magazines "will be actionable interference with" the defendant's "contractual rights." Although as we have just said, the record does not disclose why the defendant returned the property, there was plenty of reason to do so other than an acceptance of the bankrupt's...