Dairy Co-op. Ass'n v. Brandes Creamery

• Decision Date: 13 March 1934
• Citation: 147 Or. 488,30 P.2d 338
• Parties: DAIRY CO-OPERATIVE ASS'N v. BRANDES CREAMERY et al.
• Court: Oregon Supreme Court

30 P.2d 338

147 Or. 488

DAIRY CO-OPERATIVE ASS'N v. BRANDES CREAMERY et al.

Supreme Court of Oregon

March 13, 1934

In Banc.

Appeal from Circuit Court, Multnomah County; Jacob Kanzler, Judge.

Suit by the Dairy Co-operative Association, a co-operative association, against the Brandes Creamery, a corporation, and another, to enjoin defendant from violating terms of a contract between plaintiff and named defendant and from attempting to induce third parties having similar contracts with plaintiff to violate the terms thereof. From a decree dismissing the complaint and canceling the contract in suit plaintiff appeals.

Reversed and remanded, with directions.

A. E. Clark, of Portland, and W. G. Hare, of Hillsboro (Clark & Clark and R. R. Bullivant, all of Portland, on the brief), for appellant.

H. L Swett and Robert F. Maguire, both of Portland (Dey, Hampson &amp Nelson, of Portland, on the brief), for respondents.

KELLY Justice.

During the first part of August, 1931, a contract was executed by plaintiff and defendant Brandes Creamery bearing date of August 6, 1931. In it, plaintiff is called "the association" and said defendant is termed "the distributor." The contract provides that the distributor should buy its entire requirement of grade B milk and grade B cream for bottle and can purposes from and through the association, except that the distributor may continue to carry out certain prior annexed contracts theretofore entered into with producers, who are not members of the association.

A schedule of prices is set forth effective until January 1, 1932. The contract also provides that on or before December 1, 1931, or before December 1st of any subsequent year, the association and distributor will agree upon a suitable schedule for grade B milk and cream, which price, when agreed upon, is to be effective for one year from the 1st day of January of each year. There is a further provision that, if the association and the distributor are unable to agree upon such schedule, then such schedule shall be determined by arbitration as thereinafter provided.

Said contract also provides that the distributor shall make regular reports to the association at intervals, to be agreed upon, on the pounds of milk and cream received from each producer, and shall mail or deliver to the association the final report on weights and composite tests of milk and cream of producers on the 16th day of each month for milk and cream received the first 15 days of the month, and on the 1st day of each month for milk and cream received the last half of the previous month, except when the 1st or the 16th falls on a Sunday or legal holiday, in which event said report shall be mailed or delivered on the day following.

Paragraph 11 of said contract is as follows:

"The parties to this contract recognize the principle of arbitration and agree that the President of the Oregon State College, after conference with the parties hereto, shall appoint an arbiter to decide all disputes and controversies between the parties hereto arising under this contract, including price schedules, the problem of payment for surplus and all other matters, to the end that neither party to this contract shall obtain an advantage over the other and that there shall be fair dealing on the part of both parties. Both parties to the contract agree that the decision of the arbiter shall be final. The Association shall bear half the expense of any arbitration and the Distributors involved therein the other half, proportioned among them in that proportion that the volume of grade 'B' milk and cream purchased by each from the Association bears to the total volume purchased by the Distributors from the Association.

"It shall be the duty of the arbiter to ascertain, as far as possible, the cost of production, cost of distribution, prices and practices in other markets, conditions in the Portland market, and to advise with both distributors and the Association regarding their problems and possible solution. He shall be, or shall make himself, thoroughly informed regarding the milk business.

"The President of the Oregon State College shall have the right to recall any appointee, when, in his judgment, there is reason so to do, and appoint another arbiter in his place."

Similar contracts were executed by plaintiff and other distributors.

Plaintiff is a co-operative association organized under the laws of Oregon pertaining thereto, being sections 25-801 to 25-827 inclusive, Oregon Code 1930.

Until the 8th day of April, 1932, defendant Brandes Creamery was a corporation organized under the laws of the state of Oregon, and engaged in the business, among other things, of selling and distributing fluid milk and cream.

On the 24th day of March, 1932, defendant Brandes Creamery, Inc., was organized as a corporation under the laws of the state of Oregon, and since its organization has been engaged in the business, among other things, of selling and distributing fluid milk and cream.

Plaintiff alleges that, in reliance upon the strict performance of the contract involved herein and of the other similar contracts above mentioned, it has expended large sums of money in dairy herds and equipment and in efforts to produce more cleanly and wholesome milk and cream for the fluid trade in the city of Portland.

Alleged breaches by defendants of said contract are alleged in paragraph XVII of plaintiff's amended complaint, which is as follows: "That the defendants have failed and the defendant, Brandes Creamery, Inc., is now failing and refusing to take from plaintiff its milk and cream requirements for the retail and wholesale trade, and the defendant, Brandes Creamery, Inc., was organized as a part of a scheme and design on the part of said defendants to irreparably damage and impair the business of this plaintiff. That in furtherance of said design the defendants have in the past made, and the defendant, Brandes Creamery, Inc., is now making, efforts to cause other distributors who have contracts with the plaintiff similar to that between the plaintiff and the defendant Brandes Creamery to breach said contracts and to take their requirements of milk and cream for retail and wholesale trade from sources other than the plaintiff. That some of said other distributors are not now taking and in the past have not taken all of their requirements for grade B milk and grade B cream for the retail and wholesale trade from this plaintiff, notwithstanding they had contracts requiring them so to do. That plaintiff is informed, verily believes and therefore avers that the defendant Brandes Creamery, Inc. in pursuance of its wrongful design and purpose to cause irreparable injury to the plaintiff and with full knowledge of the contracts of said distributors with the plaintiff has furnished to said distributors grade B milk and grade B cream to enable said distributors to distribute the same to their retail and wholesale trade and to enable said distributors to violate their contracts with the plaintiff and unless the defendant Brandes Creamery, Inc. is restrained from continuing said course of conduct the plaintiff will suffer irreparable injury by the continued breach by said other distributors, so induced by said defendant, of the contracts between plaintiff and said other distributors."

Testimony was introduced disclosing breaches by Brandes Creamery of said contract as above alleged.

Defendants contend that the contract above outlined was procured by duress; that defendant Brandes Creamery, Inc., is neither a party nor privy thereto; that plaintiff has an adequate remedy at law to recover actual damages; and that no facts are shown, which justify equitable cognizance. Plaintiff denies that the contract was procured by duress, but insists that, if it were, defendants have waived their right to urge that defense by unreasonable delay, by having accepted and participated in the fruits of said contract and by a course of dealing with plaintiff on allied matters, which is inconsistent with the claim that defendants deemed themselves under duress.

It is unnecessary to consume time and space in giving in detail the events upon which the alleged duress is based. Suffice it to say that plaintiff became dissatisfied with the attitude of defendant Brandes Creamery and other independent distributors in Portland. By independent distributors is meant those who were not purchasing from plaintiff and its members. A milk war resulted, and trucks carrying said defendant's milk to Portland were stopped by forcible and violent means, and in several instances the milk was poured out of the cans by the roadside.

While the milk strike was in progress, a fact finding committee was appointed by the mayor of Portland to bring about an adjustment, if possible, of the differences between the parties affected by said strike. On the 6th day of August, 1931, an outline of a proposed contract with plaintiff was submitted to defendant Brandes Creamery, and to other independent distributors for acceptance or rejection and a few minutes only accorded said defendant and other independent distributors within which to decide whether to accept or reject same. After this proposal was accepted by the distributors, the strikers were called in and the milk war was at an end. Some days elapsed before the contract in suit was executed.

We are unwilling to hold that the execution of said contract was the result of the voluntary action of the defendant which signed it. We think, however, that the said defendant waived its right to urge duress in the execution thereof.

Immediately after defendant Brandes Creamery and plaintiff had agreed upon the terms of the contract in suit, a separate contract was made between them whereby said...