Allied Steel and Conveyors, Inc. v. Ford Motor Company

• Decision Date: 11 May 1960
• Docket Number: No. 13854.,13854.
• Parties: ALLIED STEEL AND CONVEYORS, INC., Appellant, v. FORD MOTOR COMPANY, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

277 F.2d 907 (1960)

ALLIED STEEL AND CONVEYORS, INC., Appellant, v. FORD MOTOR COMPANY, Appellee.

No. 13854.

United States Court of Appeals Sixth Circuit.

May 11, 1960.

COPYRIGHT MATERIAL OMITTED

George H. Cary, Detroit, Mich., George H. Cary of Cary, BeGole & Martin, Detroit, Mich., on the brief, for appellant.

Richard A. Harvey, Detroit, Mich., Richard A. Harvey and G. Cameron Buchanan, of Alexander, Cholette, Buchanan, Perkins & Conklin, Detroit, Mich., on brief, for appellee.

Before MILLER and CECIL, Circuit Judges, and WILLIAM E. MILLER, District Judge.

WILLIAM E. MILLER, District Judge.

The question presented on this appeal is whether a provision in certain written agreements between appellant and appellee purporting to indemnify appellee against damages resulting from its own acts of negligence was binding upon the parties at the time the damages were sustained.¹

On August 19, 1955, Ford ordered from Allied numerous items of machinery and equipment. The consideration to be paid was $71,325.00. Under the terms of the order, Allied was to install the machinery and equipment on Ford's premises for an additional consideration of $6,900.00, with a provision that should Ford elect to install the machinery with its own labor, Allied would furnish a supervisor to direct the installation on a per diem basis. The order further provided that "the signing and returning to Buyer by Seller of the Acknowledgment Copy shall constitute acceptance by Seller of this Purchase Order and of all of its terms and conditions." The order was submitted on printed forms regularly used by Ford, and was designated "Purchase Order No. 15145." Item 15 of the printed form provided that if Allied was required to perform work on Ford's premises, Allied would be responsible for all damages or injuries occurring as a result of the fault or negligence of its own employees, including any damages or injuries to Ford's employees and property. Attached to the Purchase Order and made a part thereof was a printed form designated Form 3618, which included an indemnity provision broader in scope than Item 15 of the purchase order, requiring the Seller to assume full responsibility not only for the fault or negligence of its own employees but also for the fault or negligence of Ford's employees, arising out of or in connection with Allied's work. This provision in Form 3618, however, was marked "VOID." On December 16, 1955, Ford submitted to Allied its Amendment No. 1 to the purchase order, deleting the item of $6,900.00 for the cost of installation by Allied and providing that the installation would be done by Ford. The original Purchase Order and Amendment No. 1 were both duly accepted by Allied and the agreements were performed.

Subsequently, on July 26, 1956, Ford submitted to Allied Amendment No. 2 to Purchase Order 15145, and it is this Amendment which is the focal point of the present controversy. By the amendment Ford proposed to purchase additional machinery to be installed on Ford's premises by Allied, at a total cost of $173,700.00. Amendment No. 2, as did Amendment No. 1, provided:

"This purchase order agreement is not binding until accepted. Acceptance should be executed on acknowledgment copy which should be returned to buyer."

The copy of Ford's Form 3618 attached to Amendment No. 2 was identical to the the printed Form 3618 which was attached to the original Purchase Order, but the broad indemnity provision in Form 3618, making Allied liable for the negligent acts of both its own and Ford's employees, was not marked "VOID." The record makes it clear that the reason for not voiding the broad indemnity provision of Form 3618 attached to Amendment No. 2 was that the installation work on Ford's premises was to be performed by Allied's employees, whereas under the original purchase order as amended by Amendment No. 1 the installation work was to be done by Ford's own employees. Another pertinent provision of Form 3618 was:

"Such of the terms and conditions of Seller\'s Purchase Order as are inconsistent with the provisions hereinabove set forth are hereby superseded."

The acknowledgment copy of Amendment No. 2 was duly executed by Allied on or about November 10, 1956, and was received by Ford on November 12, 1956. At that time Allied had already begun installation of the machinery on the Ford premises, although the exact date upon which the installation was commenced is not shown in the record. On September 5, 1956, in the course of the installation, one Hankins, an employee of Allied, sustained personal injuries as a result of the negligence of Ford's employees. Hankins later filed an action against Ford in the District Court for the Eastern District of Michigan, Southern Division. After the complaint was filed, Ford added Allied, Hankins' employer, as a third-party defendant, relying upon the indemnity provisions of Form 3618, and demanding judgment against Allied "* * * for all sums that may be adjudged against the defendant, Ford Motor Company, in favor of plaintiff, John T. Hankins." The trial before a jury resulted in verdicts for $12,500.00 in favor of Hankins and against Ford, and in favor of Ford and against Allied for the same amount. This appeal by Allied followed denial by the District Court of its motion for judgment notwithstanding the verdict of the jury and entry of judgment against it in favor of Ford upon the third-party complaint.

It was Allied's insistence at the trial, as it is here, that the agreement evidenced by Amendment No. 2 which was signed and returned to Ford on November 10, 1956, was not in effect on September 5, 1956, when Hankins was injured; and further, that, in any event, it was the intention of the parties to void the broad indemnity provision in Form 3618 attached to Amendment No. 2, thus leaving in effect Item 15 contained in the original Purchase Order which made Allied liable only for its own negligence. Although the agreements contained in Amendment No. 2 were fully performed by the parties and Allied received full payment for its goods and services, the point made by Allied is that it did not become bound by the provisions of such amendment until November 1956, when it actually signed and returned to Ford the acknowledgment copy of Amendment No. 2. It argues that it was under no contractual obligation on September 5, 1956, the date of Hankins' injury, to indemnify Ford against Ford's negligent acts.

Allied first says that the contractual provisions evidenced by Amendment No. 2 were not in effect at the time of the Hankins injury because it had not been accepted at that time by Allied in the formal manner expressly required by the amendment itself. It argues that a binding acceptance of the amendment could be effected only by Allied's execution of the acknowledgment copy of the amendment and its return to Ford.

With this argument we cannot agree. It is true that an offeror may prescribe the manner in which acceptance of his offer shall be indicated by the offeree, and an acceptance of the offer in the manner prescribed will bind the offeror. And it has been held that if the offeror prescribes an exclusive manner of acceptance, an attempt on the part of the offeree to accept the offer in a different manner does not bind the offeror in the absence of a meeting of the minds on the altered type of acceptance. Venters v. Stewart, Ky.App., 261 S.W.2d 444, 446; Shortridge v. Ghio, Mo.App., 253 S.W.2d 838, 845. On the other hand, if an offeror merely suggests a permitted method of acceptance, other methods of acceptance are not precluded. Restatement, Contracts, Sec. 61; Williston on Contracts, Third Ed. Secs. 70, 76. Moreover, it is equally well settled that if the offer requests a return promise and the offeree without making the promise actually does or tenders what he was requested to promise to do, there is a contract if such performance is completed or tendered within the time allowable for accepting by making a promise. In such a case a tender operates as a promise to render complete performance. Restatement, Contracts, Sec. 63; Williston on Contracts, Third Ed. Sec. 75.

Applying these principles to the case at bar, we reach the conclusion, first, that execution and return of the acknowledgment copy of Amendment No. 2 was merely a suggested method of acceptance and did not preclude acceptance by some other method; and, second, that the offer was accepted and a binding contract effected when Allied, with Ford's knowledge, consent and acquiescence, undertook performance of the work called for by the amendment. The only significant provision, as we view the amendment, was that it would not be binding until it was accepted by Allied. This provision was obviously for the protection of Ford, Albright v. Stegeman Motorcar Co., 168 Wis. 557, 170 N.W. 951, 952, 19 A.L.R. 463, and its import was that Ford would not be bound by the amendment unless Allied agreed to all of the conditions specified therein. The provision for execution and return of the acknowledgment copy, as we construe the language used, was not to set forth an exclusive method of acceptance but was merely to provide a simple and convenient method by which the assent of Allied to the contractual provisions of the amendment could be indicated. The primary object of Ford was to have the work performed by Allied upon the terms prescribed in the amendment, and the mere signing and return of an acknowledgment copy of the amendment before actually undertaking the work itself cannot be regarded as an essential condition to completion of a binding contract.

It is well settled that acceptance of an offer by part performance in accordance with the terms of the offer is sufficient to complete the contract. An interesting discussion of the effect of part performance is found in the opinion of the Court of Appeals for the Eighth Circuit in Durasteel Co. v. Great Lakes Steel Corp., 205 F.2d 438. After citing numerous authorities from...