
    No. 2283
    Second Circuit
    NAT SMILOW v. WALTER S. CAMPBELL, AND BANK OF OAK GROVE
    (December 1, 1925, Opinion and Decree.)
    
      (Syllabus by the Editor.)
    
    1. Louisiana Digest—Obligations — Par.' 126, 153, 154.
    Putting in default is a necessary prerequisite under Articles 1912 and 1913 of the Civil Code to the recovery of damages or to the rescission of a contract.
    2. Louisiana Digest—Obligations — Par. 155.
    Article 1911 of the Civil Code provides how the debtor may be put in default and unless this act is followed one cannot recover damages or have the contract rescinded by Articles 1912 and 1913 of the Civil Code.
    3. Louisiana Digest—Obligations — Par. 126, 154, 178.
    A contract which does not provide that the party failing to comply with it, by the mere act of his failure is in default (nor is it one of those in which the breach alone is by law declared equivalent to a default), will not allow a party to this contract to recover if he has not put the other party in default under Article 1911 of the Civil Code.
    4. Louisiana Digest—Costs—Par. 10.
    Where one, by a contract has placed his money where it cannot be recovered except by a law suit and the effect . of the suit is to also enable the other contracting party to recover his money which was similarly placed, the costs should be equally divided between the plaintiff and defendant for each recovers his own money.
    Appeal from Seventh Judicial District Court of Louisiana, Parish of West Carroll, Hon. John R. McIntosh, Judge.
    This is a suit by which plaintiff agreed to sell defendant a stock of drugs and fixtures and each made deposits of $500.00 to bind the contract. Because neither party had been put in default there was judgment giving each party his $500.00 deposited as earnest money and stipulated damages.
    Plaintiff appealed.
    Judgment affirmed.
    George Wesley Smith, of Rayville, attorney for plaintiff, appellant.
    D. J. Anders, of Rayville, attorney for defendants, appellees. /
   CARVER, J.

By a written agreement, signed August 23, 1924, plaintiff agreed to sell and defendant, Campbell, to buy a stock of drugs and fixtures, the sale to be completed on September 10, 1924. Each party deposited $500.00 in the Bank of Oak Grove, the contract providing that this was

“ * * * as earnest money and as stipulated damages to be paid to the one who is ready and willing to close the sale and transfer herein agreed to be made, provided the other is not ready and willing to close and perfect said sale.”

Plaintiff, alleging that defendant had granted an extension of • time for carrying out the contract and had thereafter violated it by formally refusing to comply with it notwithstanding frequent demand, and alleging also that he had been formally put in default, brings this suit against defendant and the Bank claiming the thousand dollars on deposit.

Defendant denies that he granted an extension or violated the contract; asserts that, on the contrary, plaintiff was not ready to carry it out on September 10; avers his own readiness to carry it out on that day; and claims that by plaintiff’s failure to carry it out on that day he forfeited his rights under the contract and that defendant is therefore entitled to the thousand dollars and reconvenes for its recovery.

Plaintiff appeals from the decision of the district judge, who rejected the demands of both parties, holding that each was entitled to withdraw his own deposit, and defendant in this court moves to amend the judgment by giving him the whole deposit.

The district judge does not state the reasons for his decision, but we think it correct for the reason that neither party ever put the other in default and this, according to Articles 1912 and 1913 of the Civil Code is a prerequisite to the recovery of damages or to the rescission of a contract.

These articles read as follows

“The effects of being put in default are not only that, in contracts to give, the thing, which is the object of the stipulation, is at the risk of the person in default; but in the cases hereinafter provided for it is a prerequisite to the recovery of damages and of profits and fruits, or to the rescission of the contract.”
“In commutative contracts, where the reciprocal obligations are to be performed at the same time, or the one immediately after the other, the party who wishes to put the other in default, must, at the time and place expressed in, or implied by the agreement, offer or perform, as the contract requires, that which on his part was to be performed, otherwise the opposite party will not be legally put in default.”

Plaintiff alleges that he did put defendant in default, without saying how; but, as a witness, after stating that an extension had been granted by defendant with whom he had frequent talks after September 10, with respect to carrying out the contract, testifies, page 4 of the testimony:

“I located Mr. C. in his office, and Mr. Johnson went along with me at the time. I asked Mr. C. again what he intended to do. Mr. C. told me he was figuring with some parties, and that they were to show up that evening some time, and he left me no results. I told Mr. C.. that time that I would give him until nine o’clock that evening to either take the stock of merchandise or I would consider the deal cancelled and I would open the store on the following morning.”

Plaintiff’s counsel argues that this was a putting in default and that the bringing of this suit was also. We cannot agree with this view. If this was an offer to perform, it was a verbal one made in the presence of only one witness.

Article 1911 of the Civil Code provides:

“The debtor may be put in default in 'three ways: By the term of the contract, by the act of the creditor, or by the operation of law.
“By the terms of the contract, when it specially provides that the party, failing to comply, shall be deemed to be in default by the mere act of his failure.
“By the act of the party, when at or after the time stitulated for the performance, he demands that it shall be carried into effect, which demand may be made, either by the commencement of a suit, by a demand in writing, by a. protest made by a notary public, or by a verbal requisition made in the presence of two witnesses.
“By the operation of law. This takes place where the breach of the contract alone is by law declared to be equivalent to a default. The law having declared that the neglect to return a thing loaned for use, at a stipulated time, or the application of it to another use than the one for which it was lent, puts it at the risk of the borrower; this, without any act of the lender, puts the borrower in default, and forms an example of this part of the rule.”

The suit spoken of in the article is not a suit for damages for a breach of the contract but a suit demanding its performance.

The contract does not provide that the party failing to comply with it shall be in default by the mere act of his failure; nor is it one of those in which the breach alone is by law declared equivalent to a default.

The defendant does not even allege, much less prove, a putting in default on his part, but relies on the fact that plaintiff was not, on September 10, 1924, ready to perform as putting an end to the contract and entitling him to the deposit. But, as stated above, neither the contract nor the law provides that mere failure to perform constitutes such a default as is necessary for the recovery of damages.

The district judge condemned plaintiff to pay half the costs and the defendant half. Under the peculiar situation of this case, We think this proper. Both were claiming the whole thousand dollars and neither could get his five hundred dollars without a suit. Plaintiff recovered judgment for five hundred dollars but so did defendant. The bank, of course, being a mere stakeholder was properly relieved from the payment of any costs.

For these reasons, the judgment of the lower court is affirmed; plaintiff to pay the costs of the appeal.  