Opinion ID: 412049
Heading Depth: 2
Heading Rank: 1

Heading: Balzac's Check

Text: 10 Guzman argues as its first basis for appeal that the trial court committed reversible error in dismissing its cross-action for recovery of damages against Balzac because of Balzac's stopping payment on its check to Guzman in payment for the coffee. Guzman's argument is premised on the idea that it had fully performed its obligations under the contract. That is, it argues that by its delivery of the Corrigan warehouse receipt and Balzac's purported acceptance of delivery of the coffee at the warehouse, it had done all that it was required to do under its contract with Balzac. 4 On this basis, it argues that it is entitled to recover the unpaid purchase price plus interest 5 on the coffee as well as incidental damages. We reject this argument. 11 To begin our analysis of Balzac's stop payment order on its check to Guzman, we must look first to the substance of the contract between the parties. Balzac clearly entered into a contract for the purchase of coffee. There is testimony in the record to indicate that Balzac was at all times dealing with the coffee. Moreover, the payment term of the contract (see note 4 supra ) evidences concern on the part of Balzac that the coffee be ready for importation into the United States. Recall that Mitsui delayed paying Guzman for the coffee for this very reason. Finally, the fact that payment was to be made against nonnegotiable warehouse receipts indicates that the contract was one to receive, hold and dispose of the coffee. 6 Thus, we hold that Balzac's duty to pay for the coffee was conditioned on its ability to remove the coffee from Corrigan's warehouse. 7 12 On that basis, Guzman's delivery of the warehouse receipts covering goods to which there were competing claims and which were subject to an interpleader action constituted nonperformance of a condition by Guzman. As such, Balzac's duty to perform did not become due. Performance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused. Restatement (Second) of Contracts Sec. 225(1) (1981). There being no excuse here, Balzac was not under a duty to pay Guzman for the coffee on being informed of the competing claims. 13 Even assuming that Balzac's duty to performance became due, Balzac would still have available here a defense to an action against it for breach. If a fact or event is a condition precedent to a promisor's duty to render the performance promised, its absence or non-occurrence is a 'defense' in an action brought against him for breach of his promise. This is so whether the 'condition' is described as express, implied or constructive. Corbin, supra Sec. 655. 14 Because we find that Balzac was not required to render its own performance in light of Guzman's failure to supply coffee capable of being disposed of by Balzac, we hold that Balzac was justified in stopping payment of its check upon being informed by Corrigan that the coffee would not be delivered because of the competing claims and interpleader action. On that basis, we hold that the Trial Court did not commit reversible error in dismissing the cross-action of Guzman and denying it recovery against Balzac on grounds of Balzac's stopping payment of its check to Guzman. 15 We should also point out here that had Balzac not stopped payment on its check to Guzman, Guzman would find itself in much the same position it is in now. By order of the court of March 30, 1977, Guzman was required to deposit into the Registry of the District Court any monies paid by Balzac to Guzman for the coffee in question. Thus, Guzman would not have retained the funds represented by Balzac's check even in the absence of Balzac's stop payment order and, as the result, Guzman could have no damages.