E.I. Du Pont de Nemours Powder Co. v. Schlottman
Decision Date | 10 November 1914 |
Docket Number | 51. |
Citation | 218 F. 353 |
Parties | E. I. DU PONT DE NEMOURS POWDER CO. v. SCHLOTTMAN. |
Court | U.S. Court of Appeals — Second Circuit |
W. H Button, of New York City, for plaintiff in error.
L. L Kellogg, of New York City, for defendant in error.
Before WARD and ROGERS, Circuit Judges, and MAYER, District Judge.
In July, 1908, one Grubb was negotiating with T. C. Du Pont president of the Du Pont Powder Company, for the sale of the whole capital stock of the Pittsburgh Fuse Company to the Du Pont Company. July 20th Du Pont wrote to Grubb as follows:
T. C. Du Pont, President.'
On July 24th the deal referred to in the letter went through in a formal agreement whereby the Du Pont Company agreed to pay Grubb $75,000 of its preferred and $75,000 of its common stock for the whole capital stock of the Pittsburgh Fuse Company. Grubb delivered the Fuse Company's stock and the Du Pont Company transferred to it its own stock, but, after operating the plant for about six months, sold it to other parties, who dismantled it.
Grubb, the plaintiff's assignor, died before suit brought, and Mr. T. C. Du Pont did not testify to the circumstances attending the writing of the letter of July 20th. At the conclusion of the case each party asked Judge Ray to direct a verdict in his favor, and he did direct a verdict in favor of the plaintiff for $25,000.
The complaint treats the letter and the formal agreement as one contract, alleges that the defendant by selling the plant of the Fuse Company wrongfully prevented the test agreed upon, and claims damages for the difference between the fair and reasonable value of the Fuse Company's capital stock alleged to be $175,000 and the market value of the defendant's stock actually received, alleged to be $120,000.
The defendant contends that the letter of July 20th is a separate contract, and, as it is not to be performed within the year, is void under the statute of frauds, because it does not state any consideration. We think, however, that the two documents are to be considered together. The Du Pont Company was to pay $25,000 more in securities if in the judgment of T. C. Du Pont upon operating for one year, the plant was worth $175,000 to his company and was capable of making double tape fuse at $2 per thousand feet with powder at $3.60 a keg. This was to be additional compensation for additional value, so that the objection of the statute of frauds is unavailing.
The letter does not contain any express promise to operate the plant for one year, and the question is whether such a promise is to be implied. We think the court below rightly held that it was. The seller evidently thought the plant worth $175,000 in the defendant's securities, and the buyer was willing to pay the additional $25,000 if such value was demonstrated in the way provided. The letter implies a promise on the Du Pont Company's part to operate the plant for a year, and that promise must be taken as part of the consideration for which Grubb sold the capital stock. The authorities support this conclusion. Allen, J., said in Booth v. Cleveland Mill Co., 74 N.Y. 15, 21:
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