Midland Steel Sales Co. v. Waterloo Gasoline Engine Co.

• Decision Date: 10 November 1925
• Docket Number: No. 6850.,6850.
• Citation: 9 F.2d 250
• Parties: MIDLAND STEEL SALES CO. v. WATERLOO GASOLINE ENGINE CO.
• Court: U.S. Court of Appeals — Eighth Circuit

9 F.2d 250 (1925)

MIDLAND STEEL SALES CO. v. WATERLOO GASOLINE ENGINE CO.

No. 6850.

Circuit Court of Appeals, Eighth Circuit.

November 10, 1925.

Alfred Longley, of Waterloo, Iowa (Charles E. Ransier, of Waterloo, Iowa, on the brief), for plaintiff in error.

George E. Pike and Carleton Sias, both of Waterloo, Iowa, for defendant in error.

Before SANBORN, LEWIS, and KENYON, Circuit Judges.

KENYON, Circuit Judge.

Parties will be designated as in the trial court. Plaintiff brought action in the District Court of the United States for the Northern District of Iowa, seeking damages for breach of a certain written contract, alleged to be entered into on or about the 8th day of September, 1921, for the sale by defendant to it, of a quantity of steel sheets and bars. The complaint alleged that the contract consisted of two parts, viz. the writing of September 8, 1921, attached to the petition as Exhibit A, and a list of steel material attached to the petition as Exhibit B. These two exhibits are in the record, identified in the evidence as Exhibits D and C to C-3 inclusive, and will be hereinafter referred to as Exhibits D and C. Damages were demanded in the sum of $75,000. Defendant answered that the alleged contract was a mere proposal or offer to purchase, incomplete, uncertain, without mutuality, and that the minds of the parties never met as to the subject-matter, and therefore no enforceable contract was in fact made.

At the close of plaintiff's case, the court, upon motion, directed a verdict for defendant, holding that the testimony conclusively showed that the alleged contract was never consummated; that, while the parties agreed upon the basis thereof and reduced it to writing, the particular items of stock or the amount of stock was not agreed upon, but was left for future listing and determination; and that the attempt on the part of plaintiff to show by parol testimony that the surplus referred to in the contract, Exhibit D was to be substantially as set forth in the contract, Exhibit C, violated the statute of frauds. Plaintiff brings the case here on writ of error.

Exhibit D, which is the nub of the controversy, is as follows:

"Waterloo, Iowa, September 8, 1921.

"Waterloo Gasoline Engine Co., Waterloo, Iowa — Gentlemen: As per conversation, we agree to purchase from you all your surplus stock of cold rolled steel, mild steel bars, angles and sheet steel. Quantities as specified on list you are to furnish, quantities specified being approximate and subject to count, and weight as found at the time of loading. Price to be $1.25 per cwt., f. o. b. Waterloo.

"It is understood that we are not to take any material which is pitted, or so badly rusted as to be in uncommercial condition. It is also understood that we will take additional quantities not included in your list, which are in good condition and commercial sizes, and which you may wish to dispose of at the time of shipment. The above flat price covers all of the items.

"The terms of payment are sight draft against bill of lading, drawn on us at Chicago. Shipment to begin as soon as convenient during the month of September, 1921, and to be completed as quickly as possible.

"Yours truly "Midland Steel Sales Co. "By A. E. Rosenthal. "Accepted "Waterloo Gasoline Engine Co. "By E. W. Bichler "Purchasing Agent."

Exhibit C is a list of steel material which was sent by defendant to plaintiff on the 30th day of August, 1921, in answer to a letter from plaintiff of August 25, 1921. The letter of August 30, 1921, is as follows:

Plaintiff's Exhibit B.

"Waterloo Gasoline Engine Company. Gasoline Engines. Traction Engines.

"Waterloo, Iowa, August 30, 1921.

"Midland Steel Sales Co., 25 East Jackson Blvd., Chicago, Ill. — Gentlemen: As requested in your letter of August 25th, we are sending you herewith list of bars, sheets, etc., that we have for disposal.

"Yours truly, "Waterloo Gasoline Engine Co., "JCH E. W. Bichler, Pur. Agt. "Dictated by E. W. Bichler."

Subsequent to September 8, 1921, the date of Exhibit D, other correspondence passed between the parties, some of which is important as bearing on the intention and purpose of the contractors.

It is to be noted that the action is based on an alleged contract in writing, consisting of Exhibits D and C. It is elementary law that in every case the proof must correspond with the allegations of the petition, and, as said by the Supreme Court of Iowa in Heim et al. v. Ressel et al., 162 Iowa, 75, 81, 143 N. W. 823, 826, "the relief must be predicated thereon, and not upon some other theory, either concealed or omitted." The only evidence in the case was that introduced by plaintiff, and it shows that Exhibit C was not furnished as a part of the alleged contract or delivered as such at the time of signing Exhibit D. It was sent through the mails prior to September 8, 1921, merely as information in response to the letter of plaintiff of August 25, 1921. There is no reference in either exhibit to the other; nothing in the exhibits themselves shows that either bears any relationship to the other. It is without dispute that it was agreed a new list of material was to be prepared after the signing of Exhibit D. There may be dispute as to the purpose of the list — whether it was to show the material that defendant was willing to sell, or was a mere correction of something else, but nevertheless a new list was to be made up. One witness testified the reason the list was not then made was that the list which would show the surplus for sale depended upon the future arrangements of the defendant in its factory. Mr. Bichler, who was connected with defendant company, but was a witness for plaintiff, testified that at the time of signing Exhibit D defendant company was unable to say what material it had for disposal, due to the fact that it had not determined its production program. Another witness testified that Exhibit C covered the surplus, with some changes and corrections, that was intended to be sold under Exhibit D. The court permitted this testimony to be introduced, but in sustaining the motion to direct a verdict held that such testimony violated the Iowa statute of frauds, saying:

"It is perfectly clear that if the plaintiff is permitted to prove this contract by parol testimony — that is, to show what was sold — then the statute of frauds would give no protection to the defendant in such cases. This case differs from a case where the mere quantity of a definite thing is to be identified. It differs from a case where the particular description, such as land, coal, gasoline, or grain, is to be identified. Here the question of what is surplus stock is a matter which depends upon the volition of the defendant, and did so depend at the time Exhibit A was signed. What was the surplus to the defendant might not have been surplus, if it had been owned by another. What was considered surplus by the defendant in August might not have been considered surplus in September, under a change of plans. So that it seems to me that, in the light of the undisputed testimony here, if this contract now claimed by the plaintiff is to stand, it must stand alone on the verbal testimony of witnesses, and not upon the writing."

The Iowa statute of frauds is as follows: "Except when otherwise specially provided, no evidence of the following enumerated contracts is competent; unless it be in writing and signed by the party charged or by his authorized agent: First. Those in relation to the sale of personal property, when no part of the property is delivered and no part of the price is paid." Code of Iowa 1897, § 4625; Compiled Code of Iowa, § 7332. The construction given to this statute by the highest court of that state is controlling here. Swiss Oil Corporation v. Eastern Gulf Oil Co. (C. C. A.) 297 F. 28; Walker et al. v. Hafer, 170 F. 37, 95 C. C. A. 311, 24 L. R. A. (N. S.) 315. That court has held that the memorandum must be complete in itself, leaving nothing to be supplied by parol; that parol evidence is not admissible to complete or vary an insufficient writing. Lynn v. Richardson, 151 Iowa, 284, 130 N. W. 1097; American Oak Leather Co. v. Porter et al., 94 Iowa, 117, 62 N. W. 658; Watt and Others v. Wisconsin Cranberry Co., 63 Iowa, 730, 18 N. W. 898; Nebraska Bridge Supply & Lumber Co. v. Owen Conway & Sons, 127 Iowa, 237, 103 N. W. 122.

This is the general rule. Greenleaf on Evidence, § 268, states it as follows: "It must all be collected from the writings, verbal testimony not being admissible to supply any defects or omissions in the written evidence." In Ryan v. United States, 136 U. S. 68, 83, 10 S. Ct. 913, 918 (34 L. Ed. 447) the court said: "The principle is well established that a complete contract binding under the statute of frauds may be gathered from letters, writings, and telegrams between the parties relating to the subject-matter of the contract, and so connected with each other...