Western Union Tel. Co. v. Brown
253 U.S. 101 (1920)

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U.S. Supreme Court

Western Union Tel. Co. v. Brown, 253 U.S. 101 (1920)

Western Union Telegraph Company v. Brown

No. 159

Argued January 20, 21, 1920

Decided May 17, 1920

253 U.S. 101




One who, in repudiation of a contract which binds him to make a certain payment, sends a telegram to stop a draft previously dispatched to meet the obligation cannot recover the amount from the telegraph company because of its negligent failure to deliver the telegram in time. P. 253 U. S. 113.

P and C agreed to sell and deliver, and H and L to buy, take, and receive certain shares of mining stock, "upon the following terms and conditions:" the price stated was to be paid part down and the remainder in equal payments on stated future dates; upon the making of the first payment, the shares, endorsed in blank, were to be deposited with a bank under an escrow agreement for delivery to H and L when the last payment was made; the bank was constituted the agent of P and C to receive the payments, and, in event of default by H and L, was authorized by the terms of the deposit to deliver all the shares to P and C, whereupon all payments theretofore made should be forfeited to them, and "all rights of each of the parties should forever cease and terminate." Held not an option terminable at the will of the vendees by failure to meet deferred payments, but an absolute agreement on their part to buy, the provision for forfeiture of past payments and termination of the agreement in case of their default being intended for the protection of the vendors, and exercisable at the vendors' election. P. 253 U. S. 110. Stewart v. Griffith,217 U. S. 323.

The provision in such contract that, upon nonpayment of stipulated sums, the rights of each of the parties shall cease and determine is the equivalent of a provision that, in case of such default, the contract shall be "null and void." P. 253 U. S. 112.

248 F. 656 reversed.

The case is stated in the opinion.

Page 253 U. S. 103

MR. JUSTICE DAY delivered the opinion of the Court.

This is an action by Brown, executor of Lange, and Hastings to recover damages from the Western Union

Page 253 U. S. 104

Telegraph Company for failure to deliver a message sent by Hastings and Lange to the Lyon County Bank, Yerington, Nevada. A judgment was recovered against the telegraph company in the district court, which was affirmed in the Circuit Court of Appeals for the Ninth Circuit. 248 F. 656. The case is here upon writ of certiorari.

Upon stipulation, the case was tried in the district court without a jury, and the court made findings from which it appears: on March 16, 1907, W. C. Pitt and W. T. Campbell entered into a contract with Hastings and Lange for the sale of 625,000 shares of the capital stock of the Kennedy Consolidated Gold Mining Company. In this contract, it was stipulated that Pitt and Campbell agreed to sell and deliver to Hastings and Lange, who agreed to buy, take, and receive from them, 625,000 shares of the Kennedy Consolidated Gold Mining Company upon the following terms and conditions: First. The total price to be paid for the shares of stock to be $75,000 in gold coin of the United States payable $7,500 on the execution of the agreement; $11,250 on or before the 1st day of May, 1907, and the like sum on or before the 5th of July, 1907, the 5th of September, 1907, the 5th of November, 1907, the 5th of January, 1908, and the 5th of March, 1908. It was agreed that, immediately upon payment of the first-named sum, Pitt and Campbell would deposit in escrow in and with the Lyon County Bank, of Yerington, Nevada, certificates of stock indorsed in blank representing in the aggregate 625,00 shares of the capital stock of the mining company, and would thereupon enter into an escrow agreement with Hastings and Lange and the bank, under which agreement the bank should hold the shares of stock to be delivered to Hastings and Lange upon the payment by them of the final sum provided for, and the bank was constituted the agent of Pitt and Campbell for the purpose of receiving the payments

Page 253 U. S. 105

under the agreement, and it was further agreed that, in event of default by Hastings and Lange, the bank should be authorized, under the terms of such deposit in escrow, to deliver all the shares of stock so deposited with it to Pitt and Campbell, and all payments theretofore made by Hastings and Lange should be forfeited to Pitt and Campbell, and that thereupon all rights of each of the parties should forever cease and terminate. Hastings and Lange paid to Pitt and Campbell the initial sum of $7,500, and Pitt and Campbell deposited in escrow with the Lyon County Bank certificates of stock representing 625,000 shares of the stock of the mining company, properly indorsed, and the bank received said certificates in escrow and held the same in accordance with the contract. After the execution of the contract, Hastings and Lange arranged with the bank to treat drafts that they might send it in partial payment as gold coin, and to pay the amount of such drafts in gold coin to Pitt and Campbell under said contract; that, for the purpose of making the payment mentioned in the contract which became due on or before May 1, 1907, Hastings and Lange, on April 27, 1907, sent by mail from Oakland, California, to the Lyon County Bank at Yerington, Nevada, a draft for the sum of $11,250 United States gold coin, payable to the order of the bank; that the draft was received by the bank at Yerington, Nevada, on April 30, 1907, some time between 8:30 a.m., the time the bank opened for business, and 9 o'clock a.m. of that day; that, on April 29, 1907, before the message hereinafter mentioned was delivered to the telegraph company, Hastings and Lange were informed and believed that the stock of the mining company was of little or no value, and, upon obtaining such information, they determined to make no further payments on their contract with Pitt and Campbell, and to abandon their rights in and to said stock, and to withdraw from the transaction with Pitt and Campbell. It is further found

Page 253 U. S. 106

that, on the evening of April 29, 1907, plaintiffs called at the office of the defendant in Oakland, California, and requested the agent in charge to telegraph the Lyon County Bank at Yerington, Nevada, as follows:

"Oakland, April 29, 1907"

"Lyon County Bank,"

"Yerington, Nevada."

"Draft mailed you Saturday under mistake. Do not pay any sum to Pitt and Campbell. Return draft. Letter follows."

"Hastings and Lange"

Hastings and Lange stated to the agent of the telegraph company that it was necessary that the message be delivered to the bank before banking hours on the following morning -- that is, before it opened for business on the 30th day of April, 1907, and desired to know of the agent in what manner they could be absolutely assured that the message would be so delivered, stating to the agent that they had a contract for the purchase of certain shares of stock of a mining company, and that payment under the contract was required to be made by them on or before May 1, 1907, to Pitt and Campbell through the bank, and that, in default thereof, the contract to purchase the stock would, by its terms, be forfeited, and the right of the parties thereto would cease and terminate; that, for the purpose of making the payment, they had mailed to the bank a certain bank draft in the sum of $11,250; that in the ordinary course of the mail between the City of Oakland, California, and the Town of Yerington, Nevada, the same would be delivered to the bank on the following morning -- that is to say, during the forenoon of April 30, 1907; that, since mailing the draft, they had learned facts touching the value of the stock which had determined them to make no further payments and to forfeit the contract and all money by them paid thereunder; that they were seeking

Page 253 U. S. 107

by the message to intercept payment by the bank on account of the contract through said Pitt and Campbell, and that, unless such message were transmitted, and delivered immediately to the bank before banking hours on April 30, 1907, it would receive the draft and make payment of the amount thereof to Pitt and Campbell, in which event the amount would be wholly lost to them, as they did not intend to continue under their contract, having learned that the stock was of little or no value. It was further found that thereupon the agent represented that the telegraph company would insure the immediate delivery of the message to the bank at Yerington if plaintiffs would pay the sum of $1.45, which sum was in excess of the company's regular charge. Plaintiff accepted the proposal, and paid the sum to the agent. In the presence of the plaintiffs, the agent thereupon wrote upon the message, immediately below the date thereof, the words, "Deliver immediately," and accepted the message for immediate transmission to the Town of Yerington for immediate delivery to the bank and agreed to immediately transmit and immediately deliver it to the bank for the plaintiffs, and assured the plaintiffs of such immediate transmission and immediate delivery thereof. The sum of $1.45 was in excess of the defendant's regular charge and usual toll, the usual charge for an unrepeated message being 98

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