Solomon v. Waterbury Brass Goods Corporation

• Decision Date: 09 March 1925
• Docket Number: No. 111.,111.
• Citation: 6 F.2d 990
• Parties: SOLOMON v. WATERBURY BRASS GOODS CORPORATION.
• Court: U.S. Court of Appeals — Second Circuit

6 F.2d 990 (1925)

SOLOMON v. WATERBURY BRASS GOODS CORPORATION.

No. 111.

Circuit Court of Appeals, Second Circuit.

March 9, 1925.

Leo Oppenheimer, of New York City (Samuel H. Kaufman, of New York City, John J. McGinty, of Utica, N. Y., and Theodore J. Miller, of New York City, of counsel), for plaintiff in error.

Sullivan & Cromwell, of New York City (E. H. Sykes, of New York City, of counsel), for defendant in error.

Before ROGERS, HOUGH, and MANTON, Circuit Judges.

ROGERS, Circuit Judge.

The action is brought on a written instrument of guaranty whereby the defendant guaranteed to the plaintiff the punctual payment by the Electric Case Company, Inc., for all goods, not exceeding $25,000, sold and delivered by the plaintiff to the Electric Case Company, and further guaranteed the full performance by the latter of all and any contracts entered into between the plaintiff and the latter company. The written guaranty was dated December 29, 1919.

The plaintiff alleged in its complaint that thereafter, and on the faith of the guaranty, it entered into certain agreements with the Electric Case Company, under which it sold and delivered to the latter certain goods and wares and merchandise at the prices agreed upon, for which it has never received payment although payment was demanded. It also alleged that on December 22, 1920, there remained to be delivered by the plaintiff to the Electric Company, under their agreements, goods of the contract price of $11,214.61; and on that day the Electric Company canceled its agreements, so far as applicable to the goods which remained to be delivered and to be received and paid for by it.

It was practically conceded upon the trial, and admitted upon the argument in this court, that when the contracts were repudiated there had been delivered merchandise of the contract price of $4,951.89, for which payment had not been made; that there was on hand and undelivered completed merchandise of the contract price of $8,473.75, and merchandise in process of manufacture of a contract price of $2,636.89. The contracts entered into between the plaintiff and the Electric Case Company were for the sale and delivery of certain quantities of flashlight parts, which parts the latter company assembled into completed flash-light units.

The Electric Case Company contends that it was to receive the flash-light parts, so as to make complete sets or units, inasmuch as receiving some of the parts at one time would be of no use to it, if it were compelled to wait for a considerable period for the other parts to complete the set or unit — its sole business being the assembling of electric flash lights. It contends that, unless and until all the parts of a unit were delivered, the goods were of no use whatsoever. The court charged the jury that there was no evidence that the plaintiff was bound to furnish the goods ordered by the Electric Case Company in sets, but it at the same time instructed them that they should take into consideration the evidence which was given in passing upon whether delivery was tendered within a reasonable time. There certainly was no error in this. The form of each of the orders corresponds to the one found in the margin.¹ It contained nothing as to units and nothing as to the time when delivery was to be made. The court submitted to the jury the question whether there was an intention to deliver in complete sets; and while there was no evidence of any agreement to furnish the parts in balanced quantities, and no reason for sending that question to the jury, he nevertheless was asked by counsel for the defendant to instruct that the evidence "shows that the delivery was to be made in complete units." This the court refused. Thereupon the counsel requested the court to charge that, "in determining whether it was intended to deliver the parts in complete sets was in balanced stocks, they are to take into consideration the action of the parties, the correspondence that passed between the various parties and the various parties representing the plaintiff in this action," and the court so charged. As the court submitted that question to the jury upon the request of the counsel for the defendant, and the jury answered it in the plaintiff's favor, the defendant would seem to be concluded thereby.

No time for delivery was specified in the orders. The jury was therefore properly instructed that, where the parties to a contract have fixed no specific date for the delivery of the merchandise, the law requires that delivery shall take place within a reasonable time. The court added:

"The court further charges the jury that, even if there were a definite time mentioned in the contract for the delivery of goods, or if the contract provided, by operation of law, that goods must be delivered within a reasonable time, the purchaser may waive the definite date or the reasonable time, and if he once does waive that reasonable time, or that definite date, the time of the delivery ceases to be of the essence of that agreement.

"The court also charges you that if, after a reasonable time has expired, or a definite date for delivery has expired, the purchaser receives and accepts goods, he necessarily — and I think that comports with common sense — has waived delay in delivery, whether the delivery should have been within a reasonable time or on a definite day. The receipt of a part of the goods after such time is a waiver of such provision.

"The court further charges you that where the time for the delivery, whether it be a definite day or a reasonable time, has once been waived, the time ceases to be of the essence of the contract, but the purchaser can make time of delivery of the essence again by giving notice that, unless the contract is complied with within a reasonable time after that notice, then the contract will be canceled. That, in a general way, is the law applicable to this case.

"It follows, therefore, that if, under all the circumstances of this case, you find that the plaintiff has made a delivery, or was ready to make a delivery within a reasonable time, then your verdict must be for the plaintiff."

The charge on the subject of the time within which delivery had to be made was not only correct, but was not excepted to by the defendant, and we do not deem it necessary under the circumstances to comment upon it.

This brings us to the question of damages. The evidence shows that there is no dispute as to the right to recover for the goods sold and delivered, and for which payment has not been made. The controversy is whether the plaintiff is entitled to recover for the completed goods which it has on hand and has not delivered, and for the uncompleted goods, and, if so, as to the measure of the damages to which it is entitled.

It is claimed on behalf of the defendant appellant that the guarantor was released from any liability on his contract of guaranty (1) by modification of the contracts of purchase and manufacture; and (2) by the plaintiff permitting the bills to remain unpaid longer than 90 days. We will consider these contentions in their order.

It is said that change was made in an order given on December 9, 1919, and in an order given on January 6, 1920. The changes made are shown by a letter written by the plaintiff to the defendant on February 21, 1920, in which the price was changed, and also, instead of being "like sample," the articles were to be made of one piece, instead of two, and certain other changes were made, which it is not necessary to consider.

We do not question that a guarantor cannot be held liable beyond the strict terms of his contract. A guaranty is strictissimi juris. It is undoubted that as a general rule any material change in the obligation or duty of the principal, if made without the consent of the guarantor, releases him from liability thereon. Mann v. Mt. Union Tanning, etc., Co. (D. C.) 267 F. 448; Holcomb v. People's Trust Co., 205 F. 491, 123 C. C. A. 559; Sagal v. Mann, 89 Conn. 576, 95 A. 6; Antisdel v. Williamson, 165 N. Y. 372, 59 N. E. 207; Page v. Krekey, 137 N. Y. 314, 33 N. E. 311, 21 L. R. A. 409, 33 Am. St. Rep. 731.

But this rule is without application to the facts of this case. The contract of guaranty into which the guarantor entered provides that:

"The undersigned hereby guarantees to you, your successors and assigns, the prompt and punctual payment by the Electric Case Company of the purchase price of all goods, wares, and merchandise sold by you to said company, and the due and punctual performance by said company of all and any contracts entered into with you. The undersigned hereby waives notice of the making of any sales or contracts with the said company, or the extension of credit to said company, and the undersigned further waives demand upon the said debtor for payment and notice of nonpayment. The undersigned assents to the extension of any obligation owing by said company to you, and agrees that the undersigned will remain bound upon this guaranty notwithstanding any such extension.

"In the event of bills not being paid at maturity, same are to bear legal interest, and in no case are bills to remain unpaid longer than 90 days.

"This guaranty shall remain in full force and effect until you receive notice in writing from the undersigned to the contrary, but the undersigned shall continue liable under this guaranty under all circumstances for all goods sold or contracted to be sold or credit extended prior to the actual receipt by you of such written notice."

This guaranty did not relate to a particular contract or contracts, but included any agreements which might be entered into thereafter between the plaintiff and the Electric Case Company until the plaintiff was notified in writing by the defendant that he would not be responsible on contracts thereafter made. There is no possible reason for contending that the guaranty was voided by changes made in the contracts within the period covered...