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Louis Dreyfus Corp. v. Commodity Credit Corp.

UNITED STATES COURT OF APPEALS SECOND CIRCUIT


February 27, 1979

LOUIS DREYFUS CORPORATION, PLAINTIFF-APPELLEE,
v.
COMMODITY CREDIT CORPORATION, DEFENDANT-APPELLANT.

Present: HONORABLE WALTER R. MANSFIELD, HONORABLE WILLIAM H. TIMBERS, Circuit Judges; HONORABLE HENRY F. WERKER, District Judge.

In this action in the Southern District of New York by plaintiff-appellee (Dreyfus) for breach of a contract requiring appellant (CCC) to pay subsidies on wheat exported by Dreyfus to foreign countries, both sides moved for summary judgment upon a stipulation of facts, supplemented by affidavits requested by the district court. The controversy turns on the meaning of CCC's Announcement No. 73-39A, dated August 25, 1972.

By Memorandum dated July 24, 1978, Judge Whitman Knapp found that the Announcement was ambiguous, being subject to the interpretation offered by each party, respectively, but that under the doctrine of contra proferentem it must be construed against CCC, the drafter of the Announcement. We agree with the district court's findings and analysis up to this point, see United States v. Seckinger, 397 U.S. 203 (1970), and believe both United States v. Larionoff, 431 U.S. 864 (1977), and Union Insurance Society v. William Gluckin & Co., 353 F.2d 946 (2d Cir. 1965), to be distinguishable.

However, the district court rejected CCC's contention that because of mutual mistake no contract at all came into existence, see Restatement of Contracts §§ 71 and 501, reasoning that CCC knew or had reason to know its contract was ambiguous whereas Dreyfus did not. We believe, however, that a material issue of fact exists as to whether Dreyfus as well as CCC knew or had reason to know that the contract was ambiguous with respect to the inclusion or exclusion of purchases of domestic wheat under "net price purchase" agreements prior to 3:31 P.M., E.D.T., August 24, 1972. The record indicates that other companies did interpret the Announcement in the manner urged by CCC and that one company had meetings to discuss the meaning of the Announcement. If Dreyfus had reason to know the Announcement was ambiguous in this respect, no binding contract would exist. See Restatement of Contracts, § 71(b).

Accordingly the case is remanded to the district court for the sole purpose of permitting the parties to conduct discovery and introduce evidence at a trial with respect to the issue of whether Dreyfus knew or had reason to know that the Announcement was ambiguous or that others had interpreted it differently with respect to the inclusion of purchases of domestic wheat under "net price purchase" agreements. In all other respects the findings of the district court are affirmed.

19790227

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