## Facts

- Monroe Street Properties, Inc. (Monroe) contracted with Western Equities, Inc. (Western), acting through its trustee Orville Carpenter (Carpenter), to transfer ten valid first mortgages (and related notes) to Western in exchange for shares of Western common stock.
- The agreement required Monroe to provide title insurance covering the mortgages and required Western to list its stock on the American Stock Exchange.
- The parties set up an escrow arrangement stating that the purchase-and-sale obligations were to be completed on or before the time Western listed and delivered its stock as contemplated by the agreement.
- Western obtained the American Stock Exchange listing for its stock but did not deposit the stock into escrow or otherwise deliver it to Monroe.
- Monroe deposited mortgage papers into escrow, but the mortgages were subject to substantial encumbrances and were not the clear, valid first mortgages contemplated by the agreement.
- Monroe did not have the financial ability to remove the encumbrances and obtain title insurance unless it first received Western’s stock and then pledged it to raise funds.
- After depositing the encumbered mortgages, Monroe demanded that Western deliver its stock.
- Western refused to deliver the stock, and Monroe sued Carpenter (as trustee for Western) for breach of contract.
- The district court granted Carpenter’s motion for summary judgment, and Monroe appealed.

## Issues

1. In a transaction calling for concurrent exchange, may Monroe recover for Western’s failure to deliver stock when Monroe neither delivered nor tendered delivery of clear, insured first mortgages and lacked present ability to do so?
2. Was summary judgment proper where the undisputed record showed Monroe’s inability to perform its side of the exchange without first receiving Western’s stock?

## Decision

- The Ninth Circuit affirmed the summary judgment for Carpenter.
- The court held that Monroe could not place Western in default or recover for breach because Monroe did not tender conforming performance and was not presently able to perform as required by the contract.
- The court concluded there was no genuine dispute of material fact: Monroe’s own showing established that it could not deliver the required insured first mortgages unless it first obtained Western’s stock.

## Legal Principles

- When a contract contemplates a concurrent exchange, a party generally cannot treat the other party’s nonperformance as a breach without tendering its own performance.
- A valid tender requires readiness and willingness to perform and a present ability to render the promised performance in the manner the contract requires.
- Tendering nonconforming performance (such as encumbered mortgages when the contract calls for valid first mortgages with title insurance) does not satisfy the tender requirement for a concurrent exchange.
- Summary judgment is appropriate when the material facts are not disputed and those facts show the plaintiff lacked present ability to tender contract-compliant performance, defeating the breach claim as a matter of law.

## Conclusion

Because the agreement required a concurrent exchange and Monroe could not tender clear, insured first mortgages (and admitted it could not do so unless it first received Western’s stock), Monroe could not claim breach based on Western’s failure to deliver stock; the grant of summary judgment for Western’s trustee was properly affirmed.


Monroe Street Properties, Inc. v. Carpenter, 407 F.2d 379 (1969)