Elkader Co-op. Co. v. Matt

• Decision Date: 21 February 1973
• Docket Number: No. 55174,55174
• Citation: 204 N.W.2d 873
• Parties: ELKADER COOPERATIVE COMPANY, Appellee, v. Francis MATT, Appellant.
• Court: Iowa Supreme Court

Page 873

204 N.W.2d 873

ELKADER COOPERATIVE COMPANY, Appellee, v. Francis MATT, Appellant.

No. 55174.

Supreme Court of Iowa.

Feb. 21, 1973.

Fuerste & Carew, Dubuque, for appellant.

Donohue Law Office, and J. S. Updegraff, West Union, for appellee.

Considered en banc.

LeGRAND, Justice.

This case involves the distinction between an oral agreement which is itself a contract and one which is only preliminary to a written contract to follow.

Plaintiff Elkader Cooperative Company (the Cooperative) buys corn from farmers for future delivery. It immediately resells the corn for a two-cent per bushel markup to the Farmers Grain Dealers Elevator at McGregor, Iowa (the Elevator). Defendant Francis Matt, a farmer, was familiar with this practice, having sold corn to the Cooperative in earlier years.

Under the evidence, the jury could have found that in the fall of 1968 Matt telephoned the Cooperative on three occasions and talked with the manager, Robert B. Murrell. The first two conversations were mainly inquiries about the price of corn. Concerning the third conversation, Murrell testified:

'On the third telephone call, the first thing I said to Mr. Matt was to state what the price of corn was at that time. What he could contract for on that day. I told him the price was such as to net him 89 cents * * * . I think we discussed some terms * * * and he finally decided and said, 'I will contract 15,000 bushels of corn.' * * * After Mr. Matt said he wanted to sell this corn, I repeated the term, 89 cents, No. 2 corn delivered to McGregor and confirmed it with him and told him, asked him if he would stop over in a few days and sign the contract on it and he indicated that he would. * * *'

Murrell immediately filled out the terms of the purchase from Matt on one of the contract forms the Cooperative uses. At that time or by the next morning he wrote on the form 'Confirmed by phone--9--11--68.' He also promptly sold 15,000 bushels of corn by telephone to the Elevator for 91 cents per bushel.

That fall the price of corn did not hold steady or decline as the crop was picked but went up. Matt did not go to the Cooperative and sign the contract nor did he deliver corn under the agreement claimed by the Cooperative, although requested to do so. Instead he sold it elsewhere at a higher price.

The Cooperative performed its contract to sell corn to the Elevator at 91 cents per bushel by delivering 8000 bushels of its own corn, then worth $1.08 per bushel, to the Elevator, and by paying the Elevator on the other 7000 bushels the difference between the current market price and the price for which it had earlier agreed to sell to the Elevator.

The Cooperative sued Matt for the loss thus sustained. The jury found for the Cooperative, and the trial court entered judgment. Matt appealed. We reverse and remand for a new trial.

Matt makes two contentions in this court: (1) the trial court should have sustained his motion for a directed verdict on the ground the Cooperative introduced no evidence that the oral agreement between the Cooperative and Matt was to be a contract, as distinguished from mere negotiation preliminary to the execution of a written contract, and (2) the trial court should have instructed the jury on the significance of the parties' intention as to whether the oral agreement or the writing was to be the contract. The statute of frauds is not involved in the appeal.

I. We hold Matt was not entitled to a directed verdict. It is generally held an oral agreement may be enforceable, even though the parties contemplate that it be reduced to writing and signed, if it is complete as to its terms and has been finally agreed to. Under such circumstances the writing is merely an expression of a contract already made. On the other hand, the parties may intend that obligation should arise Only upon the signing of a written instrument embodying the terms they have tentatively agreed to. Alpen v. Chapman, 179 N.W.2d 585, 588, 589 (Iowa 1970); Luse v. Waco Community School District, 258 Iowa 1087, 1092, 141 N.W.2d 607, 610 (1966); Restatement, Contracts, section 26 (1932); 17 Am.Jur.2d, Contracts, sections 28, 29 (1964); 17 C.J.S. Contracts § 49 (1963).

The intention of the parties is decisive on this issue--did they Intend the oral agreement to be binding or not? This fact question is dependent upon all the circumstances present in the particular case. Alpen v. Chapman, supra; 17 Am.Jur.2d, Contracts, section 29 (1964); Annot., 100 A.L.R. 969, 989 (1936); Restatement, Contracts, section 26, Comment (b)(1932).

On the record before us, there were circumstances justifying a finding the oral agreement was to bind the parties. There were opposing facts which would sustain a contrary conclusion. As the trial court correctly held, this made out a jury case, and Matt was not entitled to a directed verdict.

II. The discussion in Division I leads directly into Matt's second assignment of error. He complains of the trial court's refusal to instruct on the intention of the parties relative to the telephone conversation which the Cooperative now claims constituted a completed and enforceable contract. Matt argues he was not obligated because he had not signed an agreement to sell. He made this objection to the instructions:

'Defendant excepts to the instructions as a whole and particularly as to Instruction 4 thereof as it relates to the general discussion by the Court of the law of contract for the reason that nowhere in the instructions does the Court advise the jury as to the significance of the elements of intent to be found or not found by them from the evidence as the same establishes or does not establish the existence of a contractual relationship between the parties. The instructions in their present form omitting any reference to or instruction concerning the matter of intent of the parties is particularly prejudicial to the defendant in this matter because of the nature of the evidence claimed by plaintiff to establish the existence of a contract and the nature of the evidence of defendant establishing ignorance of any contract. The instructions as a whole are deficient in this matter of tying the element of intent of the parties to the legal requisites of the contract and the factual showings of the parties relative thereto.'

We believe the objection is well taken unless it fails to meet the requirements of rule 196, Rules of Civil Procedure, a question which we pass for the moment.

The instructions failed to relate intention to the particular circumstances important to a decision by the jury. At the conclusion of the evidence, it was quite evident the result must turn on the narrow question whether the parties intended the telephone conversation to constitute a binding contract or not. As we have already pointed out, there was evidence supporting both sides. Yet the jury was left with nothing but an abstract definition of contractual intent which could be of no help in solving the controversy before them. We have said several times instructions should apply the law to the facts of the particular case sufficiently to advise the jury on the real issues they must resolve. We believe the instructions here fell short of that goal. Nowhere do the instructions touch on the rather nice distinction between an oral agreement which is to be obligatory without a later signing and one which is not--the very heart of the lawsuit. Baker v. Wolfe, 164 N.W.2d 835, 839 (Iowa 1969); Gibbs v. Wilmeth, 261 Iowa 1015, 1021--1023, 157 N.W.2d 93, 97 (1968).

We return to the argument that Matt's objection to the instructions is inadequate under rule 196 to encompass the error now charged. Under that rule, of course, only those grounds urged in the trial court may be relied on here. We hold the objection was sufficient.

In Harrington v. Fortman, 233 Iowa 92, 101, 8 N.W.2d 713, 718 (1943), it was urged requested instructions were insufficient to preserve the error claimed on appeal. We there said, 'Even if this should be true, * * * it does not avail the appellees. (The requested instructions) were sufficient to arrest the attention of the court and call for proper instructions. (Citations)'

In Schall v. Lorenzen, 166 N.W.2d 795, 798 (Iowa 1969), appears this statement:

'In passing on the sufficiency of the record where a requested instruction has been refused we have held the question is not whether the requested instruction is technically perfect but whether the attention of the court has fairly been called to the problem so that he may correctly instruct the jury. (Citations) This is the proper standard in connection with evaluation of any exception to the instructions.' (Emphasis supplied.)

In one of our most recent cases on this subject, Martin v. Jaekel, 188 N.W.2d 331, 335 (Iowa 1971), we restated the general principle that the real question is whether the objections made 'sufficiently alerted the trial court to preserve the question for review. In other words, did defendant's objection sufficiently point out to the court the complaint they (now directed against the instructions.)'

It is argued Matt is foreclosed here because, in addition to objecting, he should have also requested a correcting instruction. Under the record before us, we disagree. The trial court has the duty to instruct fully upon the issues which the jury must decide, whether requested to do so or not. It is error to submit the case without adequate direction to the jury on matters of law. The ultimate question is not How the alleged error was raised at trial but whether it Was raised--either by objection or by request for instruction--so that the trial court was alerted to the real problem while it was still possible to correctly instruct the jury. This is abundantly clear from Vint v. Ashland, 258 Iowa 591, 600--602, 139 N.W.2d 457, 463 (1966).

In Law v. Hemmingsen, 249 Iowa 820, 826, 89 N.W.2d 386, 391 (1958), this appears:

'It is the court's duty to...