Court Opinion

ID: 8855223
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:27:45.634461+00
Date Added: 2024-06-11T17:05:38.112358
License: Public Domain

TAFT, Circuit Judge
(after stating the facts as above). The first question that meets us in this case is whether the two telegrams between Strobridge and Randall made a contract of release. If they did not, then the judgment of the court below must be reversed, without regard to the other questions made here, of accord and satisfaction, and oí Strobridge’s authority to hind his company by the alleged contract of release. Mr. Justice Foster, of the supreme judicial court of Massachusetts, speaking for that court in Lyman v. Robinson, 14 Allen, 242, 254, said:
“A valid contract may doubtless be made by correspondence, but care should always bo taken not to construe as an agreement letters which the parties intended only as a preliminary negotiation.”
In Ridgway v. Wharton, 6 H. L. Cas. 238, Lord Wensleydale said;
“An agreement to be finally settled must comprise all the terms which the parties intend to introduce into the agreement. An agreement to enter into an agreement upon terms to be afterwards settled between the parties is a contradiction in terms.”
*622In Rossiter v. Miller, 5 Ch. Div. 648, 659, Lord Justice James said:
“On a question of construction different minds may differ, but, for my own part, I have often felt that in cases of this nature parties have found themselves entrapped into contracts which they wrote without the slightest idea that they were contracting.”
—And the same learned judge used similar language in Smith v. Webster, 3 Ch. Div. 56.
Whether correspondence with the purpose of entering into a contract is merely preliminary negotiation or the contract itself must be determined by the language used and the circumstances known to both parties under which the communications in writing were had. If it is plain from the language used that some term which either party desires to be in the contract is not included or definitively expressed in the correspondence relied upon, no contract is made. If it is plain from the language that either party wishes or contemplates that another person, not a party to the correspondence, shall be a party to the contract, a correspondence as to the terms of such a tripartite agreement between two cannot be a completed contract between the two. It is as' essential that all the parties intended shall be bound as it is that all the terms intended should be definitively agreed upon.
We may infer from the evidence in this case that Eandall knew, when Strobridge's telegram was read by him, that Brooks & Dickson and the Strobridge Company were negotiating for a settlement of the indebtedness of the insolvent Arm to the Strobridge Company, and that it would help matters if the Strobridge Company could become the owners of the notes held by Eandall. The first sentence was a question. The next two sentences were the basis upon which it was desired that the question should be answered. If the telegram had read, “Will you turn over to us the notes amounting to four thousand dollars you hold of Brooks & Dickson? If so; will release you from the Detroit suit," and if it had been answered by an affirmative acceptance, undoubtedly this would have made a complete and binding contract between Eandall and the Strobridge Company, assuming Strobridge’s authority to make it. But Strobridge’s telegram was more than this. He not only proposed to release Eandall from the Detroit suit, but he added that Brooks & Dickson would get Eandall released from all other debts of the firm. There is no evidence that Strobridge had any authority to bind Brooks & Dickson to such a contract with Eandall, and there is nothing on the face of the telegram to indicate that he assumed to speak as agent for them in making such a contract. Nor, on the other hand, is there anything in the language used to indicate that Strobridge, for his company, intended to warrant that Brooks and Dickson would procure their other creditors to release Eandall. Undoubtedly A. can make a contract with B. that C. shall do something, or, to bring it nearer to the case in hand, A. can make a contract with B. that C. shall procure D. to do something for B.’s benefit; but such contracts or covenants of warranty are not usual, and the intention should be clear before such a construction will be enforced. Strobridge does not here say, “We’ll agree or warrant that Brooks & Dickson will secure a re*623lease of you by their creditors.” lie simply state's in a positive way something which will happen. He is merely conveying information of a direct and reliable character to Kandall, to enable him to say whether he will be a party to a tripartite agreement of settlement between the Btrobridge Company and Kandall and Brooks & Dickson. Btrobridge’s telegram was one of inquiry, to know whether the proposed settlement wan possible. When answered, it was not a contract, because there was lacking the essential element of the presence as parties to it of the third persons whom Btrobridge plainly intended should be the parties thereto of rhe third part.
The notes of Brooks & Dickson held by Randall were apparently a consideration quite inadequate for the release of Randall from (lie firm’s entire indebtedness. Given to him in an adjustment of an indebtedness between members of the partnership, they would doubtless be postponed in the settlement of the insolvent linn’s estate to all the other new firm debts incurred prior to his withdrawal from the firm. They were of no value whatever to the Btrobridge Company unless Brooks & Dickson succeeded in procuring their discount. Randall might reasonably understand that the value of the note's to the Btrobridge Company grew out of their place in the future agreement of settlement between Brooks & Dickson, the Btrobridge Company, and himself, and that, but for such an agreement, they could have no real value. We are not to be understood as holding that the notes were not in a technical sense a valuable consideration sufficient to uphold a contract of the effect claimed for these telegrams, but we" hold that the actual inadequacy of the consideration is a pregnant circumstance to show that the contract was not a complete one without (he presence-and agreement of Brooks & Dickson to insure to the Btrobridge Company some value in the notes which were to be turned over. We do not consider the conduct of the parties subsequent to the telegrams, because there is a direct conflict of evidence in regard to it. We rest our construction of the telegrams on their language and the then situation of the parties.
The suggestion is made that as between Randall and Btrobridge the contract is complete. There is the proposed surrender of the notes on one side and the proposed release from the Detroit; suit on (lie oilier. Why cannot Randall waive the release from the other creditors? If there wore a binding contract, undoubtedly Kandall might enforce one of the considerations moving to him and waive the other, but the question here is not of waiver of a term of an admitted contract, but; it .is whether a complete contract was made. Mow, there was no complete contract as between Kandall and Btrobridge unless Btrobridge could enforce it against Randall. Could Btrobridge sue Randall for a breach of a contract on a mere tender to Randall of a release from the Detroit suit? Clearly not, because Randall could say, “My telegram was sent on the basis of the statements in yours, and one of those was that Brooks & Dickson would procure my release from the other firm debts.” This shows that the contract, if it was made, necessarily included a.s a term in it the release of Kandall from the other firm debts. That statement in Strobridge's telegram cannot be rejected as part of the alleged con*624tract, either on the theory of Randall’s present willingness to waive it, or on the ground that it was mere surplusage. We are bound to construe its effect in deciding whether both parties intended to make a complete contract, or were only engaged in preliminary negotiation. We have given above our reasons for holding that this was a mere statement of the term of a future contract to which Brooks & Dickson wou’ l agree, rather than the statement of a condition or term of a contract which Randall was then invited to close finally by acceptance.
We reach in this case a conclusion different from that announced by the supreme court of Michigan in the same controversy. We regret it, because of the high respect we have for that tribunal. We should have differed from it with even more diffidence had that learned court considered the point upon which our decision rests. The completeness of the telegraphic correspondence as a contract seems to have had little consideration before it, but was assumed in the discussion.
The judgment of the circuit court is reversed, with directions to order a new trial.