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Attorney(S)

Erskine, Palmer Curl, for plaintiff in error. R. L. Ramsey and W. S. Wilkin, for defendant in error.

Judges

MEREDITH, PRESIDENT:

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Smart Summary

Case Summary: Oliver Allen v. J. M. Simmons, Supreme Court of Appeals of West Virginia, Oct. 7, 1924

Factual and Procedural Background

Plaintiff (the seller) sued defendant (the buyer) in assumpsit to recover damages for an alleged breach of contract for the sale and purchase of feed. The transactions involved written orders from defendant dated March 14, 1918 and April 12, 1918 for approximately 10 tons of hen feed and 55 tons of horse and mule feed, respectively, each bearing the notation "Subject to Confirmation." Plaintiff's salesman secured the orders and plaintiff contended that he promptly confirmed the offers and purchased the feed from manufacturers. The first trial produced a judgment for defendant, which this Court reversed (reported at 90 W. Va. 774, 111 S.E. 838). On re-trial, defendant again obtained a verdict and judgment. The matter returned to this Court on writ of error from that second judgment.

At the second trial, plaintiff introduced a copy of a confirmation letter dated March 16, 1918 confirming the March 14 order; plaintiff testified a similar confirmation was sent for the April 12 order but the letter could not be located. The seller's salesman testified he saw confirmations in defendant's possession; defendant denied receiving any confirmation. Defendant had written on April 29, 1918 that he was "going out of the feed business" and asked that orders be canceled. Plaintiff attempted to resell the feed on a declining market and sought damages equal to the difference between the contract price and resale proceeds. The primary dispute at this stage was whether plaintiff's confirmations, as written, created an acceptance binding on defendant (and whether they altered the offer's essential terms).

Legal Issues Presented

Whether the buyer's written orders, marked "Subject to Confirmation" and transmitted through the buyer's salesman, were effectively accepted by the seller's subsequent confirmations so as to create a binding contract.
Whether the confirmations relied on by the seller materially modified the terms of the buyer's offers (for example, by introducing contingencies such as strikes, car shortages, embargoes, railroad delays, or by designating Board of Trade weights as final) and thereby prevented a meeting of the minds without the buyer's assent.
Whether it was necessary, on this record, to determine whether actual notice of the confirmations was received by the buyer prior to his withdrawal of the offers.
(Contextual / earlier-trial contentions) Whether there was adequate proof of the proper measure of damages and whether the seller gave notice of intention to resell.

Arguments of the Parties

Plaintiff's Arguments

Plaintiff asserted that he confirmed the buyer's orders promptly after receipt and that those confirmations constituted acceptance of defendant's offers, thereby creating binding contracts.
Plaintiff relied on the confirmations (one of which — dated March 16, 1918 — was produced at the second trial) and the salesperson's testimony that defendant showed him the confirmations as proof of acceptance.
Plaintiff contended that because the confirmations were effective acceptances, defendant's subsequent refusal to accept the feed made him liable for damages measured by the difference between the contract price and the proceeds of a resale on a declining market.

Defendant's Arguments

At the first trial defendant advanced three propositions: (1) there was no evidence that plaintiff properly confirmed the sale; (2) there was no proof of any proper measure of damages; and (3) plaintiff gave defendant no notice of his intention to resell. The Court previously rejected these propositions.
On retrial defendant emphasized that plaintiff did not communicate his confirmations to defendant prior to defendant's cancellation of his offers, arguing that, because the offers were "subject to confirmation," no binding bargain arose without the buyer's receipt and approval of the confirmations.
Defendant also argued a want of proof of a fall in the market at the date of resale (i.e., contesting the measure or proof of damages). Ultimately defendant relied on his April 29, 1918 letter indicating he was going out of the feed business and cancelling orders as an effective withdrawal of the offers prior to any binding acceptance.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Parks v. Morris, Layfield Co., 63 W. Va. 51, 59 S.E. 753	That to effectuate a contract of sale there must be both a proposal and an acceptance of that proposal.	The Court cited this case for the general proposition that a valid sale requires proposal and acceptance, framing the inquiry whether the seller's confirmations amounted to acceptance.
Hampton Mills v. Hershfeld, 201 N.Y.S. 556	Support for the proposition that an agent's authority is often merely to solicit orders and transmit them, not to bind the principal.	Quoted (in support of Mechem's statement) to illustrate that traveling salesmen commonly lack power to accept orders into binding contracts unless expressly authorized or by course of dealing.
Johnston v. Fairmont Mills, 129 F. 74	Referenced as an instance where "subject to confirmation" was defined by trade custom.	Used to acknowledge prior treatment of the phrase "subject to confirmation" where custom defined its meaning; here the Court nonetheless construed the phrase as requiring seller approval.
Cable Company v. Hancock, 2 Ga. App. 73, 58 S.E. 319	Decisions that where words such as "subject to approval" or similar are used, there is no contract prior to approval and acceptance by the principal.	Applied to support the principle that an offeree's statement that acceptance is "subject to confirmation" results in no binding contract until the principal's acceptance.
Bronson v. Improvement Co., 135 Mo. App. 483, 116 S.W. 20	Same principle: no contract prior to approval/acceptance where acceptance is made contingent on confirmation.	Used with other cases to demonstrate uniformity in holdings that "subject to confirmation" prevents formation of a contract absent principal's acceptance.
Crowder v. Tolerton Warfield Co., 92 Neb. 250, 138 N.W. 151	Authority for the same proposition regarding conditional acceptances requiring principal approval.	Reinforced the Court's conclusion that a seller's acceptance conditioned on confirmation does not itself create a binding contract.
Wheeling Mold, etc., Co. v. Wheeling Steel etc. Co., 58 W. Va. 62, 51 S.E. 129	Illustration that a proposal to buy for shipment on a fixed date differs from a proposal subject to contingency for delays or other causes.	Invoked to illustrate that adding a contingency as to shipment time (as the confirmation did) materially changes the nature of the offer.
Minneapolis Ry. Co. v. Columbus Rolling Mills, 119 U.S. 149, 7 Sup. Ct. 168, 30 L.Ed. 376	That an offeree may withdraw an offer before it is accepted; withdrawal is effective if manifested before acceptance.	Applied to hold that defendant's letter of April 29, 1918 constituted a sufficient intention to withdraw his offers prior to a binding acceptance by the seller.
Oliver Allen prior opinion, 90 W. Va. 774, 111 S.E. 838	This Court's earlier reversal of a judgment for defendant in the same case (referenced as prior appellate consideration of the same factual situation).	The Court referenced its prior opinion for background and contrasted the earlier record (which lacked the written confirmation) with the present record that included the confirmation letter; that difference changed the controlling issue.

Court's Reasoning and Analysis

The Court undertook a focused examination of the confirmations themselves and the legal effect of the notation "Subject to Confirmation" on the buyer's written orders.

Key steps in the Court's analysis:

The Court reiterated the foundational contract principle (citing Parks v. Morris, Layfield Co.) that a contract of sale requires both a proposal and an acceptance. The buyer's orders had been submitted to the seller's salesman "subject to confirmation," which signaled that the salesman lacked authority to bind the seller without further approval.
The Court reviewed authority (via Mechem and attendant case citations) establishing that traveling salesmen commonly have authority only to solicit orders and forward them to their principals; acceptance by the principal is required unless the agent's authority is otherwise shown.
The Court compared the language of defendant's written offers (which fixed shipment dates and bore the "Subject to Confirmation" clause) with the contents of the seller's confirmation letter (produced at the second trial) dated March 16, 1918. The confirmation contained contingencies (shipment "contingent upon strikes, car shortage, embargoes, railroad delays and all other causes beyond our control") and specified that "Board of Trade weights [are] final."
Applying the rule that an acceptance must correspond to the offer "at every essential point," the Court concluded that the confirmation introduced material changes: it made shipment conditional on events not mentioned in the original offers and added an express provision regarding weights. The Court emphasized that a modified acceptance that imposes a new condition on the offeror does not constitute an acceptance; instead it is a counter-offer requiring assent by the original offeror.
The Court determined that because the confirmations materially changed the terms of the original offers, they did not effectuate a binding acceptance. Under that view, it was immaterial whether defendant actually received the confirmations; even if the confirmations were delivered, they did not create an unconditional acceptance of defendant's offers.
Consequently, the buyer retained the right to withdraw his offers prior to a binding acceptance. The Court found the April 29, 1918 letter (in which defendant stated he was going out of the feed business and asked to cancel future shipments) sufficient to show an intent to withdraw the offers, and therefore the seller could not have had an enforceable contract at that time.
Because the resolution of the confirmation/acceptance issue was dispositive, the Court deemed it unnecessary to resolve subsidiary evidentiary objections or instructions, or to decide issues relating to damages or notice of resale on this record.

Holding and Implications

Affirmed. The judgment for defendant was affirmed.

Implications and direct effect:

The Court held that the seller's written confirmations materially altered the buyer's offers by introducing contingencies and conditions, and therefore did not constitute an unconditional acceptance that would bind the buyer.
Because no binding acceptance occurred prior to the buyer's withdrawal, the buyer validly revoked his offers and was not liable for damages claimed by the seller for the resale of the feed.
The Court expressly stated that whether the confirmations actually reached the buyer was immaterial in light of the material variance between the offers and the confirmations; accordingly the Court did not decide the separate question of actual notice of acceptance in this case.
No broader or novel legal principle was announced beyond the application of existing contract law regarding conditional acceptances, agent authority, and the necessity of a meeting of the minds; the direct effect was to deny recovery to the seller on the facts presented and to affirm the circuit court's judgment for defendant.

This summary is confined to the matters expressly presented and decided in the opinion of the Supreme Court of Appeals of West Virginia dated October 7, 1924, and does not introduce information beyond that text.

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OLIVER ALLEN v. J. M. SIMMONS ETC.

MEREDITH, PRESIDENT:

Plaintiff, the seller, sued in assumpsit, to recover damages for defendant's breach of a contract for the sale and purchase of a quantity of feed. The first trial of the case in the circuit court resulted in a judgment for defendant, which judgment was reversed by this court in our opinion appearing in 90 W. Va. at page 774, 111 S.E. 838. Upon re-trial defendant obtained a second verdict and judgment, and the case is again before us on writ of error.

As disclosed by our former opinion, plaintiff's salesman, on March 14th and April 12th, 1918, secured two orders from defendant for the purchase of approximately 10 tons of hen feed and 55 tons of horse and mule feed, at stipulated prices, subject to confirmation. The orders were reduced to writing and mailed to plaintiff. Plaintiff contended before and contends now that the order or offer of defendant was properly confirmed and accepted by plaintiff, and that owing to defendant's subsequent unauthorized refusal to accept the feed, defendant is liable for the difference between the price agreed upon and the proceeds realized by plaintiff from a resale thereof on a declining market. Defendant contended before for three propositions: (1) that there was no evidence of proper confirmation of the sale by plaintiff; (2) that there was no proof of any proper measure of damages; and (3) that plaintiff gave defendant no notice of his intention to resell. We found against the defendant on all of his propositions, and held in effect that on the record presented, plaintiff was entitled to a directed verdict for an amount which we fixed in the opinion.

Many of the facts are unchanged by the present record, and since they are unchanged, it will be necessary for those interested to look to our former opinion for much of the case. We shall note here certain distinguishing and controlling differences in the two records. Formerly, the plaintiff testified that he confirmed the offers upon their receipt, and immediately purchased the feed from the manufacturers in East St. Louis. This was not denied by defendant. Plaintiff now asserts the same propositions, and the manner of defendant's renunciation of the contract appears substantially the same as before, but defendant states in his testimony and his counsel argue in their brief that plaintiff did not communicate his confirmation of the contract to defendant prior to the latter's cancellation of his offer; that therefore there was no binding bargain. This and a proposition as to the want of proof of a fall in the market at the date of the resale constitute the present defense.

The copies of defendant's offers show that the order of April 12th was to be shipped in June, and the order of March 14th was to be shipped May 1st, to defendant at Follansbee, West Virginia, and they bear the stipulation "Subject to Confirmation." While plaintiff insisted in both trials that he confirmed the orders promptly, he has introduced into this record a copy of his letter confirming the order of March 14th. It is dated March 16, 1918.

Plaintiff testifies he could not find the letter confirming the order of April 12th, but says it was similar to the one produced. Plaintiff's salesman, Stone, who took the orders, states that defendant showed him the confirmations. Defendant, on the other hand, denies that he ever received any confirmation of his offers. On April 29, 1918, defendant wrote plaintiff as follows:

"I am going out of the feed business and ask you if convenient for you to please cancel the orders I have with you for any future shipments.

"If this is not satisfactory please inform me so I can make some disposition and give further instructions.

"Thanking you in advance for the favor and for past favors and appreciating the pleasant dealings we have had with each other, I am,

"Yours truly, "J. M. SIMMONS."

On May 3d plaintiff replied to this letter in effect advising that he had no prospective purchasers with whom he could place defendant's orders, but advised that he would have his traveling salesman see if he could make some disposition of them, advising, however, that feed was hard to resell as the market was somewhat easier and purchasers were very timid. He also requested the defendant to see if he could not make some disposition, suggesting that he might get his successor to handle the two cars.

The next letter appearing in the present record is one dated June 13th, from defendant to plaintiff, as follows:

"In reply to your letter of June 11, regarding feed which you had booked for me, I gave you notice that I was going out of business and cancelled my orders on all purchases.

"You say you are taking the liberty to order a car forward. You will please not consign any shipments to me for I am out of the business and not in position to take care of them in any way."

Though not in the record, at least part of the contents of plaintiff's letter of June 11th may be surmised from defendant's reply.

Upon the showing made plaintiff says the contract was confirmed and binding upon defendant. Defendant says no confirmation was communicated to him prior to his withdrawal of his offer. On this issue plaintiff relies strongly upon our former opinion. At that time, as stated, the record included no copy of plaintiff's confirmation, and, upon the oral evidence, there being no express denial of confirmation by defendant, we said:

"The plaintiff, however, testifies that he confirmed the orders, and the defendant's letter of April 29th is a tacit admission that this is so."

If there had been no change in the record since we wrote the above words, plaintiff's argument would be forceful indeed. To our minds, however, we now face a different case, different in a respect apparently not fully recognized by counsel. We refer to the letter of confirmation now before us, and which was not shown at the first hearing of the case. Plaintiff bases his whole case of confirmation upon the sending of that letter and the one similar to it which he could not find. His salesman states he saw the confirmations in defendant's possession. Defendant denies receiving them. This was a clear issue of fact. But the thought occurs to us: suppose defendant did receive the confirmations in question, was the contract then sealed and beyond his recall? To answer this inquiry reference must be had to the writings themselves. The offer of April 12th reads:

"OHIO VALLEY GRAIN FEED CO. Coraopolis, Pa. 4-12-1918.

M M. J. Simmons Ship to Follansbee P. O. __________ When June How Ship P. R. R. Terms Citizens Bank 1 Car Dix H M 5950

SUBJECT TO CONFIRMATION J. M. Simmons, Buyer C. W. Stone, Salesman

The Simple Account Sales Book Co., Fremont, Ohio."

The order of March 14th is like the one above, except as to the kind and quantity of feed, and the date of the shipment.

We stated above that the confirmation, upon the language of which the plaintiff relies, is dated March 16, 1918. For the present inquiry its full contents must be reviewed. Omitting the printed heading the letter reads:

"Coraopolis, Pa., March 16, 1918.

Mr. J. M. Simmons, Follansbee, W. Va. Dear Sir:

We herewith acknowledge order For 10 tons Dixie Hen at 77.00 25 tons Dixie H M at 60.00 to be shipped May 1st, contingent upon strikes, car shortage, embargoes, railroad delays and all other causes beyond our control. Shipments to be made via P. R. R. Board of Trade weights final Terms: Draft B/L Citizens Bank."

There is a well established principle of law that to effectuate a contract of sale, there must be both a proposal and an acceptance of that proposal. Parks v. Morris, Layfield Co., 63 W. Va. 51, 59 S.E. 753. In the present case defendant's offer was made to plaintiff's agent, his salesman, "subject to confirmation." The authority of traveling salesmen, even though there be no such express limitation as appears on the present offers, is, as we conceive it, more often merely to solicit orders and transmit them to their employers than to actually bind contracts of sale for them.

"Authority merely to solicit orders and transmit them to the principal, as is usually the case with the so-called 'drummer' or traveling solicitor, clearly confers no power to accept the orders so taken or to make a binding contract of sale. Such a power may, however, be conferred expressly, or it may arise by implication from a course of dealing, or from the general custom of the trade." 1 Mechem, Agency 2d ed. § 861. Accord: Hampton Mills v. Hershfeld, 201 N.Y.S. 556.

And although we have noticed no case in which the words "subject to confirmation" were used (except where the expression was defined by the custom of the trade as in Johnston v. Fairmont Mills, 129 F. 74), we have no doubt that the words were used here as meaning in effect, subject to the approval and acceptance of the seller, — approval of the salesman's act and acceptance of the buyer's offer. Where either of the latter words have been used, the decisions are uniform that there is no contract prior to the approval and acceptance by the principal. Cable Company v. Hancock, 2 Ga. App. 73, 58 S.E. 319; Bronson v. Improvement Co., 135 Mo. App. 483, 116 S.W. 20; Crowder v. Tolerton Warfield Co., 92 Neb. 250, 138 N.W. 151. To consummate the bargain, it is manifestly essential, however, that the confirmation correspond to the offer at every essential point. There must be a complete meeting of minds on all material matters, leaving nothing for future negotiations. The offeree may not by a modified acceptance impose a new condition upon the offerer. 1 Page, Law of Contracts, p. 250; 13 C. J. p. 281; 6 R. C. L. 608; 1 Williston, Contracts, p. 57. Does the plaintiff's acceptance here meet this requirement, or did it introduce into the proposed bargain some new element necessitating the assent of the offerer? Again attention must be directed to the form of the offers and to the letter of confirmation relied on by plaintiff. Do we find anything in defendant's offer to the effect that shipment on the day named is to be contingent upon strikes or the other events mentioned in the confirmation? Is there anything in defendant's offer by which we can be assured that plaintiff's proposal that Board of Trade weights are to be final is satisfactory to defendant? We find nothing of the sort. It may be that in the light of the custom of the trade both of these seeming modifications of the offer were not in fact material departures from the original proposal; but all this record shows is that these parties had had business dealings before, there is nothing as to the conditions prevailing. Our view is, and we think it is unassailable, that a proposal to buy feed to be shipped on a fixed date is quite different from a proposal to buy feed to be shipped on a fixed date, unless prevented by causes beyond the seller's control. That is well illustrated by the case of Wheeling Mold, etc., Co. v. Wheeling Steel etc. Co., 58 W. Va. 62, 51 S.E. 129. We think plaintiff's confirmations changed materially the terms of defendant's offers. Under this view of the case, it becomes apparent that it is immaterial whether the confirmations relied upon actually reached defendant or not. It is thus wholly unnecessary to discuss defendant's argument that actual notice to him was an essential element of a necessary communication of plaintiff's acceptance. Plaintiff's acceptance of defendant's proposal was not sufficient to consummate the bargain, and defendant had the right, for any reason he might choose, or for no reason at all, to withdraw his offers to purchase. Minneapolis Ry Co. v. Columbus Rolling Mills. 119 U.S. 149, 7 Sup. Ct. 168, 30 L.Ed. 376. A sufficient intention to withdraw them was indicated by defendant's letter of April 29, 1918. Having found the true nature of the confirmations upon which plaintiff relies, what formerly appeared to be a tacit admission on defendant's part, is now but a courteous withdrawal of his former proposal. He never abandoned this position.

As we said in the beginning, counsel have not considered the position we have taken, but to us it seems the controlling issue in the case. It also renders unnecessary a discussion of plaintiff's objections to certain evidence and instructions. Defendant withdrew his offers prior to acceptance thereof by plaintiff; no verdict other than one for defendant could be sustained on the record. We therefore affirm the judgment.

Affirmed.

ALLEN v. SIMMONS