Francis H. Leggett & Co. v. West Salem Canning Co.

WiNsnow, C. J. Clearly Gilbert was the agent of both parties, as middlemen generally are and properly may be. His function was simply to act as the means of communication between parties who made their own terms. Stewart v. Mather, 32 Wis. 344, 355; Orton v. Scofield, 61 Wis. 382, 21 N. W. 261. Probably no oné would doubt that if the only facts appearing in evidence were that the plaintiff sent to the defendant' a telegram offering eighty-five cents per dozen, f. o. b., for 2,000 cases fancy four Alaska peas, and that the defendant replied immediately, “$2,000 cases four Alaskas at eighty-five, f. o. b. factory, O. K.,” there would have resulted a complete contract, which could be sued on by either party in case of breach. At first glance this seems to be what was done here by the telegrams which were exchanged on June 15th and 16th between Johnston, North & Co., Gilbert, and the defendant. The defendant contends, however, that there are additional facts in the evidence which demonstrate that no binding contract was made or intended to be made by the telegrams. These additional facts are in brief (1) that the defendant never authorized Gilbert to sell any goods to a New York purchaser; (2) that the plaintiff authorized Gilbert to make no contract except a contract which contained a provision requiring the furnishing of samples; and (3) that it was contemplated by the parties that a formal written contract containing additional and materially different provisions should be signed by the parties later. As to the first contention, it' is shown that as early as [468] June 19th or 20th the defendant was fully informed that the sale had been in fact made to New York parties, and it is just as certain that the defendant never repudiated the sale on that account. Where an agent' acts beyond or in excess of his authority it becomes the duty of the principal to disaffirm the agent’s act within a reasonable time after knowledge thereof or he will be bound thereby. McWhinne v. Martin, 77 Wis. 182, 46 N. W. 118; Clews v. Jamieson, 182 U. S. 461, 21 Sup. Ct. 845. The telegram and letter of June 21st are simply statements that the defendant can take no more contracts; they contain no hint that any contract already entered into is rescinded, or that Gilbert’s act in selling to New York parties is repudiated. Even as late as July 17th the defendant writes Gilbert returning the proposed written contract simply because “we are unable to fill it on account of the short' crop,” and assures him that “if we have anything left after filling our futures we will notify you and give you a chance.” It is true that in the letter of July 31st the defendant says that “we do not consider ourselves under contract with Francis H. Leggett & Co.,” but even here no claim is made that the contract was void because made with New York parties, but simply that “we have accepted no order” and signed no contract. In this last letter it1 seems very evident that the defendant’s officers did not have before them Gilbert’s telegraphic offer of June 15th and the unconditional acceptance thereof dated June 16th, as they refer only to “your telegram on June 12th and our reply on the 16th simply stating what we had and at what prices.” We reach the conclusion that the defendant did not dis-affirm the contract within a reasonable time after the fact that their agent had entered forbidden territory was brought to their attention, and hence that the defendant’s first' contention fails. [469] The second and third contentions are very closely related and present more serious questions. As to the furnishing of samples, it is admitted by plaintiff that Johnston, North & ’Co.’s telegram to Gilbert of June 15th authorized only a .purchase conditioned on the approval of samples Jo be furnished by the seller, but it is said that this requirement was waived by the letter of the same date passing-between the parties. This letter will be found quoted at length in the statement of the case and need not be repeated here. Its meaning is not so clear as might be desired, but if it be construed as waiving the furnishing; of samples, that waiver is only to take place in case some clause guaranteeing the quality is inserted in the contract'. The subsequent correspondence between Johnston, North &. Co. ,and Gilbert (which it has not been thought necessary to print)-shows beyond dispute that the'plaintiff, Johnston, North & Co., and Gilbert expected that samples would be-furnished in order that the plaintiff might judge of the quality. That this was Gilbert’s idea is very clearly evidenced by his letter to the defendant of June 22 d, which is quoted at length in the statement, and by a number of letters which followed it. So it seems certain that' neither the plaintiff nor Gilbert understood that the demand for samples-had been waived or made unnecessary by anything to be-contained in the proposed written contract. This brings us naturally to the third contention. The law is quite well settled that where a contract'. informal, but complete in its terms, appears to have been made, it will take effect and be-binding notwithstanding the fact that the parties anticipate that a more formal contract will be afterwards made embodying the terms of the informal contract. Cohn v. Plumer, 88 Wis. 622, 60 N. W. 1000. It is equally well settled, however, that letters or telegraphic communications between the parties will not be con [470] strued as a contract when it is plain that they were intended only as preliminary negotiations to be followed by a formal contract' containing material provisions not contained in or to be inferred from the preliminary letters or communications. Lyman v. Robinson, 14 Allen, 242, 254; Moulton v. Kershaw, 59 Wis. 316, 18 N. W. 172; Hunter v. Hathaway, 108 Wis. 620, 84 N. W. 996. In the first case above cited it is said: “The question in such cases always is, Did they mean to contract by their correspondence, or were they only settling the terms of an agreement into which they proposed to enter after all its particulars were adjusted, which was then to be formally drawn up, and by which alone they designed to be bound ?” The evidence in the present case makes it entirely certain that both the parties to the transaction and the brokers expected that a formal written contract would be executed by the parties embodying in detail the terms of the sale. If this written contract was expected to be simply a more formal document embodying only the terms expressly stated or necessarily implied in the telegrams, the fact that it was expected to be made might not be considered important, but the evidence conclusively shows that it was expected to contain terms not contained in or .to be implied from the telegraphic communications. Even if we were to ignore the fact that the plaintiff from start to finish insisted on the, furnishing of samples or the embodiment of some clause guaranteeing quality in the contract, the evidence makes it clear that there was another material provision not contained in nor to be implied from the telegraphic messages which all parties expected would be included in the written contract, namely, the provision that in case of a short crop, fire, or other unavoidable accident the defendant would only be obliged to deliver seventy-five per cent, of the contract amount. The evidence on the part of the defendant is undisputed that it never sold peas without a written contract, that it al [471] ways embodied tliis clause in its written contracts, and that this was the universal custom among packers, brokers, and. buyers of canned goods. It is certain that' the broker,-Gilbert, expected the written contract to contain this provision,, because he inserted it' in the contracts which he drew and sent to the parties for signature, as appears from his letter of July ISth. It appears also that the plaintiff entertained a like expectation, for it immediately signed and returned tile-contract which Gilbert forwarded to it on June 17th containing the seventy-five per cent, clause: If the telegrams constituted a contract there could be no> such allowance, because they call for the delivery of 2,000 cases absolutely, and where the terms of a contract are fixed and not ambiguous even proof of universal custom cannot' change them. Mowatt v. Wilkinson, 110 Wis. 176, 85 N. W. 661. These considerations seem' to conclusively negative the-id,ea that the telegrams were expected by either party to constitute the contract between them, but were simply regarded as the preliminary steps, to be followed by the furnishing of samples and the execution of a written contract by which only the rights of the parties were to be fixed. That contract never having been executed, the present action must fail. By the Court. — Judgment reversed on the defendant’s appeal, and action remanded' with directions to enter judgment dismissing the complaint. The plaintiff takes nothing on its appeal. But one bill of costs is allówed.