Oregon-Pacific Forest Products Corp. v. Welsh Panel Co.

• Decision Date: 12 October 1965
• Docket Number: Civ. No. 65-78.
• Citation: 248 F. Supp. 903
• Parties: OREGON-PACIFIC FOREST PRODUCTS CORPORATION, a corporation, Plaintiff, v. WELSH PANEL COMPANY, a corporation, Mitsui & Co., Ltd., a corporation, Mitsubishi International Corporation, a corporation, and C. Itoh & Co. (America), Inc., a corporation, Defendants.
• Court: U.S. District Court — District of Oregon

248 F. Supp. 903

OREGON-PACIFIC FOREST PRODUCTS CORPORATION, a corporation, Plaintiff, v. WELSH PANEL COMPANY, a corporation, Mitsui & Co., Ltd., a corporation, Mitsubishi International Corporation, a corporation, and C. Itoh & Co. (America), Inc., a corporation, Defendants.

Civ. No. 65-78.

United States District Court D. Oregon.

October 12, 1965.

COPYRIGHT MATERIAL OMITTED

Curtis W. Cutsforth, King, Miller, Anderson, Nash & Yerke, Portland, Or., for plaintiff.

Erskine Wood, Wood, Wood, Tatum, Mosser & Brooke, Portland, Or., for Mitsui & Co., Ltd.

KILKENNY, District Judge.

Before the court is the segregated issue on whether the action should be stayed, while the dispute is arbitrated pursuant to an arbitration clause in certain contracts between plaintiff and defendant Mitsui. Plaintiff, while conceding the existence of the arbitration clause, claims: (1) that the contracts were oral in the first instance, and that there was no consideration for the signing of the written instruments; (2) that the arbitration clause was in "fine print" on the reverse side of the contract and that the parties never intended that such clause should be incorporated; (3) that even if five of the contracts are valid, the remaining five were signed under different circumstances and invalid; (4) that Patrick Connolly, the agent who signed the contracts, was acting outside of the scope of his authority.

For some time prior to the transactions in question, plaintiff was engaged in the business of purchasing quantities of Japanese oak plywood from certain suppliers and, in turn, sold the material to defendant Welsh. One of these suppliers was Mitsui. Of the forty to fifty transactions between these parties, only ten are here in dispute.

(1) The record shows that each transaction was initiated by a telephone conversation between Connolly, as agent of plaintiff, and Yasanobu, a representative of Mitsui. In general, the terms and conditions of the sale were discussed in these conversations. On most occasions following these conversations, Connolly would forward to Yasanobu in Seattle, a document designated a purchase order, which carried a place for its acceptance. Thereafter, in most instances, Mitsui, through its agent, indicated an acceptance on the purchase order and at the same time signed and forwarded to Connolly its form of contract which incorporated, on the reverse side, the arbitration clause in question.¹

Although the purchase order contained language which confirmed the phone call,² gave an adequate description of the property purchased and of the purchase price, with the request that the same be signed and the duplicate copy returned, the fact remains that Mitsui insisted on the signing of its own form of contract, which contained the arbitration clause. Here, we have a classical example of negotiations leading up to the signing of a final contract. Each purchase order forwarded by plaintiff clearly indicated that the duplicate copy should be signed and returned. This purchase order amounted to nothing more than an offer on behalf of plaintiff to purchase the materials at the price indicated. In turn, Mitsui made a counteroffer on its own form of contract which confirmed the sale to plaintiff.³ This confirmation contract made specific reference to the terms and conditions on its reverse side,⁴ which terms included the arbitration agreement. The reference is prominently displayed at the bottom of the instrument, at the place where the signature of plaintiff was required. Consequently, we have a general pattern on practically all of the contracts of: (1) a telephone discussion; (2) an offer by plaintiff on its form of purchase order; (3) a counteroffer by Mitsui on its form of contract; (4) an acceptance by plaintiff of Mitsui's counteroffer by the signing and forwarding of a copy to Mitsui. It is a general rule that the acceptance of an offer must be positive, unconditional, unequivocal and unambiguous, and must not change, add to, or qualify the terms of the offer. C. R. Shaw Wholesale Co. v. Hackbarth, 102 Or. 80, 198 P. 908, 201 P. 1066 (1921); Wagner v. Rainier Mfg. Co., 230 Or. 531, 371 P.2d 74 (1962). It is my considered judgment that the final agreements between these parties embodied the terms and conditions of the original offers in writing made by the plaintiff and the counteroffers by Mitsui, and its acceptance by plaintiff. These instruments must be construed together.

The course of conduct pursued by parties in the performance of contracts, and especially where the performance covers a considerable period of time and involves extensive efforts, is frequently a reliable exponent of the contract's meaning. Perkins v. Standard Oil Co., 235 Or. 7, 383 P.2d 107, modification denied 383 P.2d 1002 (1963). Two or more instruments, executed contemporaneously by the same parties in reference to the same subject matter, constitutes but one contract. Lowe v. Harmon, 167 Or. 128, 115 P.2d 297 (1941); Mead v. Anton, 33 Wash.2d 741, 207 P.2d 227, 10 A.L.R.2d 588 (1949); McLeod v. Despain, 49 Or. 536, 90 P. 492, 92 P. 1088, 19 L.R.A.,N.S., 276 (1907).

Two instruments relating to the sale of specific goods which was part of the same transaction, would be construed together for the purpose of showing the true contract, notwithstanding they were executed on successive days. Pulkrabek v. Bankers Mortgage Corp., 115 Or. 379, 238 P. 347 (1925).

On the record before me, I can make no finding other than that the parties intended to finalize their negotiations by each signing both contracts, and that the terms and conditions incorporated in those contracts was the final arrangement and agreement between the parties. The conduct of the parties in following the same pattern in closing forty to fifty transactions, permits of no other conclusion. The contracts must be construed as a whole, and effect given, if possible, to every word and phrase. Fendall v. Miller, 99 Or. 610, 196 P. 381 (1921); Hardin v. Dimension Lumber Co., 140 Or. 385, 13 P.2d 602 (1932). Plaintiff's arguments that the original telephone conversation constituted a valid contract and that the court should not go beyond that arrangement, is tenuous in the extreme. First, the fact is that the parties themselves did not consider the telephone conversation as a contract. Second, sound business practice would dictate the reduction of the telephone discussion to a writing. Third, the statute of fraud section of the Uniform Sales Act⁵ requires that the terms of such a transaction be reduced to writing. The parties would be presumed to know that law. The parties never intended the telephone conversation to constitute a binding contract, and I so find.

(2) During the course of the trial, I permitted the witness Connolly to testify as to his lack of knowledge of the terms and conditions on the reverse side of the final contract even though at that time, I felt that the Parol Evidence Rule might prevent me from considering such evidence.

Here, with one exception, each of Mitsui's forms of contract was signed by plaintiff through its agent, Connolly. The purpose of a signature to a contract is to express agreement to, and, acceptance of, the terms and conditions of the instrument. Title & Trust Co. v. Nelson, 157 Or. 585, 71 P.2d 1081, 114 A.L.R. 1196 (1937). The fact that one of these contracts was signed in Connolly's name by his secretary, under the facts and circumstances of this case, is of no importance. The fact is that the contract was accepted and acted on by the plaintiff. J. I. Case Threshing Machine Co. v. Smith, 16 Or. 381, 18 P. 641 (1888).

If the evidence offered by plaintiff that Connolly, in spite of the cautionary language on the face of the contract, did not read the language on the reverse side, including the arbitration clause, is to be considered by the court, this evidence must fall within one of the exceptions to the Rule.⁶ I use the Oregon statute and the Oregon decisional law on the subject, for the reason that the contract, containing the arbitration clause, was finally accepted and approved by the plaintiff in the state of Oregon. True enough, this contract was prepared in Washington and there first signed by Mitsui. In any event, the Washington law does not differ from the Oregon law on the subject. The final signing by plaintiff was in Oregon. It is no defense that a party, seeking to avoid the contract, did not read it. The only exceptions to the Rule are: (1) the use of parol evidence of the circumstances under which the agreement was made, including the situation of the subject and of the parties; (2) to explain an ambiguity; (3) to establish illegality or fraud. The evidence offered by plaintiff does not fall within any one of these exceptions. Parol evidence is inadmissible to contradict, add to, detract from, or vary a written contract which is clear and explicit and contains no ambiguities. The writing or writings adopted by the parties as the final and complete expression of their agreement constitutes the "integration of the agreement." Webster v. Harris, 189 Or. 671, 22 P.2d 644 (1950). As recently as 1962, the Oregon Supreme Court said that where the parties entered into a complete contract, which has been reduced to writing, the whole engagement is conclusively presumed to have been included, with extrinsic evidence inadmissible to add to, subtract from, alter, vary or contradict written contract or control its legal operation or effect. Barnstable v. United States National Bank, 232 Or. 36, 374 P.2d 386 (1962). The intention of the parties, as evidenced by the legal import of the language of the written contract, cannot be varied by parol proof of a different intention. United States National Bank of La Grande v. Miller, 122 Or. 285, 295, 258 P. 205, 58 A.L.R. 339 (1927); Delaware Indians v. Cherokee Nation, 193 U.S. 127, 24 S.Ct. 342, 48 L.Ed. 646 (1904). The intention of the parties must be gathered from the instrument...