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APEX Oil Co. v. Vanguard Oil & Service Co.

decided: April 18, 1985.

APEX OIL COMPANY, PLAINTIFF-APPELLEE,
v.
VANGUARD OIL & SERVICE CO. INC., DEFENDANT-APPELLANT



Appeal from a judgment of the District Court for the Southern District of New York (John F. Keenan, Judge) awarding plaintiff damages, following a bench trial, for breach of contract.

Feinberg, Chief Judge, Oakes and Newman, Circuit Judges. Oakes, Circuit Judge (concurring).

Author: Newman

JON O. NEWMAN, Circuit Judge:

This diversity case involves an alleged oral contract for the sale of $8.8 million of fuel oil. Following a bench trial, the District Court for the Southern District of New York (John F. Keenan, Judge) found that plaintiff-appellee Apex Oil Company ("Apex") and defendant-appellant Vanguard Oil & Service Company, Inc. ("Vanguard") had entered into such a contract, under which Vanguard was to sell and Apex to buy. Finding that Vanguard's failure to deliver the oil to Apex constituted a breach of the contract, the District Court awarded Apex damages of $1,049,983.00 plus prejudgment interest.

On appeal, Vanguard primarily attacks the District Court's findings of fact. Conceding that the "clearly erroneous" standard governs our review of those findings, Vanguard nonetheless urges us to hold that the parties' agreement, if any, placed Vanguard under only a conditional obligation to deliver oil to Apex. Vanguard also argues that, if a contract of sale did exist, it is unenforceable under the statute of frauds. Our review of this record does not persuade us to reject the District Court's determination that these parties entered into an unconditional contract of sale and that the record contains a document satisfying the statute of frauds.

BACKGROUND

Vanguard and Apex are engaged in the business of buying and selling petroleum products. Prior to the course of dealing surrounding the disputed contract, which the District Court found was formed on April 7, 1982, the parties had successfully negotiated and fully performed one other agreement for the sale of oil. The prior contract was formed on December 29, 1981, when Arthur Walston, a Vanguard trader, and Edwin Wahl, an Apex trader, had a telephone conversation in which they agreed that Vanguard would sell and Apex would buy approximately 200,000 barrels of fuel oil.*fn1

The December 29 agreement was documented in the following way. On December 30, 1981, Vanguard sent a telex to Apex to which Apex responded by telex. Both telexes expressly "confirm[ed] our telephonic agreement of 12/29/81," under which "Vanguard will sell" and "Apex will purchase" approximately 200,000 barrels of oil. Both telexes also listed key terms of the agreement, including arrival date of the oil, its price, and payment terms requiring Apex to wire transfer funds on receipt of Vanguard's invoice and a report from a named inspector. In addition to the telex, Apex signed and sent to Vanguard a "Product Purchase Agreement," which confirmed the parties' "understanding" and listed some terms of the agreement, including a term designating New York Harbor as place of delivery, not contained in either telex. Wahl, the Apex trader, sent the Product Purchase Agreement to Vanguard as part of Apex's " normal procedure" when dealing with another company for the first time. Though the Product Purchase Agreement expressly requested that a copy of the agreement be returned to Apex and contained a line for Vanguard's signature, Vanguard did not sign or return a copy of the agreement to Apex.

The December 29, 1981, contract was fully performed in late January 1982 when Vanguard delivered the oil to Apex in New York Harbor. Vanguard's president sent invoices and the inspector's report to Apex and instructed Apex to wire transfer payment to Chase Manhattan Bank ("Chase"). Apex complied with these instructions. Following the January 1982 delivery, Vanguard contacted Apex on another occasion to solicit the sale to Apex of petroleum products. Apparently, Apex expressed no interest in making further purchases from Vanguard until Walston, the Vanguard trader, called Wahl, the Apex trader, on April 7, 1982.

In that call, the District Court found, Walston and Wahl entered into a binding contract of sale on behalf of Vanguard and Apex respectively. The following circumstances led up to the April 7 telephone call. On April 6, Common Energy International ("CEI") offered to sell to Vanguard 357,000 barrels of fuel oil meeting certain specifications at 80.50 cents per gallon. Vanguard accepted this offer and then prepared to arrange financing for the CEI deal. In order to obtain a letter of credit from Chase, Vanguard had to demonstrate that it had a contract to resell the oil it was buying from CEI. Since Vanguard planned to use 100,000 barrels of the CEI shipment to satisfy a preexisting obligation to sell oil to Conrail, there were 257,000 barrels from the CEI shipment that Vanguard had to sell before Chase would arrange a letter of credit. These 257,000 barrels of oil were the topic of the April 7 telephone conversation between Walston of Vanguard and Wahl of Apex.

The District Court credited Wahl's testimony concerning the April 7 conversation. Wahl stated that Walston called him, informed him that Vanguard had a cargo of oil scheduled to arrive in New York Harbor by April 24, and offered to sell to Apex 257,000 barrels from that shipment at 84 cents per gallon. Wahl testified that he offered to pay 82 cents per gallon and that Walston eventually agreed to a price of 82.254 cents per gallon. According to Wahl, Walston then stated, "We have a done deal. We are done." Wahl asked Walston if Vanguard needed "anything for [its] books." Walston responded by requesting Wahl to send him a telex for Vanguard's "in-house purposes."*fn2

On April 7, 1982, Wahl sent the following telex addressed to Walston at Vanguard:

THIS IS TO CONFIRM APEX WILL PURCHASE 257,000 BBLS. OF NO. 2 FUEL OIL 77 GRADE, (OTHERWISE MEETING N.Y. HARBOR) BY ...


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