KELLOGG-MACKAY-CAMERON CO. v. HAVRE HOTEL CO. et al., 173 F. 249

MORROW, Circuit Judge (after stating the facts as above). The defendants in error submit that the order sustaining the demurrer to-the second amended complaint ’ fully and finally determined that the facts stated in that complaint did not constitute a cause- of action, and that such determination became and was res judiqata of that question until reversed or set aside.

The third amended complaint, after certain paragraphs had been struck out by the court, was the same in legal effect as the second amended complaint; and it is contended that: the ruling of the court on the demurrer to the second amended complaint disposed of the third amended complaint.

The effect of sustaining the position of the defendants in error would he to hold that the judgment entered upon the third amended complaint was void and of no effect, and the writ of error would have to be dismissed; — a result not entirely without justification, perhaps, in view of the earnest, hut equally technical, contention of the plaintiff in error that the court abused its discretion in setting aside the default judgment in favor of the plaintiff.

In a technical controversy of this character it may he well said that “they who take the sword shall perish with the sword.” But, without expressing an opinion upon these proceedings, we will consider the case upon its merits. The important question of the case is whether the third amended complaint states a cause of action. The action as slated is based upon the letter written by defendants to plaintiff on the 7th of November, 1901, and a letter in reply, written by plaintiff to defendants on November 9, 1904, and received by defendants on November 11, 1904.

The letter written by defendants refers to an order placed by one P. H. Brader with the plaintiff for material required in carrying out a contract for plumbing and heating a new hotel. The letter set forth the terms upon which the plaintiff was to furnish this material to Brader and said: “We are prepared to meet these terms with Sir. Brader, so that you will be perfectly safe in shipping him this material.” In reply to this letter the plaintiff wrote to the defendants: “Your communication of the 7th instant, guaranteeing the account of P. II.

Brader for the material which we are to ship him for the new Hotel Havre and stating terms of payment on same, received. The same is satisfactory to us." To this letter it is alleged defendants made no reply, and remained silent and failed to notify the plaintiff that they did not “guarantee the account" with Brader, as stated in plaintiff’s letter. Defendants’ letter is clearly a proposal relating to an order placed by Brader with plaintiff for the supply of material to enable Brader to carry out a contract for plumbing and heating a hotel.

The terms of payment for this material were stated, and defendants said they were “prepared to meet these terms with Air. Brader.” This sentence so far is obscure and uncertain as to its meaning, but the remainder of the sentence is not obscure or uncertain. It is: “So that you will he perfectly safe in shipping him this material.” This last part of the sentence must have'been intended to convey an assurance that plaintiff would be paid for the material; otherwise, the letter would he meaningless. How safe? By the guaranty contained in defendants’ letter?

This was obviously what plaintiff wanted to know, and accordingly plaintiff promptly wrote to defendants that their communication “guaranteeing the account” of Brader was satisfactory. Had defendants used this language in their letter, there would have been no controversy as to the guaranty. What did defendants do then? They remained, silent. Could any inference relevant to the case be drawn from this silence? Tf so, it was a fact to be stated in the complaint, and the inference was a question for the jury. A reasonable and legitimate inference was that the defendants assented to the

interpretation placed upon the letter by plaintiff, and that they thereby intended to be understood as guaranteeing the account of Brader. Whether it was sufficient of itself to justify such an inference would be a question for the jury to determine under the instructions of the court. But our present concern is as to whether it was a statement of a fact which, taken in connection with the other facts alleged, constituted a cause of action. We think it did. We think it was properly stated, and constituted an important element in the sufficiency of the complaint.

The other charge, that defendants by their silence intended to mislead and deceive plaintiff by inducing plaintiff to-accept and act upon defendants’ proposal as a guaranty of the account of Brader, was stated to be for the purpose of setting up a legal estoppel; that is to say, that defendants by their conduct had placed themselves in a position where the law declares that they will not be heard to deny the guaranty.

It is charged that, as they were silent when good faith required that‘they should have spoken, they cannot now be heard to say that that, is not true which their conduct unmistakably declared was true, and upon the faith of which the plaintiff acted. This is an application of the doctrine of estoppel in pais, which, while originating in courts of equity, is now very generally applied in cases arising in courts of law. Dickerson v. Colgrove, 100 U. S. 578, 582, 25 L. Ed. 618; Kirk v. Hamilton, 102 U. S. 68, 79, 26 L. Ed. 79; Paxson v. Brown, 61 Fed. 874, 10 C. C. A. 135, 143; Union Pac. Ry. Co. v.

United States, 67 Fed. 975, 979, 15 C. C. A. 123, 127. In this view of these allegations, we think the third amended complaint stated a cause of action. The demurrer of the defendant to this complaint should therefore have been overruled. The judgment of the court is reversed, with instructions to overrule the demurrer. ■ For other eases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes