Associated Milk Producers, Inc. v. Meadow Gold Dairies, Inc.

• Decision Date: 17 June 1994
• Docket Number: No. 93-1350,93-1350
• Citation: 27 F.3d 268
• Parties: 24 UCC Rep.Serv.2d 825 ASSOCIATED MILK PRODUCERS, INC., Plaintiff-Appellant, v. MEADOW GOLD DAIRIES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 268

27 F.3d 268

24 UCC Rep.Serv.2d 825

ASSOCIATED MILK PRODUCERS, INC., Plaintiff-Appellant, v. MEADOW GOLD DAIRIES, INC., Defendant-Appellee.

No. 93-1350.

United States Court of Appeals Seventh Circuit.

Argued Sept. 23, 1993.

Decided June 17, 1994.

John A. St. Peter (argued), Paul W. Rosenfeldt, Edgarton, St. Peter, Petak, Massey & Bullon, Fond du Lac, WI, for plaintiff-appellant.

Thomas L. Shriner, Jr., James T. McKeown (argued), Foley & Lardner, Milwaukee, WI, for defendant-appellee.

Before BAUER, CUDAHY and ROVNER, Circuit Judges.

CUDAHY, Circuit Judge.

This appeal requires us to determine whether the district court erred in granting summary judgment in favor of a dairy in a contract dispute between the dairy and its milk supplier. For the reasons stated below, we affirm.

I.

The dispute arose from Meadow Gold Dairies' efforts to secure raw milk for its milk processing plant from Associated Milk Producers, Inc. (AMPI). Meadow Gold is a Delaware corporation with its principal office in Champaign, Illinois. AMPI is a cooperative association incorporated in Kansas, which maintains a regional office in Wisconsin. AMPI also belongs to a dairy marketing cooperative known as the Southern Illinois Super Pool, which sets a price for milk sold by its member cooperatives. The Super Pool price includes both the federal minimum "blend price" established under the Southern Illinois-Eastern Missouri Federal Milk Marketing Order and an additional "over order" surcharge set jointly by Super Pool members. The surcharge is distributed to Super Pool members based on transportation costs and other factors, in such a way that raw milk customers pay the same Super Pool price regardless of which Super Pool member cooperative actually supplies the milk.

Prior to October, 1989, Meadow Gold paid the Super Pool price for all milk shipped by AMPI except that shipped from AMPI's Platteville, Wisconsin facility. For milk shipped from Platteville, Meadow Gold paid the Super Pool price and then was invoiced or credited for the difference between AMPI's costs and the Super Pool price. AMPI billed or credited Meadow Gold for this differential amount through an "equalization" account. Under this arrangement, Meadow Gold also leased the Platteville facility from AMPI and placed two of its employees in the facility to operate it. AMPI gave Meadow Gold credit for these lease and labor costs through the equalization account, but charged Meadow Gold a marketing fee and for various costs of procuring milk. As a result of the "equalization" charge, in 1989, Meadow Gold paid several hundred thousand dollars more for milk from Platteville than it would have paid had AMPI charged only the Super Pool price.

In the summer of 1989, Meadow Gold began to negotiate with AMPI regarding the price of raw milk shipped from Platteville. On September 11, 1989, Meadow Gold informed AMPI, orally and in writing, that, beginning October 1, 1989, Meadow Gold would no longer pay more than the Super Pool price. On September 19, AMPI responded in writing to Meadow Gold's letter of September 11. AMPI's letter notified Meadow Gold of new Super Pool price levels, adding that it would continue billing Meadow Gold to cover production costs that AMPI incurred which were not covered by the new Super Pool charge (i.e., the equalization amount). ¹ The September 19 letter also indicated that AMPI was "continuing to work with other participants in the super pool to review and alter the methods by which pool income is generated and dispersed [sic]." Br.Aplt., App. at 21, p 2. On September 29, Meadow Gold reiterated that it would only pay the Super Pool price and at the same time canceled its Platteville lease and production responsibilities. ² AMPI did not respond to Meadow Gold's September 29 letter but did assume responsibility for the lease, for operations in Platteville and for shipping milk from Platteville to Champaign. AMPI also discontinued the equalization account, though it claims that it recorded costs and intended to bill Meadow Gold for costs in excess of the Super Pool charge (i.e., the same costs that had been captured in the equalization account). R. 34: Vanthournot Dep. (Nov. 23, 1992), at 70-75. Through October and November of 1989, AMPI never told Meadow Gold of any intention to charge more than the Super Pool amount. R.35: Vanthournot Dep. (Aug. 18, 1992), at 130-33.

In December, 1989, AMPI invoiced Meadow Gold for the period beginning in October, 1989, including both the Super Pool price and the former "equalization" costs associated with running Platteville. The costs in excess of the Super Pool price totaled $547,684.22 for the months in dispute. Meadow Gold reiterated its refusal to pay costs in excess of the Super Pool amount. R.34: Vanthournot Dep. (Nov. 23, 1992), at 100. When AMPI refused to sell Platteville milk at the Super Pool price, Meadow Gold switched suppliers for a time in order to obtain the necessary raw milk at the Super Pool price. R.28: Purdy St., pp 5-6. AMPI thereafter continued to ship Meadow Gold two or three truckloads of raw milk each day from Platteville at the Super Pool price. R.35: Vanthournot Dep. (Aug. 18, 1992), at 102-03. AMPI filed suit in August, 1992, to recover the $547,684.22.

The district court granted summary judgment in favor of Meadow Gold, holding primarily that, in delivering milk during the relevant months, AMPI accepted the price terms stated in Meadow Gold's September 29 letter. AMPI moved to vacate or for reconsideration of the judgment, motions the district court denied. Judgment for Meadow Gold was entered on February 3, 1993.

II.

Summary judgment is appropriate if the affidavits and materials on file with the court show that there is no genuine issue of material fact, such that the movant is entitled to judgment as a matter of law. Howland v. Kilquist, 833 F.2d 639, 642 (7th Cir.1987). "In reviewing a grant of summary judgment, all reasonable inferences from the evidence presented must be drawn in favor of the opposing party." Id. (citing Matsushita Electric Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986)).

The primary question before us is: What price did Meadow Gold agree to pay AMPI for the milk shipped from AMPI's Platteville facility to Meadow Gold's plant in Champaign during October, November and December of 1989? Did AMPI and Meadow Gold continue to carry on under their accustomed arrangement or did they have a new deal? AMPI requests that we remand this case for trial, arguing that neither the parties' writings nor their conduct supports a new contract and that, even if a contract were shown, it would not follow the terms of Meadow Gold's September 29 letter. Meadow Gold contends that the September 29 letter was a counteroffer which AMPI accepted by its subsequent conduct. Neither party argues that it is bound by the previous arrangement.

A. Whether Writings Established a New Contract

Writings between parties to a transaction may not establish a contract when they evidence fundamental differences between the positions of the parties. Koehring Co. v. Glowacki, 77 Wis.2d 497, 253 N.W.2d 64, 67-68 (1977). In particular, a disagreement over price may show that the parties failed to reach an agreement. Id.; Goebel v. National Exchangors, Inc., 88 Wis.2d 596, 277 N.W.2d 755, 765 (1979). Even if the parties' writings do not constitute a contract, however, the parties may nonetheless be found to have established a contract through their actions. Wis.Stat. Sec. 402.204(1); Quaker State Mushroom Co. v. Dominick's Finer Foods, Inc., 635 F.Supp. 1281, 1285 (N.D.Ill.1986) ("Sellers usually do not ship and buyers do not receive goods unless they think they have struck a deal."); see also Wis.Stat. Sec. 402.206 (offer can be accepted by prompt and current shipment or "in any manner and by any medium reasonable in the circumstances"); Fisher v. Elmore, 802 F.2d 771, 773 n. 2 (4th Cir.1986) (same). Thus, to determine whether a new contract had been formed, we must look both to the parties' writings and to their actions.

Here, both parties agree that their writings alone did not form a contract and we agree. Meadow Gold's September 11 letter informed AMPI that Meadow Gold would no longer pay more than the Super Pool price for AMPI's milk. AMPI responded with a letter informing Meadow Gold that it would continue to bill the dairy in excess of the Super Pool price. Meadow Gold's September 29 letter reiterated the dairy's intention to pay only the Super Pool price, adding that it would also cease to rent or operate the Platteville facility. In short, while each writing indicated on its face that price was an essential term of the arrangement, the writings certainly did not agree on price. ³ The parties were in basic disagreement, and no contract can be found based on their writings alone.

B. Sufficiency of Intent to Make a New Contract

But how about conduct considered in conjunction with the writings? Under Wisconsin law, if the parties intend a contract, their conduct may create such an agreement, even if certain terms are left open or the moment a contract takes effect is unclear. Wis.Stat. Sec. 402.204; see also Wis.Stat. Sec. 402.206(1)(b) (offer to purchase may be accepted either by a prompt promise to ship goods or by the prompt shipment of conforming or nonconforming goods); Ginsu Prods., Inc. v. Dart Industries, Inc., 786 F.2d 260, 265 (7th Cir.1986).

The district court found that the parties' conduct evidenced their intention to contract. Meadow Gold's letters requested a change in the existing milk supply arrangement. The September 29 letter sought an end to equalization billing and expressed Meadow Gold's intention to pay only the Super Pool price. That letter also confirmed the parties' oral agreement that AMPI take responsibility for running the Platteville facility. In response, AMPI shipped the milk and took responsibility for running...