Pritchard v. McLeod

• Decision Date: 05 May 1913
• Docket Number: 2,206.
• Citation: 205 F. 24
• Parties: PRITCHARD v. McLEOD et al.
• Court: U.S. Court of Appeals — Ninth Circuit

205 F. 24

PRITCHARD v. McLEOD et al.

No. 2,206.

United States Court of Appeals, Ninth Circuit.

May 5, 1913

The contract upon which the action is based is as follows:

'Memorandum of agreement made and entered into this seventh (7th) day of April, nineteen hundred and eight (1908), between Alfred J. Pritchard, of Seattle, Wash., the party of the first part, and George K. McLeod, 31 Nassan street, New York, the party of the second part:

'Whereas the party of the first part agrees to sell and the party of the second part agrees to buy all the placer mining claims (with the exception of one certain claim in the vicinity of Dearborn Discovery on the Inmachuk), also warehouses, houses, stables, china, and centrifugal pumps, boilers, engines, one horse, scows, tents, forges stoves, hoes, belts, machinery, and tools of every description, camp outfit of every description, and lots and water rights owned by said party of the first part in the Fairhaven mining district, district of Alaska, for the sum of thirty thousand dollars ($30,000.00) upon the following terms and conditions:

'(Signed) Alfred J. Pritchard. (Seal.)

'George K. McLeod. (Seal.)'

'The plaintiff attaches a copy of the contract to the complaint, and alleges that the two notes therein called for were executed and delivered to him, and that he is still the holder thereof; that no part of the notes has been paid, and that, with the exception of the $1,000 paid at the time of the execution of the instrument, no payments have ever been made; that he, the plaintiff, has performed, and is ready and willing to perform, the agreement; 'that it was understood and agreed that the said $25,000 (named in the contract) should be paid within a reasonable time; that more than a reasonable time has elapsed since the making of said agreement; that the defendant George K. McLeod has neglected to mine said premises, or to extract gold therefrom, whereby and on account of which all of said moneys are now due and payable'; and that, although plaintiff has tendered a deed, defendant fails and refuses to pay the purchase price, or any part thereof.

William H. Gorham, of Seattle, Wash., and G. J. Lomen, of Nome, Alaska, for appellant.

Ira D. Orton, of Seattle, Wash., for appellees.

Before GILBERT, Circuit Judge, and WOLVERTON and DIETRICH, District judges.

DIETRICH District Judge (after stating the facts as above).

The view that the agreement is a mere option is untenable. The 'party of the first part agrees to sell and the party of the second part agrees to buy. * * * The intent and purpose of this agreement is that the party of the first part sells to the party of the second part all his real and personal property,' etc. So reads the instrument. The obligation of McLeod to pay the items of $1,500 and $2,500 (evidenced by two promissory notes), upon November 6, 1908, and April 6, 1909, respectively, is absolute, and wholly independent of any contingency whatsoever.

The question whether or not the remaining $25,000 is payable conditionally or unconditionally is not so clear, and perhaps should be finally answered only in the light of all the circumstances surrounding the execution of the agreement. Nash v. Towne, 5 Wall. 689, 18 L.Ed. 527; Canal Co. v. Hill, 15 Wall. 94, 21 L.Ed. 64; Merriam v. United States, 107 U.S. 437, 2 Sup.Ct. 536, 27 L.Ed. 531. The most favorable view to the defendant is that this balance was understood to be payable only out of a specified fund, namely, the gross output of the claims, and that the defendant's obligation was therefore, to a degree, made contingent upon the coming into existence of such a fund. But whether such was the intent of the provision, or whether the only purpose thereof was to furnish a measure of security to the vendor, need not now be decided, for in either view the complaint states a cause of action. It is elementary that where payment is to be made out of a specific fund, which it is the duty of the obligated party to create, or where the time of payment is dependent upon a condition subject to his control, he cannot escape performance by willfully neglecting to discharge his duty. In Nunez v. Dautel, 86 U.S. (19 Wall.) 560, 22 L.Ed. 161, where the contract provides for payment out of the proceeds of a crop or money raised from some other source, the court said:

'No time having been specified within which the crop should be sold or the money raised otherwise, the law annexed as an incident that one or the other should be done within reasonable time, and that the sum admitted to be due should be paid accordingly. Payment was not conditional to the

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