Short v. Sun Newspapers, Inc., 50736.

• Decision Date: 19 December 1980
• Docket Number: No. 50736.,50736.
• Citation: 300 NW 2d 781
• Parties: Robert E. SHORT, Appellant, v. SUN NEWSPAPERS, INC. et al., Carroll E. Crawford, Vincent J. Manno et al., Elmer L. Andersen et al., Respondents.
• Court: Minnesota Supreme Court

300 N.W.2d 781 (1980)

Robert E. SHORT, Appellant, v. SUN NEWSPAPERS, INC. et al., Carroll E. Crawford, Vincent J. Manno et al., Elmer L. Andersen et al., Respondents.

No. 50736.

Supreme Court of Minnesota.

December 19, 1980.

William Busch, St. Paul, Foster, Jensen & Short, Minneapolis, for appellant.

Faegre & Benson, Lawrence Brown and Brian O'Neill, Minneapolis, for Sun Newspapers, Inc., et al.

Henson & Efron and Alan C. Eidsness, Minneapolis, for Crawford.

Mackall, Crounse & Moore, Minneapolis, for Manno, et al.

Briggs & Morgan and Frank Hammond, St. Paul, for Andersen, et al.

Heard, considered and decided by the court en banc.

SIMONETT, Justice.

Plaintiff Robert E. Short sued Sun Newspapers, Inc., and others on three counts: for specific performance of a contract to sell certain assets of Sun's newspaper business; for damages for breach of the contract; and for wrongful interference with plaintiff's contractual relationship with Sun.¹ Defendants first moved for judgment on the pleadings, which was denied. After discovery depositions were taken, both plaintiff and defendants moved for summary judgment. By its order of April 29, 1979, the trial court granted summary judgment in favor of all defendants. Plaintiff appeals from that judgment. We reverse.

The facts need to be set out at some length. Sun had started an antitrust action against the Minneapolis Star and Tribune. As part of a settlement of that action the two parties entered into a written agreement, dated September 29, 1978, whereby Star and Tribune would purchase the controlling stock interest in Sun held by its president, Carroll E. Crawford, but on the condition that Sun would first sell off its newspaper division assets. The sale was subject to the approval of the Justice Department. The proceeds of the sale of the newspaper business would go, ultimately, to Star and Tribune.

Paragraph 6 of the settlement agreement established procedure to be followed for the sale. Star and Tribune was to submit to Sun the names of three experienced newspaper brokers, and Crawford, for Sun, was to select one of the three to act as broker. The assets to be sold were "all of Sun's newspaper business, including its free circulation newspapers, but not Sun's directory, printing, or other business," and a list of the assets to be sold was attached. The list did not include any physical assets. The sale was to be for cash plus assumption by the buyer of all accrued vacation pay liability for Sun's employees who stayed with the new owner. Further, "Crawford shall cause Sun to accept * * * the highest bid obtained by such broker during the period ending on the sixtieth (60th) day after the Deposit Date." The sale was to be closed no later than December 31, 1978.

Of the three names submitted by Star and Tribune to Sun, Crawford selected Vincent J. Manno Company as the broker. On October 19, 1978, Manno and Sun signed an exclusive brokerage agreement wherein Manno had until November 28, 1978, to "exercise its best efforts in obtaining bids from potential buyers of said Newspaper Business and of said Magazine Distribution Business." Further —

Bids shall state (a) the purchase price which such purchaser offers to pay for said Newspaper Business, and (b) the purchase price which such purchaser offers to pay for said Newspaper Business and said Magazine Distribution Business combined.

Then, after providing for a certified check of $5,000 to accompany each bid and providing that "Broker shall only accept offers from potential purchasers" for cash plus the accrued vacation pay liability of Sun's personnel, the brokerage agreement went on —

On the first business day following the Final Bid Date, the Broker shall review the bids with Crawford. At such time, Crawford shall make the decision as to whether Sun shall sell only the Newspaper Business, or shall sell both the Newspaper Business and the Magazine Distribution Business. In the event that Crawford determines that Sun shall sell only the Newspaper Business, the purchaser of the Newspaper Business shall be the potential purchaser which has offered the highest offering price for said business; in the event that Crawford determines that Sun shall sell both the Newspaper Business and the Magazine Distribution Business, the purchaser of the two businesses shall be the potential purchaser which has offered the highest offering price for said businesses. The purchaser, so selected, shall hereinafter be referred to as the "Purchaser." Emphasis added.

Gerald Reilly, a representative of Manno, went to work to find prospects. His job was complicated by certain facts: He was selling only "soft" assets; the purchase price had to be cash; and the deadline was short. From time to time Crawford made suggestions to Reilly on how to make the sale more attractive. Thus he suggested to Reilly that a Goss Urbanite printing press then being used to print Sun's newspapers might be available for sale. This, however, was a tangible asset which would be owned by Star and Tribune under the settlement agreement, and its acquisition would require separate dealing with Star and Tribune. Crawford also suggested to Reilly that financing terms might be offered to potential purchasers, such as by delays in Star and Tribune's billings for printing or by the purchaser collecting the receivables. Reilly "envisioned something quite informal in the bid procedure."

Reilly also talked to people at the Star and Tribune, because the successful purchaser, if he did not immediately move the business elsewhere, might need to make arrangements with the Star and Tribune for rental of space and facilities in the Sun building and might need to continue the printing contract with the Star and Tribune. On November 20, Reilly sent a mailgram to seven prospects, including Andersen but not Short, outlining "bid procedures."²

On October 31, 1978, Elmer L. Andersen talked by phone with Reilly, having been referred to Reilly by Charles Arnason of the Star and Tribune. This was the first of many conversations between Reilly and Andersen over the next few weeks. Reilly furnished Andersen with production and rental figures and indicated to Andersen the Goss Urbanite press might be available. On November 21, Reilly told Andersen that Andersen could elect to bid for the press, but that it would be best to have the press price separately stated. On November 27, Andersen called Reilly and read a rough draft of his bid, and thereafter Andersen submitted his bid to Reilly at his New Canaan, Connecticut, office.

Short first indicated an interest in the proposed sale when he called Crawford on or shortly after November 8. On November 10, Crawford wrote Short a letter stating:

There are no hard assets included. The Star, who will be buying our printing plant, will agree to print and compose for a new owner and also provide office space. I would recommend that a new owner office and compose elsewhere and just have the Star do the printing. Even this would not be necessary. If the Star didn\'t do the printing, they might also be interested in selling the press that we use to print the newspapers.

* * * * * *

The newspapers will be sold on or before November 28 to the highest bidder * * *.

Thereafter, Short conferred at times with Reilly as well as with Crawford and the attorney then representing Crawford. On November 25, Crawford gave Short, at Short's request, a copy of the brokerage agreement, since Short wanted to know the exact terms of the bidding procedure. By November 28, Short had tentatively decided to submit a bid. He had decided to bid in the form of "X dollars more than the highest bid received to a maximum of so many dollars." Short called both Crawford and Sun's attorney on the phone, explained the form of his bid, and testified he was told by both this would be fine and would be an acceptable and conforming bid, although Short understood neither was giving an opinion as to the legality of the bid form.

As a result of a telephone conversation between Short and Reilly on either Friday, November 24, or Saturday, November 25, Reilly agreed the deadline for bids would be 5 p. m. Tuesday, November 28; that the bids could be accepted at the office of Sun's attorney in Minneapolis as well as at New Canaan; that the bids would be read in Minneapolis the next morning, Wednesday, November 29; and that Short's bid would be opened last. At this time, Short knew that Reilly already had three bids in hand. At 4:55 p. m. on Tuesday, Short submitted his bid.

On Wednesday morning, the bids were opened in a law office in Minneapolis, with all parties either present or represented by counsel. Reilly participated from New Canaan by conference phone. There were five bids, which, in the order opened, were:

C-1-$5,000, which was also the accompanying good faith deposit

"C" stands for Connecticut and "M" stands for Minneapolis.

C-2-$100,000, with no good faith payment

C-3-$1,410,000, allocated $1,100,000 for the newspaper and $310,000 for the Goss press, plus other terms, and accompanied by a $5,000 good faith deposit the Andersen bid

M-1-$10,000 bid, with a $5,000 good faith deposit

M-2-$25,000 more than the highest bid received, with a maximum of $500,000, and with a $5,000 good faith deposit the Short bid

A difference of opinion immediately arose. Was the Andersen bid, although the highest, to be ignored as nonconforming?³ Was the Short bid then the highest bid, or was it to be ignored as "illegal"? Andersen then stated his bid was severable and agreed to delete the Goss press. The conference recessed until the afternoon, when Sun's counsel indicated in his opinion the bid should be given to Short. The Star and Tribune then handed a letter to Crawford stating that deletion of the Goss press by Andersen from his bid was proper, Andersen having reserved the right in his bid to make adjustments; that the Star and Tribune was willing to sell the Goss press to the C-3 bidder once...