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February 20, 1948


The opinion of the court was delivered by: GODDARD

This action by the plaintiff, a resident of Illinois, is brought against the defendant, a Delaware corporation, to recover damages sustained for alleged breach of a contract by the defendant to purchase 153,500 laminated water-proof bags (later referred to as 'Triplex bags'). It was tried before the court without a jury.

In the complaint it is alleged that an agreement for the purchase of the bags was entered into on or about April 16, 1945, and that the contract is contained in certain writings, copies of which are attached to the complaint, which further alleges that prior to the time specified for the delivery of the bags and on or about August 1, 1945 defendant notified plaintiff that it would not accept or pay for them and that by reason of the alleged breach, plaintiff has been damaged in the sum of $ 37,556.74.

Defendant, in its amended answer in addition to a general denial, alleges as a first defense, that, during the period from April 16, 1945 to August 1, 1945 plaintiff and defendant negotiated with respect to the terms of an order for bags to be supplied to defendant by plaintiff for use in packing breakfast cereals for the armed forces, as more particularly set forth in Exhibits A to I inclusive annexed to the amended answer; and it is further alleged that it was mutually understood that the order for bags was a pro forma and tentative order only, issued in anticipation of the award to the defendant of a government contract for breakfast cereals for the fourth quarter of 1945, and was placed with plaintiff by defendant solely for the purpose of reserving a place in plaintiff's manufacturing schedule; that said order was not to become binding upon plaintiff or defendant on April 16, 1945, or at any other time, unless and until such award was made; and that no award was made as plaintiff well knew. The Second, Third and Fourth defenses are affirmative defenses of illegality and allege the failure of plaintiff and his supplier of bags, the Mehl Manufacturing Company, to comply with certain orders and regulations of the War Production Board in placing and accepting orders for Triplex bags and for Triplex paper used in their manufacture. However, no proof was offered on the trial to support these defenses of illegality.

 During the late war cereal breakfast food for the armed forces on the Islands in the Pacific frequently had to be carried or floated ashore through the surf and the Army required suppliers of these foods to pack them in what were called 'shipper bags'. These were pillow-case shaped and water proof; they were made of creped Kraft paper laminated with asphalt. Those with three layers of paper were called 'Triplex bags'; those with two layers of paper -- 'Duplex bags'.

 The need for bags was urgent and due to the general shortage of paper difficult to obtain. About the middle of 1943 plaintiff, who was and for some time had been engaged in business in Chicago as a consultant on packing materials and in the purchase and resale of such materials under the name of 'Package Products Company' was requested by Major Clark (later Lieutenant Colonel) to assist the army in finding further sources for the production of these bags. Plaintiff who had previous business with the Mehl Manufacturing Company Division of Sidney-Thomas Corporation (referred to later as Mehl) of Cincinnati, thought that Mehl might be able to manufacture the bags if it could obtain the paper and laminated material. Major Clark and plaintiff arranged with the Ruberoid Company to manufacture the laminated material if the necessary Kraft paper could be obtained and Major Clark, through the War Production Board, had Kraft paper allocated to Roberoid by Tomahawk Paper Mills (referred to later as Tomahawk). The bags were to be supplied only to manufacturers supplying foods to the Chicago Quartermaster's Depot. Under the arrangement Tomahawk would furnish Ruberoid with Kraft paper; Ruberoid would provide the laminated material and produce the Duplex or Triplex paper and send it on to Mehl who would make the bags.

 General Foods, beginning January, 1944, obtained from the plaintiff bags for packing the cereals it was furnishing the Army under contracts. Prior to 1945 the contracts for the cereals called for prompt shipping, but commencing with shipments to be shipped during the third quarter of 1945 the Army Quartermaster's orders were on a calendar quarter basis.

 General Foods manufactured and packed the cereals at its plant in Battle Creek, Michigan. Packing materials were ordered in part by its purchasing department in New York and part by Claude M. Lewis, its representative in Battle Creek. But the purchases of outer cases were handled by the New York office. In the latter part of March, 1945 Lewis received a copy of a purchase order entered into by the New York office for 153,500 outer cases which had been placed by the New York office after talks with the Quartermaster about a fourth-quarter contract. Lewis talked with plaintiff by telephone and asked if he could supply 153,500 Triplex bags in equal quantities in September, October and November, 1945. After this conversation several written communications passed between Lewis and Stolteben, which the plaintiff alleges constituted his contract with General Foods. These read as follows:

 Exhibit I

 'April 16, 1945

 Package Products Company

 221 N. LaSalle St.

 Chicago, Ill.

 Att. Mr. J. Stalteben


 Attached hereto our order No. 48368 covering fourth quarter bags. This order is being placed to give you an opportunity to place these bags in your schedule and we are reserving cancellation or change privilege up to 30 days prior to specified delivery date.

 Yours very truly, General Foods Corporation By: C. M. Lewis, Asst. Purchasing Agent


 Exhibit 3

 'April 17, 1945

 General Foods Corporation,

 Post Products Division

 Battle Creek, Michigan

 Attention: Mr. C. M. Lewis

 Dear Mr. Lewis:

 We are in receipt of your order No. 48368 covering your requirements of Triplex bags for the fourth quarter of this year. While we have entered this order in the regular way with the mill, subject to one third deliveries each during September, October and November, 1945, such filing is only for purposes of scheduling these bags in the respective months mentioned. There may be some question concerning your provision of cancellation at any time within thirty days of delivery, since our industry is required to specify paper requirements cut-to-size, a full 60 days in advance of delivery, without privilege of cancellation.

 We are attempting to establish some means of protection in the event of sudden Government cancellations, and we will have to withhold formal acknowledgment of your order until such cancellation specifications have been clearly defined, in protection to the interest of all parties concerned in the manufacture of such material.

 We do appreciate the additional business however, and are sure that some amiable arrangement can be made, whereby our mutual interests are protected.

 Yours very truly, Package Products Company J. Stolteben


 Exhibit 4

 'April 21, 1945

 General Foods Corporation

 Post Products ...

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