UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


SYNCOM CAPTL CORP

v.

LANG, DALE W.


98-7145a

D.C. Cir. 1999


*	*	*


Randolph, Circuit Judge: Plaintiffs Syncom Capital Corpo- ration and
Broadcast Capital, Inc., brought this diversity-of- citizenship action
against Dale W. Lang, claiming that on May  18, 1987, Lang executed a
promissory note in the amount of  $1,178,000 payable to plaintiffs on
May 18, 1991; that the  maturity date on the note passed without
Lang's payment;  and that Lang therefore owes plaintiffs the principal
sum of  the note plus accrued interest. On cross-motions for sum- mary
judgment, the district court issued a written memoran- dum opinion
ruling in Lang's favor.


Lang and the plaintiffs entered into a series of transactions  related
to the refinancing of a Minnesota television station.  Lang intended
to establish a new corporation, Halcomm, Inc.,  to acquire the
station. To this end, Lang personally signed  the note of May 18,
1987, paragraph 1 of which permitted  Lang to discharge his liability
to the plaintiffs by delivering to  them "a promissory note, security
agreement and related  financing agreement of Halcomm, Inc., a
Minnesota corpora- tion, substantially in the form attached as
Exhibits C, D, and  F to" a document we shall call the "Master
Assignment."  The Master Assignment, which the parties also entered
into  on May 18, 1987, gave Lang all of plaintiffs' debt position in 
the station in exchange for a promissory note of $1,178,000  and a
wire transfer of $275,000. Paragraph K of the Master  Assignment
stated that plaintiffs agreed "to relinquish and  return to Lang the
Promissory Note delivered pursuant to  paragraphs C and D above if
there is delivered in substitution  therefor on or before 30 days from
the date hereof, Promisso- ry Notes of Halcomm substantially in the
form of Exhibit C-1  and C-2 hereto, a Security Agreement
substantially in the  form of Exhibit D hereto, and a Financing
Statement sub- stantially in the form of Exhibit F hereto, it being
understood  and agreed that upon such delivery to Lang the
[plaintiffs]  shall concurrently execute and deliver a Subordination


Lang delivered the Halcomm documents, including a prom- issory note of
Halcomm as a replacement for his note, but not  until June 30, 1987,
more than 30 days from May 18, 1987.  Therein lies the heart of the
controversy. Plaintiffs say that  once the 30-day period expired,
Lang's only method of dis- charging his obligation under his
promissory note was pay- ment in full of the $1,178,000; in other
words, after the  passage of 30 days, Lang's delivery of a replacement
note  from Halcomm ceased to be an option. Lang, of course, sees 
matters rather differently. Plaintiffs accepted the Halcomm  note and
related documents when he tendered them in June  1987, even though he
was 13 days late; thereafter, plaintiffs'  course of conduct belied
any notion that they had treated  Lang's delivery of the Halcomm note
as a nullity, or as  insufficient to discharge Lang's obligations


Plaintiffs make much of this clause in Lang's promissory  note: "No
provision of this Note shall be modified except by a  written
instrument executed by Payee or a subsequent holder  hereof expressly
referring to this Note and to the provision  modified." The Halcomm
promissory note contained an iden- tical clause. Neither clause bears
on the question before us.  The 30-day provision on which plaintiffs
rest was in the  Master Assignment, not in the notes, and the Master
Assign- ment contains no provision requiring modifications to be in 


Plaintiffs also attach significance to another clause in the  Lang
note: "No delay or omission on the part of Payee or  any subsequent
holder of this Note in exercising any right  hereunder shall operate
as a waiver of such right or of any  other right of Payee or such
holder, nor shall any delay,  omission or waiver on any one occasion
be deemed a bar to or  waiver of the same or any other right on any
other occasion."  Delay there was. According to plaintiffs, the Lang
note  became due and payable on May 18, 1991, because in 1987 the 
Halcomm documents arrived 13 days late. But so far as the  record
shows, plaintiffs took no steps to collect the Lang note  during the
period between May 1991 and the filing of this  lawsuit in 1993, nor
did they complain to Lang about not 


receiving the Halcomm replacement note on time. Not until  plaintiffs
filed their motion for summary judgment did Lang  receive notice of
their position regarding his noncompliance  with the 30-day clause in
the Master Assignment. Our  decision, however, does not turn on
plaintiffs' delay in "exer- cising any right" under the Lang


As we see it, the proper inquiry is whether Lang's compli- ance with
the time limit was critical to his ability to discharge  his
obligation to plaintiffs under the promissory note by  substituting a
replacement note from Halcomm; that is,  whether his tardy delivery
gave plaintiffs the right to collect  on the Lang promissory note when
it came due. Plaintiffs'  actions after receiving the Halcomm
documents lead us to  answer both questions in the negative. The
parties agree  that Minnesota law should govern. Under Minnesota law, 
even if a contract requires performance within a stated  period, time
is not necessarily of the essence unless the  contract specifically
provides this (the Master Assignment did  not). See, e.g., Baker Domes
v. Wolfe, 403 N.W.2d 876, 878  (Minn. Ct. App. 1987); see also
Indianhead Truck Line, Inc.  v. Hvidsten Transport, Inc., 128 N.W.2d
334, 342 (Minn.  1964). If the significance of the time limit is
unclear, the  construction which the parties "in their dealings and by
their  conduct have placed upon [it] will furnish the court with 
persuasive evidence of [its] meaning." See, e.g., L.A. Donnay  v.
Boulware, 144 N.W.2d 711, 716 (Minn. 1966); Davis v.  Outboard Marine
Corp., 415 N.W.2d 719, 723-24 (Minn. Ct.  App. 1987). Plaintiffs'
conduct indicates that they did not  intend the 30-day clause in the
Master Assignment to operate  as a bar to Lang's substitution of


As the district court determined, plaintiffs took delivery of  the
Halcomm promissory note and the accompanying docu- ments without
complaint and signed the documents where  required. Plaintiffs
thereafter filed with the Small Business  Administration annual
financial statements listing the Hal- comm promissory note as an
investment, reciting June 30,  1987, as the origination date and March
15, 1991, as the note's  maturity date. One of these statements,


cial condition of Syncom Capital as of December 31, 1988,  reports on
the line listing the Halcomm note, under the  heading "Participation
Sold," the figure $81,981.


After receiving the Halcomm note, plaintiffs attempted to  negotiate
changes in one of the related documents, the Subor- dination
Agreement, with Lang. They never mentioned that  Lang missed the
deadline for delivery. In January 1989,  when plaintiffs discovered
that Halcomm lacked the resources  to fulfill its obligations under
the Halcomm note they sent it  back to Halcomm's attorneys, but did
not attribute the return  to the note's late delivery. After returning
it, plaintiffs  continued to treat the Halcomm note as an enforceable 
obligation, stating as much to a prospective borrower and to  Halcomm
itself. Compare Klipsch, Inc. v. WWR Technology,  Inc., 127 F.3d 729,
737 (8th Cir. 1997).


Plaintiffs claim that once Lang missed the 30-day deadline  they had,
and acted at all times consistent with, the right to  collect on
Lang's note when it came due. They have little to  say in support of
this claim. They argue that Lang was  "absolutely obligated" to pay
the Lang note when it came  due. But they do not indicate that they
made this clear to  Lang. They suggest that because they never
"relinquish[ed]  and return[ed]" Lang's promissory note, it was clear
that  they did not intend to release him from liability. But the  Note
provides that Lang's liability could be discharged by  "delivery" of
the Halcomm promissory note to payees, so  when plaintiffs received
and accepted that delivery, without  complaint, Lang's liability was
discharged. Lang's failure to  request the return of his note and
plaintiffs' later return of  the Halcomm note to Halcomm's attorneys
do not reinstate  that liability.


Finally, there is no indication that plaintiffs were preju- diced in
any way by Lang's tardy delivery. Rather, it  appears that plaintiffs
realized that they had made an unfor- tunate agreement, by which they
were junior lenders to a  company whose senior lender was also a
controlling share- holder, with their loan secured by a note of the
corporation,  rather than of the controlling shareholder. The district
court  rejected the argument that Lang's position as senior lender 


was a breach of the parties' agreement, in light of the  unambiguous
terms of the promissory note, and on appeal  plaintiffs have not
raised this contention again. Rather, they  attempt to find a way out
of their agreement by pointing to  Lang's failure to meet a deadline
that was never discussed in  the seven years between his delivery of
the Halcomm note to  plaintiffs and the filing of the motions for
summary judgment.


For all these reasons, we hold that Lang's June 30 delivery  of the
Halcomm documents discharged his obligation under  the promissory note
he had executed, despite the Master  Assignment's requirement that
delivery be made within 30  days of May 18, 1987.


Affirmed.