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Severi v. Seneca Coal & Iron Corp.

decided: July 3, 1967.


Waterman, Hays and Anderson, Circuit Judges.

Author: Waterman

WATERMAN, Circuit Judge:

Appellant commenced this diversity action in the United States District Court for the Southern District of New York alleging that the appellee owed him an agreed-upon commission and other compensation for procuring a buyer for a quantity of Brazilian iron ore appellee had offered for sale. After a non-jury trial the trial judge filed extensive Findings of Fact and Conclusions of Law and adjudged that plaintiff's complaint be dismissed on the merits.

Upon appeal from this judgment we hold that plaintiff is entitled to recover the commission he claims is due him, but agree with the result the trial court reached that he is not entitled to the additional sum he seeks.

Appellant, a citizen of Italy, is a coal and iron ore broker who sells these products to consumers in Europe. He conducts his business from his office in Rome, Italy. Appellee, Seneca Coal & Iron Corp. (Seneca) is a Delaware corporation with its principal place of business in New York City. It acts as a wholesaler, exporter, and selling agent of coal, coke, steel, and iron.

The transactions and negotiations between the parties were by letter and cable and were the subject of a stipulation that was incorporated into a detailed pretrial order. Except for the short testimony of one defense witness the evidence adduced at the one-day trial was composed of correspondence and documents only. The issue was whether, as plaintiff contended, Seneca was plaintiff's sole principal, or whether, as defendant contended, it and plaintiff were acting for defendant's disclosed principal.

The pre-trial stipulation and the exhibits in evidence disclosed that starting in early 1960 appellant and appellee entered into a voluminous correspondence designed to consummate a sale of Brazilian iron ore by Seneca to a European buyer procured by Severi. This correspondence evidently envisioned a sale by Seneca on its own behalf; it contained no indication that Seneca was acting for any other party.

The transaction at issue can be considered to have been initiated by Severi's letter of May 28, 1960*fn1 to Seneca. This letter did not establish any legal relationship between the parties, but it is a necessary preface if one is to understand the communications which followed it. The next correspondence was Seneca's reply to Severi on June 2, 1960, which contained a firm offer for 15 days to sell 100,000 long tons of iron ore at $11.00 per ton.*fn2 In the light of the May 28th letter, this reply must be interpreted as including a promise to pay Severi a commission if Severi could produce a buyer willing and able to purchase such a quantity of ore on the offered terms. Although it is not entirely clear from the correspondence, the parties stipulated as one of the bases for their pre-trial order that on June 14, 1960 the defendant raised the offering price to $11.30 per long ton and agreed that this offered price included a commission of $.30 per long ton for Severi. The offer on these terms was extended through July 11, 1960.

Severi entered into negotiations with Vereinigte Osterreichische Eisen-Und Stahlwerke (Voest), an Austrian steel mill, to buy the Brazilian iron ore and he learned from Voest that the Austrian import authorities would not allow the transaction to be completed unless payment was made to a Brazilian bank in favor of a Brazilian seller. Severi made these conditions known to Seneca in a letter of June 11, 1960, with the comment "No doubt you have enough connections in Brazil to arrange the matters in order to follow these official prescriptions." The pre-trial stipulation sets forth that Seneca on June 15, 1960 advised Severi that this proposed method of payment was satisfactory. By a June 20, 1960 cable Seneca designated Consorcio de Mineracao Ltda of Belo Horizonte (Mineracao) as the Brazilian seller. Seneca's letter of the same day, June 20, 1960, confirmed this designation though Seneca also there referred to itself as the "exclusive American selling agents for the Brazilian company."*fn3

On July 11, 1960, as a result of Severi's efforts, Voest agreed to buy 50,000 long tons of iron ore from Mineracao at $11.30 per ton and a written contract to this effect was executed by these two companies. Seneca was not a party to the contract. A further commitment, however, cabled to Severi, was made by Seneca on July 21, 1960, promising that if the buyer's chartered vessels would pay the shipper $.42 per ton for loading and trimming the iron ore aboard ship at Rio de Janeiro, the 42 cents so paid would be divided, 10 cents to Severi, 11 cents to Seneca, and 21 cents to Mineracao.*fn4 Voest agreed to pay the loading and trimming charges, and Severi claims this 10 cents per ton is owed to him from Seneca in addition to the 30 cents per ton commission owed to him on the 50,000 tons of ore contracted for by Voest.

Due to an internal transportation problem within Brazil, Mineracao was unable to deliver the 50,000 long tons of iron ore and Voest eventually, on November 2, 1960, canceled its contract and obtained iron ore from another source. As a result, Severi never received any compensation for obtaining Voest as a buyer of the ore. Therefore he instituted this action, alleging in his complaint that Seneca had contracted with him for his services, that he, on his part, had fully performed his part of the contract, and that he should have judgment for his $15,000 commission and his $5,000 share of the agreed-upon additional loading and trimming charges.

The court below dismissed plaintiff's complaint by concluding that Seneca's promise of June 2 was an offer for a unilateral contract which was accepted when Severi produced Voest's order on July 11 for 50,000 tons. It then held that Seneca was not liable to Severi because Severi had learned between June 2 and July 11 -- the offer and acceptance dates -- that Mineracao, not Seneca, was the seller of the ore, and Severi had learned that, irrespective of the posture of Seneca's June 2 offer, it had developed prior to July 11 that Seneca was acting as an agent for Mineracao and that Mineracao had been disclosed to Severi as Seneca's principal prior to Severi's acceptance of the agent's offer. We accept the trial court's factual findings as to the events at issue, but we differ from it as to the characterization it makes of the transaction and the legal conclusion it draws therefrom. We have mentioned that the transactions between the parties were entirely by letter and cable and, except for the testimony of one witness for Seneca, the evidence at trial consisted of this correspondence and of the parties' documents.*fn5

The district court arrived at its conclusions by a reliance on the inferences it drew from this voluminous correspondence and the undisputed facts agreed to by the parties in their pretrial stipulation, and as we are in precisely the same position we have no hesitancy in drawing different inferences and reaching a contrary result. See Agrashell, Inc. v. Bernard Sirotta Co., 344 F.2d 583, 589 (2 Cir. 1965); Miller v. Commissioner, 327 F.2d 846, 849 (2 Cir.), cert. denied, 379 U.S. 816, 85 S. Ct. 32, 13 L. Ed. 2d 28 (1964); Mottaghi v. Barkey Importing, 244 F.2d 238, 248 (2 Cir.), cert. denied, Barkey Importing Co. v. Iravani Mottaghi, 354 U.S. 939, 77 S. Ct. 1402, 1 L. Ed. 2d 1538 (1957), 5 Moore, Federal Practice para. 52.04 (2d ed.1964).

From our study of all this material we find it to be clear that at the time of the initial offer Seneca was the only party with whom Severi was dealing and the subsequent insertion of Mineracao into Seneca's transaction with Severi did not create, to the prejudice of Severi, such a relationship between Mineracao and Seneca as would permit Seneca to escape liability to Severi by stating, at a convenient time for Seneca to state it, that Mineracao had been Seneca's undisclosed principal and was now being disclosed. It is clear that Seneca's insertion of Mineracao into the transaction was in response to the Austrian buyer's request in order to have the importation of the ore into Austria comply with Austrian trade regulations. A Seneca letter to Severi of July 8, 1960*fn6 ...

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