Pierce v. Lukens , 144 Cal. 397 ( 1904 )

This is an action to recover from defendant the consideration paid by plaintiff to defendant for the purchase of certain bonds of the Perris Irrigation District.

It is alleged in the complaint that "in order to induce this plaintiff to purchase said bonds, the said defendant represented and promised in writing to this plaintiff that he, the defendant, would buy the said bonds all back from plaintiff in three years after the purchase and pay the plaintiff the price which plaintiff paid to defendant therefor." Judgment passed in favor of defendant, from which and from the order denying his motion for a new trial plaintiff appeals.

Finding II is as follows: "That at the time of said sale and as a part of the transaction, the said defendant offered to buy back from said plaintiff the said bonds at any time within three years after their purchase, which would not be later than July 8, 1896, and pay the plaintiff the price which plaintiff paid defendant therefor. That plaintiff at the time ofpurchase did not agree to resell said bonds, but reserved untilJuly 8, 1896, to determine whether he would resell the same tothe defendant on the terms offered. That thereafter, and aboutthe 10th day of June, 1896, and not before, said plaintiffnotified defendant of his acceptance of defendant's offer torepurchase said bonds."

The court also found (finding III) that none of the bonds were tendered to defendant by plaintiff on July 8, 1896, nor at any time until May 1, 1897, when he made tender, which was refused by defendant; "that said plaintiff had not been prevented by thedefendant from at any time tendering him said bonds." Appellant contends that the findings stated above in italics are contrary to the evidence.

The entire evidence is found in certain letters.

Defendant's offer to sell was made in his letter dated Pasadena, California, June 14, 1893, to plaintiff at Boston, Massachusetts. In this letter defendant assures plaintiff that the bonds are valid, and that "if there was a shade of doubt I would not offer them to anyone." He adds: "I will agree to buy them all back from you in three years at what you pay, for I am preparing to sell my real estate as fast as I can to advantage and get everything in bonds." To this letter plaintiff replied by letter dated June 24, 1893, in which, among other things, he says: ". . . taking into consideration your agreement to buy back in three years the Perris bonds, I will now take some of them (although now I do not expect to ask you to carry out that agreement)."

Plaintiff ordered part of the bonds in question, stating that in a few days he would want more and on the same terms. On July 3, 1893, he ordered the balance. On May 26, 1896, plaintiff, at Boston, wrote defendant reminding him of his agreement to buy back these bonds and of the former correspondence. The letter concluded as follows: "Now, under the circumstances, I wish you to carry out that agreement and take the No. 5500 Perris irrigation bond bought of you at the same price I paid you for them as agreed. The three years will have expired on or about July 1st [the court found July 8th], and will you please write me how, and when, I shall send them to you." On June 3, 1896, defendant at Pasadena replied as follows: "Your registered letter of May 26th at hand. I am quite surprised at its contents. While I did recommend the bonds and firmly believed they were good, and do yet, I have no recollection of giving any sort of a guarantee. Won't you kindly send me press copy of my letter you refer to. I have so far in my life kept all my promises and agreements in business matters, and certainly intend to in the future." On June 23, 1896, plaintiff answered this letter, stating that he had been out of the state for three weeks and had just returned, and hastened to reply, sending defendant a copy of his letter of June 14, 1893, and calling attention to his (plaintiff's) letters of June 24 and July 3, 1893. In reply to plaintiff's letter of June 23, 1896, defendant wrote plaintiff July 6, 1896, in which defendant stated that he found no proposition in his former letters "to guaranty the bonds," or that he "would repurchase them." He stated that if there had been any such agreement between him and plaintiff he would "have tendered the money long ago." He concludes the letter as follows: "However, I am about starting on my mountain trip to be gone a part of the summer, and I am in hopes by the time I return a decision will be rendered by the supreme court. Will correspond with you as soon as I return." On November 23, 1896, plaintiff wrote defendant: "I see by the papers the supreme court have decided in favor of the bondholders, which I suppose will now make the Perris bonds good and all right, and therefore I trust you will now take the bonds I had of you according to my understanding of the agreement. Please let me hear from you in regard to same." On December 2, 1896, defendant replied: "Your proposition in regard to irrigation bonds I cannot entertain. Your understanding and mine are quite different." This closed the correspondence and the evidence except that, as found by the court, "plaintiff caused said bonds to be tendered to defendant on May 1, 1897, and defendant refused to accept and pay for the same."

It is not necessary to consider plaintiff's first point as to an apparent uncertainty in the meaning of finding marked II. We think the finding shows that the court understood from the evidence that defendant agreed to buy back the bonds he sold to plaintiff in three years, and, had plaintiff made formal demand and tender within the three years stipulated in the agreement, the decision of the court would doubtless have been in favor of plaintiff. The only question in the case, as it seems to us, is whether plaintiff was excused by defendant from making formal tender of the bonds prior to July 8, 1896, as it is conceded that tender was necessary unless excused. By his letter of May 26, 1896, plaintiff called upon defendant in plain terms to perform his agreement to buy back these bonds, and, assuming that he would do so, plaintiff requested defendant to say how and when he should send them to defendant. In replying, on June 3d, defendant does not refuse to perform, nor does he deny the contract, but states that he has "no recollection of giving any sort of a guaranty," and asks for a copy of his letter. At the same time he gives plaintiff the following assurance: "I have so far in my life kept all my promises and agreements in business matters, and certainly intend to in the future." It seems to us that defendant could not much more plainly have said to plaintiff, "Let me see my letter, and if it is true that I agreed as you say I did, you may rest secure that I will make my promise good." The confidence which business men ordinarily have the right to repose in each other justified plaintiff in assuming that no further demand or tender was necessary, and that all he had to do was to send defendant a copy of his agreement, which beyond all question, as the court found, was an agreement to repurchase the bonds. Plaintiff sent a copy of the letter to defendant, who replied on July 6, 1896: "I cannot find in my letters . . . any proposition . . . that I would repurchase them [the bonds] from you." This letter was written only two days before the expiration of the time within which plaintiff was to exercise his right under the contract. It was not possible for defendant's letter to reach plaintiff, at Boston, before July 8th, and necessarily not possible within that interval for plaintiff to act upon that letter and make further demand or tender. Indeed, if this letter of defendant can be regarded as a refusal, it would have excused tender had it reached plaintiff in time. Mr. Wharton states the rule as follows: "The general principle is, that a party cannot defend himself on the ground of the nonperformance on the other side of conditions whose performance he had already notified the other party would have been nugatory. If he declares himself not bound by the contract, he cannot set up failure in either demand or tender." (Wharton on Contracts, sec. 995; Civ. Code, sec. 1440) It was said in Hills v. ExchangeBank, 105 U.S. 321: "It is a general rule that when tender of performance of an act is necessary to the establishment of any right against another party, this tender or offer to perform is waived, or becomes unnecessary when it is reasonably certain that the offer will be refused, that payment or performance will not be accepted." Looking further, however, into defendant's letter of July 6th, the closing paragraph would seem to convey the impression that defendant did not intend his letter to be understood as refusing to perform, but rather to hold the matter over for further correspondence. He said he was going away for part of the summer, and hoped in the mean time that the supreme court would pass upon the bonds, and that on his return he would correspond with plaintiff. He undoubtedly meant to correspond further about the matter of these bonds and his contract to repurchase, and it was not until December 2, 1896, in reply to plaintiff's letter of November 23d, that he refused to take the bonds. Section 1511 of the Civil Code provides that performance or offer of performance of an obligation, or any delay therein, is excused when the performance or offer is prevented or delayed by the act of the creditor, or "when the debtor is induced not to make it, by any act of the creditor intended or naturally tending to have that effect done at or before the time at which such performance or offer may be made, and not rescinded before that time." Herberger v. Husman, 90 Cal. 583, was a case where defendant agreed that if plaintiff was dissatisfied with the purchase of certain lots at the end of one year, the defendant would return the money paid "provided the plaintiff gave him thirty days' notice and a surrender of the title to the lots." Plaintiff gave the notice and offered to surrender the title, but did not tender deed. In discussing the phase of the case relating to whether a written release was necessary to restore the title the court said: "Be that as it may, defendant is estopped by his conduct from claiming that no release was tendered, or that the contract was not tendered for cancellation. The only claim or objection he made was, that he did not have the money at the time. He led the plaintiff to believe that he would return the money as soon as he could raise the amount; and having induced the defendant [plaintiff] to act upon the belief that he would do so, it is too late now to change his position and defeat the plaintiff on the ground that a complete technical tender was not made." (Citing cases.)

In the present case defendant led plaintiff to believe that if he had agreed to repurchase the bonds he would keep his agreement, and defendant did not notify plaintiff to the contrary (even if his letter of July 6th can be said to be such a notice) until it was too late for plaintiff to make tender within the three years. Plaintiff was therefore excused from making tender, and defendant is now estopped from claiming that there was no sufficient tender.

It is advised that the judgment and order be reversed.

Smith, C., and Gray, C., concurred.

For the reasons given in the foregoing opinion the judgment and order are reversed.

McFarland, J., Henshaw, J., Lorigan, J.