Clarey v. Security Portland C. Co., Inc.

California Court of Appeal Jul 12, 1929 No. Docket No. 6720.Published

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Holding. The court held that the loan agreement was valid, certain, and supported by consideration, and that the plaintiff could not recover the full loan amount prematurely because the defendant's obligation to pay was contingent upon cement production.

Issues

Whether the loan agreement was void for uncertainty or lack of mutuality.
Whether the plaintiff was entitled to recover the full loan amount prior to the maturity of the installments based on the defendant's production of cement.

Disposition. reversed

Quotations verified verbatim against the opinion

“We find nothing uncertain in the terms of the agreement.”

“Nor can the contention that there was a lack of mutuality be sustained.”

THE COURT.

An action' was brought by the plaintiff against appellant corporation, which is engaged in the manufacture of cement, to recover the sum of $5,000, with interest.

The court found that the plaintiff on July 26, 1926, loaned the above sum to the appellant; that the latter in considerar tion thereof agreed to repay the same in monthly installments, commencing on August 1, 1926, at the rate of five cents per barrel of cement produced, together with interest at the rate of six per cent per annum, payable with each monthly installment of the principal. sum. It was further found that appellant produced cement after August 1, 1926, and continued to do so from month to month; that it failed to pay any installment as provided by the agreement except the sum" of $27.26, which was not the full amount due at

[785]

the rate of five cents per barrel for all cement produced, and did not include the agreed interest. The court further found the agreement to be without mutuality, uncertain and void and “that there was a failure of consideration on the part of said defendant.” Upon its findings the court entered judgment against appellant for the full amount of the loan, with interest.

The following is the contract which appellant in consideration of the loan executed to the plaintiff:

“For and in consideration of loan of $5,000.00 the Security Portland Cement Co. Inc. agrees to pay a royalty of five cents per bbl. on all cement (commencing August 1st, 1926, and until paid), produced at their plant at Devore, San Bernardino county, California, until the full amount together with 6% interest shall have been paid. Payments on principal and interest on royalty account shall be paid monthly.”

On December 13, 1926, appellant sent the following letter to the plaintiff:

“Dear Sir:—

“Below you will find statement of cement sold by barrels up to December '1st, 1926. There was very little cement manufactured in the month of October and so consequently it is included in November sales.

Am’t sold bbls. Royalty per bbl. Am’t due Clarey 545% 5c $27.26

Clarey v. Security Portland C. Co., Inc.

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THE COURT.

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