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Cate v. Good Bros. Inc.

decided: April 7, 1950.


Author: Hastie

Before BIGGS, Chief Judge, and HASTIE, Circuit Judge and LEDERLE, District Judge.

HASTIE, Circuit Judge.

The diversity of the citizenship of the parties has made this controversy concerning the sale of quantities of cheese the business of the courts of the United States.

In the district court the plaintiff seller was awarded damages measured by the agreed price of the merchandise under the terms of an alleged contract with the defendant buyer. Judgment was entered pursuant to the answers of a jury to special interrogatories propounded under Rule 49(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A.

This appeal raises questions concerning the acceptance of part performance as satisfaction of the Statute of Frauds, an attempted repudiation of the original agreement, the merchantable quality of the goods, the conduct of the trial judge in submitting interrogatories and the propriety of sundry trial rulings and statements.

There is also presented the matter of an alleged agreement of compromise or settlement. The trial court found that such an agreement had been made and was binding.*fn1 If that conclusion is sustained, the questions raised concerning the making and breach of the contract of sale need not be decided. Therefore, the effect of this supervening transaction will be considered first.

After the cheese had been delivered to the buyer in November 1946, there ensued a period of controversy concerning its quality. This led to a meeting on January 9 and 10, 1947 of Mr. Maron representing the seller, Messrs. Good and Friedel representing the buyer, and Mr. Gentner, a broker, who negotiated the sale. They discussed their problem and particularly the possibility of the return of substantial quantities of cheese to the seller. Concerning this meeting, the jury made only the negative finding that Maron did not agree "that he would accept the return of the cheese and make no further claim against the defendant in respect of it". Whether the parties reached any agreement at this conference is sharply controverted. In any event, shortly after the meeting the seller sent the buyer a letter dated January 11, which the buyer claims to have received on January 15. The text of that letter is as follows:

"Reference is made to the conversation Mr. R. G. Maron had with Mr. Sam Good.

"We understand that you are going to place at our disposal certain quantities of Prins Hendrik Blue Mild with public storage warehouses in Baltimore, Washington and Philadelphia, in addition to the quantity returned to Spring Green. Mr. Maron made it clear that such action on your part does in no way affect our rights for full compensation according to our invoices previously rendered.

"We shall attempt and possibly complete resale of the Blue Mild referred to, and of the 265 Bundles of Alkmaar with bacon in storage in Philadelphia, and shall give you credit for the net proceeds as received, requiring you to pay the balance forthwith."

Pursuant to its power under Rule 49(a) to make findings on issues not covered by the special interrogatories, the court found as a fact, and there is testimony adequate to support the finding, that "after receiving the letter the defendant delivered the Blue Mild [cheese] to the plaintiff". The court further found "that Good [buyer] intended to and did accept the terms of Maron's [seller's] letter of January 11, by placing the Blue Mild cheese at plaintiff's [seller's] disposal". The record establishes no tender by the seller to take back the cheese except upon the terms of this letter. Thus the buyer's conduct appears to be an unambiguous response to the seller's letter.The finding that the letter of January 11, was an offer and the return of the cheese an acceptance of that offer is a reasonable construction of this language and behavior. We find no basis for disturbing it.

The trial judge also construed this transaction as a "contract by which the parties settled the defendant's disputed liability and provided a method of ascertaining its amount". We think this construction is reasonable and we sustain it. In one sentence of the letter of January 11, the seller states that the proposed return of the cheese "does in no way affect our rights for full 148 compensation according to our invoices previously rendered".Standing alone this language would be equivocal since it might mean merely that the seller would continue to assert a claim for invoice prices without the buyer agreeing to the validity of such a claim. However, the next sentence, and particularly the phrase that the seller will give the buyer "credit for the net proceeds [of resale] as received, requiring you [buyer] to pay the balance forthwith" shows the intendment that the cheese be treated as the buyer's property acquired at the price stipulated in the original agreement. Considering the communication as a whole, we agree with the trial judge that it is fairly construed as an offer of the seller to take back the merchandise and to assume the responsibility of disposing of it to the buyer's credit in consideration of the buyer's agreement, to be made manifest by his shipment of the cheese, to pay the difference between the invoice prices and any resale credit.

We have not overlooked the buyer's contention that the seller's letter of January 11, was a self-serving declaration and therefore inadmissible to prove any agreement at the meeting of January 9 and 10. But, on an entirely different theory, the letter was clearly admissible as a document embodying an offer. Such a document is not admitted for the probative value of the statements it contains but as an act of primary legal significance in the making of a contract.

Our conclusion on the issue of compromise makes it unnecessary to consider questions presented and argued concerning the making and ...

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