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N. DORMAN & CO. v. NOON HOUR FOOD PRODS.

November 21, 1980

N. DORMAN & COMPANY, INC., Plaintiff,
v.
NOON HOUR FOOD PRODUCTS, INC., Defendant



The opinion of the court was delivered by: PLATT

MEMORANDUM AND ORDER

This is an action by a cheese importer and distributor seeking damages against another cheese dealer for the latter's breach of an alleged agreement relating to the use of two Canadian import licenses. Jurisdiction is asserted under 28 U.S.C. § 1332(a)(1), diversity of citizenship. A non-jury trial was held on June 12 and July 24, 1980 and this Court reserved decision pending submission of post-trial briefs on the question of whether the writings which passed between the parties manifest an agreement and thus suffice to satisfy the statute of frauds.

 I

 The facts of this case, particularly as to the issue whether there was any agreement, written or otherwise, are much in dispute. But, taking into account the credibility of all the witnesses, we find the following to have transpired.

 On November 21, 1978, Mr. Neil Dorman, vice president of N. Dorman & Company, Inc. ("Dorman, Inc."), telephoned Mr. Joseph Oswald, an employee of Noon Hour Food Products, Inc. ("Noon Hour"), to inquire about the availability of any Canadian cheese import licenses *fn1" that Noon Hour might have. (Trial transcript of June 12, 1980 at 11-12, hereinafter June 12 Tr.) The purpose of the call was to attempt to enter into an agreement whereby Noon Hour, the license holder, would use the licenses for the benefit of Dorman, Inc., a non-licensed company. (June 12 Tr. at 29). *fn2"

 After a brief inquiry, Mr. Oswald informed Mr. Neil Dorman that the licenses held by Noon Hour had not been used and were available. At that time, Mr. Oswald *fn3" orally agreed *fn4" that Noon Hour would use the licenses as directed by Dorman, Inc. in return for a guaranteed profit to Noon Hour of 10 cents per pound of cheese imported. (June 12 Tr. at 28-30, 78-80, 90-94). However, because there was some uncertainty on his part as to the applicability of the licenses to the importation of the cheese desired by Dorman, Inc., Mr. Neil Dorman told Mr. Oswald that confirmation of the agreement must await arrival of some information from the United States Department of Agriculture but that he would get back to Mr. Oswald within the next few days. *fn5" (June 12 Tr. at 32). Soon after this conversation, Mr. Oswald forwarded copies of the licenses to plaintiff with a covering letter dated November 21, 1978. (See infra p. 5).

 In the course of the next few days, Mr. Oswald informed Mr. Neil Dorman that another offer, guaranteeing a profit of 15 cents per pound, for the use of the licenses had been received. Mr. Neil Dorman responded by matching that offer to keep the deal alive. (July 24 Tr. at 19; June 12 Tr. at 45-47).

 Following this series of conversations, Dorman, Inc. on November 27th sent to Mr. Oswald a letter and a power of attorney form to be filled out by Mr. Oswald so that the customs brokers could handle the paperwork on these transactions. (June 12 Tr. at 54; July 24 Tr. at 100). This form was never completed by Mr. Oswald or any one at Noon Hour. (July 24 Tr. at 103).

 As Mr. Neil Dorman discovered on the 27th of November, all these transactions went for nought. Early that day, he placed a call to Noon Hour and spoke with Mr. Eugene Lundblad, the employee of Noon Hour who actually had the power to deal with the import licenses but who had been away during the week of the 21st. Mr. Lundblad informed him that the Canadian import licenses could not be used to benefit Dorman, Inc. because, unbeknownst to Mr. Oswald, these licenses had been previously committed to another party. (June 12 Tr. at 57; July 24 Tr. at 88). Mr. Neil Dorman immediately protested that Mr. Oswald had obligated Noon Hour to Dorman, Inc. and that Dorman, Inc. had already committed itself to resell this cheese to another party. (June 12 Tr. at 57). *fn6"

 The next day, November 28th, Mr. Lundblad sent a telex to Mr. Neil Dorman, restating Noon Hour's position that the licenses were not available. (July 24 Tr. at 171-73). Mr. Neil Dorman responded with his own telex asserting that an agreement had been reached and that the licenses should be used to benefit Dorman, Inc. (July 24 Tr. at 178). Finally, a letter was sent by Dorman, Inc.' § counsel to Mr. Oswald threatening legal action if Noon Hour did not abide by its agreement. (June 12 Tr. at 63). Needless to say, Noon Hour did not so use its licenses and this action resulted.

 II

 The controlling legal issue presented by this case is whether the writings suffice to take the agreement out of the statute of frauds. Both parties agree that this question is governed by U.C.C. § 2-201. *fn7"

 
(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $ 500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought ....
 
(2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice ...

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