Opinion ID: 280810
Heading Depth: 2
Heading Rank: 1

Heading: minthorne's appeal

Text: 17 1. Minthorne's contention that the defense of no promise was not affirmatively pleaded or raised at pretrial; that Seeburg may not raise it on a post trial motion. 18 It is the contention of Minthorne that the particular ground on which the judge granted the motion for judgment notwithstanding the verdict, namely that Ex. D contained only a condition precedent to recovery and no independent promise or covenant, was raised for the first time after the verdict. Seeburg answers that all along it contended that there was no cause of action stated in that part of the counter-claim which was tried to this jury. Apparently it was at the time that jury instructions were being discussed, that for the first time, Seeburg particularized its objection to the counter-claim and made the contention which is specifically set forth on this appeal, to-wit, that Ex. D contained only a condition and not a promise or a covenant. 19 Minthorne contends (1) that the defense of lack of covenant or promise was not affirmatively plead or raised in pretrial, and (2) that by the doctrine of estoppel or waiver, Seeburg may not raise the issue for the first time on a post trial motion. Because of our holding in this appeal, namely that there was a covenant or promise in Ex. D, we do not pass on these contentions. 2. Interpretation of the Contract 20 The question comes down essentially to an interpretation of the contract. Ex. D was a part of and must be considered with the entire contract, dated February 17, 1960. Cal.C.C. § 1641; Rest.Contracts § 235(c). Section 15, of the contract, provides that it be interpreted pursuant to California law. 21 There is much discussion in Minthorne's briefs as to whether there was a condition precedent or a promise or covenant. Witkin, California Law, § 233, p. 262, states: 22    but the same fact or act may be both a condition and a promise, resulting in both an excuse of counter performance and a right of action for damages. (See Rest., Contracts, para. 257; Starr v. Davis (1930) 105 C.A. 632, 288 P. 706; Schlesinger & Sons v. Kohler & Chase (1930) 103 C.A. 195, 284 P. 244.) 23 In considering what the parties meant by the language in the contract, we are entitled to take into account the background, the facts underlying execution of the contract and in particular the business methods involved in manufacturing, distributing and operating vending machines. Cal.C.C. § 1647. 24 It is well settled in California that courts are not inclined to construe stipulations of a contract as conditions precedent unless such construction is compelled and plainly expressed by the language of the contract. Brubaker v. Beneficial, etc., Life Ins. Co., 130 Cal. App.2d 340, 278 P.2d 966 (1955); Verdier v. Verdier, 133 Cal.App.2d 325, 284 P.2d 94 (1955); Victoria S.S. Co. v. Western Assur. Co., 167 Cal. 348, 139 P. 807 (1914); Baker Aircraft Sales, Inc. v. Cassel, 200 Cal.App.2d 563, 19 Cal. Rptr. 581 (1962); Sosin v. Richardson, 210 Cal.App.2d 258, 26 Cal.Rptr. 610 (1962). 25 The agreement of February 17, 1960, provides in Section 3A that Minthorne Music Co., shall assign, transfer and convey to Seller (Minthorne) on the Closing Date the following assets: 26 (a) Parts, equipment, furniture and leasehold improvements located at    Phoenix, Arizona, together with background music equipment at various locations in Arizona    [Emphasis added] 27 (b)    28 (c)    Seller (Minthorne) will deliver to Minthorne Music Co.,    his assumption    of the lease of the Phoenix branch premises   . 29 Ex. D attached to the agreement of February 17, 1960, first provided Minthorne should remain contingently liable on Conditional Sales Contracts and Chattel Mortgages in an    amount of    $569,000.00 consisting primarily of Equipment Contracts in Arizona and contracts on equipment owned and operated by Seller (Minthorne) his wife    and the related companies    [Emphasis added]. These provisions demonstrate that Minthorne was to continue as an operator of the equipment in Arizona. 30 Next Minthorne was indemnified against his contingent liability of $816,000.00 on other contract guarantees. 31 Finally there were the provisions in four sections prefaced by    in the event a delinquency in any payment occurs in connection with any of the Conditional Sales Contracts and/or Chattel Mortgages and/or Leases, totaling approximately $569,000.00, upon which Seller remains contingently liable, the following procedure will be adopted : [Emphasis added] 32 Section 1 provided that for a period of 90 days after receipt of notice of delinquency, Seeburg would use its best efforts to negotiate in each individual case a course of action acceptable to Seller (Minthorne). Section 2 provided: 33 Seeburg and Minthorne Music Co., will during a period of ninety (90) days from receipt of such monthly notice of delinquency endeavor to avoid re-possession and cooperate with Seller in an arrangement to incur the least possible loss either by a partial or complete refinancing at the lowest financing rate available and over a period of time mutually satisfactory to Seller and Seeburg and Minthorne Music Co., or if Seller desires, Seeburg and Minthorne Music Co., shall give Seller the opportunity to take over the said equipment and operate it himself 4 or with Seller's consent, Seeburg or Minthorne Music Co., will resell the equipment contract or chattel mortgage or lease in question or any part of it to other customers.   . [Emphasis added] 34 Section 3 provided that if during the 90 day period, Seeburg and Minthorne agree that repossession is unavoidable, Minthorne Music Co. (then owned by Seeburg), would pay the balance on the contract involved, take the equipment, and resell at a price satisfactory to Seller. Any difference or balance remaining would be charged to $31,000.00 reserve fund, with no liability to Minthorne until the fund was exhausted. 35 Section 4 provided that if Seeburg and Minthorne failed to agree within the 90 day period as to action to be taken, then at the expiration of the 90 day period, Seeburg was free to take such action as it saw fit. 36 It is patent that these were provisions and promises to protect Minthorne as both a distributor and an operator from the effect of a delinquency in payments to be made under contracts; and to prevent default and repossession. The provisions ran to Minthorne to the extent that he was a distributor, and to him, with other persons, as operators of the machines. 37 Briefly, it is not in dispute that manufacturer, (Seeburg) makes the machines and sells them to distributors, (Minthorne and others). The distributor sells the machine to the operators, who execute a contract which is guaranteed by the distributor, (Minthorne), and by the manufacturer, (Seeburg). The contract, as commercial paper, is then discounted to a commercial corporation, (ReDisCo). ReDisCo then holds the contract with the written guarantee of the manufacturer (Seeburg) and the distributor (Minthorne). In the case at bar, by the contract of February 17, 1960, Minthorne continued to be a distributor in the Arizona area but also was an operator of certain of the machines, thus occupying a dual position. 38 The desires and interest of the various parties vary in such a business transaction. It is to the interest of the manufacturer, the distributor and the discount company to have good commercial paper, and to have speedy and efficient methods to repossess the equipment if there is a default by the operator. It is to the interest of the operator to be allowed to operate his machines on his route and to have such protection as he can secure from speedy and effective repossession in the case of a default. Thus, Minthorne in its capacity as an operator and not as a distributor, was benefited by the provisions protecting it against default and repossession. But it was also to his interest as a distributor, to take over and operate the equipment in case the operator defaulted. 39 The jury verdict establishes that Seeburg did not give Minthorne the opportunity to take over the said equipment and operate it himself. The jury found against Seeburg on its $40,000.00 claim and awarded Minthorne $129,371.00 as damages. 40 We interpret the contract as providing special rights to Minthorne to give him protection against default and a promise to allow him to take over the equipment and operate it. 41 Since there was a promise on which the verdict was returned, it was error to grant the motion for judgment notwithstanding the verdict.