National Farmers Organization v. Bartlett & Co., Grain
| Decision Date | 06 September 1977 |
| Docket Number | No. 76-1803,76-1803 |
| Parties | 22 UCC Rep.Serv. 658 NATIONAL FARMERS ORGANIZATION, Appellant, v. BARTLETT AND COMPANY, GRAIN, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Jim Tom Reid, Kansas City, Mo., argued and filed appendix and briefs for appellant.
Michael W. Lerner, Kansas City, Mo., argued and filed brief for appellee.
Before VAN OOSTERHOUT, Senior Circuit Judge, and BRIGHT and ROSS, Circuit Judges.
VAN OOSTERHOUT, Senior Circuit Judge.
This is a diversity action brought by the National Farmers Organization (hereinafter Seller) against Bartlett and Company, Grain (hereinafter Buyer) to recover an alleged balance due, in the stipulated amount of $18,441.62, on the price of grain sold and delivered under four of a series of fourteen contracts between the parties. The Buyer admits that the $18,441.62 was withheld from the total payment otherwise due but claims by way of setoff that the stated sum was properly withheld as damages due it by virtue of the Seller's alleged breach or anticipatory repudiation of all fourteen contracts. The pertinent facts were largely stipulated, and the cause was tried to the district court sitting without a jury. The court, agreeing with the Buyer that the Seller had breached or anticipatorily repudiated all fourteen contracts, rendered judgment for the Buyer. We affirm.
Prior to January 30, 1973, the parties had entered into forty-five contracts for the sale of grain. Of these contracts, thirty-one were performed in full by both parties and are not in issue. The remaining fourteen, which are the subject of this lawsuit, are summarized in the following table.
Table 1.
Contract Date of Execution Quantity Price Delivery Dates
-------- ----------------- -------- ----- --------------
Number (all 1972) (bushels) (per bu.)
------ ---------- --------- ---------
22868 Aug. 5 40,000 $1.80 Dec. 1972
996 Aug. 7 5,000 1.68 Aug. 7-Sept. 22, 1972
1338 Sept. 6 3,400 1.97 Feb.-Mar., 1973
1366 Sept. 11 10,000 1.96 Jan. 15-Mar. 15, 1973
1371 Sept. 11 12,000 1.96 Jan. 15-Mar. 15, 1973
1380 Sept. 11 5,400 1.99 Jan. 15-Mar. 15, 1973
1389 Sept. 12 20,000 1.98 Dec. 1972
1400 Sept. 13 750 2.035 Jan. 15-Mar. 15, 1973
1425 Sept. 16 5,500 1.86 June-Aug., 1973
1575 Oct. 12 10,000 1.87 June-Aug., 1973
7415 Oct. 17 30,000 1.155 Oct.-Dec., 1972
1729 Nov. 13 15,000 1.87 June-Aug., 1973
1824 Nov. 29 13,000 2.26 Dec. 1972
1845 Dec. 4 2,700 2.34 Jan. 1973
Contract No. 7415 was for the sale of corn; each of the others was for the sale of wheat.
The controversy over the above contracts began in December 1972. As of December 1, the only contract on which the delivery date had passed was No. 996; although the September 22 last delivery date had long since expired, 1672 of the 5,000 bushels called for under the contract remained undelivered. Deliveries were due in December on Nos. 22868, 1389, 7415 and 1824. At the end of the month, none of the 40,000 bushels had been delivered on No. 22868, 16,480 of the 20,000 bushels had been delivered on No. 1389, 19,364 of the 30,000 bushels had been delivered on No. 7415, and 8,125 of the 13,000 bushels had been delivered on No. 1824. Additional deliveries on these four contracts, although late, were tendered and accepted in January 1973; by the end of January, 31,725 of 40,000 bushels remained undelivered on No. 22868, 397 of 20,000 bushels remained undelivered on No. 1389, 8,049 of 30,000 bushels remained undelivered on No. 7415, and 648 of 13,000 bushels remained undelivered on No. 1824. In addition, none of the 2,700 bushels due in January under No. 1845 were delivered. The eight contracts not mentioned above in this paragraph had last delivery dates subsequent to January 31, 1973. No deliveries were ever made on any of these contracts, except that 3,943 of 12,000 bushels due no later than March 15 under No. 1371 were delivered in January. On several occasions during the month of January, prior to January 26, the Buyer had given notice to the Seller that the Seller had not completed delivery on certain contracts by the delivery dates designated in the contracts.
Beginning early in December 1972 and continuing throughout January 1973 the Buyer "was retaining some of the purchase price of grain actually delivered as protection against realized or potential loss caused by failure on the (Seller's) part to perform all contracts not yet fully performed." 1 On several occasions during December and January the Seller made verbal demands for the purchase price of grain already delivered.
On or about January 26, 1973, the Seller notified the Buyer that the Seller "was not going to deliver any grain to (Buyer) on any of the 14 outstanding contracts between the parties unless and until (Buyer) paid (Seller) a substantial amount of money due on deliveries already made as of that date on contracts Nos. 22868, 1371, 1389 and 1824." 2 The Seller did in fact suspend performance on all fourteen contracts as of January 27. Thereafter, no grain was ever tendered under any of the contracts.
It is the above communication which the Buyer elected to treat as an anticipatory repudiation of the contracts not yet due. On January 30, the Buyer sent the Seller the following telegram (punctuation supplied in part):
AS OF TODAY'S MARKET CLOSE WE ARE BRINGING ALL OUTSTANDING CONTRACTS WE HAVE WITH YOUR OFFICE TO CURRENT MARKET PRICE, NAMELY, OUR CONTRACTS 996, 1338, 1366, 1371, 1380, 1425, 1575, 1729, AND 22868. SETTLEMENT WILL BE FORTHCOMING.
On or about January 30-31, the Buyer mailed a debit memo and two credit memos to the Seller. The numerical accuracy of the figures used and calculations made in these memos is stipulated. 3 These memos reflect a balance due the Seller for deliveries made under contracts Nos. 22868, 1371, 1389, and 1824 of $72,894.89 and a balance due the Seller for deliveries made under contract No. 7415 of $1,919.50, for a total balance due of $74,814.39.
The same credit and debit memos claimed setoffs on thirteen of the fourteen contracts, 4 in each case by virtue of the Seller's past breach or alleged anticipatory repudiation of the particular contract. The claimed setoffs were as follows:
The Buyer, deducting the claimed setoff of $45,840.81 from the net balance due of $74,814.39, sent the Seller a check dated February 9 for the $28,973.58 difference. The check was subsequently paid.
The Seller, one day after receiving the January 30 telegram, informed the Buyer that, while it consented to cancellation of contracts Nos. 22868 and 996, it did not recognize and would not agree to cancellation of contracts for future delivery. It is now stipulated that the claimed setoffs shown in Table 2 were proper as to all contracts with last delivery dates of January 31 or earlier, viz., Nos. 22868, 996, 1389, 1845 and 7415. 5 Accordingly, at issue herein is the propriety of claimed setoffs, totaling $18,441.62, on those contracts having last delivery dates subsequent to January 31, viz., Nos. 1338, 1366, 1371, 1380, 1400, 1425, 1575 and 1729. 6 The resolution of this issue turns on the question whether the Seller's January 26 communication constituted an anticipatory repudiation of these contracts.
Before turning to the legal issue presented, we mention one additional fact not expressly stipulated or expressly found by the district court. It is quite clear from the stipulations that as of January 26 a very substantial sum, over and above the amount of damages by then sustained by the Buyer as a consequence of the Seller's past defaults, was due the Seller for deliveries already made under contracts Nos. 22868, 1371, 1389 and 1824, 7 and a very substantial portion of that sum was not only due but past due. 8
The question tendered to us for decision whether the Seller's communication of January 26 constituted an anticipatory repudiation of the contracts on which performance was not yet due is a difficult and close one. Ultimately, its resolution is governed by Section 2-610 of the Uniform Commercial Code (Mo.Ann.Stat. § 400.2-610 (Vernon 1965)) and the common law. However, as the parties readily concede, neither the Code language nor the caselaw of any jurisdiction provides a definitive answer.
Before examining the tendered question directly, we find it useful for the purpose of comparison to consider what the Seller clearly could have done on January 26 under Uniform Commercial Code § 2-609 (Mo.Ann.Stat. § 400.2-609 (Vernon 1965)) and what it clearly could not have done on January 26 under Uniform Commercial Code § 2-612 (Mo.Ann.Stat. § 400.2-612 (Vernon 1965)).
Uniform Commercial Code § 2-609(1) provides in part: "When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return." Comment 3 to this section states in part:
Under commercial standards and in accord with commercial practice, a ground for insecurity need not arise from or be directly related to the contract in question. . . .
Thus a buyer who falls behind in "his account" with the seller, even though the items involved have to do with separate and legally distinct contracts, impairs the seller's expectation of due performance.
The example just cited conforms precisely to the facts before us. Plainly, the seller could have availed itself of a Section 2-609 remedy on January 26....
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