Kosher Zion Sausage Co. of Chicago v. Roodman's, Inc.

• Decision Date: 13 June 1969
• Docket Number: No. 33245,33245
• Parties: KOSHER ZION SAUSAGE COMPANY OF CHICAGO, a Corporation, Plaintiff-Appellant, v. ROODMAN'S, INC., Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 543

442 S.W.2d 543

KOSHER ZION SAUSAGE COMPANY OF CHICAGO, a Corporation, Plaintiff-Appellant, v. ROODMAN'S, INC., Defendant-Respondent.

No. 33245.

St. Louis Court of Appeals, Missouri.

June 13, 1969.

F. Douglas O'Leary, Moser, Marsalek, Carpenter, Cleary & Jaeckel, St. Louis, for plaintiff-appellant.

Hyman G. Stein, Charles Alan Seigel, St. Louis, for defendant-respondent.

CLEMENS, Commissioner.

Plaintiff (Kosher Zion) appeals from a $2,872 judgment on defendant's (Roodman) counterclaim, challenging the sufficiency of Roodman's evidence to establish an implied contract and also the propriety of Roodman's verdict-directing instructions. We affirm, finding the evidence sufficient and the instructions invulnerable to the attack made.

After twenty years of doing business together kosher Zion, a Chicago manufacturer of kosher meat products, sued Roodman, a St. Louis distributor, for its $5,882 account. Roodman admitted the account but went to trial on its two-count counter claim. Roodman got a verdict on Count I for a $1,136 credit for spoiled products and on Count II got a verdict for a $1,736 credit for a five percent commission on Kosher Zion's direct sales to a St. Louis retailer.

On the issue of submissibility we state the verdict-consistent evidence.

Although there was no witness to relate the original terms between the parties, it is clear that in 1945 Kosher Zion and Roodman began an informal business relationship that lasted amicably until 1963 and thereafter with some dissension until 1965. At the start Roodman added Kosher Zion meat products to the line of food products it sold to St. Louis retailers. There were frequent communications between the parties by personal conferences and telephone calls. Every week Roodman phoned its order to Kosher Zion to fill orders Roodman had taken and also to keep a stock of Kosher Zion products on hand to fill 'spot' orders placed by Roodman's customers. Kosher Zion paid Roodman a five percent commission on sales. Roodman sold no other brand of kosher meats and was Kosher Zion's only distributor in St. Louis. Kosher Zion and Roodman worked closely in sales promotion and advertising programs, and Roodman continuously added new customers and increased the sales volume of Kosher Zion products. This activity finally amounted to more than a hundred customers and sales of over $30,000 a month.

One disputed part of the parties' dealings concerned the credit allowances kosher Zion gave Roodman for refunds Roodman had given its retailers for spoiled products. From time to time Roodman's retailers would return tainted products and apply in writing for credit. Roodman would give the retailer credit and destroy the product. Roodman would hold these memoranda, often over a year, and send them to Kosher Zion, who would then give Roodman credit for the total. This method was followed agreeably from 1945 to 1963. In the 1963--65 period Roodman gave its customers credit for $1,360 spoilage. Kosher Zion inquired about these items but Roodman delayed sending them, partly because of moving to a temporary office. Kosher Zion never allowed Roodman this claimed credit. This is the basis of Roodman's Count I.

The other disputed part of the case concerned credits to Roodman for Kosher Zion's direct sales to one St. Louis retailer, Louie's Delicatessen. In 1955 one of Roodman's long-time employees, Louis Fiddleman, quit and went into business for himself as Louie's Delicatessen. He wanted to buy kosher meats directly from Kosher Zion. Roodman objected, insisting it was Kosher Zion's exclusive distributor in St. Louis. To resolve the dispute Kosher Zion and Roodman began an arrangement whereby Kosher Zion sold directly to Louie's Delicatessen but paid Roodman a five percent commission on those sales. Until mid-1963 Kosher Zion paid this commission to Roodman, but thereafter it paid none on the $34,720 in direct sales to Louie's Delicatessen. This was the basis of Roodman's Count II.

Dissension began in 1960, when a St. Louis rabbinical organization declared that Kosher Zion's products were not strictly kosher. To counteract this Roodman added another brand of meat products that did meet the local religious standards. When Kosher Zion objected, Roodman offered to give up this other brand if Kosher Zion could get its products approved by the local rabbinical organization, but this was never done. Sales of the new brand began to cut into the volume of Roodman's sales of Kosher Zion's products, but they kept on doing business the same way. As sales finally fell to less than half of maximum volume, the parties had a series of meetings about the problem. In November of 1963 Kosher Zion began sending its own salesmen into St. Louis, soliciting directly from Roodman's customers. Roodman protested, without avail. Meanwhile, Roodman continued to promote and sell kosher Zion products but in reduced volume, and Kosher Zion continued to pay Roodman the five percent commission on Roodman's sales. But after November, 1963, Kosher Zion neither paid nor credited Roodman for spoilage refunds or for direct sales Kosher Zion continued to make to Louie's Delicatessen. During 1963--65 nothing definite was said or done about terminating the parties' relationship, and Kosher Zion told Roodman it still wanted Roodman as its St. Louis distributor. Then on November 3, 1965, Kosher Zion wrote Roodman it was no longer its St Louis distributor. At that time Kosher Zion's account against Roodman was $5,882. Kosher Zion promptly filed suit, and Roodman counterclaimed for the unpaid spoilage allowance and the five percent direct sales commission.

Roodman bases its counterclaim on the premise of an agreement by Kosher Zion to pay Roodman for spoiled merchandise and for direct sales to Louie's Delicatessen. Without evidence of a specific agreement between the parties (express contract), Roodman may recover on evidence from which such an agreement may be inferred (implied contract). These terms do not denote different kinds of contracts but refer to the evidence by which the agreement is shown. If shown by the direct words of the parties, spoken or written, the contract is express. But if the agreement can only be inferred from the acts and conduct of the parties, interpreted in light of the subject matter and of the surrounding circumstances, then the contract is implied. (Bailey v. Interstate Airmotive, Inc., 358 Mo. 1121, 219 S.W.2d 333(5, 6); Farris v. Faris' Estate, Mo.App., 212 S.W.2d 71(1, 2); Corbin on Contracts, § 18.)

Thus, a contractual relationship may arise without written or oral offer and acceptance, and does arise where the circumstances and the acts and conduct of the parties support a reasonable inference of a mutual understanding and agreement that one party perform and that the other party compensate for such performance. (Bailey, supra, at 219 S.W.2d 333(4); Shepard v. Glick, Mo.App., 404 S.W.2d 441(2).) As said in Roper v. Clanton, Mo.App., 258 S.W.2d 283(5); 'The agreement between the parties arises from their intention implied or presumed from their acts where there are circumstances which, according to the ordinary course of dealing and the common understanding of men, show a mutual intent to contract.'

This principle of implied contract is tersely illustrated in Prospect News Printing Co. v. Swindle, Mo.App., 15 S.W.2d 922(1), where a newspaper subscriber stopped paying when his subscription expired but for thirteen years continued to get the paper each week from his post office box. In ruling for the publisher in its suit for unpaid subscriptions, the court held that a contractual obligation arose by necessary implication from the defendant's course of conduct in accepting the newspapers. This principle applies to our case.

Original spokesmen for the parties did not testify, but we do know that for twenty years Kosher Zion paid Roodman a five percent commission on sales. Suppose that in 1965 Kosher Zion shipped...