Life Preserver Suit Co. v. National Life Preserver Co.

252 F. 139, 164 C.C.A. 251, 1918 U.S. App. LEXIS 2061

• Court: Court of Appeals for the Second Circuit
• Decided: May 10, 1918
• Docket: No. 248
• Status: Published

Opinion

HOUGH, Circuit Judge

(after stating the facts as above). Of the matters presented by this record, we shall consider only the nature of the contract, or that portion of it here in controversy, and admittedly plainly expressed in and by the writing before us. That document may be studied, first, as to the rights thereby vested in Keviczky; and, second, as to the legal propriety of attempting to remedy a breach thereof by decreeing specific performance.

[1] 1. The oral evidence for plaintiff herein consists in an attempt to show that by divers persons, who were also officers of the National, he was deceived into the belief that indefinite extensions of time would be given for the bond due from him on May 15, and thereby lulled into fancied security, from which he was rudely awakened by notice of cancellation on June 16, which notice is presented to us by appellee as the exercise of a “right of forfeiture” by the National, for a breach admitted by Keviczky; but it is asserted (and was so found below) that all such right was waived by defendant, because its proven “acts and declarations” showed an “intent to suspend the exercise of that right,” and Keviczky was “reasonably justified in relying” thereupon, and doing nothing regarding the giving of security down to June 16, when notice of cancellation was given.

This is an erroneous view of the contract; it gave Keviczky no estate or right in the patent (Richardson v. Hardwick, 106 U. S. 254, 1 Sup. Ct. 213. 27 L. Ed. 145); he had but an option or privilege to obtain such right or estate, and to the exercise of that option two things were plainly precedent — he had to give notice of election in writing, and within ten days thereafter give a $10,000 bond. Both of these requirements were of equal importance; added together they constituted acceptance of option or exercise of privilege; nothing else would do; there could be no fractional acceptance, and until there was an acceptance completed and perfected, Keviczky had nothing to forfeit.

The proper question is whether he ever complied with the two conditions precedent to his exercise of election or option; and this, perhaps, is but another way of asking whether in this contract time was of the essence. If it were a mere contract of sale, which in respect of lands is the ordinary subject of specific performance, time would not be regarded as essential in the absence of special and controlling language; but it “is different where the contract is a mere election to purchase upon certain conditions.” Waterman v. Banks, 144 U. S. 402, 12 Sup. Ct. 648, 36 L. Ed. 479. And see as exactly this case in legal effect Lord Ranelagh v. Melton, 2 Drew & Sm., 278.

It is the general rule that time is of the essence in respect of exercise of options, for unless there is by complete acceptance exactly as agreed on, a contract created, there is nothing, for before acceptance there was but a proposition for a contract. Where, as here, the option is irrevocable by the offerer, there is most cogent reason for the essen-tiality of time; it would be intolerable to hold an irrevocable offer open indefinitely. Undoubtedly the offerer may extend the time; but in this case there is not the slightest evidence that such extension was given. There is not even proof that prior to May 15 there was any of the loose talk by which Keviczky is said to have been deceived; he simply neglected to produce a bond on or before May 15, therefore on that day his option expired. After that the parties might have made a new contract, but the contract here sued on was dead. We do not in-tímate that there is any proof of deception of or false promises to Keviczky by this corporate defendant; we do regard most of the evidence on this head as irrelevant. It follows that as matter of law plaintiff never duly exercised the option of becoming defendant’s exclusive licensee, and, said option having expired, the facts present no cause of action at law or in equity.

[2] 2. If plaintiff had proven fulfillment of contract by himself and refusal to perform by defendant, the contract produced would nevertheless not justify the decree entered. Doubtless it would have been proper to order the execution and delivery of the single document known as a license to manufacture under a patent (Bijur, etc., Co. v. Eclipse, etc., Co., 243 Fed. 600, 156 C. C. A. 298); but much more was directed to be done.

In effect, the court undertook to see to it that an agreement contemplating change of conditions as time went on, calling for additional security from Keviczky as sales increased, and bristling with probabilities of dissension as to the effect on tire rights of parties of transfers of title and business acts such as can never be foreseen, was performed according to its terms for a period equal to the unexpired years of Youngren’s patent. No such protracted supervision of a business should be assumed. Rutland Marble Co. v. Ripley, 10 Wall. 358, 19 L. Ed. 955; Ross v. Union Pac. Ry., Wool. 26, Fed. Cas. No. 12,080; Berliner, etc., Co. v. Seaman, 110 Fed. 30, 49 C. C. A. 99.

Decree reversed, and cause remanded, with directions to dismiss the bill, with costs in both courts.

LEARNED HAND, District Judge, dissents as to the second ground of decision.

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