Anderson v. Ciba-Geigy Corporation

• Decision Date: 09 January 1974
• Docket Number: No. 73-1266.,73-1266.
• Citation: 490 F.2d 438
• Parties: Wendell O. ANDERSON et al., Appellants, v. CIBA-GEIGY CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

490 F.2d 438 (1974)

Wendell O. ANDERSON et al., Appellants, v. CIBA-GEIGY CORPORATION, Appellee.

No. 73-1266.

United States Court of Appeals, Eighth Circuit.

Submitted October 18, 1973.

Decided January 9, 1974.

Stephen F. Avery, Spencer, Iowa, for appellants.

David J. Blair, Sioux City, Iowa, for appellee.

Before LAY, BRIGHT and WEBSTER, Circuit Judges.

WEBSTER, Circuit Judge.

Plaintiff-appellant Wendell O. Anderson, his wife, his brother, and his brother's wife filed a petition in an Iowa district court seeking $10,228.00 consequential damages from the Ciba-Geigy Corporation after Preforan 15G, a granular preemergence weed control agent produced by Ciba-Geigy, failed in fact to control the growth of weeds on the Andersons' soybean farm.¹ Ciba-Geigy thereafter removed the action to the United States District Court for the Northern District of Iowa, as one over which that court had original jurisdiction under 28 U.S.C. § 1332.² It was undisputed that the federal court would apply Iowa law.

The Andersons invoked three theories of liability: strict products liability, express warranty, and implied warranty of merchantability. Ciba-Geigy asserted as an affirmative defense the release or settlement agreement which it had entered into with Wendell Anderson on September 10, 1971. By stipulation, the issue of the validity of this release was separately tried without a jury to the District Court, Honorable Edward J. McManus, Chief Judge. See Fed.R.Civ.P. 39(a), 42(b). Judge McManus upheld federal jurisdiction under 28 U.S.C. § 1332, decided that the release was both valid and binding, and ordered the damages action dismissed on its merits.

The Andersons appeal, asking this court to hold that the release was invalid because unsupported by consideration or, alternatively, because negotiated by parties mutually mistaken with respect to a material fact.³ We affirm the District Court's disposition of the case. In so doing, we first briefly restate the factual setting within which the release was executed.

In May, 1971, Wendell Anderson and his brother, Deane, who helped Wendell farm 480 acres of land in Iowa, shared the cost of 1450 pounds of Preforan 15G which they purchased from the Farmers Co-operative Association of Marathon, Iowa, and applied approximately 1150 or 1200 pounds of the herbicide to 100 acres of the farm. Wendell provided his own application of the product and did so according to the directions on the label. During the 1971 growing season, Wendell and Deane became aware of a weed control problem in their soybeans. Wendell contacted Mr. Lester (Lars) Petty, agricultural representative of the Farmers Co-operative Association, who advised Anderson that he would contact the Ciba-Geigy Corporation.

Soon thereafter, Petty visited the Anderson farm with a Mr. Waldo from the Ciba-Geigy Corporation, who acknowledged a weed control problem. On August 11, 1971, a Mr. Billy Lee Harrison of Ciba-Geigy brought a report form to the Anderson farm. Harrison refused to inspect the soybean crop, but orally informed Wendell Anderson that he might provide a substitute herbicide for the Preforan 15G. When Anderson said that he was not interested in another herbicide, Harrison advised him that a company official had said that this was the best that the corporation could offer. Anderson testified that Harrison had advised him that company officials had said there would be no money settlements. On the basis of this information, Harrison had Wendell Anderson complete the report form.

On August 27, 1971, Ciba-Geigy sent Anderson a written offer to settle his claim by providing an amount of liquid Preforan 3EC equal to the value of Preforan 15G previously furnished, plus a cash allowance for its application in 1972. Anderson consulted Petty, who informed him that the Farmers Co-operative had not yet successfully negotiated a money settlement with Ciba-Geigy. Petty recommended that Anderson sign the release and that he include a statement thereon to the effect that he was dissatisfied with the nature of the settlement. Anderson so completed the release form, adding that he was "not happy with this settlement," but misplaced it in his desk. Anderson later found the form in his desk and returned it, after having been assured once more by Mr. Petty that the company's proposal was the only settlement available. Ciba-Geigy thereafter performed its obligation under the settlement agreement.

For the 1971 growing season approximately 2700 complaints were made concerning the product Preforan 15G. While approximately 1800 of these were handled in a manner similar to the settlement offered to Anderson, about 300 resulted in negotiations for cash settlements. At the time of the trial, the corporation had recieved no response to its offer to settle approximately 500 of the complaints.

I. Consideration

Appellants construe the release as a promise to perform a pre-existing legal duty and, therefore, as invalid for want of valuable consideration. They argue that upon their initial purchase of Preforan 15G they were promised weed control and that Ciba-Geigy's subsequent agreement to give them another herbicide plus an allowance for its application placed the corporation under no additional legal obligation.⁴ We disagree.

Under applicable principles of common law,⁵ it is well settled that "an agreement which compromises a bona fide dispute concerning duties and obligations under a subsisting contract, is supported by valid consideration and is enforceable." Pittsburg Testing Laboratory v. Farnsworth and Chambers Co., 251 F.2d 77, 79 (10th Cir. 1958). See also White v. Flood, 258 Iowa 402, 138 N.W.2d 863 (1965); Blunk v. Kuyper, 241 Iowa 1138, 44 N.W.2d 651 (1950); Kellogg v. Iowa State Traveling Men's Ass'n., 239 Iowa 196, 29 N.W.2d 559 (1947); Messer v. Washington National Insurance Co., 233 Iowa 1372, 11 N.W.2d 727 (1943); Munn v. Town of Drakesville, 226 Iowa 1040, 285 N.W. 644 (1939); Vande Stouwe v. Bankers' Life Co., 218 Iowa 1182, 254 N.W. 790 (1934); Love v. City of Des Moines, 210 Iowa 90, 230 N.W. 373 (1930); Sheley v. Engle, 204 Iowa 1283, 213 N.W. 617 (1927); Partello v. White, 197 Iowa 24, 196 N.W. 719 (1924).

In this case, the parties disputed Ciba-Geigy's liability for consequential damages under the warranty which accompanied the initial purchase of the Preforan 15G.⁶ Anderson repeatedly informed Ciba-Geigy representatives that he was dissatisfied with the herbicide's performance and that he wished to negotiate a cash settlement therefor. At no time prior to the execution of the release, did Ciba-Geigy admit any liability. In its letter of August 27, 1971, Ciba-Geigy offered the product replacement and cash allowance only as "goodwill consideration"; the release form which the corporation provided and which Anderson signed expressly stated that it was "a compromise of a disputed claim and that the making of this settlement was not an admission of liability on the part of CIBA Corporation or its successor, CIBA-GEIGY Corporation."

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