Quaker Oats Co. v. Brinkley Dryer & Storage Co., Civ. A. No. H-646.

• Decision Date: 31 July 1958
• Docket Number: Civ. A. No. H-646.
• Citation: 164 F. Supp. 761
• Parties: The QUAKER OATS COMPANY, a Corporation, Plaintiff, v. BRINKLEY DRYER & STORAGE COMPANY, Inc., Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

164 F. Supp. 761

The QUAKER OATS COMPANY, a Corporation, Plaintiff, v. BRINKLEY DRYER & STORAGE COMPANY, Inc., Defendant.

Civ. A. No. H-646.

United States District Court E. D. Arkansas, E. D.

July 31, 1958.

Canale, Glankler, Montedonico, Boone & Loch, Memphis, Tenn., Mann & McCulloch, Forrest City, Ark., for plaintiff.

Sharp & Sharp, Brinkley, Ark., for defendant.

JOHN E. MILLER, District Judge.

Findings of Fact

1.

The plaintiff, The Quaker Oats Company (hereinafter referred to as Quaker), is a New Jersey corporation. The defendant, Brinkley Dryer & Storage Company, Inc. (hereinafter referred to as Brinkley), is an Arkansas corporation having its principal place of business in Monroe County, Arkansas. The amount in controversy, exclusive of interest and costs, exceeds the sum of $3,000.

2.

In 1956 Quaker purchased a substantial amount of oats from Brinkley. Most, if not all, of these purchases were made through brokers. In each case after the broker had negotiated the transaction, Quaker sent to Brinkley a contract of purchase on Quaker's Form 324, and in each case Brinkley signed a copy of the contract and returned the same to Quaker. It was the custom of the larger companies, such as Quaker, to require these formal contracts on major transactions. It was also the custom of Brinkley to require such contracts upon any shipment of a large quantity of oats. Six of these contracts were entered into in June of 1956, and each contract called for No. 2 oats, 34-lb. test, and each contract had a provision for discounts for oats testing less than 34 lbs. per bushel. All these contracts were fulfilled by Brinkley, apparently to the satisfaction of Quaker.

On April 29, 1957, J. W. Rascoe, Brinkley's manager, made a telephone call to George Seeds, a broker with Commodity Brokerage Company, Memphis, Tennessee, advising that Brinkley would like to sell ten carloads of oats. Seeds had formerly worked for Quaker for a number of years and had only been a grain broker for about one year. This was the first transaction Seeds, as a broker, had with Brinkley. Seeds checked with Paul Mulroy, a man who had formerly been his assistant at Quaker and who had succeeded him as a manager, and received a bid of 67¢ per bushel for 34-lb. No. 2 oats. It was the intention of Quaker, acting through Mulroy, to purchase 34-lb. No. 2 oats without any provision for a discount. In other words, Quaker wanted only oats that would test at least 34 lbs. per bushel. On the other hand, it was the intention of Brinkley, acting through Rascoe, to sell 34-lb. No. 2 oats with the regular scale of discounts for oats testing less than 34 lbs. per bushel. That is, it was Rascoe's intention and understanding that Quaker would accept oats weighing less than 34 lbs. per bushel, but a discount would be allowed because of the lower test quality of the oats. In 1956 the regular discount was ½ cent per bushel for each pound less than 34, and in 1957 the discount was 1 cent per bushel for each pound less than 34 down to 30 lbs.

After receiving the bid from Quaker, Seeds telephoned Rascoe and advised him that Quaker wished to purchase the oats at 67¢ per bushel. Seeds did not inform Rascoe that Quaker expected 34-lb. No. oats without any provision for a discount. Rascoe agreed to sell the oats at that price, and Seeds then prepared a written confirmation of sale, sending two copies to Quaker and two copies to Brinkley and keeping one copy for his company. The confirmation of sale, among other things, contained the following information:

"Commodity Brokerage Company 69 Union Memphis, Tenn. "April 29, 1957 No. 34-57 "Quaker Oats Company "Memphis, Tenn "Gentlemen "We hereby confirm sale to you for the account of Brinkley Dryer and Storage Co., Brinkley, Ark. of approximately Twenty Five Thousand (25,000) Bushels, 34 pound #2 oats. "Price Sixty Seven cents (.67¢) per bushel delivered Memphis Tenn. Via Cotton Belt R'way. "Weights Memphis Grade Memphis "Shipment June-July 1957 "Brokerage ½¢ per bu. by seller."

Quaker and Brinkley each received copies of the broker's confirmation, and each signed one copy, returning it to Seeds. Rascoe signed the copy on behalf of Brinkley and at the time of such signing still understood that he was selling 34-lb. No. 2 oats with the regular scale of discounts. He did not pay too much attention to the broker's confirmation because he knew that Quaker always sent its regular contract form No. 324 for execution. It was also Rascoe's understanding that the broker's confirmation was merely a bookkeeping record for the broker, and was not a contract.

On April 29, 1957, Quaker sent Brinkley its proposed contract No. 1226 on its standard form No. 324. Among other things, this contract contained the following standard provisions:

"8. Grain shall be milling quality, cool and sweet on arrival at mill.

"9. We shall not be liable for any loss or damage due to our inability to take delivery at time and place specified arising out of any strike, car shortage, embargo, delay, or any other cause beyond our control.

"10. Seller agrees to ship in any car not less than the railroad prescribed minimum weight."

If Brinkley had shipped oats under this proposed contract, Quaker would not have accepted them unless the oats were cool and sweet as provided in standard provision No. 8 in the contract, and would have expected Brinkley to comply with standard provision No. 10 of the contract.

Upon receiving this contract Rascoe noticed that it had no discount provision and that it called for oats "34 lbs. test or better." On May 3, 1957, Rascoe wrote the following letter to Quaker:

"Quaker Oats Co. Memphis, Tenn "Mr. Paul Mulroy:

"I am returning to you Contract # 1226 so you can add the Discount rate of 1¢ Per Bu. for test wt. under 34 lbs. and also remove the words 34 lbs test or Better.

"Return the new Contract and I will sign it.

"We can not guarantee 34 lbs or Better oats."

For some reason this letter did not reach Mulroy, and apparently the matter was overlooked by all parties for a few weeks. When it was finally learned that there was a dispute between the parties as to whether a contract was in existence, a number of telephone calls were made and a number of letters were written concerning the controversy. Early in June 1957 Rascoe advised Mulroy that Brinkley would not ship 34-lb. No. 2 oats without a discount provision. Rascoe also told Mulroy to "buy in" the oats if he thought there was a valid contract between Quaker and Brinkley.

On June 19, 1957, Mulroy wrote Rascoe as follows:

"Dear Mr. Rascoe:

"A couple of days ago we were advised by Commodity Brokerage Company that you were to write us a letter of particulars on the status of the ten cars, approximately 25,000 bushels, of oats for which you contracted with us through Commodity Brokerage on April 29, 1957. To date we have not received this correspondence and presume that this letter will be forthcoming shortly.

"In one of our phone conversations, you stated that you had signed and returned our contract. We have made a thorough search of all our files, and have failed to locate this copy. By return mail, would you please advise us as to approximately when you signed and mailed this copy, so that we, in turn, can put a tracer out through the local post office. Much obliged."

In the letter of June 19 Mulroy made reference to a signing of the contract by Rascoe. Actually Rascoe did not sign the proposed contract at any time because of the absence of a discount provision.

On June 24, 1957, Seeds wrote Rascoe as follows:

"Dear Mr. Rascoe:

"After talking with you today I called Mr. Paul Mulroy with Quaker Oats Company regarding shipment of the oats that are due on our contract 34-57.

"As you know this contract calls for 34 pound oats and as I had explained to Mr. Mulroy it has not been possible to get any oats at near this test weight from the present crop. You may recall that at one time he agreed to take oats that would not be lower than 30 pounds and at that time I told him that you could not guarantee that they would be 30 pounds or better.

"Today he agreed to accept one car as a test regardless of the test weight, at the usual scale of discounts and if these could be used by his mill in their production he would let you ship the balance under the same basis.

"Please let this first car come out as soon as possible and advise me when it moves and I will do all that I can to see that it is accepted as the basis for the balance of the contract."

At the time of the trial Rascoe did not remember having received or read this letter.

On July 8, 1957, Seeds wrote Rascoe as follows:

"Dear Mr. Rascoe:

"With reference to our many conversations regarding our Contract 34-57 with Quaker Oats Company for 25,000 bushels of 34 pound No. 2 oats for shipment during June and July 1957.

"Quaker Oats are willing to accept a lighter test weight oat on this contract and in view of the fact that they feel that this contract is still in force it is my honest suggestion that you make some effort to make delivery or at least make settlement with them.

"During the past several weeks several elevators in this area have been compelled, for various reasons, to make cancellation of oat contracts and I can assure you that I will do what ever I can to have any settlement as reasonable as possible.

"I hope that you will reconsider and permit me to negotiate a settlement for you.

"Please let us hear from you."

At the time of the trial Rascoe did not recall having received or read this letter.

On July 26, 1957, Mulroy wrote Rascoe as follows:

"Gentlemen:

"Regarding our contract No. 1226 for 10 cars, approximately 25,000 bushels, No. 2-34 No. test or better Oats for June-July 1957 shipment, via the St. Louis & Southwestern Railroad. To date, we have received no advice as to shipments having been made.

"If shipment is not made by July 31, we will be required to purchase this...