Kirby-Carpenter Co. v. Burnett

• Citation: 144 F. 635
• Decision Date: 20 March 1906
• Docket Number: 1,489.
• Parties: KIRBY-CARPENTER CO. v. BURNETT.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

144 F. 635

KIRBY-CARPENTER CO. v. BURNETT.

No. 1,489.

United States Court of Appeals, Fifth Circuit.

March 20, 1906

Rehearing Denied April 6, 1906.

This is an action to recover damages for the breach of a contract brought by John Burnett, plaintiff, a citizen of Louisiana against the Kirby-Carpenter Company, defendant, a corporation chartered under the laws of the state of Illinois. The contract is copied in the petition, and is as follows:

'Menominee Mich., January 31st, 1902.

'John Burnett, Lake Charles, La.-- Dear Sir: We hereby give you an option until March 1st, 1902, to buy the lands owned by the Kirby-Carpenter Company, in the Parish of Calcasieu, state of Louisiana, amounting in all to 20,808.46 acres, at the sum of $20.00 per acre, net to us, terms to be afterwards agreed on and to be satisfactory to us. On the above terms the option shall be in force not longer than March 1st, 1902, and you shall notify us sooner if it can well be done, whether you will take the lands on above option or not.

'Yours truly,

The Kirby-Carpenter Co. 'S. P. Gibbs, Secretary.'

It is alleged that, after receiving the option, the plaintiff found a purchaser, ready, willing, and able to purchase the lands at the price of $436,977.66, and that the sale failed, by reason of the fault of the defendant company; it being unable to make a good title to the purchaser. It is alleged that the defendant company endeavored to avoid closing the sale, and that it offered 'the sum of $10,000: to the intended purchase 'to not insist upon the transfer of the property; that said Adams (the purchaser) was exercising the right to buy under said option, and refused to waive his right to purchase the property. ' After stating the objections to the defendant's title, which, it is alleged, prevented the sale, it is averred 'that the conduct of said company and its refusal to carry out its undertaking with petitioner has actually damaged him in the sum aforesaid, $20,000, for loss of profits sustained by reason of its breach of contract herein declared upon. ' The defendant answered, admitting 'the execution of the written option or agreement to sell to plaintiff, * * * but avers that said option was given without consideration or mutuality of obligation, and is nudum pactum and not legally binding on this defendant. ' Other defenses were pleaded in the alternative, which it is unnecessary to state. The case, by agreement entered of record, was tried before the court; a jury being waived. The court found as a fact that the contract sued on was executed by the defendant company on the day of its date, and delivered to the plaintiff. The court found as conclusions of law 'that the option contract sued upon is a legal contract binding on the parties thereto,' and 'that the breach of this contract is actionable at law. ' After stating other findings of fact and conclusions of law, not material to be stated, the court rendered judgment for plaintiff against the defendant for $20,808.46, with interest from March 15, 1902, until paid. The defendant company sued out this writ of error, and assigns that the court erred: (1) In failing to hold that the contract sued on was void for want of mutuality of obligation in the contract; and (2) in rendering judgment against the defendant.

F. G. Hudson (Hudson, Potts & Bernstein, on the brief), for plaintiff in error.

A. P. Pujo and C. D. Moss, for defendant in error.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

SHELBY Circuit Judge, after making the foregoing statement of the case, .

The alleged contract which is the basis of this action is an option given by the plaintiff in error to the defendant in error. It gives the latter an option to buy certain lands at a certain price within a fixed time. It does not purport to bind the person to whom it is given. He paid nothing for it and makes no reciprocal promise. It contains no words that import any kind of consideration. A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other. While the writing in question here contains a promise on the part of the Kirby-Carpenter Company, we search in vain to find any element of consideration proceeding from Burnett, or any one, to the company. He makes no promise, is subjected to no detriment; nor does he give any benefit or advantage to the company. A promise or agreement made without a consideration, however strong and clear may be the terms in which it is made, is not enforced by courts, nor can a breach of it be the predicate for the assessment of damages. This rule is elementary in English courts and in American courts, where the principles of the common law are administered. Wald's Pollock on Contracts (3d Ed.) 185. The principle that a promise is invalid if not supported by a consideration is as applicable to options as it is to other contracts. Borst v. Simpson, 90 Ala. 373, 7 So. 814; Peacock v. Deweese, 73 Ga. 570; Davis v. Petty, 147 Mo. 374, 48 S.W. 944; Crandall v. Willig, 166 Ill. 233, 46 N.E. 755; Faulkner v. Hebard, 26 Vt. 452; Walker v. Bamberger, 17 Utah, 239, 54 P. 108; Graybill v. Brugh, 89 Va. 895, 17 S.E. 558, 21 L.R.A. 133, 37 Am.St.Rep. 894; Ide v. Leiser, 10 Mont. 5, 24 P. 695, 24 Am.St.Rep. 17; Bean v. Burbank, 16 Me. 458, 33 Am.Dec. 681; Burnet v. Bisco, 4 Johns. (N.Y.) 235.

In Richardson v. Hardwick, 106 U.S. 252, 1 Sup.Ct. 213, 27 L.Ed. 145, the Supreme Court had occasion to comment on the nature of an option that was unilateral in its terms. Hardwick made a written agreement with Richardson, whereby the former agreed that the latter might become equally interested in certain lands by paying certain sums within a certain time. Both signed the agreement, but it recited no consideration proceeding from Richardson, and it contained no promise that he would buy the interest in the lands. It was optional with him to take the interest in the lands or not, as he chose. He was left free, and he had paid nothing, and promised nothing. The court held that:

'It is clear from the terms of the contract that Richardson was not bound by it. He did not agree to purchase any share in the lands or to pay Hardwick any money. The contract gave Hardwick no cause of action against Richardson. The latter was not bound to become interested in the lands, or to pay any money thereon, unless he chose to do so. In suits upon unilateral contracts, it is only where the defendant has had the benefit of the consideration for which he bargained that he can be held bound.'

It is unquestionable that, according to the principles of the common law, the option, for a breach of which this suit was brought, is not a binding contract, and that neither the Kirby-Carpenter Company nor Burnett could maintain an action for damages for the breach of it by the other; nor could either enforce it in any way against the other.

But the agreement in question was made to be performed in Louisiana, and it was conceded in the argument at the bar that it is to be governed by the laws of that state.

It has been suggested by the Supreme Court of Louisiana, in Landeche v. Sarpy, 37 La.Ann. 835, that the French commentators and courts are divided on the question as to whether, under the civil law as administered in France since the adoption of the French Code, a unilateral promise to sell, without a reciprocal promise to buy, is binding on the promisor. It would be useless for us to enter on the investigation and discussion of that question, because it would be entirely academic, as the question in the case at bar relates to the validity of a contract under the statutes of Louisiana existing at the time the contract was made, as construed by the Supreme Court of that...