Food Management, Inc. v. Blue Ribbon Beef Pack, Inc.
Decision Date | 30 July 1969 |
Docket Number | No. 19048,19072.,19048 |
Court | U.S. Court of Appeals — Eighth Circuit |
Parties | FOOD MANAGEMENT, INC., Appellant, v. BLUE RIBBON BEEF PACK, INC., Appellee. BLUE RIBBON BEEF PACK, INC., Appellant, v. FOOD MANAGEMENT, INC., Appellee. |
COPYRIGHT MATERIAL OMITTED
John J. Greer and Jerry C. Estes, of James, Greer, Nelson & Bertell, Spencer, Iowa, for Food Management, Inc., Frank B. Nelson and James Q. Doran, of Cohen, Baron, Todd & Hogan, Cincinnati, Ohio, on the briefs.
C. Frederick Beck and David J. Butler, of Beck, Butler & Pappajohn, Mason City, Iowa, for Blue Ribbon Beef Pack, Inc.
Before VOGEL, MATTHES and BRIGHT, Circuit Judges.
Food Management, Inc., an Ohio corporation, instituted this action against Blue Ribbon Beef Pack, Inc., an Iowa corporation, seeking recovery of the balance alleged due under a contract for architectural, engineering and other services. Blue Ribbon Beef counterclaimed for restitution of money paid to Food Management under the contract. Both parties appeal from a judgment against the claim and counterclaim. Federal jurisdiction is based upon diversity of citizenship and the requisite statutory amount in controversy. The substantive law of the State of Iowa controls. The parties will be referred to as in the court below.
Defendant Blue Ribbon is the successor by merger to Peter Piper Packers, Inc., also an Iowa corporation. On July 8, 1965, plaintiff Food Management entered into a written "turn key" contract with Peter Piper Packers whereby Food Management would design, supervise construction of and initially manage a meat packing plant at LeMars, Iowa. Food Management had previously completed a feasibility study for Peter Piper for which a price of $5,000 had been agreed upon and paid.
The written contract provided that whereas Peter Piper intended to construct and equip a facility to slaughter, chill and ship approximately 50 head of cattle per hour, expandable to a maximum potential of 70-75 per hour, it agreed to pay Food Management (the "Engineer") a fee of 8% of the cost of the work for the following services:
The contract also provided that Food Management would use its best efforts to obtain a qualified major meat distributor willing to enter into a custom slaughter or "captive" contract with Peter Piper. Under such arrangement, the major packer would buy the cattle, ship them to the plant, pay Peter Piper for the slaughtering and processing services, and then would sell the beef. Food Management also agreed to assist Peter Piper to negotiate such a contract.
There was no cost limitation expressed in the contract.
On September 30, 1965, Food Management entered into a written contract with Johnson Jamerson Associates, licensed architects and engineers in Iowa, for the performance of part of the work under the general contract. This contract provided in part:
Food Management contacted major packers on Peter Piper's behalf concerning the possibility of a custom slaughter contract. On December 15, 1965, Food Management informed Peter Piper that in order to enter into a captive contract with the prospective packer, Armour and Company, construction of a plant providing for a 70-75 head per hour kill rate and at a cost of $1,567,000 would be required. Peter Piper thereafter directed Food Management to proceed with the original plans for a 50 head per hour kill rate. On February 24, 1966, Peter Piper decided not to enter into a captive contract with Armour.
On or about March 8, 1966, Peter Piper signed a merger agreement with Blue Ribbon and informed Food Management that it would like a plant with a 40 head per hour capacity. On March 25, 1966, Peter Piper cancelled the contract with Food Management on the ground "Food Management had defaulted". At this point, Peter Piper had paid $24,000 to Food Management for services under the contract.
On the basis that Food Management had not designed a $1,000,000 plant, as Blue Ribbon alleges was orally agreed upon and was imposed as a cost limitation, Peter Piper refused to make any further payments to Food Management and demanded the return of the $24,000 which it had paid.
Food Management instituted this action to recover the balance due for services rendered under the contract, in the amount of $32,085.61. Blue Ribbon counterclaimed for recovery of the $24,000 Peter Piper had paid to Food Management.
None of Food Management's officers or employees was licensed to practice architecture or engineering in the State of Iowa during the period it performed services for Peter Piper under the contract.
In a trial to the court without a jury, the Honorable Edward J. McManus, Chief Judge, presiding, Blue Ribbon presented testimony to the effect that Food Management stated that the plant could be constructed for approximately $900,000, exclusive of land and architect's fee, or for $1,000,000 with facilities for hide curing and edible rendering, and that these figures were imposed upon Food Management as a cost limitation. Blue Ribbon also introduced evidence that the Food Management plans were for a plant that would have required over $1,800,000 to construct and equip. Food Management presented testimony to the effect that there was no cost limitation, but merely an estimate or approximation, and that the increase in cost of $1,567,000 resulted from following Peter Piper's instructions to increase the plant's kill rate from 50 to 70-75 head per hour in order to obtain a custom slaughter agreement with Armour and Company.
In an unpublished opinion, the trial court held:
1. In a footnote accompanying this holding, the court stated:
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