Columbia Malting Co. v. Clausen-Flanagan Corporation

Decision Date03 November 1924
Docket NumberNo. 23.,23.
Citation3 F.2d 547
PartiesCOLUMBIA MALTING CO. v. CLAUSEN-FLANAGAN CORPORATION.
CourtU.S. Court of Appeals — Second Circuit

Barker, Donahue, Anderson & Wylie, of New York City (Ira L. Anderson and Eugene R. Pennock, both of New York City, of counsel), for plaintiff in error.

Meyer Britwitz, of New York City (Joseph I. Green, of New York City, of counsel), for defendant in error.

Before ROGERS, HOUGH, and MANTON, Circuit Judges.

ROGERS, Circuit Judge (after stating the facts as above).

The question presented is whether the contract sued upon amounted in law to a contract. The defendant claims that it did not because there was no meeting of the minds. The court below took the same view, and held that there was no real mutual assent between the parties.

The "contract" upon which the suit was brought reads as follows:

"The Columbia Malting Company, Chicago, Illinois.

"Malt contract between Clausen-Flanagan Brewery of New York, N. Y., the buyer, and the Columbia Malting Company, of Chicago, Ill., the seller.

"Date: May 3, 1920.

"Quantity: Twenty-five thousand (25,000) bushels.

"Grade: Our standard malt of choice brewing quality.

"Price: One dollar and seventy cents ($1.70) per screened bushel of 34 lbs., f. o. b. at New York, N. Y.

"Terms: Net cash on arrival of each car, and inspection.

"Shipments: Malt to be shipped in bags in gradual monthly shipments, between November 1, 1920, and May 1, 1921.

"Malt bags are the property of seller, and are to be returned promptly by the buyer.

"Shipping as directed.

"Directions: Pier 66, North River, N. Y. C.

"Caution: No verbal condition or modification of this contract is valid. This contract must be ratified from the office of the Columbia Malting Company, at Chicago, Ill. The Columbia Malting Company, the Seller, by Henderson D. Graff, Secy.

"Accept: The foregoing contract is hereby accepted. Clausen-Flanagan Company, the Buyer, by P. G. Tighe."

There was attached to the above a letter of the same date written by the plaintiff and addressed to the defendant, and which was incorporated into and made a part of the agreement, but which it is unnecessary to set forth herein.

The "contract" as above reproduced was signed in Chicago by the plaintiff, but did not then contain the italicized words "of choice brewing quality," or the words "and inspection," which now appear in it. As originally drawn with those words not contained in it and with the signature of the plaintiff appended to it, it was forwarded to the defendant at New York City for its acceptance. On its receipt by defendant the italicized words were added to the instrument by defendant, and the following was appended thereto:

"Acceptance: The foregoing contract is hereby accepted. Signed Clausen-Flanagan Brewery, the Buyer, by signed P. G. Tighe."

It is conceded that P. G. Tighe was the defendant's treasurer and that he had authority to bind the defendant by contract.

The instrument having been changed and, as changed, signed by defendant, it was then forwarded to the plaintiff in Chicago, and upon its receipt by the plaintiff it sent the following letter to the defendant in New York:

"Clausen-Flanagan Brewery, New York, N. Y. — Gentlemen: We have letter from our Mr. Blum today inclosing your contract dated May 3 properly signed by you.

"We note the addition made in reference to the grade of malt to be shipped and that you have added the words `of choice brewing quality.' This is all right, as no doubt you mean that we undertake (to) deliver you a first-class standard malt. We have therefore entered the contract accordingly and await your further commands. Yours very truly, The Columbia Malting Company, ____, Secy."

The alleged contract bears date of May 3, 1920, and it provided that shipments were to be made in gradual monthly shipments between November 1, 1920, and May 1, 1921, and the price to be paid was $1.70 per screened bushel, f. o. b. New York. The record discloses that the reasonable market value of standard brewing malt, "f. o. b. New York," was stipulated between the attorneys for the parties. The stipulation shows that the price of such malt was declining steadily. On November 1st the price of standard malt had fallen to $1.15½ per bushel, and it continued to decline, and on April 28th it had fallen to 86½ cents.

After the letter of May 8, 1920, set forth above, and to which the defendant made no reply, the plaintiff on November 17, 1920, addressed a letter to the defendant, in which it said:

"Referring to your contract with us dated May 3, 1920, we beg to advise that we are now ready to make shipments on same and await your shipping commands. * * *"

To this letter the defendant replied on December 2, 1920, as follows:

"Referring to your letter of November 17, 1920, we can do no more than to repeat, at this time, that there is no contract in existence between us, nor did we ever recognize such a contract, and we do not therefore send you shipping instructions."

At that time the price of malt had declined to $1.03½ which was 66½ cents a bushel less than the contract price. As the contract, if there was a contract, called for 25,000 bushels, the difference between the contract price and the selling price on the day the letter was written amounted to about $17,000. And, prior to May 1, 1921, the price continued to decline, and on April 28, 1920, the difference between the price contracted for and the selling price was over $20,000.

It thus appears that the proposal which the plaintiff submitted to the defendant was not accepted by the latter in the form submitted, but was altered by the defendant by the addition of certain words. The specification as to grade as proposed read, "Our standard malt." This the defendant changed to read, "Our standard malt of choice brewing quality." And the specification of Terms proposed read, "Net cash on arrival of each car." This the defendant changed to read, "Net cash on arrival of each car, and inspection."

The question is whether this amounted to an acceptance of the plaintiff's offer. It is elementary that an acceptance must be unequivocal. It must not change, add to, or qualify the terms of the offer. A reply to an offer which makes new stipulations as to quality invalidates an acceptance. National Bank v. Hall, 101 U. S. 43, 50, 25 L. Ed. 822; Bank of Buchanan County v. Continental National Bank of Los Angeles (C. C. A.) 277 F. 385, 390; Neer v. Lang, 252 F. 575, 576, 164 C. C. A. 491; Young's Market Co. v. Pioneer Produce Co., 192 F. 822, 113 C. C. A. 146; Williston on Contracts, vol. 1, p. 136, and cases there cited.

One to whom an offer is made must either accept it or reject it. And if he does not accept it he necessarily rejects it. If he introduces a new term into the offer, he in effect offers a counter proposal. Poel v. Brunswick-Balke-Collender Co., 216 N. Y. 310, 110 N. E. 619; 9 Cyc. 267.

And it is equally well settled that, although the party to whom the offer is addressed adds new words to the proposal, the words added will not impair or prevent acceptance if they do not qualify in legal effect the offer. The added words in such cases do not prevent a binding contract from being formed. Bennett v. Cummings, 73 Kan. 647, 85 P. 755; Curtis Land & Loan Co. v. Interior Land Co., 137 Wis. 341, 118 N. W. 853, 129 Am. St. Rep. 1068.

This makes it necessary to consider the effect of the added words. The proof shows that the trade generally sells malt in three different grades, "standard," "choice," and "fancy," and that these grades are distinguished by the percentage of diastase which is used in brewing. "Standard" malt contains between 68 and 72 per cent. of diastase. "Choice" contains between 72 and 74 per cent. "Fancy" contains between 74 and 77 per cent.

The "standard" is sold for a lower price than either of the other grades. It brings the lowest price and is the lowest grade of malt. The "choice" is the next higher grade, and is sold for the next higher price. The "fancy" commands the highest price of them all. And malt "of choice brewing quality" brings a higher price than the "standard," because it yields more extract.

This proposal of the plaintiff, made under date of May 3, 1920, was sent by it to its agent in New York, who took it to the office of defendant and submitted it to one of its officials, who, it is admitted, had power to make contracts binding upon the defendant corporation. That official made the additions in the writing submitted and then signed the paper. At the time the additions were written in the plaintiff's agent told the agent of defendant that he could write in the additional words, and that he would submit the changed writing to the plaintiff "subject to approval from the Chicago office." The plaintiff's agent evidently thought the change was such as to require the plaintiff's approval, although at the trial he stated that he did not think the change involved a change in the grade of malt. He admitted, however, that the Chicago office on receipt of the changed writing wrote him a letter in which they said that they ...

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    ...not constitute an "expression of acceptance" of an offer or a counteroffer under normal circumstances. Columbia Malting Co. v. Clausen-Flanagan Corp., 3 F.2d 547, 551 (2d Cir. 1924). It did not in this III. However, positive acts may constitute acceptances in the absence of expressed assent......
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    ...that silence on the part of the offeree is not consent as a matter of law in the absence of a duty to speak. Columbia Malting Co. v. Clausen-Flanagan Corp., 2 Cir., 3 F.2d 547, 551; Bowley v. Fuller, 121 Me. 22, 115 A. 466, 24 A.L.R. 964; Cincinnati Equipment Co. v. Big Muddy River Consolid......
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