Opinion
No. 23.
December 1, 1930.
Appeal from the District Court of the United States for the Southern District of New York.
Action by Alexander Davidoff against Thomas A. Edison, Inc. From a judgment dismissing action on motion, plaintiff appeals.
Affirmed.
The plaintiff and one Konuchoff, whose interest the plaintiff acquired April 1, 1914, by assignment, and who may for all practical purposes now be disregarded, entered into a written contract with the defendant, dated October 18, 1913, which provided, among other things, for the payment of $75,000 to the defendant for the exclusive right for two years from a date to be computed, and which turned out to be December 18, 1913, to lease and use in European Russia, Finland, Poland, and certain named Russian possessions and protectorates in Asia talking picture apparatus manufactured by the defendant. The contract set forth in considerable detail the agreement of the parties regarding the future conduct of each, including on both sides acts of omission and commission, in furtherance of the principal objective of the contract. These things included, inter alia, the payment to the defendant of $500 in advance in New York "cash against documents" as part of the rental of each machine shipped, the furnishing by the defendant, without charge, upon satisfactory notice to it, of unexposed negative film, phonograph record blanks, and necessary phonographic apparatus, and the establishment by the plaintiff and maintenance at his own expense within the territory covered by the agreement of a suitable studio with adequate personnel and equipment for making talking motion picture negatives and master records to be shipped to the defendant to manufacture prints and records therefrom under conditions and restrictions contained in the contract and for use in accordance with its terms. It was also agreed that, if the contract became unprofitable to the plaintiff, it might be terminated within ninety days after a request for such termination accompanied by satisfactory proof had been received by the defendant, and that, in the event of such termination, the plaintiff would "without interruption or abatement" continue to pay the defendant all sums due under the contract, and "there shall be no refund of any sums previously paid hereunder."
There was no reference in the contract to any refund by the defendant except in the event that the plaintiff should be prevented from using some of the apparatus on account of a permanent injunction or an equivalent legal process issued out of a court of competent and final jurisdiction in an action for patent infringement. It was also provided that both the legal and equitable title to all apparatus and supplies shipped by the defendant should remain in it, and that, upon termination of the contract, either at the end of the contract period or at any other time, the right to the possession of such property should immediately revert to and be vested in the defendant.
It was alleged in the first count that until August 1, 1914, both the parties carried out their agreement, and that, for the remainder of the contract term, a state of war existed between Russia and Germany which made it impossible for either party to perform, and proportionate refund of the $75,000 paid by the plaintiff is sought; in the second count, the breach of the contract by the defendant is alleged.
The contract was executed in duplicate. The plaintiff was the first to sign it, and did so in Austria. After that it was executed by the defendant in New Jersey and the plaintiff's duplicate original sent to him. When the plaintiff executed it, there was no seal upon it, and it did not then or at any later time contain any reference to a seal, other than that the execution by the defendant was with the defendant's corporate seal. It was made to appear by affidavit that, when the plaintiff executed the contract, he was told by a notary public in Austria that his signing there as he did was the equivalent of what was understood under the Anglo-American system of law as executing a sealed instrument, and was told by the defendant's representative in Austria that the contract would be sealed by the defendant when executed by it in New Jersey; also that, when the plaintiff's duplicate original was returned to him, he then adopted the seal of the defendant and thereafter treated the contract as a sealed instrument.
On April 2, 1917, the plaintiff's attorney, whose authority to act is not questioned, wrote the defendant a letter which is incorporated verbatim in the reply the defendant made to it on April 5, 1917. This letter of the defendant follows:
"April 5, 1917. "Alexander Davidoff Paul Alexandrowitsch Konuchoff c/o Mr. A. Bulat, 226 Broadway, South Boston, Mass.
"Gentlemen: We are in receipt of your letter dated April 2, 1917, signed on your behalf by your attorney, Mr. A. Bulat and reading as follows:
"`Brooklyn, N.Y. April 2, 1917. "`Thomas A. Edison, Incorporated, Orange, N.J.
"`Gentlemen: We, Alexander Davidoff and Paul Alexandrowitsch Konuchoff, both of Petrograd, Russia, through our attorney, Mr. Andriej Bulat of Petrograd, presently temporarily sojourning in the United States, submit to you the following proposition:
"`We, the above said Alexander Davidoff and Paul Alexandrowitsch Konuchoff, entered into a certain agreement with you, dated at Vienna, Austria, October 18, 1913, which said agreement related to the exploitation of the Kinetophone in certain countries, including European Russia and which said agreement has now expired. No assignment or transfer of rights in said agreement has been made except by the said Paul Alexandrowitsch Konuchoff to said Alexander Davidoff.
"`We are aware that you have certain claims against us and we desire to make settlement with you. We therefore make the following proposition.
"`We will deliver to you f.o.b. New York, all transportation charges prepaid, all Kinetophone apparatus we have previously received from you, including Kinetophones, films, records, raw negative stock, wax blanks and photographic and recording apparatus. This shipment we will insure, including war risk, for your benefit to the amount of twelve thousand ($12,000) Dollars.
"`We will deliver to you in New York, bills of lading, including insurance policies, consular invoices and packing lists giving detailed information of the contents of the packages, etc. We will give you a general release satisfactory to you for all claims which we may have against you.
"`We will give you a bill of sale or assignment of our entire right, title and interest in and to all negatives, films, master records, molds and Kinetophone records, which you now have in your possession, either made for us or supplied by us to you.
"`Upon receipt of the documents mentioned above in form satisfactory to you, you will give us a general release of all claims which you may have against us.
"`The power of attorney of our said undersigned attorney has been submitted to you and presently is in your possession.
"`Yours very truly, "`Alexander Davidoff, "`Paul Alexandrowitsch Konuchoff "`By their attorney, A. Bulat "`183 Roebling, St., Brooklyn, N.Y.'
"We hereby accept your proposition as set forth in the foregoing letter provided the documents, including the release and bill of sale or assignment are delivered to us in New York or West Orange, New Jersey not later than October 1, 1917.
"Yours very truly, "Thomas A. Edison, Incorporated "By C.H. Wilson, "Vice President and General Manager."
On the same day the defendant also wrote the attorney as follows:
"April 5, 1917. "Mr. A. Bulat, 226 Broadway, South Boston, Mass.
"Dear Sir: We are sending you herewith in the form of a letter addressed to Messrs. Alexander Davidoff and Paul Alexandrowitsch Konuchoff our acceptance of the proposition submitted to us in their letter of April 2, 1917, signed on their behalf by you as their attorney. In order to make the agreement definite, it is necessary to set a time between when the documents must be delivered to us and we have made the date October 1, 1917, believing that this will afford your principals ample time to carry out the terms of the agreement.
"Will you kindly acknowledge receipt of these letters and also kindly have Messrs. Alexander Davidoff and Paul Alexandrowitsch Konuchoff acknowledge receipt of our letter after the same has been delivered to them by you.
"Yours very truly, "Thomas A. Edison, Incorporated "By C.H. Wilson "Vice President and General Manager."
On April 14, 1917, the attorney sent the following letter to the defendant:
"Brooklyn, N.Y. April 14, 1917. "Thomas A. Edison, Inc., Export Division, Orange, N.J.
"Gentlemen: This is to certify that I received your communication dated April 5, 1917, accepting my proposition, submitted to you by me on behalf of my principals, Messrs. Alexander Davidoff Paul Alexandrowitsch Konuchoff of Petrograd, said proposition being dated April 2, 1917.
"The conditions contained in your communication of April 5, 1917, are fully acceptable and shall be carried out in the manner therein suggested.
"Yours truly, "[Signed] A. Bulat
"Attorney for Alexander Davidoff and Paul Alexandrowitsch Konuchoff.
"P.S. Until April 20, 1917, address all communications to this address: A. Bulat 1840 So. Halsted St. Chicago, Ill. and after said date Petrograd, Russia Pedolskaja 15."
And later the defendant received this letter signed by the plaintiff and Konuchoff:
"Petrograd, Fontanka 88 June 28, 1917. "July 11 "Messrs. Thos. A. Edison, Inc., Orange, N.J. U.S.A.
"Dear Sirs: We received through our solicitor the advocate Andrew Bulat your esteemed favor of April 5th, 1917, containing terms of final settlement of our accounts and liquidation of the business as per agreement closed between us and your company in Vienna on October 13th, 1913 regarding the exploitation of your Kinetophone in Russia.
"We now state that we accept in full the terms set forth in your above letter and that we are starting to fulfill them.
"Yours very truly, "Paul Konuchoff "A. Davidoff"
The plaintiff and Konuchoff did not fulfill the terms of the settlement agreement which their attorney accepted for them in his letter of April 14th and which they accepted themselves in their later letter. This action was commenced August 5, 1929. The defendant is a New Jersey corporation which has since 1912 been duly qualified to do business in the state of New York. The plaintiff is a Russian citizen.
Borris M. Komar, of New York City, for appellant.
Clark, Reynolds Hinds, of New York City (Roger Hinds, of New York City, of counsel), for appellee.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
We need not deal with all the rather interesting questions raised by the motion to dismiss. They include whether or not the original contract was under seal; what statute of limitations should be applied; what may be treated as excusing nonperformance claimed to be due to the existence of a state of war; and what effect should be given to the negotiations in regard to the settlement of all causes of action growing out of the original contract. Without meaning to intimate that it is the only valid defense, it seems that the agreement in settlement of all controversies is so conclusive of the plaintiff's right to maintain this action that it would be unprofitable to discuss the rest.
The letter written by the plaintiff's attorney to the defendant, dated April 2, 1917, contained a definite proposal for the settlement of all claims either party had against the other. This was in no respect a proposal to vary, supersede, or abrogate any existing contract between these parties. At that time there was none in existence. Admittedly the only contract they ever had was not performed in full by either and had before then expired by its terms. What was left, at most, were rights of action against each other. We may agree with the plaintiff that the defendant did not unconditionally accept the settlement proposal of April 2d in its reply of April 5th. Nevertheless it did accept it on condition that the plaintiff deliver the release to be delivered to the defendant not later than October 1st, either at New York or West Orange, N.J. Had the matter stopped there, there would have been no agreement, and neither party would have been bound, but these conditions of the defendant were accepted without reservation by the plaintiff's attorney in his letter of April 14th and by the plaintiff himself in his subsequent letter to the defendant. These acceptances, by and in behalf of the plaintiff, of the defendant's proposed changes in the plaintiff's original proposal of settlement, show that the minds of the parties met on common ground in a definite and unconditional agreement to put an end to all claims either had against the other.
The defendant did not merely hold the proposal of the plaintiff in abeyance and reserve the right to determine, if and when its release was delivered to it within the time and at the place it proposed, whether then to accept it and deliver its release to the plaintiff, but agreed to the proposal, provided it was modified so that its terms embraced a satisfactory time and place of delivery of the documents it was to get. When this modification of the proposal was agreed to unconditionally by the plaintiff, the settlement contract came into being, and thereafter neither party had any action against the other growing out of the original contract except what action it might have on the new contract itself. Babcock Russell v. Hawkins, 23 Vt. 561 . This new contract, made in consideration of the mutual promises of the parties, was a compromise of disputed rights, became binding upon them, and was not merely an accord, but an accord and satisfaction for it plainly discloses an intention to extinguish all prior causes of action either party had against the other. Moers v. Moers, 229 N.Y. 294, 128 N.E. 202, 14 A.L.R. 225; Bandman v. Finn, 185 N.Y. 508, 78 N.E. 175, 12 L.R.A. (N.S.) 1134; Very v. Levy, 13 How. 345, 14 L. Ed. 173; Beach v. Whittlesey, 73 Conn. 530, 48 A. 350. Nor did the plaintiff's failure to fulfill the new obligations it assumed under the compromise agreement make it any the less a complete accord and satisfaction. Bandman v. Finn, supra; Flegal v. Hoover, 156 Pa. 276, 27 A. 162; Laughead v. Frick Coke Co., 209 Pa. 368, 58 A. 685, 103 Am. St. Rep. 1014; Allison v. Abendroth, 108 N.Y. 470, 15 N.E. 606; In re Nachman Co., 6 F.2d 427 (C.C.A. 2).
Judgment affirmed.