Rosenberg Bros. & Co. v. Commodity Credit Corp.

128 F. Supp. 764, 1955 U.S. Dist. LEXIS 3710
CourtDistrict Court, N.D. California
DecidedFebruary 25, 1955
DocketNo. 30073
StatusPublished

This text of 128 F. Supp. 764 (Rosenberg Bros. & Co. v. Commodity Credit Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rosenberg Bros. & Co. v. Commodity Credit Corp., 128 F. Supp. 764, 1955 U.S. Dist. LEXIS 3710 (N.D. Cal. 1955).

Opinion

HARRIS, District Judge.

Plaintiff, a Maryland corporation engaged in the processing of dried fruits, seeks to recover damages from defendant, Commodity Credit Corporation, for alleged breach of contract. The plaintiff, Rosenberg Bros. & Co., Inc., succeeded to all the assets and assumed all liabilities of the business known as Rosenberg Bros. & Company, a California corporation, on October 21, 1948. Plaintiff has operated the business since the date of its acquisition. The only change in nomenclature is the addition of “Inc.” Hereafter plaintiff will be called “Rosenberg.” Defendant is a federal corporation which succeeded to the assets of and assumed the liabilities and duties of Commodity Credit Corporation, a Delaware corporation, under the terms of its charter.1 Hereafter defendant will be referred to as “CCC.”

Plaintiff corporation sets forth two causes of action, based upon: (1) An express contract for the sale and purchase of raisins; (2) an implied promise on the part of defendant with respect to the signed agreement for the sale and purchase of raisins.

[766]*766The litigation arises out of defendant’s activities in the fall of 1947 in connection with the program of the Department of Agriculture in entering the dried fruit market. As the federal foreign aid program diminished following the war and the Armed Forces returned to this country and were discharged, the wartime stimulated raisin industry found itself without a ready market for a large part of its product. Government action appeared to be necessary to save the raisin grower.

On September 5, 1947, the CCC announced a purchase program for dried fruits. The Secretary of Agriculture who was chairman of the board of CCC stated that CCC would purchase 61,000 tons of 1947 crop raisins. He further stated in his announcement that the CCC would purchase only from processors and packers. Finally, he announced that the purchase program did not provide for price support at any given level.2 The Department of Agriculture hoped that the general purchase program would enable dried fruit growers and processors to establish prices at a fair level. When the CCC made its announcement of purchases it was advised by its own economists that the raisin surplus would be in the neighborhood of 100,000 tons. These same economists believed that unless the government prepared to acquire the entire surplus, the program might well depress the dried fruit market.

In September and October, 1947, the plaintiff, Rosenberg Bros. & Co., entered into contracts with the CCC for the sale of raisins. On October 14, 1947, and subsequent to the second contract, CCC announced a new and radically different program for the purchase of 60,000 additional tons of raisins. These new offers were made not only to packers and processors, but also to producers in the physical possession of raisins. The economic result of the program whereby CCC would purchase the entire surplus of Thompson seedless raisins for 1947 was inevitable. The price for rai,sins .rose substantially.

When plaintiff made its successful bids in September and October on some 14,-000 tons of raisins it anticipated a grower price of approximately $110 per ton. This would have enabled it to make a fair profit on its sales to the CCC. After the October 14th change of program the grower price rose above $135 per ton. Plaintiff had made short sales at the time it entered into its contracts with CCC, mainly as a result of the demands of CCC that the large processors, including Rosenberg, participate at the very outset in the announced program. In addition, the short position was made necessary because the 1947 crop of raisins was not yet ready for sale by the growers.

The CCC, through its economist, Mr. S. R. Smith, whose forthright testimony tended to solve some of the complex issues, had recommended renegotiation of existing contracts between CCC and processors when the new government purchase program of an additional 60,-000 tons had been announced. Under his recommendation packers would have’ paid growers not less than $135 per ton for natural condition raisings. By renegotiating with processors at a higher price, CCC would have enabled them to come out whole and at the’ same time would have permitted them to compensate growers on a fair basis. The CCC refused to act upon this recommendation.

From September through December of 1947 plaintiff failed to furnish raisins under its contracts with the CCC. Because of the uncertain condition of the market and grower resistance to low prices, plaintiff was unable to acquire raisins in large quantities in the latter part of September and the early part of October. Thereafter the CCC’s new purchase program boosted prices so high as to make the acquisition of raisins prohibitive in terms of contractual liabilities.

[767]*767The shortage of supplies and the high prices sought by the growers caused the CCC itself to reject all grower bids on November 26th on the ground they exceeded $135 per ton. Packers could not cover their CCC commitments at the exorbitant prices sought by growers.

On November 26th the CCC announced that it would require processors to certify they had paid producers not less than $135 per ton for natural condition raisins. Such requirement constituted the price support of $135 per ton. It may be remembered also, that previous to this marked departure from its program the government announced through CCC that it would purchase directly from the grower.

Plaintiff alleges that such price support, together with the purchase of the additional 60,000 tons of surplus raisins, as well as the acquisition of raisins directly from the grower, constituted both a breach of the terms of CCC’s promise to plaintiff, as expressed in the CCC announcement of September 5, 1947, and of an implied condition to refrain from interfering in the market.

During the winter months of 1947 and January of 1948 plaintiff attempted to renegotiate its contract with CCC or, in the alternative, sought to obtain cancellation. It failed in both efforts and on January 21, 1948, plaintiff received a telegram from CCC directing that it comply with the terms of its contracts. This it agreed to do on the following day.

In the course of the next several days certain terms were worked out between CCC and plaintiff as to the waiver by plaintiff of storage charges for the past period while negotiations were pending and by CCC for nondelivery in accordance with the terms of the contracts. By the end of the month plaintiff was shipping raisins in fulfilment of its contract obligations.

Rosenberg has alleged that as a direct and proximate result of CCC’s conduct the acquisition of raisins from growers exceeded the normal and anticipated purchase price by $20 to $25 per ton. It is this differential which plaintiff seeks to recover from defendant for the alleged breach of contract.

The Issues Involved

Defendant contends that the September 5, 1947, press release was no more than that; that it was not a part of the contract with plaintiff nor did it bind the government to remain out of the raisin market for the balance of the growing year. Defendant points to the actual contracts signed by plaintiff and notes that they purport to be complete on their faces, covering all conditions surrounding the sale and purchase of raisins.

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Bluebook (online)
128 F. Supp. 764, 1955 U.S. Dist. LEXIS 3710, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rosenberg-bros-co-v-commodity-credit-corp-cand-1955.