In re Imperial Brewing Co.
| Decision Date | 11 January 1906 |
| Citation | 143 F. 579 |
| Parties | In re IMPERIAL BREWING CO. |
| Court | U.S. District Court — Western District of Missouri |
Warner Dean, McLeod, Holden & Timmonds, for claimant.
Karnes New & Krauthoff, for general creditors.
I. J Ringolsky, for trustees.
On the 21st day of October, 1905, the Imperial Brewing Company, a corporation of the state of Missouri, was adjudged an involuntary bankrupt on petition of certain of its creditors and its answer admitting its inability to pay its debts and its willingness to be adjudged a bankrupt on that account. The E. Clements Horst Company, a corporation having its residence and general place of business in the city of San Francisco, Cal., has presented its petition, setting out in substance that on the 26th day of June, 1905, it entered into a contract with the said Imperial Brewing Company whereby the petitioner obligated itself to sell and deliver to said Imperial Brewing Company 80 bales of hops, each, of the crops of the years 1905 to 1910, inclusive, for which the said vendee company obligated itself to pay to the petitioner on each bale of such hops at the rate of 15 cents per pound (tare 5 pounds) net cash, plus the freight from the Pacific Coast. The time of delivery fixed by the contract was during the months of September to February, following the harvest of each year's crop. Said hops were to be used by said brewing company in the manufacture of beer. The petition alleges, in effect, that the contract was breached by said adjudication in bankruptcy, whereby the petitioner was damaged in the sum of $5,675, and it prays that the same may be liquidated and proved against the estate of the bankrupt and for an order directing the manner in which said liquidation shall be had. The petition further alleges that the trustees in bankruptcy have elected not to keep said contract alive.
The question to be decided is, did the adjudication in bankruptcy against the Imperial Brewing Company in and of itself constitute such a breach of the contract as to mature the whole executory contract, entitling the claimant to prove up and have allowed against the estate in bankruptcy the damages claimed? While the statement of the petition is a little indefinite respecting the proceedings leading to the adjudication, the court will take cognizance of its own records, which show that it was an involuntary proceeding in bankruptcy--necessarily so because the corporation could not on its own voluntary petition be adjudged a bankrupt. While the petition herein states that the Imperial Brewing Company was permanently disabled from performing said contract and repudiated the same in all its parts, and that it retired permanently from business and was hopelessly insolvent, etc., these results are alleged to follow 'by reason of said bankruptcy proceedings. ' At the time of the adjudication in bankruptcy there was no debt owing by the bankrupt to the claimant. There had been no delivery or tender of delivery prior thereto, and none since. It may be conceded as the law of this jurisdiction that where a party is bound from time to time, as expressed in the contract, to deliver articles to be manufactured or products to be grown, each parcel as delivered to be paid for at a certain time and in a certain way, a refusal by the vendee to be further bound by the terms of the contract or to accept further deliveries constitutes a breach of the contract as a whole, and gives the vendor a right of action to recover the damages he may sustain by reason of such refusal. In such case the positive refusal of the vendee to perform when tender is made, or notice by him to the vendor before maturity of the time for delivery that he will not carry out the contract, will release the vendor from making any tender, and entitle him to an action in advance of the fixed period for delivery on his part to recover damages as for breach of the whole contract. Roehm v. Horst, 178 U.S. 1, 20 Sup.Ct. 780, 44 L.Ed. 953.
The sole reliance of the claimant to bring it within this rule for such breach is predicated of the adjudication in an involuntary proceeding in bankruptcy against the vendee. I am unable to consent to the proposition that such an adjudication in bankruptcy, ex vi termini, is in law tantamount to a refusal of the bankrupt to perform, or that it thereby permanently disabled itself from performance, to bring the claim asserted by petitioner within the operation of the rule laid down in Roehm v. Horst, supra. As said by Judge Sanborn, in Watson v. Merrill, 136 F. 363, 69 C.C.A. 719:
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