Louis Dreyfus Corporation, Cross-Appellant v. J.B. Brown and Michael Smith, Cross-Appellees

709 F.2d 898, 36 U.C.C. Rep. Serv. (West) 522, 1983 U.S. App. LEXIS 26279

• Court: Court of Appeals for the Fifth Circuit
• Decided: June 29, 1983
• Docket: 82-4161
• Status: Published

Opinions

PER CURIAM:

In January of 1980 and July of 1980, J.B. Brown and Michael Smith, the defendants, executed two contracts for the delivery of soybeans to Louis Dreyfus Corporation, the plaintiff. The first contract called for the delivery of 20,000 bushels of soybeans at $7.15 per bushel, while the second contract called for the delivery of 10,000 bushels of soybeans at $7.54 per bushel. After executing the contracts with the defendants, the plaintiff contracted to resell the soybeans to third parties. Growing conditions were poor during the 1980 season. A drought during the summer was followed by heavy rainfall which damaged a large portion of the soybean crop. The plaintiff was aware of the farmers’ difficulties and on November 26, 1980, its grain merchant, Ron Cox, sent a letter to the defendants extending the delivery time until December 12, 1980.

On December 8, defendant Smith called Cox. The center of controversy in this case is the content and effect of this conversation. Cox testified at trial that Smith informed him that the defendants had harvested all of the soybeans and that they were ready to “pay up.” At that time none of the parties knew the exact amount of the underfill on the contracts because a number of bushels owned by the defendants were being cleaned in order to meet the contracts’ quality standards. It was known, however, that the defendants were over twenty thousand bushels short on their contract.

Cox alleged that he went on to say, “Well, Mike, you know what I’ve got to do,” to which the defendant responded, “Yes, I know.” Id. at 30. Cox explained that he immediately purchased 20,000 bushels of soybeans on the Chicago Board of Trade after he finished speaking with Smith in order to make certain that the plaintiff would be able to deliver beans to its customers.- The defendants claimed that Smith merely informed Cox that they had completed their harvesting and that they would “settle up” with the plaintiff on the date of delivery. On cross-examination, however, when defendant Smith was confronted with an earlier statement made during his deposition in which he testified that he had said that the defendants would “pay-up,” Smith replied, “Well, I must have did [sic] if that’s what I said.” In light of Smith’s adoption of his earlier statement, there was no factual dispute concerning what was said on December 8th.¹

The plaintiff brought this diversity action against the defendants to recover the losses it sustained by having to buy soybeans in December to cover the shortage on the contracts, an amount totaling $21,656.00. The defendants denied liability on the basis of two affirmative defenses: (1) that poor weather conditions made performance impossible ² and (2) that the plaintiff had refused to accept delivery of the soybeans. They also counterclaimed, alleging that the plaintiff owed them $6,812.00 for the beans that it had refused, that amount representing the difference between the market price at the time of delivery and the contract price.

At trial, the district court granted a directed verdict in favor of the plaintiff on the defendants’ counterclaim, and a judgment notwithstanding the verdict, also for the plaintiff, after the jury found in the defendants’ favor. The defendants appealed both actions, as well as the trial judge’s failure to give a requested jury instruction. The plaintiff cross-appealed on the grounds that the district court’s alleged abuse of discretion concerning two evidentiary rulings entitled it to a conditional new trial.

We shall first look at the propriety of the district court’s granting of a judgment notwithstanding the verdict. A jury verdict should not be disturbed unless, after viewing “all of the evidence — not just that evidence which supports the non-mover’s case — ... in the light and with all reasonable inferences most favorable to the party opposed to the motion,” the court is able to conclude that “reasonable men could not arrive at a contrary verdict.”³ Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc). See Dalton v. Toyota Motor Sales, Inc., 703 F.2d 137, 140 (5th Cir.1983). After reviewing the record, we conclude that this is such a case.

All parties concede that the central issue is whether the December 8 phone conversation constituted an anticipatory repudiation of the contracts under Miss.Code Ann. § 75-2-610 (1972).⁴ The Mississippi Code does not define anticipatory repudiation, but the official comments accompanying the Uniform Commercial Code explain that

[ajnticipatory repudiation centers upon an overt communication of intention or an action which renders performance impossible or demonstrates a clear determination not to continue with performance.

U.C.C. § 2-610 comment 1, (1962). Similarly, pre code Mississippi law required an anticipatory repudiation to be “positive and unconditional.” Old Ladies Home Ass’n v. Hall, 212 Miss. 67, 52 So.2d 650, 655 (1951).

The plaintiff concedes that the question, whether an anticipatory repudiation has occurred, is normally a factual issue to be determined by the jury, but it maintains that the defendants in this case provided a clear indication that they had no intention of performing the contracts. We agree with the plaintiff and the district court and conclude that, under Mississippi law, Smith’s statement constituted an anticipatory repudiation. See Wander Ltd. v. Krouse, 368 So.2d 235 (Miss.1979). The context of this statement makes this the only reasonable interpretation. A contrary result would penalize the plaintiff for covering on December 8, and under the circumstances, this would be unjustifiable.

Since the standard governing review of directed verdicts and judgments n.o.v. is the same, Boeing Co. v. Shipman, supra, we also affirm the district court’s decision to grant a directed verdict in favor of the plaintiff on the defendants’ counterclaim. Once the seller had repudiated the contract, the buyer was authorized to refuse delivery of the portion of the soybeans as to which the seller had repudiated the contract. Miss.Code Ann. § 75-2-711(1) (1972).

Finally, the defendants argue that the plaintiff did not prove it was damaged by the transaction. We disagree. After an anticipatory repudiation has occurred, an aggrieved buyer may recover damages arising out of the cost of “covering” his purchase under Miss.Code Ann. § 75-2-712 (1972), or damages measured by the difference “between the market price at the time when the buyer learned of the breach and the contract price .. . under Miss.Code Ann. § 75-2-713(1). In this case, the plaintiff chose to cover; therefore, damages must be measured by the “difference between the cost of cover and the contract price .... ” Miss.Code Ann. § 75-2-712(2).

Uncontradicted evidence at trial established that plaintiff’s agent, Cox, paid $8.34V2 per bushel for 20,000 bushels of soybeans on December 8, and $7.84 per bushel for the remainder purchased on December 9. The defendants, therefore, were entitled to recover the difference between the price paid by Cox and the contract price. Consequently, the district court’s entry of a judgment for the plaintiff for $23,821.60, which included $21,656.00 as the difference between the cost of cover and the contract price, plus interest, was proper.

It is not necessary for us to address plaintiff’s cross-appeal or defendants’ challenge to the jury instruction since we find the district court was correct in granting a judgment notwithstanding the verdict in favor of the plaintiff on its claim and a directed verdict in favor of the plaintiff on the defendants’ counterclaim. Consequently, the judgment of the district court is affirmed.

AFFIRMED.

1 . Even if we accept defendants’ contention that Smith told Cox they would “settle up,” the gist of the conversation is the same. Looking at the facts leading up to the conversation and the context in which defendants claim the phrase “settle up” was used, the only reasonable interpretation of the dialogue is that, due to their failure to meet their obligations under the contract, the defendants were prepared to financially settle with the plaintiff.

2 . The defendants subsequently conceded that poor weather conditions would not have excused their performance of the contract. See Ralston Purina Co. v. Rooker, 346 So.2d 901 (Miss. 1977).

3 . Both the district court and the defendants have relied on Mississippi law in discussing the standard of review of a judgment n.o.v. See General Tire & Rubber Co. v. Darnell, 221 So.2d 104 (Miss. 1969). The federal, rather than the state test, applies in diversity cases. Boeing Co. v. Shipman, supra, at 368-370.

4 . The Mississippi statute, which was modeled after section 2-610 of the Uniform Commercial Code, provides in relevant part:

When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may

(a) for a commercially reasonable time await performance by the repudiating party; or

(b) resort to any remedy for breach [Section 2-703 or Section 2-711] [§§ 75-2-703 or 75-2-711], even though he has notified the repudiating party that he would await the latter’s performance and has urged retraction ....