Griffin Wellpoint Corporation v. Munro-Langstroth, Inc., 269 F.2d 64, 1st Cir. (1959)
Griffin Wellpoint Corporation v. Munro-Langstroth, Inc., 269 F.2d 64, 1st Cir. (1959)
2d 64
Griffin Wellpoint Corporation, organized under the laws of New York, appeals
from a judgment for defendant, a Massachusetts corporation, entered by the
district court pursuant to a directed verdict.
equipment during the period of the lease. The lessee was also to notify the
lessor at least ten days prior to the date of return of the equipment at the
completion of its use. The lessee also agreed to 'pay for any and all expenses
involved for parts and labor, whenever repairs are necessary for the
maintenance of the equipment * * * (and) keep the equipment in good
operating condition and return same to Lessor in as good condition, and
dismantled into same units, as when delivered to Lessee. In the event Lessee
returns equipment in a damaged condition, Lessor will repair or replace said
equipment and Lessee agrees to pay for the cost of such repairs or
replacements.' The contract further stipulated that the lessee should provide 'full
insurance coverage' for all losses and damages from any cause during the life of
the agreement. It is conceded that the lessee did not so insure, but the breach of
this clause was not pleaded in the complaint and is not before the court.
4
The lessee promptly advised lessor of the damage and during the same week
returned the damaged equipment to the lessor. The latter replaced the
equipment on January 8, 1957. The lessor appraised the salvage value of the
returned equipment at $600.00, which it offset against a total value assigned to
the equipment destroyed of $10,213.90. On February 5, 1957, the lessor sent an
invoice for the balance of $9,613.90, which invoice was received by the lessee.
This estimated charge appeared on the lessor's monthly statement to the lessee
dated March 1, 1957, and was presumably carried forward in the April
statement. In any event, the statement sent by the lessor on May 1, 1957, shows
a credit of $9,613.90 and shows also a balance then owed by the lessee in the
sum of $352.61, a substantial amount of which was paid on August 26, 1957. It
is not clear, and it is unimportant, whether or not the remaining balance of
$96.07 from that job has been paid.
8
The undisputed testimony is that this credit was made to reflect a payment
which had been received by the lessor upon an insurance policy taken out and
maintained by the lessor, though it was under no contract obligation to do so.
The president of the lessee company testified that, 'when the accident
happened, I called Mr. Hush (the president of Griffin Wellpoint Corp.) * * *
and asked him if he had insurance to cover this, and he said he did. With similar
equipment with a company I know that those rental rates are partly based on the
insurance they pay to maintain the pumps, and you pay for it as a rental. And
Mr. Hush told me the pumps were insured.' Mr. Hush testified that he knew
that the credit of $9,613.90 was being given to the lessee and that this credit
was made 'because we had then been paid by our insurance company. That was
the amount we received, so we credited the full amount to' the lessee.
On September 9, 1957, just eight days after the date of the monthly statement
rendered by the lessor showing a balance due of only $96.07, a complaint was
filed in the name of Griffin Wellpoint Corp. against the lessee, alleging
diversity of citizenship and the making of a contract under which the lessee had
agreed to pay the cost of repairs or replacements, because of which judgment
was demanded in the sum of $9,613.90, with interest from February 5, 1957.
10
The defendant lessee's answer set forth as a 'Second Defence' that: 'After the
pumps mentioned in the complaint had been returned to the plaintiff by the
defendant, the plaintiff and the defendant entered into a new agreement by
which plaintiff released and discharged defendant from all liability for damage
to the pumps.' As a 'Third Defence' the answer stated: 'On May 1, 1957, the
plaintiff rendered the defendant an account crediting the defendant with the
amount claimed in the complaint and showing a balance due of $352.61, and
the defendant accepted the same as an account stated.'
11
At the trial of the case before a jury there were only two witnesses, the
presidents of the two companies, who testified substantially as outlined above.
The contract between the parties and a picture of a pump were received as
exhibits. On cross-examination the defendant introduced four more exhibits.
The plaintiff rested and the district judge then in substance granted the
defendant's motion for a directed verdict, saying to the jury that the credit given
plus the oral statements by President Hush had constituted a 'waiver' and that
the statement of May 1, 1957, was an account stated. The verdict was returned
as directed and judgment entered thereon for the defendant.
12
At the oral argument before us, a question much discussed was whether the real
plaintiff here was the lessor Griffin Wellpoint Copr. or its insurer, Federal
Insurance Company, which had made the payment to the lessor on account of
the insurance policy maintained by the lessor, this payment having given rise to
the credit of May 1, 1957. This question was not resolved below. In explaining
to the jury why he had decided to direct a verdict for the defendant, the district
judge remarked that the suit 'may or may not have been brought by the plaintiff,
it may have been brought by the insurance company as a subrogated plaintiff.'
13
14
The lessor's claim that the district court erred in sustaining the defense of
'waiver' is primarily based upon an argument that consideration is required for a
waiver to be effective under the law of New York, and that in this case there
was no consideration. The answer to this claim is clear under 33 of the Personal
Property Law of the State of New York, Laws, which specifically provides for
the validity of five types of agreements made without consideration, the second
of which, particularly relevant here, is as follows:
15
17
Nor do we see why the statement of May 1, 1957, accepted by the lessee, did
not amount to an 'account stated', thereby fixing the amount of the lessee's
liability. The parties stood in the relation of debtor and creditor. The lessee
undoubtedly owed the lessor something, but the amount of the debt was
originally unliquidated, due to the necessity of estimating values. And then the
account was rendered and accepted. See Davison v. Klaess, 1939,280 N.Y. 252,
20 N.E.2d 744. See also Siepka v. Bogulski, Sup.Ct. 1937,164 Misc. 831, 299
N.Y.S. 1018; Parsons v. Batchelor, 1st Dept. 1931, 233 App.Div. 517, 253
N.Y.S. 728.
18
We think that this appeal is obviously frivolous and vexatious. Also, we do not
like some of the tricks of advocacy indulged in by counsel for appellant to lend
apparent substance to its position. Thus, in its main brief a sentence is quoted
from the opinion of the New York Court of Appeals in Ripley v. Aetna Ins.
Co., 1864, 30 N.Y. 136: 'It seems to me, that a waiver, to be operative, must be
supported by an agreement founded on a valuable consideration, or the act
relied on as a waiver must be such as to estop a party from insisting on
performance of the contract, or forfeiture of the condition.' 30 N.Y. at page 164.
No reference is made in the brief to a footnote included in the report of the
court's opinion, citing later New York cases, to the effect that, 'It has since been
decided, that a waiver of the conditions of a policy of insurance, requires no
new consideration to support it.' Again, in its reply brief appellant cites Cohen
v. Commercial Travelers Mutual Accident Ass'n of America, Sup.Ct.1944, 47
N.Y.S.2d 402, 403, for the proposition that 'any modification of (a contract)
requires a new consideration to support it which must be pleaded and proved.'
The reply brief, however, fails to note that the New York court carefully
pointed out that the contract then before it had been 'entered into in the year
1933, prior to the amendment to Section 33 of the Personal Property Law'. 47
N.Y.S.2d at Page 403. For these reasons, pursuant to the discretion vested in us
by 28 U.S.C. 1912, we shall award double costs to the appellee herein.
19
A judgment will be entered affirming the judgment of the District Court, with
double costs on this appeal to be recovered by the appellee.