Shearon v. Boise Cascade Corporation, 72-1370.

• Decision Date: 18 May 1973
• Docket Number: No. 72-1370.,72-1370.
• Citation: 478 F.2d 1111
• Parties: John SHEARON, d/b/a Shearon Lumber Sales, Appellant, v. BOISE CASCADE CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

478 F.2d 1111 (1973)

John SHEARON, d/b/a Shearon Lumber Sales, Appellant, v. BOISE CASCADE CORPORATION, Appellee.

No. 72-1370.

United States Court of Appeals, Eighth Circuit.

Submitted January 8, 1973.

Decided May 18, 1973.

Roy W. Meadows, Des Moines, Iowa, for appellant.

James L. Krambeck, Des Moines, Iowa, for appellee.

Before MATTHES, Chief Judge, BRIGHT, Circuit Judge, and TALBOT SMITH, Senior District Judge.^*

BRIGHT, Circuit Judge.

Plaintiff John Shearon (Shearon), a lumber wholesaler doing business as Shearon Lumber Sales, brought an action against Boise Cascade Corporation (Boise), a lumber producer, for breach of an alleged oral contract giving Shearon the exclusive right to sell Boise lumber products to Capp Homes of Iowa (Capp), a consumer of very substantial amounts of lumber for its prefabricated homes. The jury awarded Shearon $100,000 in damages, but the district court denied any recovery by granting defendant's motion for judgment n. o. v. The district court also granted a new trial conditional upon this court's failure to sustain the judgment adverse to the jury verdict. We reverse on the grant of judgment n. o. v., but affirm the grant of a new trial and remand the case for further proceedings.

The facts presented at the trial disclose that prior to 1963 Shearon had sold substantial quantities of Boise lumber products, primarily studs, to Capp. Shearon also had established considerable rapport with the president of Capp, Hy Diamond.

In the fall of 1963, Gordon King, a sales manager for Boise, sought to increase his firm's lumber sales to Capp. He contacted Shearon at Des Moines, Iowa, and requested that Shearon attempt to convert Capp into a buyer of larger quantities of Boise's lumber products. In this conversation, King allegedly stated that if Shearon could induce Capp to become a more substantial user of Boise products than in the past, Shearon would be protected against other wholesalers in his sale of Boise lumber products to Capp and that Boise would not sell direct to this customer.

Thereafter Shearon contacted the president of Capp for the purpose of inducing Capp to purchase substantial quantities of Inland Douglas Fir, produced by Boise. He submitted a program to Diamond designed to provide Capp's lumber requirements for a one-year period. Apparently Capp adopted this program which resulted in its purchasing substantial amounts of dimension lumber from Boise for its 1964 annual requirements, thus greatly increasing sales of Boise lumber to Capp. However, although Capp purchased 140 carloads of lumber materials from Boise in 1964, Shearon's sales accounted for only 59 carloads. Another wholesaler handling Boise's products underbid Shearon's price for a substantial part of Capp's lumber requirements from Boise. Shearon vigorously protested this apparent breach of the agreement. King explained that Boise had quoted the second wholesaler a price on lumber products without realizing that this wholesaler was seeking to sell to Capp. Boise later realized its mistake but could not retreat from its commitment to make the shipment to the second wholesaler. According to Shearon, King promised to come to Des Moines to help get things straightened out and to maintain Capp as Shearon's customer.

In late 1964, King returned to Des Moines and met with Shearon and Capp's president, Diamond. King indicated to Diamond that he would like to have Capp submit its lumber requirements to only one wholesaler of Boise products. According to the testimony of both Shearon and Diamond, King stated that he wanted Shearon to have the Capp account. Capp's lumber purchases from Boise for 1965 were ordered by Shearon. That year, Boise shipped more than 200 carloads of lumber products to Capp.

By the next year, circumstances had changed. A new president of Capp approached Boise's management with a proposal to buy directly from the manufacturer, cutting out the middleman-wholesaler. Boise agreed to this proposal and for the years here in question, 1966 through 1969, sold directly to Capp.

In bringing this action, Shearon alleged and the jury found that he and Boise entered into an oral agreement in September of 1963, under the terms of which Shearon undertook to increase Capp's purchases of Boise's lumber products, and in return for his efforts, if successful, Boise agreed to sell to Capp only through Shearon.

In denying Shearon's right to judgment on the jury verdict, the district court granted the motion for judgment n. o. v. on the following grounds:

(1) The alleged oral agreement could not be performed within one year and evidence to prove such agreement was not admissible under the Iowa statute of frauds;

(2) There was insufficient competent evidence to establish part performance to remove the agreement from the statute of frauds;

(3) The agreement was not enforceable for want of mutuality and consideration;

(4) The evidence was vague and insufficient to establish an agreement on essential and material terms necessary for the formation of an enforceable contract;

(5) The damages awarded by the jury were not sustained by sufficient admissible evidence, but rested on speculation and conjecture.

We turn to each of these issues.

I. THE STATUTE OF FRAUDS

The Iowa statute of frauds provides that "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: * * * Those contracts that are not to be performed within one year from the making thereof." Iowa Code Ann. § 622.32 (1950). Appellee argues that the agreement between King, acting for Boise, and Shearon falls within the statute since the evidence shows that although the alleged oral agreement was made in 1963, its contemplated and actual performance extended beyond 1964. Assuming, arguendo, the correctness of this assertion, the oral contract nevertheless falls outside of the statute, for its terms do not preclude the possibility of performance within one year.

In approaching the statute of frauds issue, it is well to note the nature of the performance demanded of both parties. While each party might perform on a continuing basis, the parties did not expressly specify the duration of the contract. Thus, the contract was indefinite as to time of performance.

Iowa courts from a very early date have tended to limit the application of the "performable within one year" provision of the statute of frauds. In Blair Town Lot and Land Co. v. Walker, 39 Iowa 406, 411-412 (1874), the Iowa Supreme Court expressed its restrictive view of the one-year provision:

It will be observed that the statute is negative in its language—any contract that is not to be performed within one year from the making thereof. It is not sufficient to bring a case within the statute, that the parties did not contemplate the performance within a year; but there must be a negation of the right to perform it within the year. This negation of the right to perform within the year, may be shown by an express stipulation in the contract that it shall not be performed within that time; by an express stipulation to be occupied more than that time in the performance; by a contract, the terms of which cannot, per possibility, be performed within the year; by a contract, the terms of which show, though not in express language, that the party has no right to perform it within the year. Unless the contract comes within one of these classes, it is not within the statute.

Another early Iowa case holds the statute applies only to a contract not to be performed on either side within one year. Smalley v. Greene, 52 Iowa 241, 3 N.W. 78 (1879). In Stauter v. Walnut Grove Products, 188 N.W.2d 305 (Iowa 1971), the court relied on Blair, supra, 39 Iowa 406, in enforcing an oral employment agreement which provided that employment was to continue as long as the plaintiff "kept up on his job." The court held that the statute was inapplicable due to the possible death of the plaintiff or the possible cessation of the defendant's business within one year, however improbable those contingencies might be.

Although the parties in the present case contracted with regard to a single customer, their agreement seems to fall within the general classification of exclusive distributorship agreements in which one party (manufacturer or owner) grants another party the exclusive right to distribute the products of the former. Iowa courts have apparently adopted the early restrictive view of the statute, as expressed in Blair, in enforcing distributorship arrangements and similar contracts. Iowa cases have held oral exclusive distributorship agreements of indefinite duration enforceable, even when the contemplated performance could or did extend beyond a one-year period. See, e. g., C. C. Hauff Hardware, Inc. v. Long Mfg. Co., 257 Iowa 1127, 136 N.W.2d 276 (1965); Atlas Brewing Co. v. Huffman, 217 Iowa 1217, 252 N.W. 133 (1934); Hirschhorn v. Bradley, 117 Iowa 130, 90 N.W. 592 (1902).

The Iowa cases are in accord with the general rule that an oral contract is not invalidated by the statute of frauds unless, according to the reasonable interpretation of its terms, the contract requires that it should not be performed within one year. Warner v. Texas and Pacific Ry. Co., 164 U.S. 418, 434, 17 S.Ct. 147, 41 L.Ed. 495 (1896); 3 S. Williston, Contracts § 495, pp. 575-579 (3d ed. 1960); 2 A. Corbin, Contracts, § 344, pp. 534-537 (1950). Corbin also states that, "Contracts for employment or other performance that is to begin within a year and is to continue for an indefinite, unspecified period, are terminable by either party at any time and are held not to be within the one-year clause of the statute." Id. § 446, p. 552 (emphasis added).

Since the oral contract in question is of no specified duration, since Shearon could potentially have completed his performance within one year, and...