Petition for Writ of Certiorari — North Carolina Natural Gas Corp. v. McJunkin Corp.

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oF Is THE .~. 7 .

‘Supreme Court of the United States

Ch reise Then, Ifo. ras tie

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Norrie Caron. NPi ian Gays Conor vito,

ie Waite . ii 1’, hitieuie re :

Me JUNKIN COnrons PhON, he spores wt. pte

PETITION FORA WRIT OF CERTIORARI TO THE UNITED \

‘STATES COURT OF APPEALS FOR THE ‘

FOURTH CIRCUIT pee

MrGeNxb GErssMAN

2 TBO WK Street, NL W.,

Wishineton 6, D. ey

@ Sh . aE Dicksex PHiLLis

( hapel | Witt-North Carolina

Pacieb W. McCoy % :

Favette ville, North Carolina

> Caunsel for Pettinney:

July 17, 1962.

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£

Press of Brxon S. Atvams, Wasuitneton, D.C. *

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7 INDEX:

Page

5 if .. es :

if Citation to opinion below 2.00.00 ......65 1

“ Pen EEA rpG he oT ee ee ‘cae e ee

neatinths eet oF... 6c cacescasccussaed core, 2

—_ Statement of PWR Vike cele ee ccus: birsaryse Mee 2

ges ot this litization ep a Ae i oe eeeepengeces =

ee Re levant facts . 2... eer Te ees ‘a so 8b eaacebeu oe

Reasons for ranting SO WEE kc acracives haere ck a's .. 1

I. May a federal court in a diversity auit measure

damages for ah anticipatory breach of eon-

“ ‘act without regard to the state substantive ‘

. aw as to the measurement of such damages? 10.

Il. \ ay a federal court, in directing a verdict against

the party not having the burden of proof, de-

cline to view the evidence .in a light most

favorable. to that party and thereby deprive

the party of the right to'a’ jury trial? . Seece tae

Bo Meese reyes Tey rere er or Giant aaa og ee 17—

7 °

Aeblgdie: bk Lopiniod orc ourt of. ‘Appeals’ on re-

— NEATINE) 20-2. e ecole ees eee net ecotedecscerens la

Appendix B (extract from original opinion of Court

. i) i pee aes ia Re aae eae oo 21a

cnanenenen CETATIONS

a -CXSEs: ,

«38 ‘Brveias Beutera ts 100 0 Oo: Bete Oe | a8

Callan v. Andrews, 48 ¥. DW WNS(CAr2y we: 12.

Comttiestowerv. Beottioh- American Inv. Co., 393

oS i) RO OU SA Se ea a's <baice be GY eke asd Lise Ku Gok Soe ce 15

. Continental Ore Co. v. U1 nion Carbide Co., 370 US.

—~ (Fume Za, 1982) «on oa ecco ececes er ae yore 14

Erie R. Co. v. “Tounpkins 304.U Ss. , OE PEE 10, 11, 12,

: \13, 14, 17

\

a oh

ey,

Index Continued

Page

Galloway vi United States, 319 U.S: 372............ 15

Hendérson v. Pierson, 201 FL 2d 740 (CLA, 10) ee 16

Klaxon Co. v. Stentor Blectrie Mfg. Co, 313-0,

| rr ere ee eS , Pe eeeen ve “it, 13

Perkins v. Langdon, IS a 2, ow

Reliance Cooperage ‘Co. y. Treat, 195 F. 24:977 «.

(ee ere aoe oe ne boleeess 12

Roch v. Horst, 178-U.S. DT cnt tan eras aweek ees anes 12

Tennant v. Peoria & P.U:R. Co., 325 U.8. 29:20 4,

Tillis v. Calvine Cotton Mills, 251 N.C. 359 | Pt 12

‘Transcontinental & Western: Air, Ine. v. ‘Koppal; 345,

Si GU oa ec cad Ka 8k ca ce bee lhenwacahesduadas JL

Victorson v. Albert M. Green. liosiery Mills, 202 F. :

Re ee CORO re Fe eer Se aren: "12

Wm. J. Lemp Brewing Co. v. Ems Brewing Co., 164 ;

F.2d 290 (CA. 7) oc ccetccccesscesccecetccscecs 12

Misc FULANROUS: , aa Gal

Beale, Damages upon Repndiation. of a Contract, WW ;

py PRAT SE en Oe rr rrerrr rr rr Te i

_ Beale, W ink Law Governs the Validity of a Contract,

23 Harv. L. Rev. 260 (1910) ..... 00... eee ee etee ; oa

2 Beale, Conflict of Laws (1935) ...0....5......64-- CS

5¢ ‘orbin,. Contracts (1950) ....0.... _. ee aotuns oo a

& . so" ° _ :

@. E . ; - -;

es ° ; . e a2 7 ~

James, Sufficiency of the Evidence and Jury-Control

Devices Available Before Verdict, 47 Va. L. Rev.

218 (1961) 0.27577 ST ee EPC Pe ore 15

‘Restatement, Contracts - rrr, — gy iebavekeun os - 12

* . 2 Sedgwick,’ Damages’ (1912) . ee Ree Pres os

32W illiston, Sales. (1948) -.......% Pr. Ere eee ‘12

Note, 7 N.C: Law Rev. 462 (1929) .-........ iste oa:2 12

Note, 107 U. Pa. Law Rev. 217.(1958) .......... <a:

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IN THE

- Supreme Court of the United States

OCTOBER 1 TERM, 1962 a en eh

No. ¥ . / P . -

‘ , F —

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NortTu CAROLINA NATVRAL-GAS Corr

‘ _--Petitioner,

a nee a i ° Ve vA .

McJUNKIN i gators pondent..

PETITION FOR A ‘WRIT OFC TIORARI TO THE UNITED .

' STATES COURT OF APPEALS FOR THE

_°>, FOURTH CIRCUIT '

: J

North Carolina

herein, prays t

Awe thie judgment; “sf the United States Court of Appea

for the Foutth Circuit entered on Mare h 19, 1962, in

” this procgéding. “4

Natural Gas Corporation, petitioner

/ CITATION TO OPINION BELOW

. The original opinion of. the Court of Appeals, dated

Ben 10, 1961, is not reported, The opinion of that

¢

) ourt on rehearing, dated M 19, 1962; is reported

- at 300 F. Qd 794. These opinions appear, in the

Appendix hereto,

ta writ of certiorari issue.to sett a

i eas

Abs , 1 :

ee 2 Sa

POE gat mM ~ sunispiction ,

The judgment of the Court of Appeals entered on

rehearmg is dated March 19, 1962. This judgment was —

-titered following a hearing on a petition for rehearing

of a judgment and opinion previously entered on June

12, 1961. On June 11, 1962, Mr. Chief Justice Warren

signed an order extending the time for filing this

petition fora wyit of certiorari to and’ — July

17, 1962.

The jurisdiction of this Court i is mvoked under 28

‘U.S.C, $1254(1). 6 eS,

4 A QUESTIONS PRESENTED ‘

1. Whether a federal court, in a diversity suit: for _

| anticipatory breach of a contract, may formutate and

‘apply its own standards as to interpreting the contract -

and measuring damages, or whether Erie R. Co. v.

Tompkins, 304 U.S. 64, requires such court to discover

and apply the applicable state od as'to such matters.

2. Whether a federal court may, in directing a ver-

dict in favor of the party having the burden of. proof,

substitute its own inferences and conclusions instead

‘of viewitig the evidence in a light most favorable to the

opposing party to detérmine i if a jury. ‘could rationally

have found in the opposing patty’ sfavor. ~

. STATEMENT OF THE CASE

HISTORY OF THIS. LITIGATION

The respondent McJunkin Corporation brought this

breach of ¢ontract action against the petitioner North

. Carolina Natural Gas Corporation in the United States

District Court for the Eastern District of North Caro-

lina. Jurisdiction was grounded upon the VX

3 div ersity of citizeriship.

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_ The complain alleged an antic ipatory: breach of a

~ contract for thy purchase of steel pipe and dama; ede

_ resulting the refrom,. North Carolina. by answer Seute dd

alt allegations, including asenial of the exjste nee of ©

such a contract. | :

The case camé on for trial kefore a jury: ‘at the >

conchision of MeJunkin’s. evidence, North ¢ Carolina

moved orally for a directed verdict; the: motion was.

denied. North Carolina then- presented. its. evidence.

W hen both. parties had rested, North Carolina fnoved.

AN) directed verdict, (2) for certai structions

“ to he ¢ ven to the jury, and ¢3) for the submission of

the. issues. to the jury. - All these motions were denied.

McJunkin then moved for a directed: verdict in its.

favor, which motion was granted over North Caro-

lina’s objection. Thereupon the jury, as dirécted, re-

turned a verdict awarding judgment to MeJunkin. in

the sum of $123,493.88. North: Carolina’s subsequent

_ motion (1), to’set aside the verdict and enter a judgment

“n.o,v. in its favor, or, alternatively, {2) for a new

trial, was denied. ,

The Court of Appeals for the ek h Cirenit origi-

nally affirmed the judgment in’ McJunkin’s favor on

_June 12, 1961. A rehearing was granted on North .

Carolina’s motion, the petition alleging that the court

had misapplied the substantive law of damages. After

further briefing and oral argument on the rehearing, :

the Court of Appeals issued a new opinion on March

19, 1962, and reAffirmed the judgment in MeJunkin’s

favor. 300.F. 2d 794. As to the“problem of damages,

which had formed the basis-of the rehearing, the Court

_ of Appeals coneluded (p, 20a, infra) :

“Since we decide this question of amount of

"discount on the basis of insuffici ieney of evidence,

it Mee ee

“ts =net—nece scr to dee ide what - measure, of

damages rule is‘applicable, or; whether: the law.of -

North C arolina or West Vifginia applic x.

oo

RELEVANT FACTS |

At the trial, the following ry re Jevant fac ts were estab-.

lish ed: - \

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1. McJunkin. is a a W est. Virginia corporation, with

principal offices in Charledton, West Virginia. It is

' engaged in the business of selling steel pipe prodnets’

as a discount or cominission broker, \)purchasing. such. -

_ products from the steel mills at a discount. Porth

Carolina is a Delaware: corporation with exeeutive

offices in Fay etteville, North Carolina. - It is engaged

in the business of natural as transmissions and is-

- tribution in eastern North Carolina.

2. From the Fal of 1956 through the Summer of”

1958, North Carolina was attempting to procure finane-~

ing for construction of a pipe line system in/North

Carolina, having acquired the necessary fedéral and’

- state authorization. Looking toward the time when

. _. such financing might be secured, North Carolina sought

: during, this period to line up the necessary steel pipe for |

7

the pipe line.. The main problem i in that connection was. |

the acquisition of certain sizes of high-grade thin wall . -

pipe, known as “X-grade.”

3. North ‘Carolina entered ‘into negotiations with

ee ‘MeJunkin, during the course of which MeJ unkin was

made aware of North: Carolina’s special pipe require-

- ments and its concurrent efforts to obtain the nécessary

financing. Various oral ard written sommunications |

' were exchanged between agents of the two ‘corporations

over a period of approximately one vear with regard to

the supplying.of North Cafolina’s pipe requirements:

a,

(a) March 29,1957. Hy! lowing preliminary meetings

feud correspondence, North ‘arolina *s engineer wrote”

to the vice-qresident gf North Carolina that he felt

MeJunkin e« eet North Carolina’s requirements.

This letter included specifications for pipe, quantities,

sizes, terms, delivery dates and the statement that the.

cost would bezmill price at time of shipinent plusfreight

froff the nearest cimpetitiye mill. _ Tr. 25.

(b).\ April 9, 1957. .North Carolina’s vice-president

: wrote MeJunkin that-its proposal “relative to the pipe

,*

i

for fhe North Carolina project jo be shipped: té his °

[the ‘engincer’s| specifications and construction date

requirements is hereby accepted.” Pl. Ex. 2.

(¢) April ‘12, 1957. North ¢ ‘arolina’#Viec-prefdeut:

wrote the company’s engineér, notifying bim' of the

“acceptayce”’ of MeJunkin’s proposal. “TW 132,

(d) June 11, 1957. North Carolina’s engineer was

advised by the vite-president that McJunkin would be

unable to supply the 16” pipe-ineluded in the, former.

proposal ang that such pipe would have to be obtained

elsewhere. Tr.132. , - ;

* (e) July 3, 1957. McJunkin sent North-Chréljna —

a complete and formal quotdtypn (known as‘\No. -

_ P-2469) of all prices on its pipes, including specifiea-

tiong, unit prices, terms, delivery dates and quantities.

Size 16”-pipe was included, aud thé quantities ‘for sev-

eral other sizes were different from those’in the original

March 29 proposal. PI. Ex. f *These quotas how-

ever, were subject to home office approval. ‘ nd they

resulted from MeJ unk Ps position that the previous

communications had not sufficiently **‘spelled out?’

MeJunkin’s commitments; North Carolina agreed that

-it-would be appropriate to put down in writing “what

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; you feel vou can offer, so that we will be completely

cle aur. on jt, and we will follow up with a det ailed

order. et aes , es

(f) July 1], 1957. North Carolina’s. vice-president

wrote MeJinkin “‘feancelling’? requirements for 16”.

+ ‘pipe and adding: ‘*Please accept this letter as your

# purchase order for our pipe requirements as outlined.

hereafter. and in.general accordance witli vour quota-

tion Number -P-2469.’" There then followed the same.

‘figures as appeared in the July 3 quotations, spec ifying

delivery dates and qiiantities. The last sentence read :

“Will vou please accept this order.”’? Pl. Ex. 2.

(f@) July-15, 1957. McJunkin placed. six purchase

orders for pipe, referred to as being for North Caro-

_lina’s requirements, with Jones & Laughlin Steel Co,

Jones & Laughlin acknowledged and aceepted these :

orders on August 5, 1957. Tr. 35-36,

~(h), July 16, 1957, A MeJunkin agent notified North’

Carolina’s engineer by. telephone that MeJunkin could

not. supply the ‘*X- grade”? pipe included in both the

- March'29 and July 11 letters. “Tr. §3- 95,

_ (i) July 19, 1957. North Carolina’ s ‘vice-president |

wrote MeJunkin “cancelling”? its order of 10” and 12”

pipe because MeJunkin was unable to place this order

with the mills. A repetition of the 16” pipe eancella-

ae tion was also included. Pl. Fx. 3.

(j) August 5,1957.. MeJunkin wrote.North Carolina

to thank it for the July 11 order ‘accepting our quo-

tation P-2469 for your pipe requirements.”’ The letter

- also.stated. that the two items mentioned in the July 17 :

peor been deleted. Pl. Ex. 4. - a

_AK September 24, 1957. Me Junkin wrote Jones &

_-—~ Laughlin indicating that it had placed orders with

¢ Rh ae A ore Lee te

| Jones. & Laughlin for the North Carolina pipe require-

ments and stating, “At the present time delivery on

* + this project hogy on funds hei ‘ing ‘made available.”

Pl. Ex! 17; Tr. 34.

(1) October 9, 1957. | MeJunkin wrote’ Seen. & a

Laughlin that it had been informed by North ( ‘arolina °

that the latter would jot want any’ pipe prior to

January 1, 1958, Tr. 38: This letter reflected the fact

that in the Fall of 1957 it had become -known to all

parties that financing the construction of North Caro-

lina’s.pipe system could not ‘be aecomplished on the

basis of the. plans then in’ effect. A complete change

-_ of the system was required, including major changes

in pipe requirements, and that change Was not com-

pleted until early in. 1958. Such changes were com-

municated to MeJunkin prior to May 27, 1958. Tr.

148-153.

(m) May 27, 1958. North Carolina’s vice- -president

wrote MeJunkin “eaneelling’? the pipe ordered on

July 11, 1957,.and stating further that this was. to

" cancel “the entire remainder of the order.” Pl. Ex. 9.

- On the same day, McJunkin wrote North Carolina’ 8.

engineer that’ McJunkin now understood North Caro-

lina’s “frevisell pipe requirements” were as set forth

therein, adding: =~

“Tn the event the North Carolina Natural Gas

Corporation completes financi ‘ing and proceeds with

construction this vear (1958), and on wen basis of a °

firm non- cancellable isa we agree to furnis

_these pi at the competitive deliv-

ered prices, to Jobsite, based on domestic shipment

of API pipe. .

- “his offeris Sadsjoct to acceptance by Mav 29,

1958.”’ D. es 1; Tr. 54, 135,

8

. (n) May 29, 1558. hee nts of “Medunkin visited

- Notth Carolina’s’ vice-président ; they discussed the

contents of MeJunkin’s May 27 letter and the possi-

bility of furthér discount concession to North Carolina

if it would place anorder for all its pipe requirements _

4

with MeJunkin immediately. Tr. 212- 214.

‘ (o) June 3, 1958. McJunkin wired ‘North Carolina,

of its non-aeqiiiescence in the ‘‘cancellation”’ of May 27,

1958. Pl. Ex. 10; Tr. 33. Thereafter various exchanges

between the: companies reiterated North Carolina’s

‘cancellation’? and MeJunkin’s intention to hold North.

Carolina to its ‘‘order.’? MeJunkin declined to submit

any quotations for North Carolina’s new pipe require-

ments. Tr. 120. |

° ¢ :

4, North Carolina placed orders for its new pipe

requirements with other suppliers. It received its new

financing in mid-October, 1958, and proceeded imme- :

diately’ to order delivery of its pipe requirements as

its construction project. demanded. , It. received ap-

proximately.58%. of its total pipe requirements prior

_ to January 1, 1959, and the balance in 1959. Tr. 164-

166, 212-213.

dD. MeJunkin stood to profit on. ‘any consummated

sale of pipe-to North Carolina ordered from produgers

at the 1 ‘ate of a 5 {functional discownt”’ on shipments .

~ prior to January 1, 1959, and at a rate of a 3% **fune--

tional discount”’ on. shipments on ‘and after. J anuar vd,

"959 —Fr.-62-63, 112, 163-164. =

This suit was institited on September ‘15, 1958, and

trial commenced oi Qctoher.20; 1960. On the basis of

the foregoing facts, the C ourt of Appeals affirmed the >

y directed verdict in-MeJunkin’s favor and held: ieee

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(1) That, MeJunkin’ s quotation of July 38,° 1957,

North © Arolina’ s letter of July 11, 1957, and ~-

MeJunkin's communication of aie ), 1957; eonsti-

tuted the contract. The court thereby rejected North

Carolina’s claim that there Was sufficient evidence to

permit the jury to infer, alternatively, (a) that. the |

parties had never entered into a contract because a

~ precondition to North Carolina’s “acceptance” of |

McJunkin’s *‘offer’? was the securing by North Caro-.

lina of its necessary financing, and the so-called revoea-

‘tion oceurred before that event, or (b) that the contract

was executory in nature, specitically conditioned 6n the

right of the parties to cancel unilaterally. at any time

prior to North Carolina’s financing or the actual com-

mencemént of pipe production. yy

(2) That the contr: act was breached by North € aro-

lina in its letter dated May 27, 1958.

(3). That the damages were to be measured entirely

on the basis of the-5¢) ‘functional dise ‘count’? which

MeFunkin would have received on pipe shipments made

prior to January 1, 1959. The court thereby rejected

— North Carolina’s elaim that the proper rule of damages

for si 1 an anticipatory breach of contract, where the

tea Al time of performance is demonstrable by the time

of trial, is the. actual profit realizable at:such time of

7 performance ;shere there was proof that the actual time

; ‘d upon the securing of finane-

ng by } North Caroliha ; ad upon the occurrence of that-

event North Carolina promptly secured 58% of its pipe

prior to January 1, 1959, and the remainder during a

1959. Hence, under North Carolina’s theory, the jury

could have found that 58% of MeJunkin’s damages.

were measurable at the 5% discount rate, and the

remainder at the 3% rate.

10

REASONS FOR GRANTING THE WRIT

The deci ‘ision of the Court of Appeals raises important

and disturbing questions in the exercise of the diversity’

jurisdiction of the federal ¢ourts. May a federal court,

in a breach of contract, a¢tion, interpret the contract

and measure damages without regard’to the applicable

state substantive law as.to such matters? May such |

a-court establish and apply a general federal law of

contracts and damages in a suit between citizens of

different states? .And-may a federal court deprive a

defendant ‘in a diversity suit of the right to a jury

determination of disputed factual issues by the simple

expedient of assuming the role of the jury and resolv-

ing all factual issues against the defendant ? ?

These are signific anit questions that, deserve’ plenary

consideration by @#is Court. If the guiding rule of

Erie R. Co. v. Tompkins, 304 U.S. 64, is to be respected

and if the right to'a jury trial of disputed facts is to be

maintained in the federal courts, review of the decision

below becomes not only appropriate but necessary.

OL May a Féderal Court'in a Diversity Suit Measure Damages

' -for an Anticipatory Breach of Contract Without Regard

to the State Substantive Law as to the Measurement of

Such Damages?

The Court of Appeals below siete ‘i dvtetuaine :

‘“‘on the basis of insufficiency of evidence”’ that fhe sole -

- ‘measure of damages in this case was at the 5% discount

rate. In so doing, however, the court expressly dis-

avowed, the necessity of deciding ‘what measure of

damages-rule is applicable, or whether the law of N orth

Carolina or West Virginia applies.”’ See p. 20a, infra.

Instead, .jt established its own general rule—to wit, the

measure of damages is ‘‘such as may reasonably be

said to have been in the mutual contemplation of the.

- 0

11

partigs at the time of the execution of the contract.”

> See p. ayinfra. The court then determined from the

evidence that the: parties never contemplated that the

iP discount rate would ever be reduced to 3°...

Such a ruling’ raises a most serious question in the

administration of the federal diversity jurisdiction. — |

Since this Court’s decision in Erie R. Co. v. Tompkins,

304-ULS, 64, it has been clear that in diversity suits of

this nature the appropriate state law **should determine

the requirements of the cause of action, the interpreta-

tion of the contract and fhe measure of damages to be

applied.” Transéontinental & “Western. Air, Ine. Vv.

Koppal, 345 U.S, 653, 656-657 (emphasis added), Ax °

noted in Klaraji Co. ¥. Stentor Electric Mfg. Co., 313

U.S. 487, 496, Ags not fer the federal courts te thwart.

such local policies by enforcing an independerit ‘general

law’ of conflict of laws.” In other words, it is not

‘within the compétence of a federal court, in a diversity

suit,.to.ignore the applicable state law as to measure-

ment of damages for breach of: contract or to fashion - ~——

is 5 pat 298 __jts_ewn-independent, general rule. — Nor can it do sd

as te’ matters. of contract Steiner . :

- Yet the Court of Appeals has made an ‘applied its ~ ’

own gene fl standard of damage measurement in this ~

diversity: case, And it has expressly disregarded the

necessity—imposed by the Erie doctrine——of ‘discover-

ing and applying the proper state law of damage mea- .

surement. Thiis its conclusion that the petitioner failed

to establish sufficient evidence to meet its own self-

generated standard is both improper and valueless. The

+ only relevant inquiry is whether petitioner presented

sufficient evidence tg, permit a jury, under applicable

state law requirements, to weigh the Conflicting factors

and to draw its conclusions as to the damages suffered -

ys sf ~

—

\

by the antic ipatory breach of contract. That inquiry

has yet to be made in this case,’

Petitioner suggests that since the so-called aerept-

ance of'the contract took place in North Carolina and

since the pipes were ta be delivered in North Carolina,

the applicable Jaw to be followed in interpreting the

contract negotiations and in assessing the damages 1s

that of North Cardlina.' Had the court below, as. was

its duty under the Erie doetrine, made any effort to

discover the North Carolina law as to the measurement

of damages for anticipatery breach of contract and then

assessed the facts. in light of that law, it would have had

to conchide that damages depend upon the best evidence

available at trial time to show what the. plaintiff’s

profits would have been in the normal course had per-

formance actually taken place as contemplated.

Indeed, such is the law of West Virginia and of a

overwhelming number of other jurisdictions and au-

———thorities that, have dealt with this problem.’

1See Beale, What Law Governs the Validity of a Contrart,;

Harv. L. Rev. 260 (1910) ; 2 Beale, Conflict of Laws § 332.4 (1935);

‘and see Victorson vy. Albert M. Green Hosiery Mills, 202 F. 2a 717,

718, n. 2 (C_A. 3); Wm. J. Lemp Brewing Co. v. ims Brewing

. - Co.,.164 F. 2d 290, 293 (CA. 7).

? Bryant v. Southern Co. 192 NC. 607 ; Tillis. v. Calvine Cotton

Mills, 251 N.C. 359. See also Perkins v. Langdon, 237. N.C. 159,

"172-178; Note, 7 N.C. Law Rev. 462 (1929).

3“Tn other words, thongh the plaintiff sues at onee for an

anticipatory breach of the contract, his damages are to be assessed

&

according to the cost of performance, not at the time of the breach, >

but af the time set for performance.’’ Beale, Damages upon

Repudiation of a Contract, 17 Yale L.J. 443, 448 (1908). See also.

_5 Corbin, Contrasy § 1053 (1950) ; 3 Williston, Sales § 587. (Rev.

ed. 1948) ; 2 Sedgwick, Damages’ § 636d (9th ed. 1912); Restate-

- ment, Contracts §$ 338, comment (a). See also Roehm v. Horst,

178 U.S. 1, 20; Reliance Cooperage Corp. v. Treat, 195. F. 2¢ 977

(C.A. 8); Callan v. Andrews, 48 F. 2d 118 (C.A..2).

-_

71S

y?

Applying that st. indard to this case reveals an

evidentiary basis which would have réquired the stib-

mission te the jury: of the question of what jirotits

McJunkin would have earned had the contract been >”

carfied out. From the facts available at the timy; of .

trial, there was evidence from. which the jury could -

have ratiorially conctided that Me Junkin would have

delivered only 58(, of the pipe requirements during,

- 1958, when the 5¢, rate was still it: effect. And the

. Jury could then have cone Auded _ the remaining 42

would have been: delivered—as , the farts showel

* aetually happened when ‘petitioner

fo secure pipe

- from other SOUPERS— vaffer January 1, 1959, when the

. 3° pate béeetame effective. The total damages, under

“this theory, would have been materially less than the

‘amount ‘determined by the courts below.

The“omplete and ac knowledged failure. of the scant

~— to determine the proper state law for measurmg

ch damages and then to match the foregoing facts

against that standard constitutes an abdication of ‘the

court’s function under the Eric doctrine. See Klaron -

‘Co. v. Stentor Electric Mfg. Co. 313 US. A487, 496, And

it deprives petitioner of its right to au jury determina-

tion of this contested damage question in light of the

‘proper state law. The same may he said as to the |

court’s failure to treat, the contract and breach ques-

tions in light of North Carolina law. A dangerous pre-

cedent has thus been created for ignoring the Eric

doctrine. For that important reason, the invocation

, of this Court! s certiorari jurisdic tion | is sought. »

2 ee

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14

II. May ‘a Federal Court, in Directing a Verdict Against the

Party Not Having the Burden of Proof, Decline to View

the Evidence in a Light Most Favorable to That Party and

_ Thereby Deprive the Party of the Right to a Jury Trial?

An integral part of the failure of the court below to,

follow'the commands of the Eric doctrine was its own

injection inte, and resolution of, two highly contested

‘yssues of fact: (1) Was there ever a contract between

Vie parties and a breach-thereof? (2) If there was a

contrayt and a breach, what loss of profits Was suffered

by M¢eJunkin? As to bothewf.those issues the court

below, as well as the District Court, found in favor. of

McJunkin without ever pe rinitting the questions to go

to the jury for resolution. ‘And the court did so by

formulating 1 Reged rulessas to what constituted a

contract: a-bremteh thereof ‘and the resultant damages.

“No mention was made of the North Carolina Jaw on

such matters. The: Court’s Erie function was dis- —

regarded,

It is elemental, of course, .that it is heyond the

function of either a federal trial judge or a federal

appellate court to replace the jury in determining

contested issues of fact. If the evidence at the trial

fairly permits of different inferences and conclusions,

only the jury can make the decisive determinations.

_ As Sn I Me I most recently in Continental Ore Co. ,

v. Union CarbiderCorp., 370 U.S. — (June 25, 1962),

| where all the evidence does not point in one direction, -

_it is for the jury to weigh the contradictory evidenee

and inferences and to draw the ultimate conelusionis as

to fact. See Tennant-v. Peoria & PUR. Co., 321 US.

29,35. ‘The judicial eye’must not in the first instance

rove about searching for evidence to support other

vonflicting inferences and conehisions which the jndges

or the: litigants may consider more reasonable or desir a

as

able’ Commissioner Ve Seottish-. Vacrican Inu. Co.,

3253 US, 119, 124.

fit in this case the courts below have ente red’ into

the arena ‘of factual confliet with ‘a venge ance, - The

very length-of the opinion of the Court .6f Appeals

stands as mute evidence of the extreme judicial inter-

vention inte matters reserved for the jury. That opin-

jon might well refleet-the considered opinion of a jury, |

had. the ease heen submitted’ to if. Vet it cannot. -

disguise the very real conflicts of fact which inhere in

this trial record. The decision below, is merely one -

view, one conclusion, whie h can be drawn: from that

: record. oz

~The pane below, ingxustaining a directed verdict ‘in

. favor of the party having the burden of proving the

determinative issues, reached the outer limits of the

permissible area fer the exercise of the power to take

the case from the jury. The utmost of judicial restraint

should be exercised in this context, view ing the ev idence ’

ina light most favorable to the opposing party. Indeed,

to direct a verdict for the ‘party having. the burden of

proof comes closest to infringement upon the Sev enth -—

Amendment's guarantee of jury trial rights in ¢ivil —

cases, Cf. Galloway vy. U nited “States, 319 U.S, 372,

395-396. The. ev idence should thus have been viewed

from tlie standpoint of whether the jury, had it believed

petitioner’s evidence, might rationally have found for

the petitioner.

_As'to the question of the existence df a.contract, there

was substantial evidence that the. parties never -con-

_ templated a: completed contract until the financing of

North Carolina’ soperations became sé “ure. ~ MeJunkin

* See. generally, James, Sufficiency of the reidegpa and Jury-

Control Devices Available Before Verdict, 47 Va. L. Rev. 218,_

226 (1961) ; Note, 107 U. Pa. L. Rev. 217, 219 (1958).

'

was made aware of these financing difficulties, made

changes in the specifications as circumstances dictated, °

and informed its su pliers; that delivery of the pipe

depended upon fundbeing available to North ¢ ‘arolina

Even as late as May 27, 1958 (the date of the-‘cancella- —

tion’? of the alleged contract), MeJun'in was: still,

seeking “*a firm non-caneellable order’’ on the basis of,

"-. North Carolina’s ‘revised pipe requirements”? in the, -

event North Carolina ‘complet ® financing and pro-

ceeds with construction this year.’ D. Ex.:1; Tr. 54, -

135. o

+ Added to these facts was evidence that the custom of

the trade permitted just such negotiations as here

occurred to be considered as tentative until the resolu-

_ tion of a prime contingency, such as the procufement -

of necessary financing. Even so-called ‘cancellations’ —~

were considered part of the custom in the steel pipe

business in such cireumstances.. Tr. 167. See Hender-

son V. Pierson, 201 F. 2d 740 (C.A. 10). ;

- All-of such evidence, admitted into the record, per? -

mitted an inference that in this context no firm contract \,

+ was ever formulated, pr that, if such a contract existed,

it was by custom subjéct to unilateral cancellation. The

fact that the court below felt that.a different inference

was required merely feflects the contested nature of the

issue and the necessity for allowing the trier of facts— __

the jury—to draw thie inference that it considers most

reasonable. Addftiqnally, of course, the court below

- made no effort to find or apply the North Carplina law

of contract-interpretation. —

.The same is true.as to the issue of oO Here

again the ev idence as to the losses actually suffered by:

McJunkin was a matter of irreconcilable dispute, com-

pounded by the failure of the courts below to\apply the

proper state law as to the measurement of damages. ~

As. already indicated, evidence was available to permit

‘?

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pi

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the jury, properly instrue ted, to find that-had the .

alleged contract actually been consummated, at least

$2 of MeJunkin’s profits. would have been computed

a verdict.

at the lower ‘37 discount rate. To ignore the possibility:

of such a conelusion, to insist upor thie computation at

the higher 5‘; rate for ail lost profits, is to invad® the

fiinction of the jury and to abuse the power to direct a é

Ww hat. the court below has ‘dine is to disregard the

Erie doctrine’as to both the contract and damage issties,

— to establish its own rules in those respects, and to

measure the evidence in light of those rules. And it

has compounded such errors by declinimg to view the

evidence in a light most favorable to the party. against.

whom the verdict was directed. _ ; )

To preserve the historic function of the jury in the -

federal court system, and to guarantee the right of

litigants. to-a_jury determination of contested issues —

of fact, a review 1¢ decision below is requisite.

For the foregoing: reasons, a writ of ce 1 to

review the judgment of the Court of Appeals for the

Fourth Circuit,should issue.

Respectfully submitted,

a ; EUGENE GRESSMAN °

pf eng ee 1730 K Street, N. W.

‘Washington 6, D. C,

‘ _. Dickson Pairs.

re Hil), North Carolina

~ Doxdt W. McCoy |

Fayetteville, North Carolina

J uly 17, 1962. Counsel for Petitioner -

.