Appeal from the United States District Court for the Eastern District of Wisconsin. No. 86 C 683-Terence T. Evans, Judge.
Posner, Coffey and Flaum, Circuit Judges.
Dairyland Financial Corporation ("Dairyland") filed suit against the Federal Intermediate Credit Bank of St. Paul ("FICB") alleging that FICB breached an oral contract between the parties for the sale of a portfolio of agricultural loans.*fn1 The district court granted summary judgment in favor of FICB on the ground that enforcement of the alleged agreement was barred by the applicable statute of frauds. We affirm.
Dairyland alleges that it entered into an agreement with FICB to purchase an agricultural loan portfolio ("the loan portfolio") originated by the Farmers Credit Company ("FCC"). FCC made agricultural loans to farmers and farm enterprises. It obtained a substantial amount of its financing through direct loans from FICB and by discounting its customers' notes with FICB. FCC's obligations to FICB were secured by FCC's loan portfolio. The rights and interests of FICB and FCC in the portfolio and the other terms of the parties' lending agreement were set forth in "the General Financing Agreement" signed on August 8, 1974. In 1985 FCC sustained serious financial setbacks and was delinquent in its obligations to FICB. On January 3, 1986 FICB notified FCC that it was in default and demanded full payment under the terms of the General Financing Agreement.
During this same time period James Stopple, President of FCC, tried to organize a group of investors to purchase FICB's interest in FCC's loan portfolio. This investor group became Dairyland. On January 24, 1986 a FICB representative informed Stopple that on January 27, 1986 FICB would take physical possession of the files and documents related to FCC's loan portfolio. On January 25, 1986 Stopple called Thomas Sitz, an associate credit officer for FICB; Stopple and Sitz had previously discussed the proposed sale of the portfolio to Dairyland. Stopple claims that he told Sitz that FCC would not release the files to FICB until an agreement had been reached for the sale of the portfolio to Dairyland.
On January 27, 1986 Stopple again called Sitz to discuss the terms of the proposed sale. Dairyland contends that during this call an agreement was reached between Stopple (on behalf of Dairyland) and Sitz (on behalf of FICB). The principal terms of the alleged agreement were: (1) FCC would turn over the loan files to FICB immediately; (2) FICB would sell the loan portfolio to Dairyland for $3.8 million cash, the price to be adjusted up or down for loan payments received by FICB in the interim, administrative costs and interest; (3) Dairyland would have 45 days to close the transaction; and (4) FCC and FICB would exchange releases of legal liability.
Stopple made a second call to Sitz on January 27. This time James Fretty, an attorney and Dairyland investor, was also a party to the discussion. Pursuant to this conversation Fretty drafted a document entitled "Commitment to Sell Loans" ("the Fretty document") and forwarded it to FICB. Sitz also summarized these calls in a memorandum to his supervisor, Stuart Peterson, dated January 27, 1986. Sitz later prepared a second memo to Peterson, dated February 19, 1986, summarizing FCC's financial status and discussing the state of affairs between FICB and Dairyland. Although FCC turned over its files and documents related to the loan portfolio on January 27, 1986 allegedly in accordance with the first principal term of the asserted agreement, FICB rejected Dairyland's claims that an agreement had been reached. Dairyland never acquired the loan portfolio, and filed suit in the district court alleging breach of contract.
A substantial obstacle to Dairyland's efforts to establish an enforceable contract between Dairyland and FICB is § 401.206 of the Wisconsin Statutes. This section sets forth the statute of ads applicable to "kinds of personal property not otherwise covered." See Wis. Stat. § 401.206 Official UCC Comment ("Purposes: To fill the gap left by the Statute of Frauds provisions for goods, securities and security interests."). The parties agree that it governs the alleged sale of the loan portfolio. Section 401.206 provides in part:
(1) ... [A] contract for the sale of personal property for the price of $5,000 or more is not enforceable by way of action or defense unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by his authorized agent.
(3) A contract which, but for sub. (1) would be enforceable, is enforceable:
(a) If the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under sub. (1) beyond ...