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SOYA PROCESSING CO. v. SIROTA

April 15, 1952

SOYA PROCESSING CO.
v.
SIROTA et al.



The opinion of the court was delivered by: KAUFMAN

This adjudication grows out of an action which commenced when plaintiff filed a complaint asking for a declaratory judgment that plaintiff has not entered into any contract with defendants for the sale of soy bean oil and has not contracted to settle any controversies with defendants by arbitration, and for a temporary and permanent injunction restraining defendants from proceeding further under a demand for arbitration made by them upon plaintiff.

Defendants pleaded, in substance, a general denial of plaintiff's allegations, and, as a defense and counterclaim, declared that plaintiff had made two contracts for the sale of soy bean oil to defendants of $ 29,737.50. Plaintiff replied with a general denial and the defense of the statute of frauds.

Upon agreement of the parties and by order of this Court the matter was referred to a Special Master pursuant to Rule 53 of the Federal Rules of Civil Procedure, 28 U.S.C.A. By stipulation pursuant to subdivision (e)(4) of Rule 53, the Special Master's findings are final with respect to the factual issues between the parties.

 The Special Master heard and reheard both parties and has filed his Report, dated September 13, 1951, and a Supplement thereto, dated January 8, 1952, the Supplement being responsive to the objections raised by the parties to the September 13, 1951 Report and the additional argument on said objections.

 Plaintiff has now moved this Court to confirm in part and overrule in part the two Reports of the Special Master and for a further order fixing the fee of the Special Master. The parties have raised their respective objections to the two Reports and, pursuant to Civil Rule 5(g) of the Southern District of New York, *fn1" the cause is now before this Court.

 Two issues were before the Special Master by the order of this Court dated April 30, 1951:

 (1) Whether on or about January 26, 1951 the contracts which are annexed to Exhibit B of the complaint as Exhibits A and B thereof, were entered into by Soya Processing Company and George Sirota & Sons.

 (2) If it shall be determined that said contracts were entered into by said parties, whether the defendant partnership sustained damages by reason of plaintiff's refusal to recognize and perform said contracts, and if so, the amount of said damages.

 Upon the reference, the Special Master determined that the first transaction involved in the case resulted in an oral agreement but that the 'confirmation' intended to be a memorandum of that prior oral agreement did not correctly state the terms of the agreement. (The Special Master also concluded that the confirmation did not constitute an independent written contract but was intended to be a confirmation of the prior oral agreement.) Having drawn this conclusion, which defendants contest, the Special Master then held the first oral agreement unenforceable since it did not meet the requirements of the statute of frauds.

 The Special Master's conclusion of law in this connection rests upon his finding that the absence of any limitation as to direction of shipment, either east of Wooster or east of Decatur, was an omission of a material term of the written memorandum. I agree.

 It is to this portion of the two Reports that defendants' objections are addressed. As I understand their argument, they contend:

 (1) The broker's notes constituted written contracts and were not 'mere memoranda' of oral agreement, but

 (2) even if they were memoranda, the confirmation of the first transaction (the one found unenforceable by the Special Master) did not omit any material term of the agreement.

 What I have called point (1) of that argument depends for its effectiveness on defendants' contention that: 'When an agreement is reduced to writing so that it can be called a written agreement, the Statute of Frauds cannot be urged as a bar to its enforceability.' *fn2"

 The point is urged upon the Court on the authority of In re Huxley, 1945, 294 N.Y. 146, 61 N.E.2d 419, 169 A.L.R. 194. I do not find that case determinative of the issue before me. In clear language at page 149 of 294 N.Y., at page 420 of 61 N.E.2d, the Huxley case noted that the broker's confirmation there provided: 'In the absence of such (formal) contract this memorandum represents the contract of the parties.' No such provision appears in the instant confirmation, and the Special Master's finding that the confirmation here reads: 'We, acting as brokers, confirm having made this day * * * the following transaction' (emphasis supplied) stresses the confirmatory rather than contractual nature of the instant broker's note.

 Friedman & Co. v. Newman, 1931, 255 N.Y. 340, 174 N.E. 703, 73 A.L.R. 95, is more in point. It was there said at page 343 of 255 N.Y., at page 704 of 174 N.E.:

 'The paper executed thereafter, denominated 'confirmation of sale,' was, as its name and form clearly indicate, merely intended as a memorandum of the oral contract. It is ...


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