Ford v. Luria Steel & Trading Corp.

• Decision Date: 03 December 1951
• Docket Number: No. 14298.,14298.
• Citation: 192 F.2d 880
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: FORD et al. v. LURIA STEEL & TRADING CORP.

192 F.2d 880 (1951)

FORD et al. v. LURIA STEEL & TRADING CORP.

No. 14298.

United States Court of Appeals Eighth Circuit.

December 3, 1951.

Albert G. Schatz and Harold W. Kauffman, Omaha, Neb. (Gross, Welch, Vinardi & Kauffman and Daniel J. Gross, all of Omaha, Neb., on the brief), for appellants.

Alexander McKie, Jr., Omaha, Neb. (Finlayson, McKie & Kuhns and Barton H. Kuhns, all of Omaha, Neb., on the brief), for appellee.

Before SANBORN, JOHNSEN, and RIDDICK, Circuit Judges.

SANBORN, Circuit Judge.

This appeal challenges the validity of a summary judgment, Rule 56, Federal Rules of Civil Procedure, 28 U.S.C.A., in so far as it dismissed a counterclaim of the defendants (appellants). The defendants assert that their counterclaim presented a genuine issue of fact triable by a jury, and that the plaintiff (appellee) was not entitled to judgment as a matter of law upon the issues raised by the counterclaim.

The plaintiff brought this action to recover $22,297.92 and interest, upon the claim that that was the balance due it from the defendants upon a promissory note, which they had endorsed with recourse, and upon an alleged account stated. The defendants in their answer denied liability and set up the following counterclaim:

"That on or about the 9th day of January, 1948, these defendants entered into an oral agreement with plaintiff, whereby these defendants were to buy, for and on behalf of the plaintiff, scrap iron and steel, to be resold by the plaintiff and the profit, above the purchase price paid by the defendants, to be equally divided between the plaintiff and these defendants. That between March 23, 1948, and November 17, 1948, these defendants bought and shipped, pursuant to said aforesaid oral agreement, approximately 4,000 tons of steel, iron and scrap which was later resold by the plaintiff at a profit of approximately $20.00 per ton, to wit: A total profit of approximately $80,000.00, to which these defendants are entitled to one-half, to wit: $40,000.00, which is due and owing by the plaintiff to these defendants, no part of which has been paid."

In answer to this counterclaim the plaintiff denied the existence of any such oral agreement, denied the shipment by the defendants of steel, iron and scrap to be resold by the plaintiff pursuant to an oral agreement for the sharing of profits, and denied that the plaintiff realized $20 per ton on such material purchased by it from the defendants. The plaintiff alleged that all shipments of steel, iron and scrap made by the defendants to the plaintiff between March 23, 1948, and November 17, 1948, were made pursuant to written contracts, and that each contract constituted a separate and distinct transaction and was not made pursuant to any other agreement.

The plaintiff also alleged that on or about May 16, 1949, an account was stated between the parties showing that the defendants were indebted to the plaintiff in the sum of $26,297.92, and that, as security for this indebtedness of the defendants, the plaintiff accepted a note of the Ford Mfg. Co. in the principal amount of $25,500, payable to the defendants and endorsed with recourse by them to the plaintiff, and that, by reason of this account stated, the defendants were estopped to claim that any amounts are due them from the plaintiff.

As a further defense to the counterclaim, the plaintiff asserted that none of its officers or agents had, at any time, authority to enter into oral agreements with the defendants or others.

The plaintiff, after a motion made by it for a partial summary judgment had been denied, D.C., 9 F.R.D. 479, filed its motion (with supporting affidavits and exhibits) for a summary judgment, asserting that there was in the case no genuine issue as to any material facts and that the plaintiff was entitled to judgment as a matter of law. The District Court granted the plaintiff's motion upon two grounds: (1) that the transactions between the plaintiff and the defendants covered by the asserted oral profit-sharing agreement forming the basis for the counterclaim were all evidenced by written purchase contracts, complete upon their face, and that parol evidence to vary, contradict or supplement the terms of such contracts would not be admissible; and (2) that the evidence of E. J. Ford tending to show the existence of the alleged oral profit-sharing agreement was so unsubstantial and so inconsistent with his subsequent actions and statements and the documentary evidence of the dealings between the parties that a verdict for the defendants upon the counterclaim could not be sustained.

We question the validity of the second reason given by the District Court for its action. A surmise or belief, no matter how reasonably entertained, that a party cannot prevail upon a trial, will not justify refusing him his day in court with respect to material issues which are not clearly shown to be sham, frivolous, or so unsubstantial that it would obviously be futile to try them. Sprague v. Vogt, 8 Cir., 150 F.2d 795, 801. It has become settled law that a genuine issue as to a material fact cannot be tried and determined upon affidavits, and that it must conclusively be shown that there is no such issue in the case and that the moving party is entitled to judgment as a matter of law, before a summary judgment can lawfully be entered. See Sartor v. Arkansas Natural Gas Corporation, 321 U.S. 620, 627, 64 S.Ct. 724, 88 L.Ed. 967; Walling v. Fairmont Creamery Co., 8 Cir., 139 F.2d 318, 322-323; Sprague v. Vogt, supra, 150 F.2d 795, 800-801; Colby v. Klune, 2 Cir., 178 F.2d 872, 873; Pierce v. Ford Motor Co., 4 Cir., 190 F.2d 910, 915-916; Dulansky v. Iowa-Illinois Gas & Electric Co., 8 Cir., 191 F.2d 881.

The controlling question in this case is whether evidence to establish the defendants' alleged oral profit-sharing agreement would be admissible upon a trial. Nothing is more futile than calling a jury to determine a fact the existence of which is not susceptible of proof. The defendants on this appeal are in no worse position than they would have been in had the District Court upon a jury trial excluded the evidence tending to establish their alleged oral agreement and directed a verdict and entered a judgment for the plaintiff.

The conclusion of the District Court with respect to the admissibility of parol evidence to sustain the defendants' counterclaim is stated as follows: "It is shown by the exhibits attached to the Pretrial Order and by the affidavit attached to the plaintiff's motion for summary judgment that there were only seven transactions between the plaintiff and defendants which could be involved in the defendants' counterclaim. * * * All seven of these transactions were covered by written contracts of purchase and sale entered into and signed by the parties. Photostatic copies of the contracts are attached to the affidavit and made a part of the record. The contracts are clear and unambiguous on their face and there is no indication that there was any fraud, accident or mistake in connection with their execution. Consequently, the deposition and oral testimony of E. J. Ford concerning the oral agreement, which by his own testimony is the only evidence of this agreement, there being no written memoranda, would not be admissible in the trial of the case. It is well established that parol evidence is not admissible to affect, contradict, modify, vary, add to or subtract from a written instrument. 32 C.J.S., Evidence, § 851; 20 Am.Jur. 958; Theno v. National Assurance Corp., 133 Neb. 618, 276 N.W. 375, 377; Walter v. Sohio Petroleum Co., 402 Ill. 33, 83 N.E. 2d 346. Since the terms of the alleged profit sharing agreement are inconsistent with the terms of the written contract, the terms of the latter, must, as a matter of law, control; as a result there remains no genuine issue as to any material fact."

If, under the applicable law of Nebraska, the conclusion of the District Court is a permissible one, it should not be overruled by this Court. See National Bellas Hess, Inc., v. Kalis, 8 Cir., 191 F.2d 739; Western Casualty & Surety Co. v. Coleman, 8 Cir., 186 F.2d 40, 43 and cases cited.

The defendants contend that the seven written purchase agreements were not complete contracts, but were "merely shipping notations" which did not purport to include all of the terms of the entire agreement between the parties, and could therefore be varied and enlarged by parol evidence. We think the contracts for the purchase and sale of the specified materials at specified prices are not subject to supplementation upon the theory that they purported to be incomplete expressions of the terms agreed upon by the parties.¹ See and compare S. Spiegel & Son v. Alpirn, 107 Neb. 233, 244-246, 185 N.W. 415, 419-420.

The defendants assert also that, under the applicable Nebraska law, evidence to establish the alleged oral profit-sharing agreement was competent for the reason that "Parol evidence is admissible to show a contemporaneous oral agreement on the faith of which a written contract was executed and without which the written contract would not have been entered into."

The parol evidence rule is stated in 20 American Jurisprudence, Evidence, § 1099, as follows: "It is a general principle that where the parties to a contract have deliberately put their engagement in writing in such terms as import a legal obligation without any uncertainty as to the object or extent of such engagement, it is conclusively presumed that the entire engagement of the parties and the extent and manner of their undertaking have been reduced to writing; in other words the parol agreement is merged in the written agreement and all parol testimony of prior or contemporaneous conversations or declarations tending to substitute a new and different contract for the one evidenced by the writing is incompetent. * * *" See, also: 32 C.J.S., Evidence, § 851 and § 901; Restatement of the Law, Contracts, § 237, pages...