September 27, 1993

                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

No. 92-2293

                    WHITNEY BROS. CO., ET AL.,
                      Plaintiffs, Appellees,

                                v.

              DAVID C. SPRAFKIN AND JOAN BARENHOLTZ,
       TRUSTEES OF THE BERNARD M. BARENHOLTZ TRUST, ET AL.,
                     Defendants, Appellants.

                                           

                           ERRATA SHEET

     The  opinion of this Court  issued on September  9, 1993, is
amended as follows:

     Page   3,   second  complete   paragraph,  line   1,  delete
"defendant"  and insert  "Bernard Barenholtz's  (and defendants')
attorney, Samuel M."

     Page 3, second complete  paragraph, line 2, delete "Bernard"
and insert "Mr."

     Page 3, last line, substitute "first" for "third."

     Page 13,  line 1-2, delete ", one of whom, ironically, was a
director of Whitney Brothers,".

                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT
                                           

No. 92-2293

                    WHITNEY BROS. CO., ET AL.,

                      Plaintiffs, Appellees,

                                v.

              DAVID C. SPRAFKIN AND JOAN BARENHOLTZ,
       TRUSTEES OF THE BERNARD M. BARENHOLTZ TRUST, ET AL.

                     Defendants, Appellants.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF NEW HAMPSHIRE

           [Hon. Norman H. Stahl, U.S. District Judge]
                                                     

                                           

                              Before

                    Torruella, Cyr and Boudin,

                          Circuit Judges.
                                        

                                           

     Richard B.  Couser, with whom  James P. Bassett,  Cordell A.
                                                                 
Johnston, Orr and  Reno, P.A.,  and Samuel M.  Sprafkin, were  on
                                                       
brief for appellants.
     James R. Muirhead, with whom Peter D. Anderson,  and McLane,
                                                                 
Graf,  Raulerson &amp; Middleton,  Professional Association,  were on
                                                       
brief for appellees.

                                           

                        September 9, 1993
                                           

          TORRUELLA,  Circuit  Judge.   Plaintiffs/appellees  are
                                    

Whitney  Brothers Company  ("Whitney  Brothers")  and Griffin  M.

Stabler, Whitney Brothers' president, chief executive officer and

director.   Defendants/appellants,  David C.  Sprafkin  and  Joan

Barenholtz, are the trustees of the Bernard  M. Barenholtz Trust,

Whitney Brothers'  majority  shareholder.    Plaintiffs  sued  to

compel  defendants  to  sell  their  stock  in  Whitney  Brothers

pursuant to a written buy/sell contract.

          After  two  years  of litigation,  the  district  court

ordered the sale  at defendants' asking price.  In the order, the

district court also held  that:  (1) plaintiffs were  entitled to

prepay  the promissory note bearing the  sale price; (2) interest

would begin to accrue  when plaintiffs execute the note;  and (3)

plaintiffs were entitled to attorneys' fees.  Defendants appealed

only  on  the  issues of  prepayment  and  interest.   Plaintiffs

subsequently moved for attorneys' fees for this appeal.  W      e

reverse the district court's judgment with respect to prepayment,

affirm  with  respect  to  the  accrual  of  interest,  and  deny

plaintiffs' motion for attorneys' fees on this appeal.

                            BACKGROUND
                                      

          Whitney Brothers  is a  New Hampshire corporation  that

produces wooden learning materials.   Bernard Barenholtz acquired

62.6% of the  company's outstanding  shares in 1969.   Ten  years

later, he transferred these  shares to the Bernard M.  Barenholtz

Trust  (the  "Trust")  and  named  himself  and  defendant  David

Sprafkin trustees.   Plaintiff Griffin Stabler owns 32.7%  of the

                               -2-

shares, and his son, David Stabler, owns the remaining 4.7%.

          On January  27, 1987,  Whitney Brothers,  the trustees,

and Griffin Stabler executed a written buy/sell agreement.  Under

the  agreement, Whitney  Brothers  would buy  the Trust's  shares

within ninety days  of the  death of Bernard  Barenholtz and  buy

Griffin Stabler's  shares within ninety days  of Stabler's death.

To  determine  the  purchase price,  the  parties  would plug  an

agreed-upon appraisal  into a  formula to determine  the purchase

price.   If  the parties could  not agree  on an  appraisal, they

would each get their own and  plug the average into the  formula.

The contract also provided for payment by a promissory note, with

monthly installments  over ten years  at 10% interest  per annum.

The  agreement did not mention whether prepayment of the note was

permissible.

          On   February  3,   1987,  Bernard   Barenholtz's  (and

defendants')  attorney, Samuel  M. Sprafkin  wrote a  letter (the

"February 3  letter") advising  Mr. Barenholtz that:   (1)  David

Stabler, as  a shareholder, should  consent to the  contract; (2)

the promissory note should be prepayable without penalty; and (3)

Article 4 of the contract should have an additional provision not

relevant to  this appeal.   Plaintiffs contend, and  the district

court found,  that after Bernard Barenholtz  received the letter,

the   parties  orally   agreed  to   the  prepayment   provision.

Barenholtz  then placed  the letter  in a  file with  the written

contract and David  Stabler signed  an addendum  to the  contract

pursuant to Sprafkin's first suggestion.

                               -3-

          When Bernard  Barenholtz died,  on August 5,  1989, his

daughter,   defendant  Joan   Barenholtz,  assumed   his  trustee

position.  Whitney Bros. Co. v. Sprafkin, No. 90-054-S, at  4 (D.
                                        

N.H.  filed Sept. 30, 1992).  A few days later, plaintiff Stabler

and defendant  Sprafkin discussed the  contract's required  stock

sale.  Id.  One of the parties asked E.F. Greene to update a past
          

appraisal of Whitney Brothers.1  Id.   Sprafkin rejected Greene's
                                    

appraisal; Whitney  Brothers  accepted  it.    Id.    Relying  on
                                                  

Greene's  appraisal, Whitney  Brothers tendered  to defendants  a

prepayable  promissory note  for  $1,178,000 for  the stock  (the

"September 1989 Tender").2  Id. at 4-5.
                               

          Instead of responding immediately, defendants secured a

significantly  higher appraisal from Alfred  Schimmel.  Id.  They
                                                           

then  rejected   Whitney  Brothers'  tender  by  letter,  without

mentioning the note's prepayment clause.  When Stabler learned of

defendants' appraisal, he rejected it as too high.

          Ultimately, plaintiffs sued  to compel the transfer  of

the stock.   Ten months later,  on December 13, 1990,  as part of

their cross-motion  for summary judgment,  plaintiffs offered  to

tender  either $1,349,3433  immediately  or, if  the court  found

that the  agreement did not  permit prepayment, that  amount over

                    

1  The parties disagree over who requested the update.

2  Defendants contend  that Stabler made the tender  knowing that
they  did not accept Greene's appraisal and planned to obtain one
of their own.

3  This was  the price calculated under the  contract by plugging
the average of the two appraisals into the formula.

                               -4-

ten  years   at  10%  interest  (the   "December  1990  Tender").

Defendants again rejected the tender.  They now contend that they

rejected it because:   (1) it omitted $145,000 worth  of interest

that  had accrued since November 3, 1989, 90 days after the death

of Bernard Barenholtz; and  (2) it was invalid because  the first

option  permitted   prepayment,  and   the   second  option   was

conditioned upon a court judgment that prepayment was prohibited.

          In response to the  cross-motions for summary judgment,

the  district court:  (1) ordered defendants to sell their stock;

(2) found that plaintiffs  were not entitled to prepay  the note;

and  (3) decided  to hold  a trial  on the  issue of  the stock's

price.   See Whitney Bros.  Co. v. Sprafkin,  No. 90-54-S (D.N.H.
                                           

filed June 5, 1991).

          After the trial, the court issued an order in which it:

(1) required  plaintiffs to  pay $1,349,343  for  the stock;  (2)

reconsidered  and reversed,  sua sponte,  its previous  order and
                                       

ruled that plaintiffs could  pay for the stock with  a prepayable

promissory  note; (3) ruled that interest on the note would begin

to accrue when  it was executed, and not before;  and (4) awarded

attorneys'  fees to  plaintiffs  based on  defendants' bad  faith

conduct  of the litigation.   See Whitney Bros.  Co. v. Sprafkin,
                                                                

No. 90-054-S  (D. N.H.  filed Sept.  30, 1992).   When  the court

entered judgment on the  order the following day, the  court also

awarded  prejudgment interest  pursuant to  N.H. Rev.  Stat. Ann.

  524:1-b,  "if appropriate."    Whitney Bros.  Co. v.  Sprafkin,
                                                                

No. 1:90-cv-0054-S (D.N.H. filed Oct. 1, 1992) (emphasis added).

                               -5-

          Defendants  appeal  on  only   two  issues:    (1)  the

prepayability of the note;  and (2) the date from  which interest

accrues.   In  addition, plaintiffs  request attorneys'  fees for

this appeal.

                            DISCUSSION
                                      

I.  PREPAYABILITY

          Article 4 of the buy/sell contract provides:

            The purchase  price .  . . shall  be paid
                                                     
            with a negotiable  promissory note  which
                                                     
            shall  provide  for  the payment  of  the
                               
            purchase price in 10 years  with interest
            at the rate  of 10% per annum,  principal
            and  interest  payable   in  120   equal,
            consecutive monthly payments.

(emphasis added).   The agreement nowhere  mentions prepayment of

the proposed promissory note.

          At  trial,  the  district  court  conditionally allowed

evidence of a subsequent  oral agreement permitting prepayment of

the note.  Ultimately,  the court admitted the  evidence, finding

that  it was not  precluded by the  parol evidence rule.   In the

same  ruling, the court found that the parties indeed entered the

alleged oral agreement.

          The court erred in  finding the asserted oral agreement

binding  on the  parties.   Article  5  of the  written  buy/sell

contract prohibits  the parties from orally  altering or amending

the written contract.4   Under  N.H. Rev. Stat.  Ann.    382-A:2-

                    

4  Article 5 provides:

            This agreement may be altered, amended or
            terminated by a writing signed by all  of
            the shareholders except David G. Stabler,

                               -6-

209(2),  "[a] signed  agreement  which  excludes modification  or

rescission  except  by  a  signed  writing  cannot  be  otherwise

modified or  rescinded. . . ."   While an  attempted modification

can constitute a waiver,  that waiver can be retracted  absent "a

material  change of position in  reliance on that  waiver."  N.H.

Rev.  Stat. Ann.    382-A:  2-209(4) and  (5).   Here, plaintiffs

allege  no  alteration  of  their  position   in  reliance  on  a

prepayment provision.   Thus, we  can find no  binding waiver  of

                    

            and the Corporation.

   Although the  Article does not  state in mandatory  terms that
alterations  must  be in  writing,  defendants  argue that  since
                 
agreements  may  always be  altered by  a  writing signed  by the
parties,  the Article  must have  been  intended to  exclude oral
modifications.   While we do not foreclose other purposes of this
clause, we agree that the purport  of the provision is to require
that alterations be in writing.

   In addition,  plaintiffs never countered  defendants' argument
that the Article precludes oral alterations and amendments to the
contract.   In response to this  argument, plaintiffs, apparently
characterizing the clause as  an integration clause, argued that:
(1) such a clause did not mandate a finding that the contract was
totally integrated; (2) the contract was not a total integration;
(3) the  February  3 letter  "contemplated  an  extra-contractual
understanding about  a  term of  the  agreement," rather  than  a
variation;  and   (4)  therefore,   since  the  court   found  an
independent  agreement,  the  court   could  find  the  note  was
prepayable.  This argument ignores defendants' assertion that the
clause prohibits oral alterations of the contract.

   At  oral  argument,  when  questioned  about the  prohibition,
plaintiffs' counsel simply argued that the oral agreement was not
a modification  because the contract did  not mention prepayment.
Counsel  did state  that  Article 5  "supposedly" precludes  oral
                                                
modification,   suggesting  a   possible  disagreement   on  that
interpretation.   However, since  defendants raised Article  5 at
the trial level, see Defendants' Objections to Plaintiffs' Cross-
                                                                 
Motion for Summary Judgment  at 11; Defendants' Post  Trial Brief
                                                                 
at 44-45,  and on appeal, Appellants' Brief  at 17-19, 21 n.7, we
                                           
construe plaintiffs' failure  to argue that the Article  does not
prohibit oral alteration as a concession that it does.

                               -7-

Article 5 by defendants.5  Plaintiffs  contend   that  since  the

written  contract says  nothing  about  prepayment, a  subsequent

agreement to  allow prepayment does not  constitute an alteration

or  amendment under  Article  5.   Rather,  they argue  that  the

agreement was  independent of the written  contract.  Apparently,

the district court agreed.  Although the court did not explicitly

address Article 5,  it did conclude  that a prepayment  provision

"does not,  by its  terms, vary  or contradict  the terms  of the

Agreement. . . ."   Whitney  Bros. Co.,  No. 90-054-S  (Sept. 30,
                                      

1992), at 13.6

          We  review this  determination  de novo  as it  centers
                                                 

around  the  interpretation  of   the  language  of  the  written

contract.  See  In Re SPM  Mfg. Corp., 984  F.2d 1305, 1311  (1st
                                     

Cir. 1993)  (de novo review of  bankruptcy court's interpretation
                    

of unambiguous  contract); Hermes Automation Technology,  Inc. v.
                                                              

Hyundai  Elec.  Ind.,   915  F.2d  739,   745  (1st  Cir.   1990)
                    

(interpretation  of  plain  language  of  release  agreement  was

question of law warranting de novo review).
                                  

          On review, we find that the district court erred in its

                    

5  We apply    2-209 by analogy.  Although  that section does not
apply  to the sale of securities,  the purpose behind the rule --
"to protect  against false allegations of  oral modifications" --
equally applies to these contracts.  See   2-209, comment 3.
                                        

6  This finding  reversed the district court's first  order which
found that "[t]he prepayment term is  inconsistent with the plain
meaning of the Agreement, which clearly provides for payment over
a  period of  years."   Whitney Bros. Co,,  No. 90-54-S  (June 5,
                                         
1991), at 16-17.

                               -8-

determination.7     The   written  buy/sell   contract  provision

regarding payment  expressly contemplates payment over  ten years

at 10% interest.  If plaintiffs prepay the  note, they will avoid

paying  the  10% interest  and  thereby deviate  from  an express

provision of the contract.  Moreover, 10% interest over ten years

amounts to a significant percentage of the contract price.  Since

prepayment  would  substantially  alter  the  parties'  financial

positions under  the contract, an agreement  to permit prepayment

constitutes an alteration under Article 5.  

          Furthermore, although the  New Hampshire Supreme  Court

has never  encountered this  precise issue, recent  holdings from

that court support our  conclusion.  In DeCato Brothers,  Inc. v.
                                                              

Westinghouse Credit  Corp., 529  A.2d 952,  956 (N.H. 1987),  the
                          

court  stated,   "generally,   absent  manifest   injustice,   an

instrument is payable  in full  according to its  tenor, and  the

maker  has no  right  to  prepay in  the  absence  of an  express

provision  providing for  prepayment."   Later,  in Patterson  v.
                                                             

Tirollo,  133  581  A.2d  74,  77  (N.H.  1990)  (quoting  Fuller
                                                                 

Enterprises v.  Manchester Sav.  Bank,  152 A.2d  179, 181  (N.H.
                                     

1959)),  the court  reaffirmed  that "the  law  is clear  in  New

Hampshire that  negotiable instruments  are 'payable at  the time

fixed therein,' and in the absence of an express provision that a

mortgagor  is entitled to prepay  his or her  note, the mortgagor

has no legal rightto pay the debt inadvance of the maturitydate."

                    

7   We  note that  our  analysis would  not change  under a  more
deferential  standard of review as we find that the court clearly
erred in this determination.

                               -9-

          Although these cases  involve actual promissory  notes,

rather  than  agreements to  make  promissory  notes, by  finding

prepayment  precluded  in the  absence  of  a specific  provision

authorizing it,  the New  Hampshire Supreme Court  demonstrated a

belief  that prepayment  significantly alters  the rights  of the

parties involved.

          Finally,   plaintiffs'    last-ditch   argument,   that

Sprafkin's February  3 letter  constitutes a  sufficient writing,

needs  little  deliberation.8    Sprafkin  wrote  the  letter  to

Barenholtz.  Thus, it cannot be construed, as plaintiffs propose,

as  a written  offer  which plaintiffs  were  entitled to  accept

orally.

          Because Article 5 of the contract precludes plaintiffs'

asserted oral agreement, the district court erred  in finding the

note prepayable.9

II.  INTEREST

          Defendants next assign  error to  the district  court's

                    

8    Plaintiffs  did  not  make  this  argument  in  response  to
defendants'  Article 5  argument.   They made  the argument  as a
response  to defendants'  invocation  of the  statute of  frauds.
However,  we address the issue  to alleviate any  doubts that the
argument  might   have  assisted  them  against   the  Article  5
prohibition.

9   Plaintiffs stress on appeal the district court's finding that
the parties formed the oral agreement after executing the written
                                           
contract,  and   they   have   not   challenged   this   finding.
Additionally, they  specifically argued  to this court  that "the
evidence Plaintiffs offered was to prove a subsequent agreement .
                                                     
.  ." (Plaintiffs-Appellees'  Brief at  29).   Thus, we  need not
address defendants' alternative arguments that the oral agreement
could not bind them  if it had been formed before  or at the time
of the written contract.

                               -10-

determination  that interest  will  not  accrue until  plaintiffs

execute the promissory note.   They offer two principal arguments

to support this proposition.

          First, defendants find their entitlement to prejudgment

interest in  N.H. Rev. Stat. Ann.    524:1-b (1992).   Under that

section, when a party  wins pecuniary damages, he is  entitled to

prejudgment  interest  on the  award.   Defendants argue  that by

finding  the  stock's purchase  price  to  be  that advocated  by

defendants, the court granted them pecuniary damages.  Defendants

were not awarded pecuniary  damages, however.  Rather, plaintiffs

were awarded  specific performance of  the contract at  the price

that the court found stipulated in their cross-motion for summary

judgment.   In its second  order, the district court reconsidered

its summary judgment ruling  and determined that since plaintiffs

offered to pay defendants' advocated price at the time, the court

should have  ordered the  sale at  that price.   Thus,  the court

granted  plaintiffs'  cross-motion for  summary  judgment  to the

extent that it sought to  compel defendants to sell the  stock at

defendants' price.   See Whitney Bros.  Co., No. 90-054-S  (Sept.
                                           

30,  1992), at 10-11.  Indeed, the court specifically referred to

plaintiffs  as "prevailing  parties."   Id.  at  19.10   Thus,   
                                           

524:1-b  provides no  basis for  awarding defendants  prejudgment

                    

10  In light of the court's conclusion that the appraisal used to
calculate defendants' advocated price lacked  factual foundation,
see Whitney Bros. Co., No. 90-054-S (Sept. 30,  1992), at 21, the
                     
court's  statement that  "the price of  the securities  . .  . is
$1,349,343"  does not convince us that the court believed that to
be the price contemplated by the contract.

                               -11-

interest.11

          Second,  defendants  argue  that  plaintiffs  owe  them

interest under the written  contract, beginning November 3, 1989,

90 days  after the death  of Bernard Barenholtz.   The theory  is

that  plaintiffs never made a valid tender within the required 90

days, and therefore defendants  deserve the interest that accrued

from that date.   See Lancaster Development Corp. v.  Kattar, 262
                                                            

A.2d  278, 280-81 (N.H. 1970) (where plaintiff was ready, willing

and able to perform, and  defendant made faulty tender, plaintiff

was  not responsible  for interest  accruing from  the contracted

date of  sale).  Specifically, defendants  claim that plaintiffs'

September  1989 tender  was invalid  because:   (1) the  note was

$170,000 less than the  defendants' advocated purchase price; and

(2) the note contained a prepayment provision.

          We  cannot conclude  that  defendants  are entitled  to

interest under the agreement based on  the September 1989 tender.

With respect  to the  purchase price, defendants  failed to  tell

plaintiffs their  requested  price within  the prescribed  ninety

days.  Moreover, the  district court specifically determined that

the appraisal on  which their price  was based was so  lacking in

                    

11  Defendants' assertion that the court's judgment which ordered
"prejudgment interest pursuant to  NH RSA 524:1-b, if appropriate
                                                                 
. . . " (emphasis  added) was  a judgment for  interest in  their
favor that  had to be appealed by plaintiff, lacks merit.  As the
court's  opinion did not indicate  a belief that  it was awarding
defendants  damages  by  granting  plaintiffs'  cross-motion  for
summary judgment, we cannot construe the court's reference to the
statute  as an award of  interest for defendants.   Moreover, the
award   specifically  ordered   prejudgment   interest  only   if
appropriate.   As  we explained  above,  such interest  would  be
inappropriate here.

                               -12-

factual  foundation that it should not have even been admitted at

trial.  That plaintiffs later  acquiesced to defendants' price in

order to  end  this  disturbing  litigation does  not  require  a

finding that they were  wrong to make their initial  offer at the

time they made it.

          Similarly, although we  found that plaintiffs  were not

entitled  to prepay  the  note, we  are  not convinced  that  the

prepayment provision  of the  September 1989 tender  rendered the

tender faulty  at the time  it was made.   The record  reveals no

evidence  that  defendants complained  of  the  prepayment clause

before June 29, 1990, nine months after  the tender.  They cannot

now claim  that the prepayment  provision in  the September  1989

tender stalled  the sale.   Cf.  Elliott v.  Dew, 212 S.E.2d  421
                                                

(S.C. 1975) (if defect in  tender not objected to when tender  is

made, cannot use defect to prevent performance of contract).

          Moreover,  defendants,   consistently  complained  that

Whitney  Brothers could not  afford the purchase.   (The district

court  later found that the evidence amply supported a finding to

the contrary).  Yet,  at the same time, defendants  demanded what

the district court found to be a trumped-up price.  This suggests

that  defendants were  attempting  to hamper  the  sale that  the

contract required.   Thus,  even assuming plaintiffs'  tender was

somehow  faulty, as defendants were not willing to perform at the

time,  they are  not  entitled  to  interest.    Cf.  Platsis  v.
                                                             

Diafokeris,  511 A.2d 535 (Md. App. 1986) (faulty tender does not
          

trigger accrual of  interest if clear that only  excessive amount

                               -13-

would be accepted).

          Finally, as  defendants were  not entitled  to interest

beginning  November 3, their refusal to  accept the December 1990

tender  because it failed to  include such interest precludes the

accrual  of interest from  that time.   In  addition, defendants'

parenthetical argument  that the December 1990  tender was faulty

because it was conditional  also fails.  When the  district court

determined  that prepayment  was  prohibited,  the tender  became

unconditional.    Yet,  defendants  still refused  to  accept  it

without interest running from November 3.  Again, defendants were

at  no time  willing  to perform.    Accordingly, we  affirm  the

district court's  decision that  interest should begin  to accrue

when the note is executed.

III.  ATTORNEYS' FEES

          As  defendants   won  their  appeal  with   respect  to

prepayment, plaintiffs  are not  entitled to attorneys'  fees for

that  issue.   In addition,  although defendants'  arguments with

respect to interest were  unconvincing, we do not find  that they

went  "against  the  overwhelming  weight  of  precedent,"   that

defendants  "could   set  forth  no  facts   to  support  [their]

position,"  or that  "there  simply was  no legitimate  basis for

pursuing an appeal."   See Kowalski v.  Gagne, 914 F.2d 299,  309
                                             

(1st  Cir. 1990).   Accordingly, we  deny plaintiffs'  motion for

attorneys' fees.

          Finally, plaintiffs request a finding that if we affirm

the district  court's judgment,  defendants may not  appeal their

                               -14-

motion  under Fed. R.  Civ. P. 59(e)  to alter the  judgment with

respect to fees.   Plaintiffs  cite no cases  that would  justify

such  a finding.   Thus,  we decline  to make  such a  finding or

otherwise consider the issue  of the award of attorneys'  fees by

the district court.

          Affirmed  in  part;  reversed  in  part.    Motion  for
                                                                 

attorneys' fees in this court denied.
                                    

                               -15-
