Crown Industries, Inc. v. Boyertown Burial Casket Company

300 F.2d 809, 20 Ohio Op. 2d 399, 1962 U.S. App. LEXIS 5529

• Court: Court of Appeals for the Sixth Circuit
• Decided: March 30, 1962
• Docket: 14619_1
• Status: Published

Opinions

O’SULLIVAN, Circuit Judge.

Defendant-appellee, Boyertown Burial Casket Company (hereinafter referred to as Boyertown) agreed to buy, and plaintiff-appellant, Crown Industries, Inc., formerly the Cincinnati Coffin Company, (hereinafter referred to as Cincinnati) agreed to sell to Boyertown, substantially all of the assets of Cincinnati. On September 16, 1957, the date of closing, all of the assets sold were transferred to Boyertown. At that time, Boyertown paid Cincinnati $315,590.00. Of that amount $200,000.00 was paid as an estimated minimum price for Cincinnati’s inventory of finished and partly finished goods, and other materials on hand. Paragraph 4 of the agreement, entitled “Closing,” deals with the price to be paid for such inventory. The price therefor was to be determined by taking the inventory and valuing the items thereof at the lower of cost or market. If the parties themselves were unable to agree upon the valuation, such disagreement was to be resolved by an arbitrator named in the agreement.

It was further provided that if final inventory figures were not available at closing, an estimated minimum amount of inventory would be agreed upon, which amount was to be paid by Boyertown, “subject to additional payment by, or refund to, it when final figures become available.” (All italics used herein are provided.) The receipt for such estimated minimum payment, given to Boyertown by Cincinnati at closing, contained a recital that should the purchase price of the inventory, “determined as provided in the agreement,” total more than said minimum figure, Boyertown “will promptly pay * * * the amount by which such purchase price so determined is more than” the aforesaid minimum figure.

Cincinnati and Boyertown were unable to agree upon final figures for the inventory, and Cincinnati brought this suit against Boyertown for $159,452.08, the amount it claimed was the proper excess over the estimated minimum. The District Judge, pursuant to the purchase and sale agreement, appointed an arbitrator to determine the correct amount payable. A final figure of $78,157.87 was fixed by the arbitrator as the excess of the inventory value over the minimum amount paid on September 16, 1957, by Boyer-town to Cincinnati. Twenty-one days after the arbitrator’s award, Boyertown paid such amount. The District Judge allowed interest on it from the date of the award, December 2, 1960, to the date of payment, December 23, 1960. Appellant claims that it should receive interest on the award from September 16, 1957, to December 23, 1960.

Jurisdiction in this case is based upon diversity of citizenship. The contract here involved was made and performed in Ohio. Consequently, Ohio law is controlling. Under Ohio law, interest, unless otherwise contracted for, is recoverable, “* * * when money becomes due and payable upon any * * instrument of writing upon any book account, or settlement between parties * * * at the rate of six per cent per annum, and no more.” Page’s Ohio Revised Code Annotated, § 1309.03. Whether interest is allowable in this case from the date of the closing depends on when the money became due and payable under the terms of the contract. O’Neill v. German, 154 Ohio St. 565, 97 N.E.2d 8, 25 A.L.R.2d 945. The contract provided that Boyertown “will make payment at the closing on the basis of such estimate, subject to additional payment by * * it when final figures become available.” That this clause of the contract meant that the amount of the excess was not payable until finally determined is confirmed by Cincinnati’s receipt given for the amount paid to it at the closing. The receipt stated that if the inventory value “determined as provided in the agreement” (in this case, by the arbitrator’s award) totalled more than the estimate, Boyertown “will promptly pay” such excess. Thus, no part of the excess amount was payable until after the arbitrator’s determination and no interest, under Ohio law, began to accrue until that time.

We do not think that the fact that on September 17, 1957, Boyertown took possession of the goods constituting the inventory, requires a holding that interest then began accruing on that part of its purchase price as yet undetermined. There was no breach of contract by Boyertown, nor is any claimed. It complied strictly with the terms of the contract, which did not call for the payment of interest. It did not wrongfully detain or withhold the payment of money.

“The law allows interest only on the ground of a contract express or implied for its payment, or as damages for the detention of money, or for the breach of some contract, or the violation of some duty, or where it is provided for by statute; and the courts have authority to determine, in accordance with legal rules and principles, whether or not interest should be directed to be paid.” 47 C.J.S. “Interest” § 3, p. 13.

In Herrmann v. Gleason, 126 F.2d 936 (C.A.6, 1942), relied upon by Judge Mc-Allister in his dissenting opinion, a long term lease provided that the stipulated monthly rental should be payable “quarterly in advance.” It further provided that for each ten year period after the initial ten year period, the rental should be agreed upon and, in case the parties failed to agree, it should be determined by referees. Because the parties were unable to agree upon the rental for the third ten year period, referees were appointed to determine the rental to be paid. Twenty months after the last payment of the theretofore agreed upon rentals, the referee’s award determined that the fair rental for the period beginning April 1, 1937, and ending March 31, 1947, was “$725.00 per month, payable quarterly in advance.” On those facts, we held that the landlord was entitled to interest on the unpaid installments of rent during the period involved, from the dates on which they were payable, both by the lease and the referee’s award; that is, “quarterly in advance.” We think that our holding in the Herrmann case is not inconsistent with our holding in the ease at bar. Such holding did no more than allow interest on unpaid installments of rent from the dates on which such installments were made payable by contract. In the instant case, the District Judge allowed interest from the date when the excess amount became payable by contract, the date of the arbitrator’s award.

We find no reason, on the facts presented here, to imply a promise by Boyer-town to pay interest between the time of transfer of possession and the time of the arbitrator’s award. Cincinnati contracted that, as to a portion of the purchase price, it was not entitled to reeeive that money until “final figures become available.” If appellant desired to receive interest on such money prior to the time it was due and payable, “the place [was] in the instrument to so stipulate.” O’Neill v. German, 154 Ohio St. 565, 570, 97 N.E.2d 8, 25 A.L.R.2d 945. The fact that possession of the goods took place prior to the arbitrator’s determination is not germane here. O’Neill v. German, supra, at 572.

Other cases relied upon by appellant are inapposite. A review of these cases —Crescent Mining Co. v. Wasatch Mining Co., 151 U.S. 317, 14 S.Ct. 348, 38 L.Ed. 177; Hettler Lumber Co. v. Olds, 242 F.2d 456 (C.A.6, 1957); Chicago Railway Equipment Co. v. Superior Charcoal Iron Co., 12 F.2d 235 (C.A.6, 1926), discloses factual situations where money was unpaid after a time at which it became due or payable, or where interest was allowed on damages for breach of contract. These are not the facts before us. Young v. Potts, 161 F.2d 597 (C.A.6, 1947), dealt with the power of equity to make a discretionary grant of interest.

Judgment affirmed,