K. O. Lee & Son Co. v. Sundberg

291 N.W. 146, 227 Iowa 1375
CourtSupreme Court of Iowa
DecidedApril 2, 1940
DocketNo. 44979.
StatusPublished
Cited by4 cases

This text of 291 N.W. 146 (K. O. Lee & Son Co. v. Sundberg) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
K. O. Lee & Son Co. v. Sundberg, 291 N.W. 146, 227 Iowa 1375 (iowa 1940).

Opinion

Oliver, J.

Appellant, K. O. Lee & Son Co., a corporation, was a manufacturer of binder twine, located at Aberdeen, South Dakota. Appellee, Sundberg, was a dealer in farm supplies. He had been selling twine for appellant, and in July 1936 wrote appellant relative to a sales contract and its sales policy for the ensuing year. Lee replied he had come to the conclusion the company should sell twine at 25 cents per cwt. (1214 cents per bale) under International Harvester Company. Appellee then called upon C. C. Lee at Aberdeen. He testified Lee told him the price for the ensuing year would be 12^ cents per bale below International Harvester Company, or, in other words, below American standard make binder twine; that:

“We have made up our mind to do that this year. * * * We are going to establish that price regardless of what the other concerns do.”

Appellee further testified he told Lee he had sold twine for International, and that Lee might be “putting his head in the loop”; that Lee said he would spend a million dollars to put this twine out and carry out his contract; that appellee told Lee if he devoted all his time and gave up other work he wanted to be assured Lee would carry out his program and that appellee was told he could rest assured that was what Lee was going to do. Appellee testified he relied upon these repre *1377 sentations and was thereby induced to enter into the sales contract.

About August 22, appellee received the written contract signed by K. 0. Lee & Son Company by C- C. Lee, which provided appellee was to act as sales agent for appellant to solicit orders from dealers in certain towns and cities of Iowa and Nebraska, at a commission of 15 cents per bale with advanced expense money to be deducted from commissions. The contract contained the following:

“It is understood that all twine is to be sold for cash. Any orders written with a discount allowed or calling for special terms (either time settlement or consignment) must be approved by the Company. Commissions on such sales will not be due and payable to the Sales Agent until settlement in cash is received in full by the Company from the purchaser. The-Company assumes no liability to pay commissions on twine orders unfilled for any reason. * * * This contract may be terminated at any time by either party.”

Enclosed with this contract was a letter of transmittal and company bulletins stating:

“Our selling price on * * * twine will be 25‡ per ewt. below the International Harvester Company price. * '* * After the Harvester Company prices have been announced next winter or spring, the price per bale, of course, can be inserted, this price being 12%‡ less than International Standard.”

Also: “Subject: Revised policy for 1937. Gentlemen:' (Sundberg) We have worked out a new sales program for this coming season which will be outlined herein * * *. The price of these twines will be 25 (é per 100 weight under I. H. C. « * ® This is going to increase your business materially and possibly double it.”

The bulletins instructed salesmen to tell dealers “the price will be 25{£ per cwt.'under” standard twine and that, if necessary, this statement could be inserted in orders. There was also enclosed a sample order blank in which was printed a statement that the price would be “12%^ per bale below the 1937 regular American prices for standard twine.” The customer was permitted to reduce his order in case of crop failure.

Appellee then executed and returned the contract and pro *1378 ceeded to work thereunder. Orders were taken for delivery during the 1937 crop year and no price was inserted but it was agreed to be 121,4 cents per bale below regular American prices. On December 23, 1936, appellee received a bulletin advising him that thereafter the company wanted no orders written with the notation that the price would be 12% cents per bale under American prices:

“You can tell the customers that our price will be 12%¡í per bale under American prices for Standard twine, but do not write it in the order. You can call the customer’s attention to the fact that the order plainly reads that if the price is not satisfactory when announced, he has the privilege of cancelling the order.

“After American prices are out, and we have established our p.riee, it will then be all right for you to insert on the order our price. This is entirely different than writing 12%?! per bale under the other fellow’s price. We dislike to have International, and other American Twine manufacturers’ representatives calling around inspecting these orders, and possibly picking one up to send in to their main office.”

The next bulletin from the company was dated March 24, 1937. It advised that I. H. C. had made such a low price as to create a serious situation; that appellee should discontinue soliciting orders at prices less than I. H. C.

The orders secured by appellee prior to March 24, 1937, appear to have been accepted by appellant. However, none had been shipped and appellant declined to fill them at 12% cents per bale below Standard prices. At the increased price only about 25 per cent of the twine ordered was taken by the customers.

Appellant brought this action at law to recover a balance due from appellee for twine sold him. Appellee counterclaimed alleging he was induced to enter into the sales contract by false and fraudulent representations of the price at which the twine was to be sold, made without intention to perform, and that the increase in price resulted in the cancellation of orders taken by him and the consequent loss of commissions thereon. At the trial appellant’s account was admitted and the controversy concerned the counterclaim only. The jury allowed appellee’s *1379 counterclaim in part and judgment was entered for appellant for tbe excess of the bill over tlie counterclaim.

I. Appellant’s motion for directed verdict on the counterclaim was overruled. The motion was based in part upon the theory that the only issue plead and submitted concerned a future promise and not a misrepresentation of any fact and that there was no competent proof that at the time the promise was made there was an intention not to perform it. Error is assigned to the overruling of this ground of the motion.

In support of this proposition appellant relies upon the following cases: City Nat. Bank v. Mason, 192 Iowa 1048, 186 N. W. 30; Rowe Mfg. Co. v. Curtis-Straub Co., 223 Iowa 858, 273 N. W. 895; Security Savings Bank v. Capp, 193 Iowa 278, 186 N. W. 927; Blaul & Sons v. Wandel, 137 Iowa 301, 114 N. W. 899.

So far as material to appellant’s contentions these cases hold in substance that fraud cannot be predicated upon the failure to perform a promise or stated intention to do something in the future, unless the statement is made with an existing real intention not to perform. Several of these cases also enunciate the rule that such fraudulent intent not to perform may not be inferred merely from the fact of nonperformance.

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Bluebook (online)
291 N.W. 146, 227 Iowa 1375, Counsel Stack Legal Research, https://law.counselstack.com/opinion/k-o-lee-son-co-v-sundberg-iowa-1940.