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Tradeways Inc. v. Chrysler Corp.

March 1, 1965


Author: Swan

Before LUMBARD, Chief Judge, SWAN and WATERMAN, Circuit Judges.

SWAN, Circuit Judge:

This is an action for breach of contract. Federal jurisdiction rests on diversity, plaintiff being a New York corporation with its principal place of business in New York and defendant, a corporation of Delaware, with its principal place of business in Michigan.

Plaintiff was engaged in the business of rendering sales promotional services to large corporations. Its complaint alleged that plaintiff entered into an express, bilateral, oral contract with defendant on November 22, 1955, and that defendant broke its contract obligations. Defendant counter-claimed for $12,480.12, the unpaid balance of a $15,000 advance made by defendant to plaintiff as part of the transaction. The case was tried before Judge Murphy and a jury in January 1964. The jury's verdict awarded plaintiff damages in the amount of $108,000. Judge Murphy directed entry of a judgment in favor of defendant on its counterclaim.

As a preliminary argument Chrysler asks us to dismiss the complaint on the ground that Tradeways failed to prosecute its case with proper dispatch. The original complaint was filed on October 29, 1958. Four amended complaints were submitted between January 3, 1959 and February 18, 1960. The case was dismissed twice for lack of prosecution during 1960 and 1961. Twice it was restored to the calendar with Chrysler's consent. On May 21, 1963, after the restoration of the case to the calendar and on the eve of trial, Tradeways moved for a stay in order to take the deposition of Nielsen, a former Chrysler vice-president, and this motion was granted. Nielsen had not been listed on the pre-trial order although he had been known to Tradeways for a considerable period of time. The deposition was taken on June 17, 1963. On November 1, 1963, plaintiff sought an order allowing it to continue taking Nielsen's deposition, an order which was in violation of the terms of an order issued on October 2, 1963 by Judge Noonan when he previously denied a motion to extend time. Judge Weinfeld denied the motion and suggested that a motion to dismiss for failure to prosecute might be in order. Defendant made that motion, but it was denied by Judge Ryan who noted in his order that the new trial date would be the fourth set for the case.

In our opinion, it was an abuse of discretion for Judge Ryan not to grant this motion. The delays appear to be almost entirely the fault of Tradeways. Chrysler's leniency in twice consenting to the restoration of the case to the calendar after the dismissals of 1960 and 1961 should not count against it in determining whether the delay in later proceedings had become intolerable. The delay eventually worked to the prejudice of Chrysler, owing to the unexpected death in an airplane accident in May 1962, three and a half years after the start of this litigation, of Welch, Chrysler's Director of Promotions Programming, who directed Chrysler's performance of the written contract which its answer admitted making, and who could have given testimony valuable to Chrysler.

Shorter delays in prosecuting a case have frequently been held to justify dismissal. See, for examples, Messenger v. United States, 231 F.2d 328, 331 (2d Cir. 1956); Newport v. Revyuk, 303 F.2d 23, 26 (8th Cir. 1962); Agronofsky v. Pennsylvania Greyhound Lines, 248 F.2d 829, 830-831 (3d Cir. 1957); Refior v. Lansing Drop Forge Co., 6 Cir., 124 F.2d 440, 444, cert. denied, 316 U.S. 671, 62 S. Ct. 1047, 86 L. Ed. 1746 (1942).

My brother WATERMAN disagrees with the decision to dismiss the case on the ground of prejudicial delay in its prosecution. As his dissent would have to discuss the contract issues and both parties have argued them in their briefs, it seems desirable to discuss such issues in this opinion.

Plaintiff's action was commenced October 29, 1958. It alleged the making of a bilateral oral contract with defendant on November 22, 1955. Defendant's answer denied that it entered into an oral contract but admitted that on or about March 23, 1956, plaintiff agreed to conduct a twelve-month sales training and development program to be paid for by DeSoto dealers at the rate of $15 per month, and to repay to defendant, at the rate of $1500 per month, the sum of $15,000 advanced to plaintiff by defendant. The agreement was defendant's Purchase Order (defendant's Exhibit A).

The alleged oral agreement of November 22 was said to contain a promise by Chrysler that it would use its "best efforts" to obtain dealer subscriptions for the Tradeways program. The written agreement of March 23 contained no such requirement. Plaintiff's entire case is predicated on the theory that the breach of the "best efforts" requirement in the oral contract caused Tradeways to incur losses in conducting its program, for which Chrysler should be held liable. Thus the gravamen of plaintiff's case is the existence and contents of the alleged oral agreement of November 22.

In 1 Corbin on Contracts, § 22 (1963), it is stated that "The history of any contractual transaction is merely the narrative of a series of events," and that these events should be considered "in their chronological order, determining their legal operation one by one as they have occurred." In their briefs both plaintiff and defendant cite § 22 and each claims it has applied these principles to the series of events in the case at bar; but they arrive at completely contradictory results. In our discussion we shall also attempt to apply the principles stated by Professor Corbin.

In the spring of 1953 Robert E. Taylor was made vice-president of Tradeways in charge of new business and he continued in that capacity until April 1, 1956. On February 23, 1955, Mr. Taylor wrote the defendant "seeking to interest it in a sales training method known as the 'Case Cast' method, which Tradeways had previously developed and which was currently being used by American Motors Corporation." He testified to going to the defendant's offices in Detroit, Michigan, on March 29, 1955 where he demonstrated the Case Cast technique and presented a price sheet telling "how much we were paid for building these cases for individual companies." His next contact with defendant was in April 1955 when he went to Detroit to call on American Motors and "stopped in at DeSoto." He saw Mr. Mix, an employee of the defendant, who asked Taylor to supply him with a case recording made for American Motors in which American Motors' name was deleted and the word DeSoto substituted so that the defendant's executives could listen to this recording and get an idea how it might apply to their own selling activities. Taylor agreed to do this. On October 11, 1955 Mr. Taylor went to Detroit and talked with Mr. Blount and Mr. Mahler, employees of the defendant, who wanted to know about the technique of the Case Cast training and about the other recommendations Taylor had made in the earlier meetings with other DeSoto executives so that they [Blount and Mahler] could be brought up to date. Taylor prepared such an outline and sent it in a letter to Mr. Blount dated November 4, 1955. Four or five days later Mr. Taylor telephoned Mr. Blount and was asked by him to come to Detroit because a completely new development had arisen which Blount wanted to discuss with Taylor. Taylor went to Detroit on November 14, 1955.He was told that it had been decided not to go ahead with the Case Cast program because the executives of defendant had decided on a much larger program and were inviting Tradeways and two other organizations to make full-scale presentations on November 22 as how to carry out these objectives for the DeSoto Division.

On November 22, 1955, Mr. Taylor presented the program proposed by Tradeways to a group of defendant's major executives. The program had been recorded on a record which was played to the assembled group and Mr. Nielsen, an officer of the defendant remarked "This is the finest program we have heard yet." The members of the group began to discuss plans for the program in more concrete terms. For several reasons this remark and the discussions that followed cannot operate as an acceptance of plaintiff's offer. One reason is that Mr. Taylor had also discussed the cost to the defendant and had stated two alternative price terms. The first alternative was that one part of the program could be purchased for $130,000 and the other part for between $35,000 and $40,000. The second was that each participating dealer would purchase the program for $180, to be paid at the rate of $15 per month. It is well settled that no contract can be formed if agreement has not been reached on an essential element, and price is certainly such an element. 1 Corbin on Contracts § 97 n. 31 (1963); Boatright v. Steinite Radio Corp., 46 F.2d 385 (10 Cir. 1931); Ansorge v. Kane, 244 N.Y. 395, 398-399, 155 N.E. 683 (1927). Moreover, Chrysler told Mr. Taylor they wanted the proposal in writing. No agreement could bind Chrysler until the parties settled on a written document. 1 Corbin on Contracts § 30 (1963); Ambler v. Whipple, 87 U.S. (20 Wall.) 546, 555-556, 22 L. Ed. 403 (1874); Banking & Trading Corp. v. Floete, 257 F.2d 765, 769 (2 Cir. 1958); Willmott v. Giarraputo, 5 N.Y.2d 250, 184 N.Y.S.2d 97, 157 N.E.2d 282 (1959); Michigan Broadcasting Co. v. Shawd, 352 Mich. 453, 90 N.W.2d 451 (1958).

Four or five days after the presentation on November 22, defendant's employee, Mr. Blount, telephoned Mr. Taylor that Tradeways was "selected" but Taylor did not know whether payment alternative No. 1 or No. 2 was accepted, and in any event it is apparent that the telephone conversation was not intended to supersede the requirement that Tradeways' offer be in writing, and ...

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