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Tabor & Co. v. Gorenz

OPINION FILED NOVEMBER 3, 1976.

TABOR & CO., PLAINTIFF-APPELLEE,

v.

JOHN GORENZ, D/B/A GORENZ GRAIN CO., DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Kane County; the Hon. WILLIAM H. ELLSWORTH, Judge, presiding.

MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT:

The plaintiff, Tabor & Co., sued to recover damages for the breach of alleged oral contracts under which it claimed that the defendant, John Gorenz, d/b/a Gorenz Grain Co., promised to deliver soybeans. Defendant denied the existence of the contracts and pleaded the affirmative defense of the Statute of Frauds. The jury found for the plaintiff and assessed damages in the amount of $159,352.71. Defendant appeals from the judgment entered on the verdict. He also appeals from an order assessing attorney's fees and mileage as costs arising from proceedings subsequent to the trial.

In addition to claiming that he did not contract to sell the beans to plaintiff, defendant contends that in any event the alleged oral contracts are barred under the Statute of Frauds set forth in section 2-201 of the Uniform Commercial Code (Ill. Rev. Stat. 1973, ch. 26, par. 2-201). In this regard plaintiff relies on section 2-201(2) of the Uniform Commercial Code which provides:

"(2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements * * *."

Defendant denies receipt of confirmations and contends that plaintiff failed to prove receipt either by direct proof or with the aid of the presumption of receipt based upon evidence of proper mailing. Plaintiff contends that the proof of mailing, based upon customary business practices which had resulted in actual notice to defendant in contemporary transactions, plus proof of circumstances tending to show defendant's knowledge of the contents of the disputed confirmations is sufficient to support the judgment by its manifest weight.

Tabor has its principal place of business at Decatur, with branch offices in De Kalb and a barge loading station at La Salle, all in Illinois. It produced testimony by its employees that Gorenz, a grain dealer and elevator operator, in a telephone conversation with a merchandiser at De Kalb on October 3, 1972, orally agreed to sell and that Tabor agreed to buy 40,000 bushels of soybeans at $3.46 per bushel for shipment in March 1973, to be delivered at La Salle; that on September 27, 1972, Gorenz orally agreed to sell and Tabor agreed to buy 20,000 bushels of soybeans for delivery in July 1973, at La Salle for $3.50 1/2 per bushel; that Gorenz repudiated the agreements on April 13, 1973, denying that they existed; and that Tabor replaced the soybeans at a market price of $6.50 per bushel on April 13 and 16, suffering net damages as found by the jury.

The plaintiff also proved that on March 5, 1973, the defendant sold one load of soybeans containing 938.83 bushels and was sent a settlement sheet which showed a contract price of $3.46 per bushel to be credited on the October 3 contract. The load was also shown to have been credited in Tabor's records as a partial delivery on the October 3 contract. Witnesses for Tabor testified that Gorenz, during various communications between April 10 and April 13, 1973, denied for the first time the existence of the contracts for March and July deliveries. Proof was also adduced that the price of soybeans had advanced to between $6.50 and $7 per bushel by the middle of April 1973.

Frederick Lawton, the Tabor employee at De Kalb, testified to the making of the oral contract with Gorenz. He testified that he knew Gorenz's voice from previous dealings. He also testified to the customary procedure which was followed in large grain transactions, those over 15,000-20,000 bushels. He would write the transaction into his purchase record while the phone conversation with the seller was going on and would simultaneously be on the telephone with the Decatur office to get approval. It was further established through Lawton and other Tabor employees in the Decatur office that the Tabor employee answering the phone in Decatur then makes a note of the transaction on a similar buyer's card; that when a buyer's card in Decatur is filled with transactions, the card is placed on the secretary's desk; that the secretary then types up a confirmation of the transaction on a form which is designed to be slipped into a window envelope; that a Decatur merchandiser then checks the typed confirmation form against the notes on the buyer's card, signs the confirmation on behalf of Tabor & Co., and returns it to the secretary; that the confirmation form consists of a white original, a green copy, and a yellow copy; that on the same day the white original is sent to the customer in a window envelope with the company's return address printed on it; that the green copy is kept in the Decatur office, and the yellow copy is sent to the point of delivery; and that subsequent to this someone holding the green copy in Decatur or someone holding the yellow copy at the delivery point telephones the De Kalb office where a note is made of the number on the confirmation form in a particular column on the same card on which the transaction was originally recorded. Documents showing that these procedures were followed in the case of the disputed contracts were introduced. However, the white originals were not produced by Gorenz. Other documents received by the defendant concerning contracts for the purchase of corn, entered into on September 15, 1972, and October 5, 1972, as to which the white original confirmations were produced by the defendant were also introduced. There was further evidence that no mail directed to Gorenz had been returned to the Tabor office around the time in question. There was testimony that the yellow copies of both the soybean and corn confirmations were received by mail in La Salle.

Lawton further testified that about February 20, 1973, he began to talk to Gorenz about shipping arrangements for the soybeans; that Gorenz said in one conversation that he would do his best to start delivering beans "on that contract" right after the first of March; that the witness had many further talks with Gorenz in March relating to both corn and soybean delivery arrangements; that he arranged for Tabor to "buy back" the majority of the corn sale which was due to be delivered in March; and that Gorenz did not state at any time before April 10, 1973, that he had no contract with Tabor for beans.

The secretary in the Tabor office in Decatur who typed up the confirmations for the disputed soybean sales, as well as for the undisputed corn sales, testified that she gave the originals addressed to Gorenz to the mail clerk for inclusion in a window envelope. The customary procedure was for the mail clerk to fold and place the confirmation in the envelope. It would go through a machine which sealed the envelope and stamped it. It then would be placed in a leather pouch which the mail clerk carried to the post office daily. The mail clerk, however, was not produced or identified, but it was stated that the company practice was to hire high school students to do this work.

David Porter, a Tabor employee at Decatur, testified that on behalf of Tabor he entered into future transactions for the sale of soybeans on the Chicago Board of Trade on September 27, 1972, which were tied directly into the purchase of the 20,000 bushels of soybeans from Gorenz on that same date. He also testified that he wrote to Gorenz on March 20, 1973, with reference to the settlement of the corn contract and also expressed concern because Gorenz was late on his bean contract, but that Gorenz did not respond. He said that on April 7, 1973, while he was working on shipping schedules for the La Salle terminal, he called Gorenz at a number he received through information and that a voice answered, "This is Mr. Gorenz." The witness said that in the conversation Gorenz asked him how many soybeans he owed on the March contract and that he gave him the computation but recalled no response from Gorenz.

Tabor called Gorenz as an adverse witness. Gorenz conceded that he had received written confirmations of his corn sales to Tabor in September and October 1972, but denied making the oral contracts to sell soybeans and denied receiving any confirmations of soybean sales. Gorenz admitted that he had delivered one load of soybeans consisting of 938.83 bushels to Tabor on March 5, 1973, at the price of $3.46 per bushel which was the same price listed for March delivery on the October 3 confirmation. He, however, testified that he was intending to make a spot delivery of the soybeans denying that he had a contract to do so. He said he did it, "Just to be good hearted," and claimed that he was promised 10¢ over the market price which was then over $6. He said he did not notice the reference to the contract or the price, both of which appeared on the settlement sheet he received enclosed with the March 20 letter from Porter. He also conceded that on "spot sales" it was customary to be paid within a week of delivery, but that he was not paid and later found that they had taken it off the corn crop contract settlement. He said he didn't pay any attention to Porter's reference to the contract in the March 20, 1973, letter from Tabor because he didn't have a contract.

The examination of Gorenz also produced a great number of discrepancies between his sworn depositions and his trial testimony. Also, Gorenz had denied in depositions that he received various correspondence such as settlement sheets and corn confirmations which he later produced at trial in response to discovery motions. In a number of instances Gorenz's memory was shown to be unreliable. It was also established in Gorenz's testimony that he kept incomplete records of his grain sales.

The defendant contends that the plaintiff failed to prove receipt of the soybean confirmations by any competent evidence. Essentially he argues that upon his denial of the oral contracts and his denial of receipt of the written confirmations, Tabor was required to prove the mailing by producing the direct testimony of the person who claimed to have mailed the letters. He argues that the presumption of receipt upon proper mailing could not be relied on in this case because of inadequate proof of mailing and that in absence of proof tending to show actual receipt or a proper ...


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