Emco Mills v. Isbrandtsen Co.

• Decision Date: 09 March 1954
• Docket Number: No. 14899.,14899.
• Citation: 210 F.2d 319
• Parties: EMCO MILLS, Inc. v. ISBRANDTSEN CO., Inc.
• Court: U.S. Court of Appeals — Eighth Circuit

210 F.2d 319 (1954)

EMCO MILLS, Inc. v. ISBRANDTSEN CO., Inc.

No. 14899.

United States Court of Appeals, Eighth Circuit.

February 15, 1954.

Rehearing Denied March 9, 1954.

Herschel H. Friday, Jr., Little Rock, Ark. (J. L. Shaver, Wynne, Ark., and Pat Mehaffy, Little Rock, Ark., on the brief), for appellant.

E. R. Morrison, Kansas City, Mo. (E. L. Westbrooke, Jonesboro, Ark., John A. Morrison, Clark Kuppinger, Morrison, Hecker, Buck, Cozad & Rogers, Kansas City, Mo., on the brief), for appellee.

Before GARDNER, Chief Judge, and THOMAS and COLLET, Circuit Judges.

COLLET, Circuit Judge.

The plaintiff corporation, the appellee on this appeal, an exporter of grain, located in New York City, gave an order to a grain broker in Memphis, Tennessee, to purchase for it for export from New Orleans, Louisiana, 50,000 bushels of soybeans at $2.08¼ per bushel. The president of defendant company, which is the present appellant, a dealer in grain at Earle, Arkansas, and a customer of the broker, called the broker by telephone October 13, 1950, and informed him that defendant desired to sell 10,000 bushels of soybeans. The broker informed defendant of the order from plaintiff for 50,000 bushels. Defendant had not theretofore had any business transaction with plaintiff. Defendant informed the broker that he would sell plaintiff only 10,000 bushels. On the same day the broker prepared the following "confirmation," reciting the sale of 50,000 bushels and mailed a copy of it to plaintiff and defendant.

"Confirmation Received "No. 1068-50 Oct. 16, 1950 Standard Commission Company 414 Cotton Exchange Building Memphis October 13, 1950 Isbrandtsen Company, Inc 26 Broadway New York, N. Y "Gentlemen "We hereby confirm sale to you for the account of Emco Mills, Inc. Earle, Arkansas 50,000 bushels No. 2 Yellow Soybeans. Mill discounts of to apply. Amendment 3 to rule 230 of the Kansas City Board of Trade rules to apply price $2.08¼ per bushel f.o.b. Earle, Arkansas weights New Orleans official grades New Orleans Official Seller's option October 20-November 15, 1950, shipment to New Orleans for export. Ship to Isbrandtsen Co., Inc., c/o Public Grain Elevator. Notify W. L. Richeson & Sons, 624 Gravier, New Orleans, La. Route to protect 19½¢ per 100 lbs. export freight rate to New Orleans, La. Permit No. will be furnished on request. Drafts and papers to Isbrandtsen Co., Inc., c/o Chase National Bank, New York, N. Y. "Assuring you of our appreciation of this business, we are, "Very truly yours, "Standard Commission Company. "By /s/ Dixon Jordan"

The confirmation was duly received by both. Defendant received its copy the same day or the next day. Earle, Arkansas, is only a short distance from Memphis. Defendant's president testified that he treated the confirmation as merely a memorandum, such as would be made of a telephone call. It was his custom and practice, and, as we must view the evidence, it was the custom and practice in that area for the buyer to send to the seller a contract after receipt of a broker's confirmation, which both buyer and seller would sign, the signed copies constituting the contract. Defendant's president testified that he expected daily to receive such a contract from plaintiff but did not. It is undisputed that the "confirmation" was received and was in defendant's files from the date of its receipt October 13 or 14. It is also undisputed that the order number on the "confirmation" was used as the identifying number of the transaction and was placed on the invoices at the time shipments were made. From October 21 through October 27, 1950, defendant loaded and shipped eight cars of soybeans pursuant to the agreement made in the telephone conversation. The loading of approximately 10,000 bushels was completed on October 27, 1950. November 1, 1950, defendant's president went to the broker's office in Memphis and called his attention to the discrepancy between the amount agreed upon in the telephone conversation and the amount in the "confirmation", and told the broker that the contract for 10,000 bushels¹ had been filled and that if the broker had made a commitment to plaintiff for 50,000 bushels he, the broker, would have to furnish the remainder. Without the knowledge or consent of defendant, on the next day, November 2, 1950, the broker wired plaintiff asking for an extension on behalf of defendant of the time for fulfilling the 50,000-bushel commitment, which, as the commitment heretofore quoted shows, would not expire until November 15, 1950. There appears to have been no response to this wire. On November 15, 1950, plaintiff wired defendant as follows:

"Urgently Need Soybeans Bought From You When Do You Expect Ship Please Wire."

November 16, defendant answered as follows:

"Our Arrangement With Standard Commission Co. Was That We Would Supply 10,000 Bushels Of Beans. They Agreed To Purchase That Additional Amount If We Were Unable To Furnish. We Have Filled Our Commitment. You Will Have To Look To Standard Commission For The Unshipped Portion. Standard Commission Company Was So Notified November 1, 1950."

The difference between plaintiff and defendant, reflected by these telegrams, being called to the attention of the broker, the latter wrote defendant on November 17, 1950, as follows:

"With reference to your letter of November 16 concerning soybeans, and with reference to contract covered by our confirmation No. 1068-50 dated October 13, 1950.

"If the terms contained in the contract were not exactly in accordance with your understanding of the transaction, the time to have questioned it was immediately.

"We are brokers only in this transaction and arrangements for cancelling any unfilled portion must be made in agreement with the Isbrandtsen Company, the buyer."

It appears from the evidence that plaintiff was operating under the practice of depending upon the custom and practice adopted by the Grain and Feed Dealers National Association which required either party, upon receipt of a broker's confirmation, immediately, by wire or telephone, to notify the other party to the transaction and the broker of any substantial error in the terms of the confirmation, and in default of such notice the contract should be filled in accordance with the confirmation. Hence, plaintiff, not receiving any notice from defendant, relied upon the terms of the confirmation. No further shipments were made by defendant. Plaintiff was obliged to purchase the remainder of the 50,000 bushels on the market at an increase of 57¢ per bushel. It was stipulated that the additional cost to plaintiff over the contract price was $22,170.72 and that plaintiff owed defendant a balance on the soybeans delivered of $2,042.36.

Plaintiff filed this action in the United States District Court in Arkansas for the difference between the contract price and the purchase price of the soybeans bought on the market, as its damages for defendant's alleged breach of the contract. Defendant's defense was that the broker's authority as defendant's agent was limited to making a contract for the sale of 10,000 bushels; that the contract was for that amount; and that it had been performed.

Over plaintiff's objection and motion for a directed verdict, the issue of whether defendant had ratified the contract as submitted to plaintiff and defendant in the confirmation for 50,000 bushels, or whether the contract was for only 10,000 bushels, was submitted to a jury. The jury found for the defendant. Plaintiff then filed its motion for judgment notwithstanding the verdict. The court sustained the motion on the ground that the undisputed evidence showed ratification. The decisive question is whether by failing to raise any objection to the confirmation within a reasonable time defendant ratified the confirmation as the contract.

The question is raised as to whether plaintiff's motion for a directed verdict sufficiently directed the trial court's attention to the insufficiency of the evidence to show lack of ratification to authorize plaintiff to rely on that point in its motion for judgment notwithstanding the jury's verdict. The motion was adequate in that respect.

It is conceded that the broker was the agent of both plaintiff and defendant. It is conceded by plaintiff for the purposes of this appeal that the broker did not originally have authority to bind defendant to a 50,000-bushel contract. Defendant concedes that the broker was its agent, but contends that his authority extended only to the making of a 10,000-bushel contract. The trial court concluded that defendant was obligated under the law to give notice of the error in its agent's "confirmation" and, failing to do so, it ratified the contract as stated in the confirmation, and there being no dispute that defendant received it and had knowledge of it, defendant was bound thereby. The parties apply the law of Arkansas. We do likewise.

The broker, as the parties agree, was the agent of both parties. He did...