California Lettuce Growers v. Union Sugar Co.

CourtUnited States State Supreme Court (California)
Writing for the CourtSHENK; GIBSON, C. J., EDMONDS, CARTER, TRAYNOR and SPENCE, JJ., and MUSSELL
Parties, 49 A.L.R.2d 496 CALIFORNIA LETTUCE GROWERS, Inc., a corporation, Plaintiff and Respondent, v. UNION SUGAR COMPANY, a corporation, Doe Company, a corporation, Roe Company, aco-partnership, Doe 1, Doe 11, Doe 111, Doe IV and Doe V. Defendant andAppellant. L. A. 23650.
Decision Date08 November 1955

Page 785

289 P.2d 785
45 Cal.2d 474, 49 A.L.R.2d 496
CALIFORNIA LETTUCE GROWERS, Inc., a corporation, Plaintiff and Respondent,
v.
UNION SUGAR COMPANY, a corporation, Doe Company, a corporation, Roe Company, aco-partnership, Doe 1, Doe 11, Doe 111, Doe IV and Doe V. Defendant andAppellant.
L. A. 23650.
Supreme Court of California, In Bank.
Nov. 8, 1955.

Page 788

[45 Cal.2d 478] Richard E. Guggenheime, Eugene S. Clifford, Heller, Ehrman, White & McAuliffe, San Francisco, and Twitchell & Rice, Santa Maria, for appellant.

O'Melveny & Myers, William L. Scott, Pierce Works, Los Angeles, Lewis, grant & Davis, Denver, Colo., and Dennis O'Rourke, Colorado Springs, Colo., as amici curiae on behalf of appellant.

Schauer, Ryon & McMahon and Robert W. McIntyre, Santa Barbara, for respondent.

SHENK, Presiding Justice.

This is an appeal from a summary judgment for the plaintiff. The pleadings and affidavits in support of the motion for the judgment disclose that the controversy arises from the contractual relations of the parties in the sale and purchase of sugar beets during the years 1945 to 1949 inclusive.

On November 1, 1945 the defendant Union Sugar Company leased to California Lettuce Growers approximately 1,000 acres of land situated in Santa Barbara and San Luis Obispo counties for a three year term. Rent for the first two years was fixed in the lease; for the third year the rent was to be determined by arbitration in the absence of an interim agreement between the parties. The lease provided that the lessee should apply a minimum of fourteen tons of manure per acre during the term of the lease.

On the same day the parties entered into a so-called growing agreement whereby California Lettuce agreed to grow and deliver sugar beets to Union Sugar from 500 acres during 1946, the same amount in 1947 and from 400 acres in 1948. This agreement was silent as to price, terms of payment, place and manner of delivery, and contained no express [45 Cal.2d 479] promise on the part of Union Sugar to accept delivery and buy the beets. On November 1, 1947 the parties entered into an agreement to fix the rental for 1948 and extend the lease an additional year to included the crop period of 1949. The rental for this period was left to future determination. This agreement also provided that California Lettuce would apply at least seven additional tons of manure per acre over the minimum required by the original lease.

Two more agreements were entered into on November 1, 1948. In the first, the parties agreed to release 400 of the original 1,000 acres subject to the lease of 1945 as extended. The rent for the remaining 600 acres was fixed for the 1949 crop season. The second was a growing agreement obligating California Lettuce to grow and deliver beets to Union Sugar from 239 acres during 1949. This growing agreement, like its predecessor, failed to specify price, terms of delivery or obligation of Union Sugar to accept delivery and purchase the beets.

In 1946, 1947 and 1948 California Lettuce grew the sugar beet acreage pursuant to the growing agreement of November 1, 1945 and delivered the contract beets to Union Sugar. In each of those years printed supplemental purchase agreements were concluded by the parties. For the 1946 and 1947 crops the supplemental agreements set a flat purchase price per ton of beets based on their sugar content. The 1948 supplemental purchase agreement contained a price schedule based not on a flat price per ton but on a formula based upon the net return to Union Sugar from the processed

Page 789

beet sugar. No supplemental purchase agreement was consummated by the parties for the 1949 crop.

The lease, growing, and supplemental purchase contracts were fully performed by both parties during 1946, 1947 and 1948. In 1949, under the growing agreement contemplating the delivery of 239 acres of beets, California Lettuce delivered only 117 acres. In a letter to California Lettuce dated December 13, 1949, Union Sugar recognized its debt in the amount of $27,300.78 for the beets so received, but it refused to pay this full value because of the following setoffs: (1) The failure of California Lettuce to deliver beets from the full 239 acres under the growing agreement for 1949; (2) The failure of California Lettuce to apply the additional manure contemplated in the 1947 rental agreement; (3) An unpaid debt for sale and delivery of certain manure; (4) Charges due and owing for use of a pumping plant, and (5) Charges [45 Cal.2d 480] for the use of other acreage. If these setoffs were accepted by California Lettuce, the balance owed by Union Sugar would be $3,825.95. Union Sugar subsequently tendered payment of that amount but California Lettuce refused to accept it. After the present action was commenced, Union Sugar tendered to California Lettuce the sum of $2,355.09 which was accepted on account.

Refusing the off-sets, California Lettuce commenced this action on January 11, 1950 to recover the reasonable value or the contract price of the 117 acres of beets delivered to Union Sugar or damages for breach of contract. The first amended complaint states the first count in assumpsit for the reasonable value of the beets sold and delivered in the amount of $45,000. In the second and third causes of action, California Lettuce alleges breach of contract and damages in the sum of $29,655.37. Each cause of action admits the receipt of $2,355.09 actually paid by Union Sugar.

Union Sugar answered and counterclaimed. It admitted liability in the amount of $29,655.87, less $2,355.09 paid on account and less the setoffs pleaded in five counterclaims. The first counterclaim alleged damages in the sum of $7,412.45 resulting from the failure of California Lettuce to deliver the full 239 acres of beets. The second counterclaim alleged a $14,529.94 debt owed Union Sugar for the failure of California Lettuce to apply the additional manure as required by the 1947 lease extension. California Lettuce demurred to the first and second counterclaim and its demurrer was sustained.

In the affidavit in support of its motion for summary judgment California Lettuce accepted Union Sugar's statement that the reasonable value of the beets sold and delivered in 1949 was $29,655.87, waiving any additional amounts those beets might reasonably be worth. For purposes of the motion, California Lettuce conceded Union Sugar's third, fourth and fifth counterclaims totalling $1,532.45 and the sum of $2,355.09 paid on account, leaving a balance of $25,768.34.

The trial court found that Union Sugar's first and second counterclaims did not state facts sufficient to constitute a valid setoff against the first amended complaint. Union Sugar's demurrer to the amended complaint was overruled. The demurrers to the first and second counterclaims were sustained without leave to amend. October 19, 1953 the trial court accordingly gave summary judgment on the pleadings to [45 Cal.2d 481] California Lettuce in the amount of $25,768.34 with interest from December 13, 1949 in the sum of $6,942.49.

Union Sugar contends that its first and second counterclaims state valid setoffs; that its debt to California Lettuce, if any, was unliquidated and interest was not allowable, and that the judgment is contrary to law.

In support of the first counterclaim, Union Sugar alleges that California Lettuce violated the growing agreement of November 1, 1948 with respect to the 1949 crop in that California Lettuce delivered only 117 acres of beets while the contract called for delivery of 239 acres. The contract provides that California Lettuce '* * * personally grow, on suitable land in Santa Maria Valley, and deliver to (Union Sugar) two hundred thirty-nine (239) acres of beets during the year 1949.' California Lettuce

Page 790

contends that this agreement lacks mutuality, is illusory and void because there is no provision for price, time and place of delivery and no duty on Union Sugar to accept delivery and pay for the beets.

The principal question is whether the contract is illusory and void for failing to stipulate the purchase price. California Lettuce argues that the contract leaves the price to the future discretion of one party and therefore lacks mutuality. Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable. See Civ.Code § 1598; Sutliff v. Seidenberg, Stiefel & Co., 132 Cal. 63, 64 P. 131, 469. If the price of a commodity in a sales contract is intended to be left to the subsequent agreement of the parties, the purported contract is merely an agreement to agree and therefore mudum pactum until the price is fixed or agreed upon. See Schimmel v. Martin, 190 Cal. 429, 213 P. 33; Avalon Products, Inc., v. Lentini, 98 Cal.App.2d 177, 219...

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  • In re Libor-Based Fin. Instruments Antitrust Litig., 11 MDL 2262 (NRB)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 4, 2015
    ...a contractual price, then the counterparty must exercise its discretion in good faith. See Cal. Lettuce Growers v. Union Sugar Co., 45 Cal. 2d 474, 483-84, 289 P.2d 785, 791 (1955) (sugar processor not permitted to alter its accounting system to reduce calculations of payments to grower of ......
  • Perdue v. Crocker National Bank, S.F. 24591
    • United States
    • United States State Supreme Court (California)
    • July 18, 1985
    ...the price charged for goods or services does not render the contract illusory. Thus in Cal. Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 289 P.2d 785, the court upheld a contract permitting the buyer of sugar beets to set the price to be paid. The buyer did not have arbitrary po......
  • Hewlett-Packard Co. v. Oracle Corp., H044371
    • United States
    • California Court of Appeals
    • June 14, 2021
    ...provisions of a contract may be inferred from the writing or external facts." ( Cal. Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 482, 289 P.2d 785 (Cal. Lettuce ).) While courts may not "create for the parties a contract that they did not make" ( Vons, supra , 78 Cal.App.4th at......
  • Kashmiri v. Regents of University of Cal., No. A113662.
    • United States
    • California Court of Appeals
    • November 2, 2007
    ...goods or services does not render the contract illusory." (Ibid.) The Perdue court cited Cal. Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 289 P.2d 785, where the court upheld a contract permitting the buyer of sugar beets to set the price to be paid because the buyer did not ha......
  • Request a trial to view additional results
198 cases
  • In re Libor-Based Fin. Instruments Antitrust Litig., 11 MDL 2262 (NRB)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 4, 2015
    ...a contractual price, then the counterparty must exercise its discretion in good faith. See Cal. Lettuce Growers v. Union Sugar Co., 45 Cal. 2d 474, 483-84, 289 P.2d 785, 791 (1955) (sugar processor not permitted to alter its accounting system to reduce calculations of payments to grower of ......
  • Perdue v. Crocker National Bank, S.F. 24591
    • United States
    • United States State Supreme Court (California)
    • July 18, 1985
    ...the price charged for goods or services does not render the contract illusory. Thus in Cal. Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 289 P.2d 785, the court upheld a contract permitting the buyer of sugar beets to set the price to be paid. The buyer did not have arbitrary po......
  • Hewlett-Packard Co. v. Oracle Corp., H044371
    • United States
    • California Court of Appeals
    • June 14, 2021
    ...provisions of a contract may be inferred from the writing or external facts." ( Cal. Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 482, 289 P.2d 785 (Cal. Lettuce ).) While courts may not "create for the parties a contract that they did not make" ( Vons, supra , 78 Cal.App.4th at......
  • Kashmiri v. Regents of University of Cal., No. A113662.
    • United States
    • California Court of Appeals
    • November 2, 2007
    ...goods or services does not render the contract illusory." (Ibid.) The Perdue court cited Cal. Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 289 P.2d 785, where the court upheld a contract permitting the buyer of sugar beets to set the price to be paid because the buyer did not ha......
  • Request a trial to view additional results

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