Zinsmaster Baking Co. v. Commander Milling Co.
| Citation | 273 N.W. 673,200 Minn. 128 |
| Decision Date | 28 May 1937 |
| Docket Number | 31280. |
| Parties | ZINSMASTER BAKING CO. v. COMMANDER MILLING CO. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Hennepin County; Levi M. Hall, Judge.
Action by the Zinsmaster Baking Company against the Commander Milling Company. From an order striking out the defendant's answer as sham and frivolous, the defendant appeals.
Reversed.
Syllabus by the Court .
The court erred in striking out the answer as sham and frivolous and granting judgment for the full amount demanded in the complaint; for, in this action for money had and received the general denial in the answer was not so qualified by admissions or defensive matters pleaded that it could be struck as frivolous. Nor could it be struck as sham; for in no event can it be said that the denial of unjust enrichment as to a substantial amount of the sum demanded was false. The defense stated in the answer does not appear frivolous from a mere inspection, and whether true and adequate should be determined upon a trial and not upon conflicting affidavits.
Oppenheimer, Dickson, Hodgson, Brown & Donnelly, of St. Paul for appellant.
R. H. Fryberger and E. P. Willcuts, both of Minneapolis, for respondent.
Pfau & Pfau, of Mankato, Sawyer & Sawyer, of Winona, Somsen, Dempsey, Johnson & Somsen, of New Ulm, and Kingman, Cross, Morley, Cant & Taylor, of Minneapolis, amici curiae.
Defendant appeals from the order striking out its answer as sham and frivolous.
To determine the legal sufficiency of the answer it is advisable to give a summary of the issues tendered by the complaint. Plaintiff alleges that during the time referred to in the complaint it was in the business of manufacturing bread and cakes from flour, and defendant was in the business of producing flour from wheat, rye, and other grains, which plaintiff bought from time to time. Under the provisions of the Agricultural Adjustment Act of May 12, 1933, tit. 1, 48 Stat. 31 (see 7 U.S.C.A. § 601 et seq.), a processing tax of 30 cents was imposed by federal authority upon every bushel of grain milled. After the tax went into effect, and between March 8, 1935, and December 28, 1935, plaintiff purchased 10,094 barrels of flour of defendant on which it paid a processing tax of $13,929.72. It is alleged that said tax amounted to $1.38 per barrel of flour. Plaintiff was a customer of defendant and purchased under contracts many thousand barrels of flour while the act was in effect. On flour delivered by defendant previous to March, 1935, the tax collected from plaintiff was paid over to the collector of internal revenue. It is also alleged that a combination or agreement existed between all processors of grain to charge purchasers of flour with the processing tax in addition to the market price of the grain, and thereby to limit competition and force plaintiff to pay, in excess of the cost of the grain and its manufacture into flour, the sum of $1.38 as a tax on each barrel. It is alleged that because of such combination of the manufacturers or processors of flour plaintiff was compelled to pay defendant, in addition to the cost and a fair profit for the milling of the grain, this processing tax and, if defendant is permitted to retain the same, it is unjustly enriched at plaintiff's expense. In June, 1935, defendant began suit to restrain the collector of internal revenue from collecting the tax on the ground that the Agricultural Adjustment Act was unconstitutional. On January 6, 1936, the Supreme Court of the United States held the act void. United States v. Butler et al., 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914. And following that decision the defendant prevailed in the suit by it begun; and January 27, 1936, judgment was entered enjoining the internal revenue collector of this district from collecting from defendant the said sum of $13,929.72 processing tax which plaintiff had been compelled to pay defendant.
It is to be noted that plaintiff does not plead any contract or express agreement under the terms of which it is entitled to recover. The action is for money had and received. The answer contains a general denial of each allegation not specifically admitted. The incorporation and business of plaintiff and defendant are admitted. Likewise the Agricultural Adjustment Act and that the Secretary of Agriculture has taken the steps alleged in the complaint to make it effective, but denies the validity of the law. It is admitted that there was an attempt to fix the tax at 30 cents a bushel for processing or milling grain into flour; that defendant since July 9, 1933, has been a processor of grain, and made returns under the act to the proper collector up to February, 1936.
The answer then proceeds to aver by way of defense that in June, 1935, it instituted suit against the internal revenue collector for the district of Minnesota, to enjoin the collection of the processing tax, obtained a temporary injunction, upon giving bonds in specified large amounts, and that on January 21, 1936, these bonds were annulled by the court on defendant's application and, upon the giving of $1,000.00 bond, judgment in this defendant's favor was entered. It further alleges that under contracts made with plaintiff for the sale of flour at specified prices it delivered between March 8, 1935, and December 28, 1935, to plaintiff 10,094 barrels of flour; that each of said contracts provided for payment by plaintiff to defendant of a definite price per barrel of flour and there was no allocation in said contracts of any part of said price to any of the many items of costs which may have been given consideration in arriving at the price, such as the cost of overhead, the cost of raw materials, the cost of labor and taxes paid of one kind or another; and that the price specified in each of said contracts was a total and composite selling price per barrel of said flour.
There are two assignments of error, viz.: (a) The court erred in striking out the answer as sham and frivolous. (b) The court erred in directing judgment to be entered for the amount asked in the complaint. The two assignments may be treated together.
Mason's Minn.St.1927, § 9259, authorizes the court to strike out sham and frivolous answers. An answer is sham when clearly false, and frivolous when its insufficiency appears from mere inspection. Dunnell, Minn.Dig., §§ 7667, 7668; Pederson v. Eppard, 181 Minn. 47, 231 N.W. 393; Nelson v. Independent Fruit Auction Co., 176 Minn. 468, 223 N.W. 767. In this last case it is said:
It is clear to us that the answer cannot be stricken as frivolous, for it contains a general denial. Furthermore, it pleads as a defense that the 10,094 barrels of flour were sold to plaintiff under contracts at a total or composite price per barrel. That is, there was no allocation of any part of such price for the processing tax. Plaintiff could certainly not have judgment on the pleadings. If not, the answer, if not false, must be conceded to state a defense. Is the answer sham? On a motion to strike an answer as sham, care must be used so that the issues tendered for decision on a trial are not disposed of upon affidavits with no opportunity of confronting and cross-examining witnesses. In Western Gravel Co. v. Nolan Co., 174 Minn. 315, 219 N.W. 148, 149, the court said:
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