Blue Valley Creamery Co. v. Consolidated Products Co.

• Decision Date: 24 January 1936
• Docket Number: No. 10348.,10348.
• Citation: 81 F.2d 182
• Parties: BLUE VALLEY CREAMERY CO. v. CONSOLIDATED PRODUCTS CO.
• Court: U.S. Court of Appeals — Eighth Circuit

81 F.2d 182 (1936)

BLUE VALLEY CREAMERY CO. v. CONSOLIDATED PRODUCTS CO.^*

No. 10348.

Circuit Court of Appeals, Eighth Circuit.

January 24, 1936.

Ben Phillip, of St. Joseph, Mo. (Culver, Phillip, Kaufmann & Smith, of St. Joseph, Mo., on the brief), for appellant.

John T. Chadwell, of Chicago, Ill. (Russell Greenacre, of Chicago, Ill., and Charles H. Mayer and Floyd M. Sprague, both of St. Joseph, Mo., on the brief), for appellee.

Before GARDNER, WOODROUGH, and VAN VALKENBURGH, Circuit Judges.

GARDNER, Circuit Judge.

This is an action at law brought by appellant to recover the contract price of buttermilk sold and delivered by it to appellee. On written stipulation of the parties a jury was waived and the action was tried to the court. We shall refer to the parties as they appeared below.

At the close of plaintiff's case, the court sustained a motion for judgment in favor of defendant on the ground that the contract sued upon could not be enforced because within the Missouri statute of frauds, and from the judgment entered dismissing plaintiff's action this appeal has been perfected. In reviewing the action of the lower court we shall consider plaintiff's evidence as true, and shall give effect to such legitimate inferences as may be drawn therefrom in favor of plaintiff. Smith v. Russell (C.C.A.8) 76 F.(2d) 91. So considered, the evidence may fairly be said to establish the following facts:

On August 19, 1927, plaintiff and defendant entered into a written contract by which defendant agreed to buy the entire output of raw buttermilk produced in certain creameries of plaintiff for a period of five years from March 31, 1928. Defendant agreed to pay 23 cents per hundred for the buttermilk; invoices were to be rendered for all buttermilk sold as soon after the first day of each month as possible, and defendant agreed to pay not later than the 15th of the month for all buttermilk received during the preceding month. The contract provided that in the event plaintiff should dispose of any of its plants covered by the agreement, "that either party will have the option of cancelling this agreement to the extent that it pertains to the creamery or creameries sold."

A second written contract was made by the parties, by which plaintiff agreed to sell and defendant agreed to purchase all buttermilk produced at plaintiff's creamery at Parsons, Kan., at the same price basis as the first contract, for a period of ten years. An oral agreement was entered into in 1929 or 1930, to the effect that the output of plaintiff's Kansas City plant should be included in the purchases of defendant from plaintiff.

In the fall of 1930, the market price of buttermilk declined, and defendant attempted to secure a reduction from the contract price, and on December 12, 1930, wrote plaintiff as follows: "This is to confirm our conversation with you yesterday in which we outlined the difficulties with the buttermilk business and our desire that your people allow us a price reduction of 5¢ per hundred for the year 1931 and we, in turn, will extend the present contract existing with you, expiring March 31, 1933, for another year, to March 31, 1934."

On January 12, 1931, plaintiff replied to this letter as follows: "Replying to your letter of December 12th in regard to a reduction in buttermilk price to you for the year 1931, will advise that we have taken this matter up with some of the directors of our Company and are willing to go along with you to the extent of a reduction of three cents per hundred from the original contract for the year 1931, with the understanding that the present contract will be extended another year so as to expire March 31st, 1934."

By an oral acceptance or agreement made in January, 1931, the contract was in form extended a year from March 31, 1933. As has been observed, this action was brought (1) to recover the contract price for buttermilk sold and received at all plants, except Parsons, Kan., from April 1, 1933, to September 18, 1933; (2) to recover the contract price of buttermilk received by defendant at Parsons, Kan., from April 1, 1933, to March 31, 1934; (3) to recover the contract price of buttermilk received by defendant at all plants, except Parsons, Kan., from September 16, 1933, to March 31, 1934; (4) to recover damages on account of refusal to receive buttermilk at any plant, except Parsons, Kan., from September 15, 1933, to March 31, 1934; and (5) to recover damages for refusal of defendant to receive buttermilk at Parsons, Kan., from December 17, 1933.

On this appeal it is contended: (1) That the oral contract was enforceable and not within the statute of frauds; (2) that if a writing were necessary, there was sufficient evidence of such writing; and (3) that if there were not sufficient written evidence, plaintiff was entitled to recover the contract price for the buttermilk actually delivered, since the contract was divisible and the period of performance was from month to month.

1. The pertinent parts of the Missouri statute of frauds (R.S.Mo.1929, § 2967 Mo.St.Ann. § 2967, p. 1835) read as follows: "No action shall be brought * * * to charge any person * * * upon any agreement that is not to be performed within one year from the making thereof, unless the agreement upon which the action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith, or some other person by him thereto lawfully authorized."

The construction given a state statute by the highest court of the state will, of course, be followed by this court. Midland Steel Sales Co. v. Waterloo Gasoline Engine Co. (C.C.A.8) 9 F.(2d) 250; City of Campbell v. Arkansas-Missouri Power Co. (C.C.A.8) 55 F.(2d) 560; Cargile v. New York Trust Co. (C.C.A.8) 67 F.(2d) 585; Chicago & North Western Ry. Co. v. Bauman (C.C.A.8) 69 F.(2d) 171; Davies v. Mills Novelty Co. (C.C.A.8) 70 F.(2d) 424. The Missouri Supreme Court has held that the clause of the statute under consideration applies only to contracts which, by their express terms, are not to be performed within a year, and that it does not apply to those cases in which the contract may, by its terms, be performed within the year. Foster v. McO'Blenis, 18 Mo. 88; Suggett's Adm'r v. Cason's Adm'r, 26 Mo. 221; Green v. Whaley, 271 Mo. 636, 637, 197 S.W. 355; See v. See (Mo.Sup.) 237 S.W. 795. In Delventhal v. Jones, 53 Mo. 460, the policy is declared that exceptions to the statute should be limited rather than extended. The court there said: "It has been the uniform inclination of the courts of this State — and for the most part of the courts elsewhere, both in England and in this country — to give the words of this statute full effect, and to refuse to sanction such a latitudinous construction of those words as would give rise to all the evils that the statute was enacted to prevent."

It is the contention of plaintiff that the oral agreement modified the written contract so that it would not expire until March 31, 1934, and that the clause of the contract which provided that if all of plaintiff's creameries should be sold at any time, either party might terminate the contract, took it out of the statute. The contract as so interpreted is a contract for a definite period exceeding one year, but subject to a defeasance which might terminate it within a year. The contract here under consideration differs from the contracts considered in the above-cited Missouri cases. In Foster v. McO'Blenis, the agreement was not to run carriages on a particular route; in Suggett's Adm'r v. Cason's Adm'r, the agreement was to sell a slave, with no time fixed for performance; in Green v. Whaley, the agreement between two joint owners of notes was that the notes should become the property of the survivor upon the death of the other; in See v. See, there was a lease for life. In all these cases, the time for performance was uncertain and indeterminate, while in the instant case, the contract, by its express terms, fixes a definite period for its performance, and, by its express provisions, it is not to be performed within a year.

Plaintiff urges that the rule should be applied in this case because of the possibility of terminating the contract within the year. It is its contention that the performance of this contract might be accomplished in either of two ways, first, by a compliance therewith during the full term, or, second, by compliance until the option to terminate it might be exercised; the latter contingency advancing the time of fulfillment, but not operating to defeat the contract. The defendant urges that the contingency which provides for a cancellation of the contract does not transform the contract into one that may be fully performed within a year, and that it cannot be said that the agreement would be fully performed by its cancellation under such an option, but rather that such an event frustrated the performance of the contract. The statute looks to the performance and not the defeat of the contract, and a defeasance within a year would not constitute a performance according to the express intent of the parties, that performance should continue longer than a year.

It is generally held that a contract for a definite period extending over a year is not taken out of the statute by an option allowing either party to terminate it within a year. The performance contemplated by the statute is a full and complete performance, and a cancellation is not such a performance. Biest v. Versteeg Shoe Co., 97 Mo.App. 137, 70 S.W. 1081; Washington, A. & G. Steam Packet Co. v. Sickles, 5 Wall. 580, 18 L.Ed. 550; Union Car Advertising Co. v. Boston Elevated Ry. Co. (C.C.A.1) 26 F.(2d) 755, 58 A.L. R. 1067; Meyer v. Roberts, 46 Ark. 80, 55 Am.Rep. 567; Wagniere v. Dunnell, 29 R. I. 580, 73 A. 309, 17 Ann.Cas. 205; Seder v. Grand Lodge, 35 Idaho, 277, 206 P. 1052; Bernier v. Cabot Mfg. Co., 71 Me. 506, 36 Am.Rep. 343; White v. Fitts, 102 Me....