
    McLEOD LUMBER CO. v. WESTERN REDWOOD CO.
    (Circuit Court of Appeals, Ninth Circuit.
    November 23, 1925.
    Rehearing Denied January 4, 1926.)
    No. 4558.
    1. Contracts <§=>322(2) — Contract by president for purchase of timber for company held admissible to show compliance with requirement of contract.
    In action by corporation owning mill against lumber company for breach of contract to advance money for operations and to sell entire product of mill, evidence of agreement between plaintiff’s president and owner of timber lands for purchase of same in behalf of plaintiff held admissible to show compliance by plaintiff with requirement that it should procure timber.
    2. Evidence <§=>244(7) — Admissions against interest by agent of defendant corporation held admissible.
    Evidence that one assisting plaintiff’s representative in attempting to obtain selling agent, in lieu of defendant at defendant’s request, stated that plaintiff had fully complied with its contract, held admissible as admission made within, the scope of his authority and in the course of his employment.
    3. Appeal and error <§=>1050(4) — Admission of impeaching testimony without technically sufficient foundation held not prejudicial.
    Admission of testimony competent to impeach a witness, if technically erroneous because foundation was somewhat informal, held not prejudicial.
    4. Contracts <§=>312(1) —'Tender of note not indorsed as required by contract or use made of new note held not breach of contract.
    Where contract between mill owner and defendant required latter to act as selling agent and advance money on note signed by plaintiff and indorsed by three individuals, mill owner held not to have broken contract by tendering note not indorsed by all named individuals or by use made of new note, prepared and indorsed as required by the contract.
    5. Damages <§=>218 — In action for breach of contract, instruction that damages for breach of covenant to advance money could not be recovered held properly refused.
    In action by mill owner for breach of defendant’s contract to finance operations and act as selling agent, refusal of an instruction that no damage could be allowed for failure to advance money as agreed held proper; such agreement being only one of numerous covenants.
    6. New trial <§=>6 — Motion addressed to sound discretion of court.
    A motion for new trial in action for breach of contract is addressed to the sound judicial discretion of trial court.
    On Writ of Error to the District Court of the United States for the Southern Division of the Northern District of California, Second Division; John S. Partridge, Judge.
    Action by the Western Redwood Company against the McLeod Lumber Company. Judgment for plaintiff, and defendant brings error.
    Affirmed.
    Redman & Alexander, of San Francisco, Cal., for plaintiff in error.
    John L. MeNab, Byron Coleman, and Norman A. Eisner, all of San Francisco, Cal., for defendant in error*.
    Before GILBERT, HUNT, and RUD-KIN, Circuit Judges.
   RUDKIN, Circuit Judge.

This was an action to recover damages for breach of a written contract between the Western Redwood Company, as first party, and McLeod Lumber Company, as second party. The contract provided, among other things, that the first party should, without delay, place its mill at Needle Rock, Cal., in readiness to operate, and should procure and cut redwood timber and sell the entire redwood output of the mill through the second party, and that, if the present mill failed to turn out at least 20,000 feet per day, after two weeks’ operation, the first party should, as soon as possible, bring the mill up to that minimum capacity by whatever means necessary. The second party agreed; To sell the entire redwood output of the mill at the highest prices obtainable; to advance to the first party, when the mill actually started operation, the sum of $5,000 in exchange for a note of the first party, bearing 7 per cent, interest, payable 6 months after date, and indorsed by George F. Braun, Calvin Stewart, and John Bartram; to advance the sum of $20 per thousand as each 100,000 feet of lumber was sawed and delivered in ..the yard at the mill; to advance 75 per cent, of the value of the lumber as the same was loaded on boats, after deducting the $20 per thoiisand theretofore advanced; and to pay the difference between the actual selling price and the advances theretofore made upon the salo and delivery of the lumber to third parties, less a commission of 12% per «ent. Other provisions of the contract are not deemed material at this time. The complaint filed by the Western Redwood Company, as plaintiff, against the McLeod Lumber Company, as defendant, alleged due performance of the conditions of the contract on the part of the plaintiff; the failure and refusal of the defendant to advance the $5,-000 as agreed; that the defendant,' on or about August 1, 1923, removed its offices from San Francisco, Cal., and made no preparations to receive the lumber manufactured by the plaintiff or to act in any way aa selling agent for the plaintiff; that, on the contrary, the defendant failed and refused to act as such selling agent; refused to make any arrangements to take care of the output of the mill or to dispose of the lumber manufactured therein, and refused to perform the conditions of the contract on its part to be performed.

Upon the trial, the jury returned a verdict in favor of the plaintiff, and the judgment oil the verdict has been brought here for review by writ of error. Error is assigned in the admission of testimony during the trial, in the charge of the court and in the refusal to charge as requested, and in the denial of a motion for new trial.

The defendant in error offered in evidence an agreement entered into between the Coast National Bank of Ft. Bragg, as vendor, and Calvin Stewart, Sr., as vendee, for the sale of certain timber lands in Mendocino county, Cal. An objection to the admission of this contract was overruled. It appears from the testimony that Stewart, the vendee named in the contract, was president of the Western Redwood Company, and that he obtained the contract for the use and benefit of that company. The contract tended to show that the defendant in error had complied with that part of its agreement requiring it to procure timber, and was clearly competent and material for that purpose. One Braun, a witness for the defendant in error, was asked whether one Blanchard had not made statements to different parties to the effect that the defendant in error had fully complied with the .terms and conditions of its contract. The witness answered in the affirmative, and the admission of this testimony is assigned as error. At the time the statements were made Blanchard was assisting Braun in an effort to obtain another selling agent for the Western Redwood Company in the place of the McLeod Lumber Company, at the request of the latter, and the statements were therefore made in the course of his employment and within the scope of his authority. The same witness was further asked whether one Matteson had told him, in the month of August, that he had an efficient mill. This testimony was competent for the purpose of impeaching testimony theretofore given by Matteson, and, while the foundation for the impeachment was somewhat informal, we do not think that the ruling was prejudicial, if technically erroneous.

The principal contention of the plaintiff in error seems to he that the court erred in refusing to direct a verdict in its favor. The court charged the jury in plain and concise language that it was incumbent on the plaintiff to establish the following tacts by a preponderance of the testimony: First, that there was a contract as alleged; second, that the plaintiff complied with the terms of the contract; third, that the defendant breached the contract; fourth, that the plaintiff suffered damages; and, fifth, that the damages resulted from the breach. This instruction embodied a correct statement of the law, and was fully warranted by the testimony.

Much is said in the record concerning the note of $5,000 mentioned in the contract in suit. The facts in relation to that matter are not in dispute. It clearly appears from the testimony that the plaintiff in error desired to be released from the burdens imposed by the contract, and to that end gave notice of cancellation on August 6, 1923. The notice of cancellation was later recalled, and this was followed by negotiations for a modification of the .contract, but without avail. Finally the parties met at San Francisco for the purpose of closing the note transaction. The plaintiff in error was there represented by one Smith, the defendant in error by Braun, and the vendor in. the timber contract was likewise represented, as the proceeds of the note were to go to the bank from which the timber land was purchased. Braun had in his possession a promissory note for $5,000, executed by the defendant in error, and indorsed by Stewart and himself, hut not by Bartram, as required by the contract. Smith took the note, raising no objection on the ground that it was not indorsed by Bartram, and attempted to discount it at different banks in San Francisco. Later be reported to Braun that be was unable to discount tbe note because it did not bear tbe indorsement of tbe plaintiff in error, and be was .without authority to indorse tbe note in it's behalf. He then produced a blank form of note bearing tbe indorsejnent of tbe plaintiff in error, and suggested that Braun execute this note in behalf of tbe defendant in error. Braun informed him that tbe note could only be executed by tbe president of tbe company, under its by-laws, and tbe note was thereupon sent to Stewart; tbe president, for execution aifd for bis indorsement, and was later sent to Bartram, at Fresno, to procure bis indorsement. The note was finally returned to Braun, executed by all parties, as- required by -the contract. In tbe meantime, Smith was injured in an accident and was confined in a hospital at Eureka, unable to attend to business. A question then arose as to what should be 'done with tbe note. Braun took tbe matter up with one Schultz, representing the vendor in the contract for the sale of the timber, and as a result tbe note was sent to Schultz, with instructions to bold it as additional collateral; tbe letter of transmittal stating that, owing to tbe condition of Smith, the matter could not be elosed for two or three weeks, and that, when tbe money was paid over, it would be forwarded to tbe bank and tbe note could tben.be returned. Tbe money was not paid, Schultz made no use of tbe note, and it was finally returned to Braun. Under tbe foregoing facts, which are not in dispute, there is no merit in tbe contentions that tbe defendant in error breached tbe contract by failing .to tender a note indorsed by Bar-tram, that tbe use made of tbe note was a waiver of tbe .right to demand tbe payment of the $5,000, or was otherwise a defense to tbe action.

Nor was there error in tbe refusal of tbe court to charge that no damages could be allowed for failure to advance tbe $5,000. Tbe agreement to advance this amount was only one of numerous covenants contained in the contract to be kept and performed by tbe plaintiff in error, and the defendant in error was entitled to recover such damages as resulted directly and proximately from the breaches complained of. The measure of damages was stated by tbe court in its charge to tbe jury, and to that part of tbe charge no exceptions were taken. Tbe m'otion for a new trial was addressed to tbe sound discretion of tbe trial court, and no abuse of discretion in tbe denial of tbe motion is shown. On tbe contrary, the showing was weak in two aspects: First, as to the character of tbe newly discovered evidence; and, second, as to tbe diligence used to obtain tbe evidence on tbe former trial, or on a continuance thereof.

We find no error in tbe record, and tbe judgment is therefore affirmed.'  