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Thomson Printing Machinery Co. v. B.F. Goodrich Co.

August 12, 1983

THOMSON PRINTING MACHINERY CO., PLAINTIFF-APPELLANT,
v.
B.F. GOODRICH CO., DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division No. 80 C 750 -- Charles P. Kocoras, Judge.

Author: Cudahy

Before WOOD and CUDAHY, Circuit Judges, and GRANT, Senior District Judge.*fn*

CUDAHY, Circuit Judge. Appellant Thomson Printing Company ("Thomson Printing") won a jury verdict in its suit of breach of contract against appellee B.F. Goodrich Company ("Goodrich"). The district court could not be enforced against Goodrich because it was an oral contract, the Statute of Frauds applied and the Statute was not satisfied. Because we conclude that the contract was enforceable on the basis of the "merchants" exception to the Statute of Frauds, we reverse.

Introduction

Thomson Printing buys and sells used printing machinery. On Tuesday, April 10, 1979, the president of Thomson Printing, James Thomson, went to Goodrich's surplus machinery department in Akron, Ohio to look at some used printing machinery which was for sale. James Thomson discussed the sale terms, including a price of $9,000, with Goodrich's surplus equipment manager, Ingram Meyers. Four days later, on Saturday, April 14, 1979, James Thomson sent to Goodrich in Akron a purchase order for the equipment and a check for $1,000 for part payment.

Thomson Printing sued Goodrich when Goodrich refused to perform. Goodrich asserted by way of defense that no contract had been formed and that in any event the alleged oral contract was unenforceable due to the Statute of Frauds. Thomson Printing argued that a contract had been made and that the "merchants" and "partial performance" exceptions to the Statute of Frauds were applicable and satisfied. The jury found for Thomson Printing, but the district court entered judgment for Goodrich on the grounds that the Statute of Frauds barred enforcement of the contract in Thomson's favor.

Historical Background

In 1671, in Old Marston, Oxfordshire, England, defendant Egbert was sued by plaintiff John over an alleged oral promise by Egbert to sell to John a fighting cock named Fiste. John's friend, Harold, claimed he overheard the "deal" and by that dubious means John won, though in fact there apparently was no deal. In 1676 courts did not allow parties to a lawsuit to testify so Egbert could not testify to rebut Harold's story. Compounding the problem was the fact that courts then could not throw out jury verdicts manifestly contrary to the evidence. So, in response to the plight of the Egberts of this world and to the recurring mischief of the Johns, as well as to combat possible "fraude and perjurie" by the Harolds, Parliament passed in 1677 a "statute of frauds" which required that certain contracts for the sale of goods be in writing to be enforceable.*fn1

The "Merchants" Exception

A modern exception*fn2 to the usual writing requirement is the "merchants" exception of the Uniform Commercial Code, OHIO REV. CODE ANN. § 1302.04(B) (Page 1979) (U.C.C. § 2-201(2), which provides:

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 [writing requirement] against such party unless written notice of objection to its contents is given within 10 days after it is received.

We must emphasize that the only effect of this exception is to take away from a merchant who receives a writing in confirmation of a contract the Statute of Frauds defense if the merchant does not object. The sender must still persuade the trier of fact that a contract was in fact made orally, to which the written confirmation applies.

In the instant case, James Thomson sent a "writing in confirmation" to Goodrich four days after his meeting with Ingram Meyers, a Goodrich employee and agent. The purchase order contained Thomson Printing's name, address, telephone number and certain information about the machinery purchase. n.3 (FOOTNOTE OMITTED.) The check James Thomson sent to Goodrich with the purchase order also had on it Thomson Printing's name and address, and the check carried notations that connected the check with the purchase order.*fn4

Goodrich argues, however, that Thomson's writing in confirmation cannot qualify for the 2-201(2) exception because it was not received by anyone at Goodrich who had reason to know its contents.*fn5 Goodrich claims that Thomson erred in not specifically designating on the envelope, check or purchase order that the items were intended for Ingram Meyers or the surplus equipment department. Consequently, Goodrich contends, it was unable to "find a home" for the check*fn6 and purchase order despite attempts to do so, in accordance with its regular procedures, by sending copies of the documents to several of its various divisions. Ingram Meyers testified that he never learned ...


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