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A.M. WEBB & CO. v. ROBERT P. MILLER CO.

May 3, 1948

A. M. WEBB & CO., Inc.
v.
ROBERT P. MILLER CO.



The opinion of the court was delivered by: KIRKPATRICK

This is an action by a selling agency against a manufacturer to recover damages for breach of a written agreement made January 9, 1941, which provided that the plaintiff would have the exclusive disposal of the entire output of the defendant's mill for a period of five years. No price was mentioned and for that reason this Court, on a preliminary motion by the defendant, dismissed the action holding that, inasmuch as an essential term was omitted, the writing amounted to no more than an agreement to agree in the future and was unenforceable. The Circuit Court of Appeals, 3 Cir., 157 F.2d 865, reversed and the case has now been tried before this Court with a jury. The jury returned a special verdict in the form of answers to five written questions. Both parties have moved for judgment and the plaintiff has presented an alternative motion for a new trial.

The Motions for Judgment.

 The questions submitted to the jury dealt with two major issues: First, what was the agreement as to price between the parties, and second, was the arrangement entered into on January 9 subsequently rescinded.

 The jury, in answer to the third question, found that the understanding on January 9 was that the price of the goods over a five year period was to be fixed from time to time by voluntary agreement -- in other words, that it was in fact an agreement to make agreements in the future. It follows as a matter of law that no valid contract ever existed. The answer to the fifth question was a finding that the agreement of January 9 was rescinded by mutual agreement on April 8. Either *fn1" of these findings, entirely independent of the other, makes it necessary to enter judgment for the defendant, provided that either question was a proper one and was submitted with proper instructions.

 As to the parol evidence rule: When both sides agree that the writing does not and was not intended to express the entire agreement between the parties, parol evidence is always admissible to show what the whole understanding was. Frederick's Estate, 156 Pa.Super. 547, 554, 41 A.2d 59, and cases there cited.

 In the present case both parties testified in effect that there was in existence an earlier understanding as to price which they had acted upon over a period of years and which the written agreement of January 9, 1941, was not intended to supersede. Ives testified: '* * * let us go into the thing exclusively. That was all that was considered on January 9, and that was in our minds. We did not expect that our relationship as far as price and giving him half of our mark-up would be disturbed in the least.' Miller testified:

 'Q. Was there an understanding that your price to him would be your cost plus a reasonable profit, or something like that? Was there such an understanding as that prior? A. Yes, a reasonable profit was supposed to be included in our base price.

 'Q. And that was the understanding you had before January 9? A. Yes, sir. * * *

 'Q. Now, that agreement you said existed before January, 1941, both before and after, that you had just testified to? A. Well, there wasn't any changes made.

 'Q. There wasn't any changes made? After that you dealt on the same basis as you did before? A. Yes, sir, as far as the base price, but understand we always had to agree on the base price. That was the contention all the time.'

 As to what the earlier agreement was, the testimony was conflicting and that of Ives was self-contradictory, and evidence could be found in the record to support any one of the three alternative findings possible under the questions submitted. But both parties were in complete agreement (1) that there was an existing understanding of some kind upon the matter of price and (2) that they did not intend to change it by the agreement of January 9.

 As to the law of the case: that doctrine applies to all questions of law identical with those on the prior appeal, and on the same facts, and to such questions only. Whenever different questions arise on the second appeal or the record presents a different state of facts the former determination is not controlling. The judgment of the appellate court can make res judicata only that which was in issue and decided. See 5 C.J.S., Appeal and Error, 1964d and cases cited. A case very nearly in point involving a contract like the one in the present case was Kann v. Wausau Abrasives Co., 85 N.H. 41, 153 A. 823. On an appeal from a judgment on a demurrer on a bill in equity setting forth a written contract, the Supreme Court interpreted certain provisions of the contract. On a subsequent appeal the Supreme Court held that its earlier decision was not res judicata as to the meaning of provisions which required for their final interpretation the consideration of evidentiary facts and circumstances in connection which appeared in evidence at the trial of the case.

 The earlier appeal in the present case was from a judgment on pleadings only and the Circuit Court of Appeals had before it nothing but a bare written agreement which provided for the sale of the output of a factory over a period of five years with no mention of the price to be paid for the goods. The Court ruled that, in such an agreement, the law will supply a term to the effect that the price is to be at 'market' or 'current' rates, and cited the Personal Property Law of New York, Sec. 90, subd. 4, which provided that where no price is fixed the buyer must pay 'a reasonable price', A. M. Webb & Co. v. Robert P. Miller Co., 3 Cir., 157 F.2d 865. But this is not to say that where, as here, it appears from the testimony of both parties in a subsequent trial that there was an understanding between them about the price and further that, whatever it may have been, it was not market, current or reasonable rates, the trial court may not proceed to determine what the real understanding was. It cannot be supposed that there ...


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