stating that "[h]e who asserts a waiver must prove . . . a clear, unequivocal, decisive act."Summary of this case from Lincoln Elec. Co. v. St. Paul Fire and Marine Ins.
Decided May 27, 1936.
Contracts — "Waiver" defined — Parole waiver of written terms not favored — Waiver after breach carefully and seriously considered — Proof of clear, unequivocal and decisive act, necessary, when — Retaking property sold on instalments, not malicious taking, when — Error to submit such issue to jury and charge upon punitive damages — Nonliability for wilfully taking property by right.
1. Waiver as applied to contracts is a voluntary relinquishment of a known right.
2. Courts move slowly and carefully when the claim is made that a party has waived the terms of a written contract and agreed to different terms by parole, as it amounts to an oral modification of a written contract.
3. Where a waiver comes after a breach of the original contract by the party claiming the benefit of the waiver, it should receive, not only careful but serious consideration at the hands of courts, as such an arrangement is diametrically opposed to sound business principles.
4. He who affirms a waiver must prove it, and in so doing he must prove a clear, unequivocal, decisive act of the party against whom the waiver is asserted, showing such a purpose or acts amounting to an estoppel on his part.
5. If a party to a contract has a color of right to retake property sold on instalments for the further protection of his security, such taking is not malicious and it is error for the trial court to submit such an issue to the jury under such circumstances, and the error is intensified when the court recognizes such issue in its general charge to the jury by instructing the jury on punitive damages.
6. No liability attaches to him who "wilfully" takes that which under the law he has a right to take.
ERROR to the Court of Appeals of Stark county.
The parties occupy the same relative positions here as in both courts below and will be referred to in the statement and opinion as plaintiff and defendant.
On April 23, 1931, the defendant purchased from the Canton White Truck Sales Company, a corporation entirely separate and distinct from plaintiff, The White Company, a certain motor bus for the total purchase price of $7,245 of which $1,845 was paid by trade-in allowance. It was agreed that the balance of $5,400 was to be paid in monthly instalments of $180 each, beginning on May 23, 1931, and the twenty-third day of each month thereafter until and including March 23, 1932. The balance of $3,420 was to be paid on April 23, 1932.
To secure the payment of the aforesaid sum of $5,400, representing part of the purchase price of the bus, defendant executed and delivered to the Canton White Truck Sales Company its chattel mortgage, a specific provision of which was as follows:
"It is agreed that if default be made in the performance of any of the agreements or conditions herein resting upon the mortgagor * * * then in either or all of such events the full amount of the purchase price remaining unpaid shall be immediately due and payable, and further, in either or all of such events, or if the mortgagee shall at any time deem it necessary for the more perfect and complete security of his claim, then the mortgagee is hereby authorized and empowered to enter any premises of the mortgagor or other place where the property may be and take possession thereof without notice or demand or legal procedure, said notice and demand being hereby expressly waived."
On April 23, 1931, the Canton White Truck Sales Company duly transferred, assigned and conveyed said chattel mortgage and the obligation secured thereby to plaintiff, The White Company.
Monthly payments of $180 were made from May, 1931, to February, 1932, inclusive; the payment due March, 1932, was never made. In accordance with the acceleration clause contained in the chattel mortgage the entire unpaid balance of $3,600 became due and payable at that time.
Thereafter payments of $100 each were made at intervals ranging up to fifty days, as follows: April 18, 1932; May 10, 1932; June 13, 1932; July 25, 1932 (returned by the bank "not sufficient funds," and reimbursed on August 3, 1932); August 22, 1932; September 20, 1932; October 17, 1932; November 29, 1932; December 28, 1932; January 24, 1933; February 1, 1933; March 17, 1933; April 12, 1933; May 3, 1933; June 2, 1933; July 5, 1933; August 7, 1933.
On April 18, 1932, Octavian Bertea, president of defendant company, went to the office of the plaintiff in Cleveland and talked with Mr. Hoffman, credit manager. Mr. Bertea said that his income was insufficient to enable him to meet payments of $180 a month. Mr. Hoffman told him he would be given consideration if he would "prove his point." Mr. Bertea said that business was "kind a all going down" and requested that he be permitted to make payments of only $100, as a concession to be made "one month after the other." Mr. Hoffman accepted a check for $100 at that time and told him that a payment of $100 would be accepted in May and that further concessions would depend on the facts existing when concessions were asked.
Mr. Bertea testified that his wife, who was the secretary and treasurer of the defendant company, was authorized by him to write his letters and sign his name. That after his conversation with Mr. Hoffman on April 18, 1932, he told his wife about what had been said. In view of what he told her, on June 26, 1932, she wrote plaintiff the following letter, over Mr. Bertea's signature:
"In regards to my note for White bus, I am doing the very best I can with the payment of ($100.00) one hundred dollars a month as we talked the matter over when I was there.
"Mr. Hoffman please believe me. I am working very hard to meet the hundred dollars I am sending now. Since school has been out, business is worse, as for the bus it is in perfect condition.
"Please try and talk this over with some of your officials and let me send one hundred a month until things get a little better.
"If you are not convinced send some one to investigate.
"Trusting you will do the best you can for me."
No answer being forthcoming, on July 10, 1932, the following letter was sent by defendant to the plaintiff:
"In regard to my letter of June I have not received any word, as to what you will do with the notes on my bus.
"Please Mr. Hoffman arrange for me to pay ($100.00) one hundred dollars for a few more months. I believe that you no [know] I would pay the whole amount if I had the money. Business is terrible and I can hardly make a go.
"Please write as to what you intend to do.
"Hoping you will try to do the best you can for me."
The plaintiff replied to the defendant, under date of July 19, 1932, as follows:
"This will answer your letter of July 10 and confirm our telephone conversation of Sunday night, July 17.
"The White Company will accept a payment of $100.00 for this month to apply on your note account provided the check is forthcoming in the immediate future.
"The amount of the payment for the month of August will be determined after we have had an opportunity to go into conditions existing on or about August 5. If you, at that time, are making no more progress than you have in the last month or so, we will give favorable consideration to acceptance of payment of $100.00 in August as against the amount scheduled to mature, but we cannot commit ourselves until we know what the facts are in August.
"We want you to know that we are willing and anxious to help you in every way we can in meeting your emergencies, but of course, there must be a limit to concessions we can make and it naturally follows that that limit should be based upon the actual conditions in existence at the time we consider the issue."
During the period after April 18, 1932, there were recurring instances when the defendant failed to make any payments, and requests for additional concessions were granted from month to month by the plaintiff. The payments were not made every month and the intervals between payments from time to time were as great as fifty days.
On April 21, 1933, plaintiff sent the defendant the following letter:
"Our home office has expressed dissatisfaction with the manner in which you are making payments on your contract with us covering the purchase of a Model 613 White bus in April of 1931. They feel that the amount of your monthly remittances is not sufficient to justify our continuing to carry the account. They have demanded that you arrange to pay not less than $180.00 a month commencing in May with the alternative of repossession.
"I personally believe that their request is fully justified and I must, therefore, insist that you comply with the conditions outlined or surrender the unit to us for repossession.
"Please acknowledge receipt of this letter agreeing to raise your payments to the required figure beginning with the May installment or tell us when and where we can get the bus."
In June, 1933, Mr. Hoffman conferred with Mr. Bertea and told him that the payments would have to be increased or repossession would be required.
The plaintiff received reports that the defendant was not properly maintaining the bus and one of plaintiff's service men inspected it and reported to Mr. Hoffman. The bus had been run approximately 126,000 miles and was in serious disrepair. Plaintiff also received information that defendant was contemplating bankruptcy. In view of the unfavorable payment record, the report of the inspection of the bus, and information from Mr. Bertea and other sources, concerning the precarious financial condition of the defendant, the plaintiff deemed it necessary to repossess in order to more perfectly secure its claim.
This action was filed, bond given and possession of the bus taken on August 4, 1933. At that time there was due and owing in principal and interest the amount of $1,983.57.
The defendant continued to operate the Canton-Middlebranch line upon which the White bus had been used, by substituting a bus from its Canton-Hartville line, until the middle of September, 1933, when the franchise to the Middlebranch route was sold back to Mrs. Mabel Merryman, from whom defendant had originally purchased the franchise. The consideration for the return of the franchise was the cancellation of fourteen notes of $125 each which were unpaid on the original purchase price of the line. The defendant had been unable to meet its payments on the purchase price of the franchise, and of the fourteen notes thirteen were then overdue and unpaid. Defendant had been in default on its obligation to Mrs. Merryman from September 6, 1932, till September, 1933, when the franchise was returned.
To plaintiff's petition defendant filed an answer, admitting the original contract but averring that plaintiff had waived its right to insist upon the $180 monthly payments and that by receiving $100 in monthly payments for seventeen months it had modified the original contract and there was no breach whereby the plaintiff had any right to repossess itself of the bus. He further alleged that at the time plaintiff took the bus he had a transportation business worth $10,000 and having no bus with which to conduct it he lost it, and that he was thereby injured by the taking and detention of the bus by plaintiff to the extent of the full value thereof.
He further alleges that plaintiff, without lawful right, "wilfully and maliciously" caused the writ of replevin to be issued and thereby took possession of his bus, whereby he was injured.
All this is denied by plaintiff.
On trial in the Court of Common Pleas the jury returned a verdict, finding that at the commencement of the action the defendant had the right of possession to the bus in question, was entitled to the possession thereof and they assessed his damages at the sum of $2500.
The trial court charged on "wanton and malicious" misconduct in the taking of the bus under the writ of replevin. A general exception was taken to the charge. The fact is that "wanton" misconduct was not in the case at all, defendant having alleged "wilful and malicious" misconduct. That part of the charge is not set out in this statement, as we deem it unnecessary.
Motion for new trial was made in due time and overruled. Error was prosecuted to the Court of Appeals of Stark County, Ohio, which court affirmed the judgment of the Court of Common Pleas, and error is prosecuted to this court to reverse the judgment of the Court of Appeals.
Mr. Kenneth B. Cope and Messrs. Lynch, Day, Pontius Lynch, for plaintiff in error.
Mr. Frank T. Bow and Mr. Charles S. Weintraub, for defendant in error.
Once again we are confronted with that legal monstrosity "wilful and malicious" misconduct.
This is an action in replevin, brought under virtue of a repossession clause in a chattel mortgage in the words and figures following:
"It is agreed that if default be made in the performance of any of the agreements or conditions herein resting upon the mortgagor, or if the mortgagor shall commit any waste or misuse and not keep said property in first-class condition or shall attempt to sell, secrete, convert or remove said property without mortgagee's written consent, or if the property shall be seized upon mesne or final process had against the mortgagor, or if a petition in bankruptcy be filed by or against or an application for a receiver be filed by or for, or a receiver be appointed for the mortgagor, then in either or all of such events, * * * or if the mortgagee shall at any time deem it necessary for the more perfect and complete security of his claim, then the mortgagee is hereby authorized and empowered to enter any premises of the mortgagor or other place where the property may be and take possession thereof without notice or demand or legal procedure, said notice and demand being hereby expressly waived * * *."
Plaintiff was the owner of this chattel mortgage by assignment. It might well have taken the bus without legal process under this clause of the mortgage, but it resorted to the more orderly procedure by suing out a writ of replevin.
Plaintiff made its election as to remedies and naturally must abide the consequences.
As was said by the trial court there was not much for the plaintiff to prove. The court was right. The original contract was admitted, but defendant claimed that plaintiff had waived its right to demand payment in the amount of $180 per month and agreed to receive and did for seventeen months receive payments in the sum of $100 per month.
He who asserts a waiver must prove it. The trial court so charged and, in so far as it went, that was correct. This court defined "waiver" in the case of List Son Co. v. Chase, 80 Ohio St. 42, 88 N.E. 120. While the definition was not carried into the syllabus, waiver was the basic issue in the case. Davis, J., at page 49 said:
"A waiver is a voluntary relinquishment of a known right. It may be made by express words or by conduct which renders impossible a performance by the other party, or which seems to dispense with complete performance at a time when the obligor might fully perform. Mere silence will not amount to waiver where one is not bound to speak."
Ofttimes it is difficult to discern from the pleadings whether the issue is waiver or estoppel, but inasmuch as the defendant has elected to treat the issue herein as waiver, we will so treat it.
Courts move slowly and carefully when the claim is made that a party has waived the terms of a written contract and agreed to different terms by parole, as it in fact, if not in law, amounts to a modification of the original contract. This is particularly true in a case wherein it is claimed that the only waiver was the oral waiver of the right to receive payment in instalments, less in amount than that stipulated in the original written contract.
When such waiver, if in fact there was a waiver, comes after a breach of the original contract by the party claiming the benefit of the waiver, it should receive not only careful but serious consideration at the hands of the courts, as such an arrangement is diametrically opposed to sound business principles.
It was up to the defendant to assume and carry the burden of proving the waiver by the greater weight of the evidence, but in so doing he was required to prove a clear, unequivocal, decisive act of the party against whom the waiver was asserted, showing such a purpose or acts amounting to an estoppel on the latter's part. 27 Ruling Case Law, 909 and 910, Section 5, and cases cited.
The only vestige of testimony tending to show a waiver by plaintiff is that of Bertea, president and general manager of the defendant company, wherein he details a conversation with Harold O. Hoffman, credit manager of plaintiff company, held at its office in Cleveland, Ohio, in April, 1932.
Bertea was asked to detail this conversation. He gave it as follows:
"Well I went to his office and I told Mr. Hoffman, I said 'I can't pay any more a hundred and eighty dollars.' And Mr. Hoffman asked me why. I said business is kind a all going down and I can't make any more hundred and eighty dollars. Well Mr. Hoffman said 'Well how much can you pay?' I said 'Mr. Hoffman I can pay from now on a hundred dollars.' Then I had a blank check with me. He said 'All right.' Then I hand the blank check to Mr. Hoffman and Mr. Hoffman made it himself, the check, and I signed it. * * *"
Hoffman's detail of this conversation is vastly different from that of Bertea. His statement is to the effect that the April check, for $100 would be accepted, but different arrangements would have to be made for the May payment.
No question has been raised as to the power and authority of Hoffman to waive for his company, so we assume that he had such power and authority. Bertea's testimony as to an agreement to waive is neutralized by his subsequent correspondence wherein he is consistently begging for lenience in the matter of payments. If he had an agreement with plaintiff to the effect that it would receive monthly payments in the sum of $100, he could and undoubtedly would have stood flatly on such agreement; but he does not even refer to it in his letters.
For the sake of the argument, let us assume that plaintiff did agree to accept $100 per month from Bertea. The record shows beyond all cavil that he breached this agreement, as he did not pay $100 per month. As much as fifty days elapsed between payments. Bertea breached the original contract and the modified contract, if it was modified. After all this, how much longer was the plaintiff required to wait before taking action to repossess the bus?
It is not necessary for this court to determine whether or not there was a waiver in this case. If there was a waiver, Bertea failed to comply with the modified contract in making payment, and plaintiff had a full and complete right to retake its bus and such retaking, although it was probably wilful, was not malicious; and no liability attaches when one wilfully takes that which under the law he had a right to take.
If a party to a contract has a color of right to retake property sold on instalments for the further protection of his security, such taking is not malicious and it is error for the trial court to submit such an issue to the jury under such circumstances, and the error is intensified when the court itself recognizes such issue in his general charge to the jury by instructing the jury on punitive damages.
This finding is decisive of this case. There was nothing to send to the jury in this case and the trial court erred in so doing, and the Court of Appeals likewise erred in not reversing the Court of Common Pleas and rendering final judgment.
The judgments of the Court of Appeals and Court of Common Pleas are reversed, and final judgment is rendered for plaintiff in error.
WEYGANDT, C.J., WILLIAMS, JONES, MATTHIAS, DAY and ZIMMERMAN, JJ., concur.