Consolidated Products Co. v. Blue Valley Creamery Co.

• Decision Date: 25 May 1938
• Docket Number: No. 11011.,11011.
• Parties: CONSOLIDATED PRODUCTS CO. v. BLUE VALLEY CREAMERY CO.
• Court: U.S. Court of Appeals — Eighth Circuit

97 F.2d 23 (1938)

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

No. 11011.

Circuit Court of Appeals, Eighth Circuit.

May 25, 1938.

John T. Chadwell, of Chicago, Ill. (Victor P. Kayser, of Chicago, Ill., Floyd M. Sprague, of St. Joseph, Mo., Nicholson, Snyder, Chadwell & Fagerburg, of Chicago, Ill., and Mayer, Conkling & Sprague, of St. Joseph, Mo., on the brief), for appellant.

Benjamin Phillip, of St. Joseph, Mo. (R. E. Culver and Culver, Phillip, Kaufmann & Smith, all of St. Joseph, Mo., on the brief), for appellee.

Before STONE, GARDNER, and WOODROUGH, Circuit Judges.

WOODROUGH, Circuit Judge.

This is an action at law in which the Blue Valley Creamery Company sued to recover the contract price of buttermilk sold to the defendant Consolidated Products Company. There have been two trials of the case to the District Court, the jury being waived. On the first trial of the case, the District Court dismissed the action at the close of the plaintiff's testimony on the ground that the contract sued on was oral and was by the terms thereof not to be performed within one year from the making thereof, and therefore could not be enforced under the Missouri statute of frauds, Mo.St.Ann. § 2967, p. 1835, and the plaintiff appealed to this court from the judgment of dismissal. Blue Valley Creamery Co. v. Consolidated Products Co., 8 Cir., 81 F.2d 182.

Our opinion on that appeal states the substance of the written contract entered into between the parties on August 19, 1927, by which the Consolidated Products Company agreed to buy the entire output of raw buttermilk produced in certain creameries of the Blue Valley Creamery Company for a period of five years from March 31, 1928, at 23 cents per hundred. We noted that in the fall of 1930 the price of buttermilk declined, and on that account the creamery company, in January 1931, consented to a reduction from the contract price of three cents per hundred for the year 1931, but upon an oral agreement with defendant to modify the written contract by extending it at the 23 cent price over an additional year, from March 31, 1933, up to April 1, 1934.

This court, upon full consideration of the Missouri law as set forth in the statute of frauds of Missouri and the decisions of its Supreme Court, held that the contract sued on, which was an oral modification of a contract in writing not to be performed within one year from the making thereof, was within the state statute of frauds and was void.¹ But the court also held that the contract was a divisible contract because payments for deliveries thereunder were to be made monthly, and that under Missouri law a party who completely performed such a divisible contract was entitled to recover for such complete performance of a divisible part according to the contract, where the performance was referable to the oral agreement and in reasonable expectation that the other party would perform it.

There was a contention for the defendant that there had been no complete performance of any part of the contract, but that defendant had repudiated the alleged oral contract before the deliveries of buttermilk sued for were made, and that none of the deliveries was received under the contract. Defendant insisted that this court ought to sustain the judgment of the trial court denying a recovery to the plaintiff for the contract price because the defendant had not received the buttermilk under the contract.

This court decided the law upon the question so presented in favor of the defendant, and indicated its determination that it was incumbent on the plaintiff to show that at the time of the alleged performance defendant was not denying the contract, but that under the circumstances then existing there was a reasonable expectation on the part of the plaintiff that the defendant would perform it. We declared: "The right of the plaintiff to recover the contract price for the buttermilk actually delivered is dependent upon whether deliveries were made by plaintiff and accepted by defendant under the contract." This court referred, however, to its duty to draw the most favorable inferences reasonably possible from the plaintiff's testimony, and held that the evidence then before the court was insufficient as a matter of law to charge plaintiff with notice that defendant was denying the alleged contract when the deliveries of buttermilk were being made. We remanded the case because the question whether deliveries were made by plaintiff and accepted by defendant under the contract could not be determined as a matter of law upon the testimony in the record.

After the remand of the case, the plaintiff amended its pleadings and incorporated therein the following allegations:

"On March 31, 1933, after plaintiff had delivered and defendant had received and accepted buttermilk during the year 1931 at the reduced price hereinabove stated, the defendant asserted that the contract expired on that date, to-wit: March 31, 1933. On April 1, 1933, plaintiff notified defendant that the contract had not expired; that it would continue to sell and deliver the buttermilk and bill the defendant for it on the basis of the original contract, to-wit: Twenty-three cents per hundredweight, calculated on the basis of one hundred and sixty (160) pounds of buttermilk for each one hundred (100) pounds of butter produced, and that if defendant discontinued picking up the buttermilk as usual plaintiff would run the buttermilk down the sewer in accordance with the terms of the agreement and continue to bill the defendant therefor."

The testimony on the second trial differed from that on the first trial, in that it was clearly shown on the second trial that the defendant had fully advised the plaintiff that it had repudiated and denied the oral contract in question before the buttermilk involved in the suit was delivered or received. And the trial court so found.

But the plaintiff contended that it was entitled to recover the contract price for the buttermilk, notwithstanding such repudiation of the contract by the defendant and notwithstanding the decision of this court, because it was alleged in the amendment to the pleading and it appeared from the testimony that at the times when the buttermilk was taken by the defendant, the defendant was informed by plaintiff and well knew that the plaintiff was claiming that the contract had not expired, but that the plaintiff would continue to sell and deliver the buttermilk and bill the defendant for it at the original contract price. It contended an agreement on the part of defendant to pay the contract price was implied in fact. This contention of the plaintiff was sustained by the trial court and it entered judgment for the plaintiff for the full contract price of the buttermilk received by defendant during 1933 after March 31st of that year, such price being greatly in excess of the market value. The court also gave judgment to the plaintiff for the contract price of certain other buttermilk manufactured by plaintiff and tendered during the period after March 31, 1933, but not received by defendant.

On this appeal taken by the defendant to obtain a reversal of the judgment against it, defendant contends that the judgment for the contract price and in enforcement of the contract was erroneous, because the contract was void under the statute of frauds and defendant's obligation was legally limited to the reasonable value of the buttermilk which was received by it (which obligation had been substantially discharged.)

In urging its theory for the recovery of the contract price of the buttermilk, the plaintiff has not sought to question the expressed conclusion of this court that the oral contract sued on in the case was one not to be performed within a year, and that it was void under the statute of frauds of Missouri, where the contract was made, nor the finding of the trial court that the plaintiff knew defendant had repudiated and was denying the contract at the time of the buttermilk deliveries. But plaintiff has cited numerous cases which it contends establish a right to recover the price fixed in the void contract broader than the definition of the right in this court's opinion on the former appeal. The cases are claimed to support the contention that the vendor does have a right to recover the price for his merchandise specified in the void contract, notwithstanding the vendee's denial of the contract, when the vendor is able to show that he informed the vendee that he was asserting the contract and demanding the price specified therein at the time of the deliveries.

It was apparent to this court from the record before it on the former appeal of the case, that the plaintiff had at all times asserted the existence of the contract and had insisted that the defendant pay the price specified in the contract, but, notwithstanding that fact, we limited plaintiff's right of recovery by requiring it to prove that there had been a complete performance referable to the contract before it could recover the contract price upon any divisible part of the contract. We do not think the cited cases contradict our conclusion or support the plaintiff's position.

The cases relied on by plaintiff do illustrate the law that where the statute of frauds is not involved, but where a merchant exposes his goods for sale at a certain price, one who knows the price and silently accepts the goods becomes liable to pay the price — the law implies that he promised to pay the price when he took the goods with knowledge of what the seller's price was. Such is the import of the following cases, cited and relied on by plaintiff: Caldwell & Drake v. Cunningham, 162 Ky. 272, 172 S.W. 498; Estey Organ Co. v. A. & E. Lehman, 132 Wis. 144, 111 N.W. 1097, 11 L.R.A.,N.S., 254, 122 Am.St.Rep. 951; Neidig v. Cole & Pilsbury, 13 Neb. 39, 13 N.W. 18; Mummenhoff v. Randall, 19 Ind.App. 44, 49 N.E. 40; Royal Roofing Co. v. Goss, 170 Ark. 398, 280 S.W. 1...