Opinion
No. 7053.
May 5, 1952.
APPEAL FROM THE DIVISION TWO CIRCUIT COURT, GREENE COUNTY, WARREN L. WHITE, J.
Neale, Newman, Bradshaw, Freeman Neale, Springfield, for appellant.
Warren McE. Turner, Wendell H. Richmond, Springfield, for respondent.
This is an action by the vendor for damages accrued on account of a breach of contract of sale. The trial court sustained a motion to dismiss plaintiff's action at the close of its testimony, from which judgment plaintiff appealed.
The petition was filed in the Circuit Court of Greene County, Missouri, and states that plaintiff entered into a contract with defendant August 11, 1949, to purchase 2200 cases of No. 2 water pack blackberries, which would meet government specifications, at a price of $1.85 per case, F.O.B. Bolivar, Missouri; that it was the trade custom that blackberries purchased for re-sale to the government should meet government specifications, which required the blackberries to contain a grade of at least seven degrees brix, which custom was known to defendant and became a part of the contract; that the berries did not contain the required degrees brix and were rejected by the government; that plaintiff had to go into the market to replace such berries and was damaged in the sum of $3,229.03.
The motion to dismiss contains six grounds:
1. That plaintiff failed to prove a contract.
2. Failed to prove a trade custom as alleged.
3. That the evidence failed to show the defendant knew of any trade custom.
4. Failed to show defendant agreed to furnish blackberries meeting government test.
5. Failed to prove the government refused to accept the blackberries tendered by defendant.
6. Failed to prove a cause of action.
All of these objections raised but one issue. Did plaintiff's evidence make a submissible case?
The issues are made by the pleadings and plaintiff's petition pleads that on or about August 11, 1949, it entered into a contract with defendant to purchase 2200 cases of No. 2 water pack blackberries, which would meet government specifications Z-B-421, 1931, which required the berries to contain a grade of at least seven degrees brix and that defendant failed to deliver the berries as contracted, to plaintiff's damage.
The answer was a general denial.
It becomes our duty to determine whether or not there is substantial evidence to support the issues made by the pleadings. In determining this question we take plaintiff's evidence as true together with all reasonable inferences drawn therefrom. Gray v. Columbia Terminals Co., 331 Mo. 73, 52 S.W.2d 809, 810.
In this opinion, to avoid confusion, we will refer to the appellant as plaintiff and to respondent as defendant, being the positions they occupied in the lower court.
In the beginning we can dispose of some of the matters involved. The witnesses refer to an option secured from defendant on the blackberries in question. We think it unnecessary to set out the testimony on this point for the reason that plaintiff admits, in its brief, that there was no option.
An "option" is an offer binding on optionor until time stipulated for election has expired. There must be a valid consideration for such option. Plaintiff's evidence clearly shows that there was no consideration given for the option they refer to, and, therefore, there was only an offer to sell. Hathaway v. Nevitt, 358 Mo. 202, 213 S.W.2d 938.
Plaintiff's proof to establish a contract in this case consists of the testimony of a Mr. Klein, a member of the brokerage firm of Klein Adderton Brokerage Company, St. Louis, Mo., together with the introduction of correspondence between said brokerage company and defendant.
In order to establish a valid contract there must be an offer on the part of the seller and an acceptance of that offer according to its terms on the part of the buyer.
In 17 C.J.S., Contracts, § 34, p. 362, the law is stated:
"Every agreement, whether written or oral, is the result of, and springs from, an offer and the acceptance thereof. * * *"
In other words, we say there must be a meeting of the minds.
In 17 C.J.S., Contracts, § 36, division (c), p. 364, the law is stated:
"It is essential to a contract that the nature and the extent of its obligations be certain. If an agreement is uncertain it is because the offer was uncertain or ambiguous to begin with, for the acceptance is always required to be identical with the offer, or there is no meeting of minds and no agreement. * * *" Hutting v. Brennan, 328 Mo. 471, 41 S.W.2d 1054.
To establish an offer on the part of defendant, plaintiff testified that the government asked for bids to furnish blackberries, according to government specifications, as pleaded in plaintiff's petition. In the negotiation for berries, in order that plaintiff might make a bid to the government, the plaintiff inquired of Klein Adderton Brokerage Company to locate canned blackberries. It is admitted that plaintiff never, at any time, had direct communications with defendant. It is further admitted that only 2200 cases of berries located at Bolivar, Missouri, were finally left in the offer. Mr. Klein testified that he knew the government's berries must meet federal specifications and identified plaintiff's exhibit "C", a copy of the federal specification, which was introduced in evidence. He gave this testimony:
"Q. I wish you would state whether it was a matter of common knowledge and common practice in the trade to refer to this federal specification of the federal government in referring to the type and grade of berries? A. Yes, sir."
He testified that these specifications were described as Z-B-421, September 15, 1931. The witness testified that after plaintiff inquired of them for berries meeting federal specifications, he called defendant and talked to Mrs. Deck, requesting defendant to render an option on whatever quantity of berries they had which would meet federal specifications. He testified that he discussed the federal specifications over the phone with Mrs. Deck. He stated he specifically mentioned, in this conversation, the brix requirements and cautioned her as a matter of precaution. Then he testified that defendant rendered an option for this government bid which was to be let on a certain date, around September 1st.
On cross-examination he testified that in this particular instance plaintiff requested it to locate canned blackberries some time between the 5th and 10th of August, 1949, and that he called defendant, by telephone, and told Mrs. Deck that plaintiff wanted to bid on some berries for the government. He gave this testimony:
"Q. And you would like for them to locate some? A. Yes, sir.
"Q. They did not quote you at that time on berries, your first call? A. No, sir, they didn't. They thought that they could find some.
"Q. They told you they would try to find some? A. Yes."
This witness testified that it two or three days later when he first heard from defendant about locating the berries. He admitted that defendant had written Klein Adderton stating they were having difficulty getting the berries and identified defendant's exhibit "A", a letter introduced into evidence to that effect. This witness was asked if he didn't understand, from the letter of defendant, that defendant wasn't selling the berries and answered, "Well, that could be interpreted that way, yes."
"Q. That they were trying to get canners to offer these options? Let's put it that way. A. Yes."
This witness testified that it received a letter dated August 11, 1949, from defendant, which is in evidence marked plaintiff's exhibit 2, containing the option that constituted the offer in this case. This letter, omitting the caption, reads:
"Supplementing our letter to you of yesterday, we have secured prices and option good to September 1 on the following blackberries:
"3000 Cases 24/#2 Water Pack Blackberries $1.85 F.O.B. Bentonville, Ark. 2400 Cases 24/#2 Water Pack Blackberries $1.85 F.O.B. Bolivar, Mo.
"Both of the above lots would carry 4 per cent brokerage to you as well as 1 1/2 per cent cash discount, 1/2 of 1 per cent swell allowance and if they are shipped unlabeled, they would allow $2.25 per thousand label allowance and .02 cents per case labor allowance.
"It is our understanding that should either of these packers wish to withdraw their prices prior to August 26 that it may be done by wiring you to that effect. If it is not correct please let us know and also advise if samples are necessary for the General Grocery Company."
Then Mr. Klein testified:
"Q. Did you understand from that letter that Canners Exchange were offering to sell you these, or offering to sell Amos-James these? A. Well, I presumed that they had some canners that was doing it."
The witness testified that Mrs. Deck was the only one he ever talked to and that he told her plaintiff would like to have an option on them to sell to the government.
"Q. That is correct. Now what did she tell you about the kind of berries that they were offering? A. I don't know that she told me what kind of berries. And I would rather answer that in this way, for the record on it: that I told her what kind of berries were wanted by the government and only that type of berry, and if we couldn't find that type of berry that Amos-James did not want an option on it.
"Q. And she told you at that time that these berries were the same type that the government had been buying in this territory? A. That's right. She did tell me that.
"Q. And that was all she said about it, wasn't it? A. Yes, I believe that is all at that particular time.
"Q. Now then, you were told in a telephone conversation that neither of these lots that were referred to in the letter of August 11th had government grades, or have any grading? A. At that particular time?
"Q. Yes. You were told that? A. Yes, sir.
"Q. And you informed Mr. Pringle of that fact, did you not? A. Yes, sir, we did.
"Q. And you also informed him that they would furnish the samples if requested? A. That's right."
Plaintiff introduced a letter, marked exhibit "G", written to it by the brokerage company, August 12th, which informed it that they had talked with defendant who advised them it was sure the Bentonville blackberries would meet the grade but said nothing about the berries at Bolivar. The witness admitted that he didn't tell plaintiff that there was any assurance that the Bolivar berries would meet the grade.
Plaintiff's witness testified that his company was advised the packers would not be interested in government cases; that their berries were already boxed. He gave this testimony:
"Q. You were informed that they wouldn't re-case these berries? A. That's right.
"Q. They would sell in their own cases? A. That's right."
He testified the first time he knew that Polk Canning Company was furnishing the berries was when the controversy came up about plaintiff questioning who was the canner because the cartons had been sent to defendant at Bolivar. He stated this was some thirty days later and until then he didn't know who the canner was. He also testified that if a Mrs. Feldman, in his company's office, knew who the canner was, she didn't tell him. He testified that plaintiff took up the option on the berries immediately after it learned it had received the award from the government; that he called defendant, September 13th, and wrote defendant a letter, introduced in evidence as exhibit "B", which had attached to it a memorandum of the sale. He stated the letter was written after the contract was actually made.
We submit that defendant's offer, set out in plaintiff's exhibit 2, did not show or prove that defendant ever offered 2200 cases of berries to plaintiff which would comply with government specifications containing at least a grade of seven degrees brix; that plaintiff's testimony clearly shows that the brokerage company was informed, prior to the acceptance of the offer, that these berries had no grade. It shows that plaintiff had requested the berries be graded immediately; that plaintiff refused to accept a sample offered by defendant. We find that the offer, when accepted, by telephone, on the 13th day of September, did not constitute a contract containing the provisions as pleaded in plaintiff's petition. The minds of the parties never met on a definite set of facts or terms.
Plaintiff's exhibit 2 contains a definite offer in writing to furnish blackberries. It specifically failed to contain any representation of quality and it negatives that idea by offering to furnish samples.
True enough this offer was modified before acceptance by other letters in writing. First, the brokerage company was notified definitely that the berries had no grade and plaintiff was notified of this fact. Plaintiff, through its agent, was notified that defendant was sure the Bentonville berries would meet the government grade but said nothing as to the berries at Bolivar. From what defendant had formerly notified plaintiff's agent that the berries had no grade, we must infer that this gave notice to plaintiff that the berries at Bolivar would not meet the grade. Plaintiff's agent was definitely notified that the packers would only furnish the berries in their own cases and would not re-pack them.
Plaintiff's witness, Mr. Klein, testified that the above offer was the one that plaintiff accepted through the brokerage company. We hold that this acceptance did not constitute a contract as set out in the memorandum of the agreement, prepared on the 14th day of September, 1949, by Klein Adderton Brokerage Company. The offer was not accepted according to its terms and, under the law, there was no contract.
We also hold that the testimony offered as to a custom in the trade that the berries must meet government specifications did not become a part of the contract entered into between the parties for the reason that the offer was in writing and specifically negatives that idea.
We think the testimony as to defendant's knowledge of any trade custom was indeed weak but, under the facts in the case, we think it does not aid plaintiff.
There is another question involved in this case and that is whether or not defendant ratified the contract as pleaded in plaintiff's petition by accepting a memorandum of agreement prepared by Klein Adderton Brokerage Company, dated September 14, 1949.
This memorandum of agreement clearly sets up a different contract from that contained in the offer submitted by defendant to the brokerage company to furnish the berries in question. The memorandum of agreement is in evidence under plaintiff's exhibit 22. It provides:
"Sold to The Amos-James Grocer Co., 8th and Clark, St. Louis, Missouri. Date of Sale September 14, 1949. Sold for Canners Exchange, 1180 East Mill Street, Springfield, Missouri. When Ship Instructions later. Terms: 2% Sight Draft or 1 1/2 10 days — Seller's Options. F.O.B. Bolivar, Missouri. 2200 cs. 24/2 Water Pack Blackberries, Price $1.85 Per doz. Less 2% Swell Allowance. To be shipped in Government furnished cases and value of cases to be deducted from above price.
"Remarks: To conform to Federal Specification Z-B-421 dated Sept. 15, 1949 and Amendment dated June, 1934 for Grade D Walter Pack. To be shipped to: Transportation Officer, Fort Worth, Texas. Freight to be prepaid and add to invoice. Make no shipments until further advised."
This memorandum of sale contains a written provision on the side thereof: "Subject to Confirmation of Seller", and it also contains a provision, "Seller guarantees goods to conform to the National Pure Food Law." It also has this provision: "This Memo. Becomes Void When Sale is Covered by Contract."
In Meier v. Goebel-Reid Grocery Co., Mo.App., 20 S.W.2d 605, the evidence shows that there was a rule and custom of the trade in St. Louis that when a broker sends out copies of a sales memorandum to both buyer and seller which does not correspond with the terms and conditions of sale, the seller or buyer may disapprove or reject. The court states the following proposition of law on page 607:
"In Schlesinger v. Texas St. Louis Ry. Co., 87 Mo. 146, our Supreme Court held that a broker for the purpose of signing the memorandum of the sale is the agent of both parties to the contract which he makes, but that in other respects he is only the agent of the party originally employing him. A like rule was announced in the same case by this court (13 Mo.App. 471), whence the case went on appeal to the Supreme Court.
In Fruit Auction Co. v. F. Quattrochi [Quattrocchi] and Son (Mo.App.) 200 S.W. 709, this court announced the general rule that a broker is ordinarily a special agent who derives his power and authority to bind his principal from the instructions his principal gives him, and that he cannot bind his principal beyond the limit of the authority conferred upon him.
"The same rule is announced in Mechem on Agency, at page 1045, as follows:
"`At the outset the broker is the agent of the party who first employed him, but he becomes the agent of the other also, when the latter instructs him to close the bargain, or deals with him as representing both parties, or subsequently ratifies what, as agent of both parties, he has assumed to do. When so authorized he has, like other agents, implied authority to do whatever is necessary and proper to proper to carry his authority into effect, including herein the signing of the necessary memorandum.
"`Where, however, he is thus authorized to represent the other party in a single transaction inaugurated by the broker as agent of the first, he is deemed to be a special agent, and he will not bind such other party unless he keeps within the limits of the authority conferred upon him.'
"The text of 9 Corpus Juris, p. 524, states the rule thus: `A broker is a special agent for a single object, and he cannot bind the principal beyond the limits of his authority. His power is limited by, and ceases with, his instructions, he having only such powers as are actually given or as are implied from those given.'
* * * * * *
"Under the authorities, it is manifest that in the instant case the broker was but the special agent of the defendant, and could not bind the defendant to a contract in terms not authorized by defendant. It is, however, fundamental that the subsequent ratification of an unauthorized contract is equivalent to a previous authorization. It is the duty of the principal at once to disapprove an unauthorized contract made by another in his name or on his account, when brought to his knowledge, and this duty is more imperative when the unauthorized contract is made by an agent in the execution of a conferred power in a mode not sanctioned by its terms. Implied ratification of the contract as made by the agent more readily arises from mere silence when the contract as made is a mere misuse or excess of authority given. In such case, the principal has no right to delay if he intends in any contingency to repudiate the contract of his agent. He cannot lie by and seize the benefit of it if profitable, and renounce it if otherwise, at his election. If the contract when brought to the principal's knowledge is not seasonably disapproved, a ratification must be presumed with all the consequences which follow. * * *"
We find, in the case at bar, that plaintiff's evidence shows that it inquired of Klein Adderton Brokerage Company, and, authorized that company to secure blackberries for plaintiff which would meet government specifications. This was the first step leading up to the alleged contract in question. There can be no doubt that Klein Adderton Brokerage Company was thus constituted the agent of plaintiff to go into the market and secure options or offers on the blackberries needed by plaintiff. We, likewise, find from the testimony that Mr. Klein, acting for and in behalf of the Klein Adderton Brokerage Company, inquired of defendant and requested it to furnish blackberries to plaintiff and, at that time, notified defendant that the berries were to be re-sold to the government by plaintiff and we think there is substantial testimony to show that Mrs. Klein informed defendant's agent, Mrs. Deck, that these berries must meet government specifications. The testimony then clearly shows that the brokerage company was informed by defendant that they would go into the market and see if they could locate any berries for plaintiff and determine what price such berries could be secured for, and, according to Klein Adderton Brokerage Company, the seller would pay the brokerage company four per cent commission. Mr. Klein, testifying for plaintiff, admits he had been doing business for defendant for many years; that he had never seen an invoice of goods sold by defendant excepting said invoice had on it, "On Account". He admitted that from the general reputation of defendant, defendant was a broker, doing business for others. Yet he states that he did not know defendant was not acting for itself and did not learn for thirty days after the offer was made that Polk Canning Company of Bolivar, Missouri, was the packer, who was furnishing the berries. However, there is in evidence a letter from the brokerage company to Polk Canning Company, telling Polk Canning Company that they knew when this offer was made that the berries were to be of the quality required by government specifications and that they knew unless such specifications were met plaintiff would be damaged, etc. There certainly is very little testimony, if any, that the brokerage company did not know that defendant was not the principal. However, the principal, in this case, whether defendant or Polk Canning Company, did make an offer to furnish 2200 cases of blackberries, which offer was open at the time of acceptance. Thus we hold that the brokerage company was acting for both the seller and buyer under the authorities cited herein.
However, the case at bar differs on facts from the Meier v. Goebel-Reid Grocery Company case. In that case the evidence showed there was a rule and custom of the trade that the broker send out copies of a sales memorandum to both buyer and seller and if the memorandum did not correspond with the terms and conditions of sale, either of the parties may disapprove or reject. No such custom of the trade was shown in the case at bar. While the memorandum has a printed provision on the said thereof, "Subject to Confirmation of Seller", it does not provide for rejection. It merely says that if there is any controversy arising from or concerning the transaction of which the contract is a part, such controversy shall be settled by arbitration. It also provides that the memorandum is void when covered by contract.
First, we think that the terms of this contract is in writing. It consists of a written offer which became a contract by acceptance. The offer contains the whole contract and it does not sustain plaintiff's contention as to the terms.
It would seem, from the allegations in plaintiff's petition, that it relied upon a contract of option. It inquired for berries to be secured by option so that a bid might be made to the government. In other words, the surrounding facts and the allegations of the petition would indicate that plaintiff was relying upon an option which could not be withdrawn. One supported by consideration and enforceable by law so that it could with safety bid to supply the berries according to the government's invitation. No one would dispute that under the law the offer, which was finally accepted, could have been withdrawn without legal liability after September 1st, or any time before its acceptance so plaintiff was not protected in any way until it accepted defendant's offer. Certainly there was not a contract made on August 11th, as alleged in plaintiff's petition.
We think, under the terms of the memorandum or agreement, there was no ratification of the contract as contained in the memorandum. First, because we think that both plaintiff and its agent, Klein Adderton Brokerage Company, had a definite written offer which did not contain the terms of the contract as set out in the memorandum but did contain the written terms of the contract as agreed to by defendant or by The Polk Canning Company for which defendant was acting. Thus we think when the acceptance was given to defendant, September 13th, or on the date the memorandum was made, September 14th, there was a definite, written contract shown by the written offer in evidence marked plaintiff's exhibit 2. Therefore, we think that the rule requiring rejection on the part of the seller or buyer is not applicable in the case at bar. We think the written memorandum was sufficient to comply with the statute of frauds. Dinuba Farmers' Union Packing Co. v. J. M. Anderson Grocer Company, 193 Mo.App. 236, 182 S.W. 1036.
Defendant, under point I, contends that there was no substantial evidence offered by plaintiff to support its cause of action in that the evidence did not show that defendant offered the blackberries to meet government specifications. With this contention we agree.
However, we do not agree with the third contention of defendant that plaintiff's evidence failed to show that the berries were rejected by the government. We think the evidence sufficient to submit that issue to the jury or court on the trial.
We do not agree with plaintiff's contention that there was substantial evidence offered showing the existence of a valid and enforceable contract between the parties.
We find against plaintiff on its contention under assignment "B", that is, that the evidence showed that defendant agreed to furnish plaintiff with blackberries of a certain grade, meeting government specifications. We do find that there was substantial evidence offered by plaintiff to show that the berries tendered by the Polk Canning Company did not meet the government specifications and made that a submissible issue.
There is a serious question as to whether or not plaintiff offered substantial evidence showing the defendant to be the principal.
On September 7, 1949, the brokerage company wrote a letter to R. D. Pringle, plaintiff's agent, marked exhibit 13, which contained this statement:
"We presume that the 2200 cases #2 Blackberries is absolute and definite as a firm order. Packer is now over-anxious and wants shipping instructions and you requested inspection on this lot with the A. M. A. Of course, this will be necessary with approval before the packer can draw draft on General. Kindly advise."
Defendant's exhibit 3, offered in evidence, is a letter written August 15, 1949, to Klein Adderton Brokerage Company, by defendant, in which it notifies this company that the packer desires to reduce their offer to 2200 cases. In this letter the following paragraph is inserted:
"As we wrote you earlier, it may be necessary to again revise these figures in the event either of these packers should sell the berries elsewhere, as this represents their entire stock, and they do not want to be entirely off the market until they are sure that they will secure the business from the government. We trust that this method of handling meets with your approval."
This letter clearly states that the defendant is representing packers who are determining the offer made.
Plaintiff's witness admitted, on cross-examination, that the information furnished him by defendant could be interpreted that defendant was acting as agent and not as principal. He admitted that was generally what he understood defendant to be, just a broker.
On August 26, 1949, defendant wrote a letter to the brokerage company, which is in evidence as plaintiff's exhibit 9. In this letter defendant states they received a wire from the brokerage company advising that A. M. A. grade certificates would be required on the blackberries offered for the government bid to be opened September 1st. This letter advises the brokers that defendant has passed this information along to the packers but defendant expresses the view that the information cannot be secured within the time.
In defendant's exhibit "B", being a letter from Klein Adderton Brokerage Company to defendant, dated September 14th, this paragraph is contained:
"This letter is to confirm our conversation yesterday regarding the above and that you are in turn to make sure that the packer holds this merchandise until the government gets around to passing on the quality and just as soon as this has been accomplished, the packer may draw draft on General Grocer Company attaching thereto the papers showing that the quality and grade has been OK'd by the government."
In this paragraph plaintiff's agent clearly shows that he is aware that the Polk Canning Company is furnishing the berries as the packer and says that that company may draw a draft for the purchase price of the berries.
On October 20, 1949, Klein Adderton Brokerage Company wrote Polk Canning Company of Bolivar, Missouri, a letter, which is in evidence marked defendant's exhibit "F". We quote from this letter:
"You may not recognize our firm name with regard and in connection with a sale of 2200 cases Blackberries to Amos James Grocer which is covered by your option on a government bid of recent date through Canners Exchange, Springfield, Missouri. However, for your information, wish to advise we are the local broker who handled the deal with the purchaser."
In this letter the brokerage company absolutely admits they knew the Polk Canning Company was the seller and that the Canners Exchange was handling the deal for the Polk Canning Company. So we find that it is indeed doubtful that plaintiff offered substantial evidence to show that the defendant was the principal. However, under our findings that there was not substantial evidence to show a contract, it is unnecessary to decide whether or not there is substantial evidence to show defendant was the principal in the contract so as to submit that question to the court or jury, as the case might be.
We find there was no substantial evidence to establish a contract between plaintiff and defendant as pleaded in the petition. Granting that Klein Adderton, as brokers, were authorized to execute a sales memorandum, showing the terms of the contract, as agent of defendant, yet, we find that the authority of the broker to so execute said sales memorandum is limited to the terms authorized by defendant.
In 12 C.J.S., Brokers, § 14, p. 36, the law is stated:
"* * * and if it is sought to bind either party by any action of the broker after the execution of the contract, it must be shown that he had authority to act. * * *"
In this case the evidence must have shown that the brokerage company, in executing the memorandum of sale, had authority to include in that memorandum that the berries in question must meet government specifications and that the berries were to be shipped in the cases furnished by the government. We think the evidence clearly shows that Klein Adderton acted outside the express authority granted by defendant, or defendant's agent as the case may be, when it added these additions to the contract. Therefore, the sales memorandum, offered as plaintiff's exhibit 22, contained terms different from those in the offer made through defendant. Certainly there was never any confirmation of this sales memorandum on the part of defendant and we hold that under the evidence defendant is not held to have ratified the contract as set out in the memorandum.
In the light of the legal principles which requires us to consider all of plaintiff's evidence as true and all reasonable inferences that may be drawn therefrom in determining whether or not plaintiff made a case, we find there is no substantial evidence in the record to prove the issues involved.
Judgment affirmed.
VANDEVENTER, P. J., and BLAIR, J., concur.