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WOODWARD & DICKERSON, INC. v. YOO HOO BEVERAGE CO.

November 26, 1980

WOODWARD & DICKERSON, INC.,
v.
YOO HOO BEVERAGE COMPANY, INC., Defendant and Third Party Plaintiff, v. YOO HOO (AFRICA), LTD., Third Party Defendant



The opinion of the court was delivered by: BRODERICK

MEMORANDUM

The plaintiff, Woodward & Dickerson, Inc., instituted this action for damages against the defendant, Yoo Hoo Beverage Company, Inc. (Beverage) for the alleged breach of three contracts involving the sale of cocoa powder by the plaintiff to Beverage. Beverage joined Yoo Hoo Africa, Ltd. (Africa) as a third party defendant pursuant to Fed.R.Civ.P. 14. This action, which was based on diversity jurisdiction, was tried before a jury from April 21, 1980 to April 29, 1980. The jury answered interrogatories that resulted in a verdict in favor of the plaintiff. *fn1" Beverage subsequently filed a motion for a judgment n. o. v. and/or a new trial. After carefully considering all of the grounds alleged by Beverage, this Court has determined that it will grant Beverage's motion for a judgment n. o. v. in connection with Count II of the complaint, and will deny its motion in all other respects.

 Motions for a new trial require the exercise of discretion by the Court, whose "duty is essentially to see that there is no miscarriage of justice." 6A Moore's Federal Practice P 59.08(5), at 59-160 (footnote omitted) (2d ed. 1974); Thomas v. E. J. Korvette, Inc., 476 F.2d 471, 474-75 (3d Cir. 1973). The jury's verdict may be set aside only if manifest injustice will result if it were allowed to stand. The Court may not substitute its own judgment for that of the jury merely because the Court may have reached a different conclusion. To grant a motion for judgment n. o. v., the Court must find as a matter of law that the plaintiff failed to adduce sufficient facts to justify the verdict. Neville Chemical Co. v. Union Carbide Corp., 422 F.2d 1205, 1210 (3d Cir.), cert. denied, 400 U.S. 826, 91 S. Ct. 51, 27 L. Ed. 2d 55 (1970). Such a motion "may be granted only when, without weighing the credibility of the evidence, there can be but one reasonable conclusion as to the proper judgment." 5A Moore's, supra, P 50.07(2), at 50-77 (footnote omitted); Korvette, supra, at 474.

 I. The Evidence at Trial

 The evidence at trial which was not controverted showed the following: The plaintiff is a Pennsylvania corporation with its principal place of business in Pennsylvania. It is engaged in the purchase and sale of large quantities of cocoa powder. Edward Staffenberg was the manager of the plaintiff's food products division responsible for the purchase and sale of cocoa powder. He commenced working for the plaintiff in 1975, and stated that for a number of years prior to that date the plaintiff had been selling cocoa powder to Beverage, a Delaware corporation with its offices and principal place of business in Carlstadt, New Jersey. Beverage is a going concern which continues to use large amounts of cocoa powder to manufacture a chocolate drink called "Yoo Hoo", which it distributes through franchisees. Africa is a franchisee of Beverage, and all of its stock is owned by a Mr. Eric Barischoff. Africa is not a going concern. There is no common equity ownership between Beverage and Africa.

 In September 1976, Dr. Hotelling asked Mr. Wittpenn if he could place a contract for cocoa powder in the name of a Mr. Agar, a cocoa broker. The plaintiff advised Mr. Wittpenn that it did not enter into such contracts with anyone other than users of cocoa powder. Shortly thereafter Dr. Hotelling began to place some contracts for the purchase of cocoa powder in the name of Africa while continuing to make purchases of cocoa powder in the name of Beverage.

 Dr. Hotelling negotiated all contracts between the plaintiff and Africa and the plaintiff and Beverage with Mr. Wittpenn, and always issued delivery instructions when a shipment of cocoa powder was ready for delivery. When Dr. Hotelling placed an order for cocoa powder, whether such order was in the name of Beverage or Africa, Mr. Staffenberg would send a printed form of contract to Mr. Wittpenn, which contract would be in the name of Africa or Beverage, and Mr. Wittpenn would then obtain signatures on the contract. Contracts between the plaintiff and Beverage were issued in the name of "YOO HOO BEVERAGE CO., 600 Commercial Ave., Carlstadt, N.J. 07072," whereas contracts between the plaintiff and Africa were issued in the name of "YOO HOO AFRICA, LTD., 511 New Bridge Ave., East Meadow, L.I., N.Y." Between September 1976 and mid-August 1977, which is the period immediately prior to the events in late August and September of 1977 for which the plaintiff claims payment in this action, Dr. Hotelling placed three cocoa powder contracts with the plaintiff in the name of Beverage and five contracts with the plaintiff in the name of Africa. In connection with these contracts, however, there were two occasions when Dr. Hotelling instructed the plaintiff that a shipment of cocoa powder covered by a contract with Beverage should be delivered to Africa and invoiced to Africa. There was also one occasion where Dr. Hotelling instructed the plaintiff that a shipment of cocoa powder covered by a contract with Africa should be delivered to Beverage and invoiced to Beverage.

 The records of the plaintiff show that it maintained separate accounts for Beverage and Africa, that the two companies were billed separately, and that the plaintiff had different addresses and telephone numbers for Beverage and Africa. Checks issued by Beverage in payment for the cocoa powder which the plaintiff invoiced to it were drawn on a New Jersey bank. Checks issued by Africa in payment for the cocoa powder invoiced to it were drawn on the Nassau, Bahamas branch of the Royal Bank of Canada.

 In connection with the sales of cocoa powder for which the plaintiff claims payment, four documents were admitted into evidence (Exhibits P19, P20, P35, and P49). Exhibit P19 is a printed form of sales contract dated September 20, 1977. The seller is "WOODWARD & DICKERSON, INC." The buyer is "YOO HOO BEVERAGE CO., 600 Commercial Ave., Carlstadt, N.J. 07072." The contract covers the sale of 120,000 pounds of cocoa powder to be delivered in three separate shipments-one promptly, one in November 1977, and one in December 1977. Mr. Barischoff signed the contract as follows: "YOO HOO BEVERAGE CO., by Eric Barischoff." Exhibit P35 is identical to Exhibit P19 except that the buyer's name is changed from "YOO HOO BEVERAGE CO., 600 Commercial Ave., Carlstadt, N.J. 07072" to "YOO HOO AFRICA, LTD., 511 Newbridge Ave., East Meadow, N.Y. 11554." Mr. Barischoff signed Exhibit P35 as follows: "YOO HOO AFRICA, LTD., by Eric Barischoff." Exhibit P20 is a similar printed form dated September 20, 1977. The seller is "WOODWARD & DICKERSON, INC." The buyer is "YOO HOO AFRICA, LTD., 511 Newbridge Ave., East Meadow, N.Y. 11554." This contract covers the sale of 40,000 pounds of cocoa powder to be delivered in one shipment in December 1977. Mr. Barischoff signed this contract as follows: "YOO HOO AFRICA, LTD., by Eric Barischoff." Exhibit P49 is the same type of form contract, dated August 23, 1977. The seller is "WOODWARD & DICKERSON, INC." The buyer is "YOO HOO AFRICA, LTD., 511 Newbridge Ave., East Meadow, N.Y. 11554." This contract covers the sale of 40,000 pounds of cocoa powder to be delivered in one shipment between September and December of 1977. Dr. Hotelling signed the contract as follows: "YOO HOO AFRICA, LTD., by E. B. Hotelling."

 The controverted evidence at trial was as follows: On or about September 15, 1977, Mr. Staffenberg, Mr. Wittpenn and Dr. Hotelling met for lunch in Carlstadt, New Jersey. Both Mr. Staffenberg and Mr. Wittpenn testified that at this meeting Dr. Hotelling orally ordered three 40,000 pound shipments of cocoa powder for Beverage, one shipment to be delivered immediately, while the other two shipments were to be delivered in November and December. Mr. Staffenberg and Mr. Wittpenn also testified that at the same meeting Dr. Hotelling orally placed an order for one shipment of cocoa powder in the name of Africa, which was to be delivered in December. Dr. Hotelling's recollection of what took place at the meeting contradicted the testimony of Mr. Staffenberg and Mr. Wittpenn. Dr. Hotelling testified that at this meeting he ordered only three shipments of cocoa powder and that the three shipments were for Africa. He also testified that he informed Mr. Staffenberg and Mr. Wittpenn that Beverage did not need any cocoa powder at that time. He claims that he was asked if Africa would be in a position to take the three shipments and he responded affirmatively. Shortly after this meeting, Dr. Hotelling received two sales contracts from the plaintiff, one of which was Exhibit P19, and the other Exhibit P20. As previously stated, Exhibit P19 identifies the buyer as Yoo Hoo Beverage Co., and covers three shipments of cocoa powder totalling 120,000 pounds. It is signed as follows: "YOO HOO BEVERAGE CO., by Eric Barischoff." Exhibit P20 identifies the buyer as Yoo Hoo Africa, Ltd., and covers one 40,000 pound shipment of cocoa powder. It is signed as follows: "YOO HOO AFRICA, LTD., by Eric Barischoff." Dr. Hotelling testified that Exhibit P19 was incorrect in that the buyer should have been designated as Africa, and that he communicated this fact to Mr. Wittpenn.

 Mr. Staffenberg testified that the first shipment of cocoa powder covered in Exhibits P19 and P35 was received by the plaintiff in late September, and that Dr. Hotelling directed it to be delivered to Beverage. There is no dispute that Beverage paid for this shipment. Mr. Staffenberg also testified that when the two additional shipments of cocoa powder described in Exhibits P19 and P35 arrived, Dr. Hotelling directed these shipments to be placed in a public warehouse in Camden, New Jersey. Dr. Hotelling testified that he did not remember giving such directions.

 In March 1978, Mr. Staffenberg and Mr. Wittpenn met with Dr. Hotelling in Carlstadt and discussed with him payment for the two shipments which were still in the warehouse. Mr. Staffenberg testified that Dr. Hotelling informed him that he had placed the order for these two shipments in the name of Africa, and that the sales contract should have been in the name of Africa. Mr. Staffenberg also testified that Dr. Hotelling stated he no longer had authority to sign contracts in the name of Africa, and that Mr. Barischoff, the president of Africa, would sign all of Africa's contracts in the future. The plaintiff subsequently reissued the same contract in the name of Africa (Exhibit P35), and Mr. Barischoff signed this contract as well as the contract set forth in Exhibit P20. Payment for the three shipments of cocoa powder described in Exhibits P20 and P35 was never made by either Africa or Beverage.

 II. Theories of Recovery

 The plaintiff's complaint consists of two counts. In Count I, the plaintiff claims that Beverage owes it $ 240,000.00 plus interest for two of the three shipments of cocoa powder described in Exhibits P19 and P35. In Count II, the plaintiff claims that Beverage owes it $ 88,800.00 plus interest for the two shipments of cocoa powder described in Exhibits P20 and P49. *fn2" At the trial of this action, the plaintiff argued a number of different theories of recovery. With respect to Count I only, the plaintiff argued that an oral contract was entered into between the plaintiff and Beverage at the meeting of Mr. Staffenberg, Mr. Wittpenn and Dr. Hotelling on September 15, 1977. Beverage contended that no oral contract was made at that meeting but if such an oral contract were made, it was unenforceable under the Statute of Frauds. 13 Pa.Cons.Stat.Ann. § 2201 (1979). The plaintiff, however, asserted that the oral contract was taken out of the Statute of Frauds because: (1) Beverage received and accepted the goods subject to the contract, id. § 2201(c)(3); and (2) the sales contract sent by the plaintiff to Dr. Hotelling was a writing in confirmation of the contract, id. § 2201(b). Beverage further contended that an oral contract had never been pleaded by the plaintiff and that the reissuance of this contract by the plaintiff in the name of Africa was a novation. The jury answered in the affirmative the following three interrogatories in connection with Count I:

 
1. Do you find from a preponderance of the evidence that there was an oral contract between the plaintiff and Beverage for the two shipments of cocoa powder for which the plaintiff claims payment in Count I?
 
2. Do you find from a preponderance of the evidence that Exhibit P19 confirms the oral contract between the plaintiff and Beverage which you found to exist by your answer of "Yes" to Question 1?
 
3. Do you find from a preponderance of the evidence that there was a receipt and acceptance by or at the direction of Beverage of the two shipments of cocoa powder for which you found an oral contract by your answer of "Yes" to Question 1?

 The jury thus found that an oral contract was entered into between the plaintiff and Beverage, that Exhibit P19 was a writing sufficient to confirm the oral contract between the plaintiff and Beverage, and that there was a "receipt and acceptance" by Beverage of the two shipments of cocoa powder for which the plaintiff claimed payment in Count I.

 With respect to both Count I and Count II, the plaintiff contended that it was entitled to recover against Beverage under the instrumentality doctrine, the theory of apparent authority, and the theory of agency by estoppel. The jury answered in the affirmative the following three interrogatories in connection with both Count I and Count II:

 
Do you find from a preponderance of the evidence that, under the rule of apparent authority, Beverage authorized Africa to enter into the three contracts in the name of Africa on behalf of Beverage covering the four shipments of cocoa powder?
 
Do you find from a preponderance of the evidence that Beverage controlled Africa to such an extent that Africa was a mere instrumentality of Beverage, and that Beverage misused its control of Africa for the benefit of Beverage, thereby causing the plaintiff to not be paid for the four shipments of cocoa powder?
 
Do you find from a preponderance of the evidence that, under the theory of estoppel, Beverage is estopped from denying that Africa acted as its agent in connection with the purchase of the four shipments of cocoa powder covered by the three written contracts in the name of Africa?

 The jury thus found that Beverage had cloaked Africa with apparent authority to enter into the three contracts in the name of Africa on behalf of Beverage covering the four unpaid shipments of cocoa powder, that Africa was a mere instrumentality of Beverage, and that Beverage was estopped to deny that Africa acted as its agent in connection with the four shipments of cocoa powder covered by the three written contracts in the name of Africa.

 III. The Oral Contract

 In connection with Count I only, Beverage contends that since the plaintiff did not allege an oral contract in the complaint, this theory of recovery should not have been submitted to the jury. Although the complaint is far from a model of a well drafted pleading in terms of the theories of recovery presented, Count I does allege that an oral agreement was entered into between the plaintiff and Beverage at the lunch meeting of Mr. Staffenberg, Mr. Wittpenn, and Dr. Hotelling on September 15, 1977, and it also seeks recovery on this contract. Furthermore, the plaintiff's oral contract theory was clearly set forth in the final pretrial order, which was filed of record after being signed by the Court and counsel for both parties. Pursuant to Local Rule 21(d), the final pretrial order "supersede(s) all prior pleadings in the case." The submission of interrogatory number one (1) to the jury was therefore proper.

 With respect to this first interrogatory, the Court charged the jury in part as follows:

 
First, a contract is a promise or set of promises for the breach of which the law gives a remedy or the performance of which the ...

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