Terry v. Dairymen's League Co-op. Ass'n, CO-OPERATIVE

• Decision Date: 16 November 1956
• Docket Number: CO-OPERATIVE
• Citation: 157 N.Y.S.2d 71,2 A.D.2d 494
• Parties: Malcolm TERRY, Plaintiff-Respondent, v. DAIRYMEN'S LEAGUEASSOCIATION, Inc., Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 71

157 N.Y.S.2d 71

2 A.D.2d 494

Malcolm TERRY, Plaintiff-Respondent, v. DAIRYMEN'S LEAGUE CO-OPERATIVE ASSOCIATION, Inc., Defendant-Appellant.

Supreme Court, Appellate Division, Third Department.

Nov. 16, 1956.

Frank B. Lent, New York City, for the defendant-appellant (Rushmore, Mason & Marcus, and George Marcus, Stamford, of counsel).

Francis R. Paternoster, Walton, for plaintiff-respondent.

Before FOSTER, P. J., and BERGAN, COON, HALPERN and GIBSON, JJ.

HALPERN, Justice.

The plaintiff has recovered a substantial judgment for damages upon the theory that the defendant maliciously induced the breach of trucking contracts which had been entered into between the plaintiff and a number of dairy farmers.

This case has been tried twice. A verdict in favor of the plaintiff upon the first trial was set aside by the Trial Justice on the ground that it was against the weight of the evidence. The Justice presiding at the second trial indicated that he, too, had been inclined to set aside the verdict but, in view of the fact that two juries had arrived at the same result, he had decided to allow the verdict to stand. We have concluded that the judgment should be reversed and the complaint dismissed.

The plaintiff was engaged in the business of hauling milk from various dairy farms in the vicinity of Downsville, New York, to the defendant's milk plant at Margaretville, New York. The defendant, as its name indicates, is a co-operative association of dairy farmers. The farmers with whom the plaintiff had contracted for trucking were all members of the defendant association. Prior to 1949, the defendant's plant had been located at Downsville, New York, and the plaintiff was one of several truckers who hauled milk to the plant for farmers in that area. Because of the condemnation of many farms by the New York City Board of Water Supply, the number of dairy farms operating in the area was greatly reduced and the defendant decided to close the Downsville plant and to transfer the patronage of the farmers in that area to its Margaretville plant, about 20 miles away. There obviously was not enough business to sustain several truckers and the defendant selected the plaintiff and one Williams as the two truckers who would serve the farmers in the Downsville area and bring their milk to Margaretville. While the defendant had operated its plant at Downsville, the cost of hauling the milk to the plant had been borne wholly by the farmers. The truckers' charges, about 15 cents per hundredweight, had been deducted by the defendant from the amounts owing to the farmers and had been paid over by it to the truckers. Because of the longer haul to Margaretville, the defendant agreed to contribute about 5 cents per hundredweight during the summer months and 10 cents per hundredweight during the winter months, as an additional payment to the truckers. The contract of transportation was in each instance made orally between the farmer and the trucker but, since it was not economically feasible for a trucker to engage in the business of transporting milk unless he had a substantial number of customers along the same route, the farmers had to act cooperatively in arranging for the services of a trucker. The farmers, as members of the defendant, naturally looked to the defendant to make the arrangements for the trucking. As an executive of the defendant testified, the defendant regarded it as part of its responsibility to see to it that suitable trucking service was made available, even though under its contracts with the farmers for the purchase of milk, it was the legal obligation of the farmers to deliver the milk to the plant.

It thus appears that the defendant acted as the agent of the farmers in making arrangements for the trucking, subject to ratification or adoption of the arrangements by the individual farmers. The defendant had an interest an seeing to it that satisfactory arrangements were made, both in order to assure a steady flow of milk at its plant and in order in order to protect the farmers as its members. In the special case of the transportation to the Margaretville plant, the defendant had an additional interest growing out of the fact that it contributed a subsidy for part of the cost of the transportation.

In 1949, when the plaintiff started to haul milk to the Margaretville plant, he had about 23 customers on his route. The New York City water supply project continued to absorb dairy farms and, in the ensuing years, several of the dairy farmers on the plaintiff's route ceased to operate, with the result that in 1953 the plaintiff had only 13 customers left. The plaintiff contended that this volume of business did not produce a sufficient income at the rates currently paid. He complained about this from time to time to his farmer customers and to the officials of the defendant. The situation came to a head late in 1953. On Wednesday, November 4, the plaintiff telephoned to one Clark, a member of the board of directors of the defendant, who resided in the vicinity, and took the matter up with him. There is a controversy as to the exact content of the conversation. The plaintiff testified that he demanded more money and stated that he was losing money at the current rates but he denied that he threatened to quit if more money was not forthcoming. On the other hand, Clark testified that the plaintiff told him that he would quit if the defendant did not increase the amount of its payment. According to Clark, the plaintiff said that he would give the defendant until the first of the following week to provide additional money and, if it failed to do so, he would quit hauling the milk. The following Friday, November 6, a conference was held at the office of the defendant at which its division representative, its local field representative and the manager of the milk plant were all present. The plaintiff repeated his demands, but the defendant's representatives told him that they could not pay him any more money, and they pointed out that Williams, the other trucker, was willing to continue at the agreed rates. Here again, there is a dispute as to whether the plaintiff gave notice of his intention to quit. The plaintiff denies that he did but the defendant claims that the plaintiff stated unequivocally that, if more money was not forthcoming, he would cease to haul the milk on the following Monday. According to the defendant's version of the conference, the plaintiff was repeatedly told that the defendant could not pay any more and that the farmers could not be expected to pay any more and that other arrangements would have to be made if the plaintiff was unwilling to continue at the current rates. Immediately after the conclusion of the conference, the defendant's filed representative and its plant manager made arrangements with Williams to take over the plaintiff's route as well as to carry on his own route and they then notified all the farmers whom they were able to find at home, of the change in the arrangements. According to their testimony, they advised the farmers that they were, of course, free to make any trucking arrangements that they wished but that Williams would be available to haul the milk after Monday, if they wished to have him do so. Practically all the farmers whom they interviewed, constituting a majority of the farmers on the plaintiff's route, acquiesced in the change.

Accordingly, on Monday, November 9, after the plaintiff had delivered a truckload of milk at the defendant's plant, the defendant declined to return the empty milk cans to the plaintiff but turned them over to Williams who, in regular course, returned them to the farmers. Thereafter, the farmers continued to ship their milk by Williams' truck, without protest or objection. The plaintiff then brought this action for damages against the defendant.

It is undisputed that the oral contracts between the plaintiff and the farmers were terminable at will and that the agreement of the defendant to pay a subsidy was also terminable at will. The plaintiff, nevertheless, characterized his action as an action for damages for maliciously inducing the breach of the contracts between himself and the farmers. Since the contracts were terminable at will, the discontinuance of the plaintiff's services, however induced, could not constitute a breach of contract. The action must, therefore, be regarded as one for damages for inducing the discontinuance of business relations rather than as one for the inducing of a breach of contract. It is settled that such an action can be maintained only upon a showing that the defendant acted solely out of a malicious desire to injure the plaintiff, without any expectation of furthering its own business interests. Reinforce, Inc., v. Birney, 308 N.Y. 164, 124 N.E.2d 104; Beardsley v. Kilmer, 236 N.Y. 80, 140 N.E. 203, 27 A.L.R. 1411. The trial court correctly charged the jury in accordance with this settled principle, using language adopted from the opinions in the cited cases:

'And the action is brought upon the theory that this defendant maliciously and without legal or social justification caused these producers to discontinue the plaintiff's services. If the defendant deprived the plaintiff of his employment by means not in themselves unlawful, by acts not in themselves unlawful have [sic] any proper purpose to serve, they are not liable for any damage they caused. The genesis which will make a lawful act unlawful must be a malicious one, unmixed with any other, and exclusively directed to injury and damage of another.

'In other words it is incumbent upon the plaintiff to establish to your satisfaction that the action of the defendant was without legal or social justification; that their action was not motivated by a proper desire.'

No exception was taken to the charge and there was no request to charge. The jury returned a verdict in favor of the plaintiff in the amount of $4,357.

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