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Riley v. General Mills Inc.

May 5, 1965; As Amended May 25, 1965.

HELEN RILEY, EXECUTRIX OF THE ESTATE OF BERNARD A. RILEY, DECEASED, AND WILLIAM E. EDGEWORTH, INDIVIDUALLY AND TRADING AS RILEY & EDGEWORTH, A PARTNERSHIP,
v.
GENERAL MILLS, INC., APPELLANT.



Author: Hastie

Before McLAUGHLIN, STALEY and HASTIE, Circuit Judges.

HASTIE, Circuit Judge.

This controversy is the aftermath of an unsuccessful scheme to promote the sale of the defendant's gingerbread mix by offering purchasers of this product an opportunity to acquire school child accident insurance through applications enclosed in the mix packages. The plaintiffs, appellees here, are the insurance agents who at the suggestion of defendant's advertising agency undertook the formulation and the steps necessary for the effectuation of this plan. They have sued General Mills for out-of-pocket expenses and for the loss of prospective commissions on insurance policies which would have been sold under the promotional scheme, alleging that these losses were caused by General Mills' repudiation of a contract. The defendant counterclaimed, alleging that it had been damaged by the failure of the plaintiffs to carry out their undertaking to obtain approval of the proposed method of selling insurance by state authorities.

The issues concerning liability were tried to a jury and submitted on special interrogatories, with the result that the defendant was found liable on the claim and the plaintiffs not liable on the counterclaim. Thereafter, the issue of damages was tried to the court, which awarded the plaintiffs $61,663.75, including about $17,000 for accrued interest and $3000 for out-of-pocket expenses.

On this appeal, General Mills has challenged both the decision on liability and the court's determination of damages.

The theory of the complaint is that all essential details of the promotional scheme, although never integrated, were worked out during the course of many conversations and written communications and that a telegram on June 8, 1955 from General Mills to one of the plaintiffs, promising to go forward with the scheme, completed the manifestation of mutual assent essential to a binding contract.

General Mills defended on the grounds, first, that no contract was entered into and, second, that if a contract was formed either the plaintiffs failed to perform their promise to obtain the approval of the insurance commissions in the then forty-eight states and the District of Columbia, or the condition that such approval be obtained was not satisfied. General Mills also counterclaimed on the theory that it incurred expenses and thereby suffered damages in reliance upon plaintiffs' promise to secure the approval of the state insurance commissioners.

In an effort to resolve the various matters in dispute the district court submitted seven interrogatories to the jury. The interrogatories and the jury's answers are as follows:

"1. Was there a valid contract entered into between Riley and Edgeworth on the one hand and General Mills on the other when the telegram (plaintiffs' Exhibit #5), dated June 8, 1955, was sent to Mr. Edgeworth at the Peerless Insurance Company office in Keene, New Hampshire?

"[Answered] Yes

"2. (If you answered the above question 'no,' you need not answer the following question.)

"When the telegram was sent had Riley and Edgeworth agreed that they would obtain approval of the promotion plan in all 48 states and the District of Columbia?

"[Answered] No

"3. (If you answered the above question No. 2 'yes,' then please answer the ...


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