Case ID: ad_276/html/0459-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Curiam,.\n     \n      Callahan, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Robert P. Zobel, as Sole Surviving Director of Caribbean Guano Company, and on Behalf of Himself and All Other Stockholders of Caribbean Guano Company, Appellant, v. Jean U. Koree, Respondent.
    First Department,
    March 14, 1950.
    
      David Harrison for appellant.
    
      Milton S. Gould of counsel (George Trosk and Philip J. Albert with him on the brief; Gallop, Climenko & Gould, attorneys), for respondent.
   Per Curiam,.

In a representative action on behalf of Caribbean Guano Company, hereinafter called “ plaintiff ”, judgment is demanded and has been denied declaring a certain agreement to be terminated, pursuant to which plaintiff purports to have granted to defendant, but without warranty of title, the exclusive right for a term of years to export and sell guano from certain islands in the Caribbean Sea, under a license held by plaintiff and alleged to have been issued by proclamation of the Secretary of State of the United States on November 30,1869, pursuant to an Act of Congress which became a law on August 18, 1856.

On January 20,1949, the parties to this action signed a memorandum reciting plaintiff’s rights under said license, and granting to defendant a ninety-day option to enter into an agreement thereto annexed for a term of five years, with a renewal privilege for an additional five years at defendant’s election.

The option to enter into this agreement was exercised by defendant on April 5, 1949, within the ninety days allowed for that purpose.

Defendant, as above stated, was given the exclusive right to export guano from these islands for a period of years, subject to payment of a royalty to plaintiff upon each ton to be sold. The contract was subject to cancellation by plaintiff on thirty days’ written notice if defendant failed to sell a mim'rmrm of 1,000 tons of guano during each year of the term of said agreement, ‘ ‘ unless prevented by Acts of God or the United States Government ”. The undisputed fact is that the Government of the United States refused to sanction the removal of any guano from these islands indefinitely, due to an international dispute with Colombia concerning the ownership of the islands.

This was not a new obstacle to the exportation of this guano, since the Department of State had taken the same position for many years, a fact which was known to both parties when they signed the option agreement on January 20,1949. But that circumstance did not give to plaintiff the right to cancel this option after it had been signed, or to cancel the agreement after the option had been exercised, inasmuch as the agreement was drawn so as to remain in force for its full term although no guano were to be exported, provided that this was prevented by the Government of the United States. It appears to have been contemplated that defendant might succeed at some time during the life of the agreement in persuading the Department of State to change its position respecting these islands, in which event plaintiff would profit from royalties as well as defendant from the sale of the guano. The option and contract annexed thereto could have been differently expressed, but the language does not support plaintiff’s alleged right to cancel the arrangement in event that the governmental bar to the removal of Caribbean guano were not lifted within three months.

The judgment appealed from dismissing the complaint on the merits should be affirmed, with costs of the appeal to defendant.

Callahan, J.

(dissenting). I am unable to concur with the majority holding in respect to the contract annexed to the option agreement in this case.

It seems to me that the parties did not intend to give the purchaser a five or possibly ten-year period during which he might sit idly by without payment of any kind or further action on his part to await the possible lifting of a governmental ban against removal of guano from the islands in question. The contract requires the purchaser to dig, mine and remove the guano immediately on execution at no less than 1,000 tons in any one year during the term of the agreement. It also provides that such operations be conducted in accordance with the laws of the United States. The fact is that both sides were aware of the Government’s refusal over a period of many years to license or permit such work. Accordingly, it would appear that the parties must have contemplated a change of position or attitude on the part of the Government and a lifting of its ban before execution of the contract. I think that this is the only reasonable inference in the circumstances of this case. In my opinion the consent of the Government to the operations covered by the contract was in the nature of a condition precedent to the valid exercise of the purchaser’s option so as to effect a binding final agreement.

If, as the defendant contends, the parties had it in mind to give the purchaser a contractual right to remove guano from the islands at any time that such removal might become lawful within the term of the proposed agreement, it would have been an easy matter to manifest such intention in plain and unmistakable language. Indeed, if such was the intent of the parties, there was little point in granting an option of three months to the purchaser to consider whether or not he desired to enter into the contract. The courts are reluctant to construe a contract or agreement in such manner that one party is placed at the mercy of another.

It may be pertinent to note that the provisions of paragraph 11 relate to cancellation of the contract after execution and commencement of performance.

I vote to reverse the judgment appealed from and for declaratory judgment in favor of the plaintiff.

Peck, P. J., Cohn and Van Voorhis, JJ., concur in Per Curiam opinion; Callahan, J., dissents and votes to reverse the judgment appealed from and for declaratory judgment in favor of the plaintiff, in an opinion in which Dobe, J., concurs.

Judgment affirmed, with costs,