Vess Beverages, Inc. v. Paddington Corp.

• Decision Date: 05 August 1991
• Docket Number: No. 90-2316,90-2316
• Parties: VESS BEVERAGES, INC., Appellant, v. The PADDINGTON CORPORATION, Morgan Furze, Ltd., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 651

941 F.2d 651

VESS BEVERAGES, INC., Appellant, v. The PADDINGTON CORPORATION, Morgan Furze, Ltd., Appellees.

No. 90-2316.

United States Court of Appeals,

Eighth Circuit.

Submitted March 13, 1991.

Decided Aug. 5, 1991.

Steven Schumaier, argued (Firmin A. Puricelli, on brief), Clayton, Mo., for appellant.

Howard Graff, argued (William B. Schreiber, Deborah A. Skakel and Terese L. Arenth, on brief), New York City, for appellees.

Before McMILLIAN and MAGILL, Circuit Judges, and BRIGHT, Senior Circuit Judge.

MAGILL, Circuit Judge.

Vess Beverages, Inc., appeals from the decision of the district court ¹ setting aside a jury verdict for Vess in its diversity contract action and entering judgment for the defendants, The Paddington Corporation and its wholly owned subsidiary, Morgan Furze, Ltd. (collectively "Paddington"). Vess contends that the district court erred in holding that the Missouri Statute of Frauds barred enforcement of its alleged oral contract with the defendants. We affirm.

I.

Vess, which is based in St. Louis, makes and sells soft drinks. Paddington, an international firm, imports and distributes liquor. In 1985 Paddington and Vess agreed orally that Vess would take over production of Steidl Wine Cooler, a Paddington brand. Vess produced the wine cooler for approximately a year and a half under this agreement. In early 1986 Paddington decided to sell Steidl because sales of the wine cooler were declining and profits were nonexistent. Vess expressed interest in buying it, and negotiations began in June 1986 when Richard Keller, general manager of Steidl Wine Company, sent a letter to Don Schneeberger, president of Vess, proposing terms for the sale of Steidl's assets and the Steidl name.

Schneeberger sent Keller a counter-proposal on August 5, 1986. On August 12, Schneeberger, Keller, and Dave Welch met at the Vess plant in St. Louis. Welch, who had arranged the meeting, was a Paddington employee based in St. Louis who was in charge of quality control at Steidl. He later joined Vess as its manager of new product development after the relationship between Vess and Paddington deteriorated. Keller took notes of the terms discussed and allegedly agreed on at the meeting. At the top of the notes Keller wrote the date, the initials of those present at the meeting, including himself, and "No Publicity At All," indicating the parties' preference that the sale not be advertised. Keller told Schneeberger that he had full authority to sell Steidl, and all the essential terms for the sale of Steidl Wine Cooler were agreed on except for the method of payment. The notes provided that Vess would purchase all full cans and bottles and all packaging materials except empty cans at 50% of their value. The parties further agreed that Vess would purchase Steidl promotional items and empty cans for 25% of their value. In addition, Vess agreed to pay Paddington $10,000 for the Steidl Wine Cooler trademark. The notes further provided that Vess would pay Paddington a royalty on all cases of wine cooler sold outside the St. Louis region (defined as Missouri, Illinois, Kansas, Nebraska, and Oklahoma). The royalty was to be $1 per case the first year and $.25 per case the second year. A second meeting to set the method of payment and finalize the agreement was scheduled for August 28 but later changed to September 4.

Later on August 12, Welch told Schneeberger that after the meeting that day at Vess, Keller and Welch had gone to meet with representatives of another company, where Keller had agreed to sell Steidl to that company for $750,000 if the other company could arrange secured financing. Schneeberger decided to wait and see what happened with that deal; he did not think it would interfere with the Vess-Paddington deal because the other company's financial position was shaky.

Schneeberger, Keller, and Welch met again on September 4. Again, Keller took notes, but this time he did not write down any initials at the top. However, as the negotiations proceeded, Schneeberger wrote in some changes on Keller's notes and ok'd or initialed some of the provisions. Schneeberger also made a copy of the notes for himself. During the meeting, Keller again assured Schneeberger he had authority to sell Steidl. When it ended, Keller and Schneeberger shook hands on the deal, and Keller told Schneeberger that he now owned Steidl. The parties agreed on a method of payment, changed the price of one category of item, and set a closing date of September 17, 1986. A physical inventory was to be taken before that date to enable the parties to calculate the exact sale price. Keller was to have Paddington's attorneys prepare the closing documents, and the documents were in fact prepared, incorporating the terms in Keller's notes; however, Vess never received the documents, nor was the closing held. In early October, Keller called Schneeberger, who was in Dallas. According to Schneeberger, Keller told him that the deal was off and that Paddington was using Keller as the "fall guy" by saying that he had never had the authority to sell Steidl. Schneeberger then called Peter Thompson, president of Paddington. Thompson said that Keller had never had authority to sell Steidl and that Paddington was planning to sell Steidl to another company that had offered $500,000 more than Vess.

Vess filed suit against Paddington in the district court, seeking damages for repudiation of the oral agreement for the sale of Steidl. Paddington moved for summary judgment based on the Statute of Frauds, Mo.Ann.Stat. § 432.010 (Vernon 1952). Section 432.010 provides, in relevant part:

No action shall be brought ... upon any agreement that is not to be performed within one year from the making thereof, unless the agreement upon which the action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith, or some other person by him thereto lawfully authorized....

The district court denied the motion. At trial, Paddington unsuccessfully moved for a directed verdict both at the close of Vess' case and at the end of all the evidence, relying in part on the Statute of Frauds. The district court also refused Paddington's request to instruct the jury on the Statute of Frauds as a defense. The jury found for Vess and assessed damages of $500,000. Paddington moved for judgment notwithstanding the verdict and for a new trial, again partly on the basis of the Statute of Frauds. The motions were denied, and Paddington appealed.

The Eighth Circuit reversed and remanded, holding that the district court had erred in failing to consider whether the Statute of Frauds barred enforcement of the contract. Vess Beverages, Inc. v. Paddington Corp., 886 F.2d 208 (8th Cir.1989). It ruled that the Statute of Frauds applied to the contract because it could not be performed within one year, as Vess had promised Paddington royalties for the first two years after the sale. Id. at 212-13. The Eighth Circuit remanded the case to the district court to determine whether Keller's notes satisfied the Statute of Frauds. ² The district court received briefs on the issue and scheduled a hearing for the presentation of additional evidence, but Vess elected to rely on the trial record. The district court held that the Statute of Frauds barred recovery because although the notes contained all the essential elements of the agreement, they were not signed by Paddington, the party to be charged. Accordingly, the district court entered judgment for Paddington. Vess appeals.

II.

Under Missouri law, to satisfy the Statute of Frauds, a document must contain all the essential terms of the contract, Kansas City Power & Light Co. v. Burlington N.R.R., 534 F.Supp. 1318, 1323 (W.D.Mo.1982), aff'd, 707 F.2d 1002 (8th Cir.1983), and must be signed by the party to be charged, Dinuba Farmers' Union Packing Co. v. J.M. Anderson Grocer Co., 193 Mo.App. 236, 182 S.W. 1036, 1038 (1916). The contract itself need not be in writing; a memorandum of the contract is sufficient. See Weil Clothing Co. v. National Garment Co., 148 S.W.2d 586, 594 (Mo.App.1941) (quoting Carter v. Western Tie & Timber Co., 170 S.W. 445, 446 (Mo.App.1914)). The memorandum need not be a single document but may comprise several writings that, in combination, supply the essential terms. Bayless Bldg. Materials Co. v. Peerless Land Co., 509 S.W.2d 206, 211 (Mo.App.1974). Even if only one of the documents is signed, the requirement is satisfied as long as one document refers to the other, or their contents clearly show they are related. See Mayer v. King Cola Mid-America, Inc., 660 S.W.2d 746, 748 (Mo.App.1983). Although the signature requirement may be met with initials, Kamada v. RX Group Ltd., 639 S.W.2d 146, 148 (Mo.App.1982), they must be affixed with the intent to authenticate the writing as that of the signer, 2 E. Farnsworth, Farnsworth on Contracts § 6.8, at 144 (1990); Restatement (Second) of Contracts § 134 (1981). A signature may appear anywhere in the document and may be typed, printed, or stamped, as well as written. Dinuba, 182 S.W. at 1039.

The district court found that Keller's notes contained all the essential elements of the agreement between Vess and Paddington. The two sets of notes clearly are connected by virtue of their subject matter. Keller wrote his initials on the August 12 notes along with the initials of Welch and Schneeberger, the others who attended the meeting. It is undisputed that he did not sign or initial the September 4 notes. The district court held that the signature requirement was not met because Keller did not intend to authenticate the August 12 notes as his own when he wrote his initials; rather, he was recording who attended the meeting. The court relied on Keller's testimony that he did not sign the notes ³ and on Schneeberger's admission that the notes were not signed. ⁴ Whether Keller intended to authenticate his notes when he...