with the contract and sought to negotiate a new one. We disagree.
The notice to terminate in Maloney stated without ambiguity that the terminating party did "not wish to continue this agreement". 385 Pa. at 226. Here, by contrast, API stated that "we will continue to honor our contracts". True, as in Maloney, API sought to adjust the terms of the contract; however, unlike Maloney, API never gave "notice as called for under the agreement".
Maloney v. Madrid Motor Corp., 385 Pa. at 226.
Efco Importers v. Halsobrunn, 500 F. Supp. 152 (E.D. Pa. 1980), sheds no light upon the issue at bar. In Efco Importers, plaintiff admitted that it had received a clear and unambiguous notice of cancellation. See, id., at 154 and 155, citing P 9 of plaintiff's complaint. Nevertheless, plaintiff in Efco Importers argued that defendant's conduct subsequent to sending the notice evidenced an intent to renew the contract. Judge Lord disagreed and held that " assuming communication of a clear notice to terminate", post-termination conduct identical to pre-termination conduct is insufficient to support a renewal of the contract. Efco Importers v. Halsobrunn, 500 F. Supp. at 156 (emphasis added).
Here, the January 28 letter evidences API's ambivalence with respect to continuing its relationship with Eastern. On one hand, API stated that it would honor its contract and affirmed its obligation to provide proper, timely notice. On the other hand, API expressed a desire to alter the contract and hoped that this could be accomplished by April 1, 1981.
These conflicting signals which API sent Eastern are not clear and unambiguous. They are not compelling. API failed to clearly communicate its apparent desire to terminate the contract with Eastern.
Defendants' reliance upon Music, Inc. v. Henry B. Klein Co., 213 Pa. Super. 182, 184, 245 A.2d 650 (1968) is also misplaced. There, the Superior Court considered the "sole question" of whether an effective termination notice had been given. The contract in Music required that notice of termination be given sixty days before the expiration of the contract. The terminating party mailed the notice sixty-one days prior to the expiration date. Notice was received fifty-eight days before the contract was scheduled to expire. The Court held that the notice was effective because the contract did not contain a "time is of the essence" clause. Id.
API argues that its letter of March 12, 1981, though untimely under the contract, was a clear and unambiguous notice to terminate. Further, because the contract had no "time is of the essence" clause, under Music, the untimely notice was effective. In so urging, API ignores Music's most relevant language and misapprehends its holding.
Music did not, without qualification, sanction untimely notices to terminate. Rather, Music "approved a rule of [contract] construction" that an untimely notice to terminate is effective when the terminating party "acted reasonably . . . and [where] there is no demonstrable prejudice". Music, Inc. v. Henry B. Klein Co., 213 Pa. Super. at 185. Continuing, the court concluded that under the circumstances at bar, there was no "showing" of prejudice which resulted from the untimely notice of termination. Music, Inc. v. Henry B. Klein Co., 213 Pa. at 186.
The rule which we distill from Music is this: in the absence both of a clause which deems that "time is of the essence" and a "showing" that the party which suffered the untimely notice was "damaged" or had "changed its position to its detriment", it is "unconscionable" to give effect to an automatic renewal provision of a contract. 213 Pa. Super. at 186. Applying this rule, Music concluded that the notice of termination was effective.
In the instant matter, there is no clause which deems that "time is of the essence". However, Eastern has made an unrebutted showing that it was damaged by the forced sale of large volumes of milk at distress prices. See e.g., Affidavits of Michael H. Donovan, para. 8; Carl Lanning, para. 2; Herbert W. Dorn, para. 5. This evidence satisfies Music's requirement that a "showing" of "demonstrable prejudice" be made. Hence, the untimely notice to terminate is ineffective. 213 Pa. Super. at 185.
Defendants' final argument need not detain us. They argue that Eastern was verbally informed of their intention to terminate. Further, defendants asseverate that Music held an oral notice sufficient notwithstanding the contractual requirement of a written notice.
Contrary to this assertion, Music did not "hold" that oral notice was sufficient. Rather, the court observed in dictum that the "position has also been taken that the notice may be verbal even though the contract calls for written notice". Music, Inc. v. Henry B. Klein Co., 213 Pa. Super. at 185 n. 3. Our characterization of this footnote as dictum springs from a plain reading of the court's language as well as the court's framing of the issue for decision. 213 Pa. Super. at 184. Cf., Chowdhury v. Reading Hospital & Medical Center, 677 F.2d 317, 324 (3d Cir. 1982) (Aldisert, J., dissenting) (dictum, characterized as "statements of law in an opinion which could not logically be a major premise of the selected facts of the decision" are the "antithesis of precedent".) (quotations omitted).
An appropriate order shall issue.
AND NOW, this 15th day of August, 1983, IT IS ORDERED that plaintiff's motion for partial summary judgment as to liability is GRANTED and defendants' cross-motion for summary judgment is DENIED.