Court Opinion

ID: 6836568
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:06:36.381541+00
Date Added: 2024-06-11T16:04:43.325423
License: Public Domain

SWAN, Circuit Judge
(after stating the facts as above).  The construction of the contract for which the defendants argued, and which was apparently adopted by the court, was that the contract provided for a penalty — -the forfeiture by defendants of $60,000, whether the breach of their undertakings was total or partial, a failure to deliver any goods or a failure to deliver a last insignificant installment. This is not, we believe, the correct interpretation of the contract. The buyer was to deposit $30,000, approximately 10 per cent, of the contract price, as security for faithful performance by him. Eor each lot of goods accepted, he was to pay nine-tenths of the price with new money, and one-tenth from the money held by defendants as security. Consequently, if the buyer had received four-fifths of the goods, he would also have applied four-fifths of his deposit in payment. The amount of the penalty for the plaintiff’s failure to perform his agreement would diminish proportionately with the seriousness of his default.
It is to be noted that the clause which provides for “the losing of the deposit by the buyer” does not specify a given sum. It means that he shall lose the amount of the deposit on hand when the breach occurs. Similarly, in the ease of a breach by the sellers, they are to pay “a double amount of the deposit.” We construe this as an agreement to return to the buyer the amount of his deposit then on hand and to pay him a like sum as damages for the sellers’ breach. Such construction makes the penalty for each party the same, and provides for a return of the plaintiff’s security in ease of the defendants’ breach — a matter regarding which the parties would be likely to provide, and which is not covered at all, if the contract is construed otherwise. The intent of the contract, as we read it, is to give each party, in case of breach by the other, damages of 10 per cent, of the value of the undelivered goods, and to provide for a return to the buyer of the deposit which the sellers held as security for his agreement to pay such damages.
If this be the true construction, it may well be doubted whether the agreement may not be a valid provision for liquidated damages. Suppose it could be proved that the goods in question were at the time scarce and irreplaceable in Vladivostok, so that, if the *595sellers defaulted, it was impossible to ascertain at what price the buyer could fill his needs; or, conversely, suppose that there was no market for such goods at that time and place, and the buyer was apparently the only person who wished them. Can it be said that 10 per cent, might not be a fair estimate of the loss of either party, should the other default? Such provisions can seldom be characterized without a knowledge of the attendant facts.
But, even if the provision for 10 per cent, damages were deemed a penalty, this would not excuse defendants’ breach of their agreement to return plaintiff’s deposit. Tho fact that he has claimed damages in too large an amount is immaterial. The complaint sufficiently alleges a cause of action for the return of the deposit, even though more skillful pleading might have charged that failure as a breach distinct from the failure to pay damages for nondelivery of the merchandise.
Nor is there any defect in the complaint in stating a cause of action in respect to storage charges of $4,200. However unlikely it may appear that the buyer should incur storage charges because of the delay in delivery by the sellers, the facts are distinctly alleged that he did, and that the sellers for a valid consideration had agreed to pay them. The letter of March 6, 1919, in the bill of particulars, is not such an agreement; but we cannot say this is all the plaintiff’s proof. Paragraph 4 of the bill of particulars alleges that the request to extend the time of delivery was made first a few days after the execution of the contract.
We come, then, to the question of the statute of limitations. The contract originally required completion of deliveries in six weeks from January 29, 1919. This would be March 12, old style, or, if we take judicial notice of the difference in calendars, March 25, our style. The complaint alleges an agreement to extend deliveries “a reasonable time.” Certainly it cannot bo said, without evidence, that a reasonable time expired before April 17, 1919. Defendants’ argument rests solely on tbe fact that the bill of particulars contains an extract from a letter of March 16, 1919, in which plaintiff wrote: “On March 29 (April 11, our style) expires the two months period for delivery to mo of all merchandise.” Why extracts from letters are reproduced in the bill of particulars, or what allegations of the complaint they-sought to elucidate, does not appear from the record. Other portions of the bill of particulars state that “deliveries under the agreement were made to the middle of April, 1919,” and that a payment of 100,000 rubles was made on April 9, which would be April 22, our style. The complaint alleged an agreement extending deliveries “a reasonable time” and the making and acceptance of deliveries till April 9 (April 22, our style), and by amendment until June.
Under these circumstances there is no warrant for the contention that the complaint is so limited by the bill of particulars as to show a breach by the defendants on March 29. It does not appear from the pleadings that the six-year statute of limitations had ran before April 17, 1925. Therefore the judgment must be, and is, reversed.