Interstate Industries, Inc. v. Barclay Industries, Inc.

• Decision Date: 24 August 1976
• Docket Number: No. 75-2081,75-2081
• Citation: 540 F.2d 868
• Parties: 20 UCC Rep.Serv. 280 INTERSTATE INDUSTRIES, INC., Plaintiff-Appellee, v. BARCLAY INDUSTRIES, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 868

540 F.2d 868

20 UCC Rep.Serv. 280

INTERSTATE INDUSTRIES, INC., Plaintiff-Appellee, v. BARCLAY INDUSTRIES, INC., Defendant-Appellant.

No. 75-2081.

United States Court of Appeals Seventh Circuit.

Argued June 1, 1976.

Decided Aug. 24, 1976.

Stephen W. Terry, Jr., Indianapolis, Ind., for defendant-appellant.

Samuel S. Thompson, Elkhart, Ind., for plaintiff-appellee.

Before PELL, SPRECHER and BAUER, Circuit Judges.

SPRECHER, Circuit Judge.

The sole question presented by this interlocutory appeal is whether the district court had personal jurisdiction over the defendant.

I

This diversity action was commenced by Interstate Industries, Inc. (Interstate), plaintiff-appellee, to recover damages from Barclay Industries, Inc. (Barclay), defendant-appellant, for breach of an alleged contract.

The pleadings and affidavits reveal that Interstate is an Illinois corporation whose principal place of business is located in Illinois. Interstate is admitted to do business in Indiana and has a facility in Michigan City, Indiana. Barclay is a Delaware corporation with its principal place of business and manufacturing plant in Lodi, New Jersey. Barclay is not admitted to do business, nor does it have property, offices, warehouses, employees or agents in Indiana. In addition, Barclay does not advertise, maintain a bank account, or telephone in Indiana.

Over a five year period Interstate was involved in numerous business transactions with Barclay in which goods manufactured by Barclay were delivered in Interstate's facility in Michigan City, Indiana. On August 23, 1973, Barclay sent a letter from its offices in Lodi, New Jersey advising Interstate that it would be able to manufacture fiberglass panels in accordance with certain specified standards. The letter included the prices Barclay would charge for manufacturing the panels and expressly stated that the "price quotation is based on orders of 75,000 sq. ft. or more (truckload quantities) freight prepaid. Order less than 75,000 sq. ft. add $.01/sq. ft., F.O.B. Lodi." In November, Interstate mailed two purchase orders to Barclay's New Jersey office with "F.O.B. Delvd." notations in the upper right hand corners. On January 16, 1974, Barclay sent a letter from its New Jersey office informing Interstate that it would be unable to provide the panels requested in the purchase orders.

In April 1975, Interstate filed a complaint against Barclay for breach of contract in the United States District Court for the Northern District of Indiana basing subject matter jurisdiction upon diversity of citizenship. Process was served on Barclay by certified mail at Lodi, New Jersey.

Barclay filed a motion to dismiss the complaint or in the alternative to quash the return of service on the ground that the court lacked personal jurisdiction over Barclay. On August 15, 1975, the motion was denied. Barclay then filed a motion requesting the district court to reconsider its August order or to grant Barclay permission to take an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). ¹ On October 3, 1975, the district court denied Barclay's motion to reconsider the August order but granted it permission to file an interlocutory appeal. Shortly thereafter, by order of this court, Barclay was permitted to appeal the October order of the district court.

II

We shall first review the order and memorandum of August 15, 1975 denying Barclay's motion to dismiss or in the alternative quash service of the summons. The district court utilized Indiana Trial Rule 4.4 to determine whether it had personal jurisdiction over Barclay. Trial Rule 4.4, in pertinent part, provides:

(A) Acts serving as a basis for jurisdiction. Any person or organization that is a nonresident of this state, a resident of this state who has left the state, or a person whose residence is unknown, submits to the jurisdiction of the courts of this state as to any action arising from the following acts committed by him or his agent:

(1) doing any business in this state;

(4) having supplied or contracted to supply services rendered or to be rendered or goods or materials furnished or to be furnished in this state.

After reviewing the pleadings and affidavits, the district court found that Interstate's complaint alleged the existence of a contract "to supply . . . goods or materials to be furnished . . ." in Indiana. Thus, the court concluded that it had personal jurisdiction over Barclay pursuant to Trial Rule 4.4(A)(1).

Furthermore, the court reasoned that since Barclay had sufficient minimum contacts with Indiana, exercising personal jurisdiction would not violate the due process clause of the Fourteenth Amendment. In response to Barclay's motion to reconsider, the district court in October 1975 found that a "destination" contract existed to supply goods or materials to be furnished in Indiana. The court reaffirmed its earlier decision regarding Barclay's "minimum contacts" with Indiana. Interstate urges us to affirm the decisions of the district court. Moreover, it contends that Barclay was doing business within Indiana thereby bringing it within the purview of Trial Rule 4.4(A)(1).

In order to decide whether the district court had personal jurisdiction over the defendant, we must consider whether the correspondence between the parties constituted an enforceable contract to deliver goods in Indiana.

According to Section 2-204 of the Uniform Commercial Code:

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy. (Citations omitted, emphasis added.) ²

To form a contract then, it is necessary to show agreement or a meeting of the minds. Restatement of Contracts § 20 (1932), in part provides:

A manifestation of mutual assent by the parties to an informal contract is essential to its formation and the acts by which such assent is manifested must be done with the intent to do those acts; . . .

As the Illinois Appellate Court pointed out in Euclid Engineering Corp. v. Illinois Power Co., 79 Ill.App.2d 145, 223 N.E.2d 409, 413 (1967):

The law is well settled that in order for a contract to come into being, there must be a meeting of minds of the parties to the contract. . . . We believe the rule to be well stated in I.L.P., Vol. 12, Contracts, § 31, as follows:

"One of the essential elements for the formation of a contract, other than a contract implied in law or quasi contract, is a manifestation of assent by the parties to the terms thereof. It is essential that both parties assent to the same thing in the same sense and that their minds meet on the essential terms and conditions."

See 1 Williston Sales § 7-2 (4th ed. 1973).

The first step toward mutual assent in the formation of a contract is an offer by one of the parties. As the Restatement of Contracts § 22 (1932) states:

The manifestation of mutual assent almost invariably takes the form of an offer or proposal by one party accepted by the other party or parties.

An offer is defined as "a promise which is in its terms conditional upon an act, forbearance or return promise being given in exchange for the promise or its performance." Restatement of Contracts § 24 (1932).

In the instant case the district court characterized Barclay's August letter which informed Interstate of the cost of manufacturing the fiberglass panels as an offer. ³ Because the Uniform Commercial Code provides no guidelines as to when a communication will constitute an offer, we must look to case law and other authorities for guidance. Specifically, we must decide whether the price quotation constituted an offer or an invitation to make an offer.

As Judge Sparks indicated in R. E. Crummer & Co. v. Nuveen, 147 F.2d 3, 5 (7th Cir. 1945), citing 12 Am.Jur. Contracts §§ 28, 29 (1938), the distinction between when a price quotation constitutes an offer rather than an invitation to make an offer is critical:

. . . A general offer must be distinguished from a general invitation to make an offer. . . . A mere quotation of price must be distinguished from an offer. From the nature of the subject, the question whether certain acts or conduct constitute a definite proposal upon which a binding contract may be predicated without any further action on the part of the person from whom it proceeds or a mere preliminary step which is not susceptible, without further action by such party, of being converted into a binding contract depends upon the nature of the particular acts or conduct in question and the circumstances attending the transaction. It is impossible to formulate a general principle or criterion for its determination. Accordingly, whether a communication naming a price is a quotation or an offer depends upon the intention of the owner as it is manifested by the facts and circumstances of each particular case. . . .

After careful consideration of an oral price quotation, made by a subcontractor to a contractor for the purpose of making a bid, the court in Thos. J. Sheehan Co. v. Crane Co., 418 F.2d 642, 644-646 (8th Cir. 1969), observed:

In order to hold that the parties entered into a contract to buy and sell at the (quoted) prices, there must be evidence of an offer by . . . (the supplier) inviting an acceptance at those prices. Such an offer must have manifested a present intention of a promise to sell to . . . (the subcontractor) at the prices indicated. We think it clear that the . . . (supplier's) oral quotation . . . manifested only a future intention to sell and thereby its quotation constituted only an invitation to . . . (the...