Supplemental Brief of Petitioner — Rosenberg Bros. v. Commodity Credit Corp. (No. 357)

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OCT 2

JOHN T. FEY, Cherk

In the Supreme Court of the —_.

United States

OcToBER Term, 1957

Rosexberc Bros. & Co., bxe.,

a corporation,

Petitioner,

Vs. ,

ComMopiry Crepit Corroratrion,

Respondent.

’

Petition for Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

Supplemental Brief of Petitioner

’ Liuoyvp W. DIN KELSPIEL

Kpw ARD W. Rosston

14 Montyomery Street

San Francisco 4. California

. Mewuvinne Marien

bee Vermont Ave, NOW

Washinpten 5, Db ¢

Attorneys for | i, frfioner

Hiren, Maire.

14 Montgomery S

San Francises 4, Californian

Of Counsel

s, Ware & Me Acie:

PARKER PRINTING COMPANY '50 FIRST STREET SAB FRANCISCO &

SUBJECT INDEX

III ooo cece Se Ride cea eel ieee S csduneeeh mene 2

1. Respondent’s Argument Emphasizes the Importance of

the Question of Federal Law Which Should Be Settled by

Chae Chunar CG ahi isis ses ericson 2

2. Respondent’s Contentions Do Not Affeet Petitioner’s

Argument That the Decision of the Court of Appeals Has

Departed from the Decisions of the Other Circuits and

from ihe Usual Course of Judicial Proceedings..........0........- 4

CU We ge Tae RUm snus nnn nein nore 4

(b) Failure of Follow Findings.....2..........-0:-:s0eseseeeesee 6

3. The Decision of the Court of Appeals on the Question of

Waiver Not Only Ignores the Findings of the Trial Court,

but Is in Conflict with Another Decision in the Same

CMY 6c eee ee eee ihe a oe 6

~)

Conelusion ....... EN RTE EN SDL IS E OM LA BD She AP AROS BREN.

TABLE OF AUTHORITIES. CITED

(CASES Pages

Board of Trustees vo O. Do. Wilson Co., 133 Pod 390 (CLA,

8 Toh Sills ISR RE ad pee gE A 2 iE sire ORDO NR RO CEN RL i)

-Bu-Vi-Bar Petroleum orp. v. Krow, 40 F. 2 458 (CC ro A. 10,

Beet as sate AON By eR Des Ld NORA ES OR ROT ERR! MD a

Simon v, Good Year Metallie Rubber Shoe Co. 105 F.2d 573

5 OAD, BE AaRaR Atel MURS a0 1A Shp BaP a Maer I OO EES RACER ERTIER Dd

United States v. Lundstrom (D. Ore, 1941) 53 Fed. Supp. 709,

aff'd (C.CLA. 9, 1943) 139 F.2d 792 ic 2

Warren v. Stoddart, 105 US, 224... . 5

STATUTES AND RULES

Rule 52(a). Federal Rules of Civil Procedure... ie elabatdete 6

Tithe 15 USCA, Section 7146 aie ”

© Williston Contracts | Rev. Edo) § 1334, p. 3040 5

In the Supreme Court of the

United States

October Term, 1957

No, 357

RosenperGc Bros. & Co., Ixe.,

a corporation,

Petitioner,

, £.*

ComMopity Crepit Corporation,

Respondent.

Petition for Writ of Certiorari to the United States.

Court of Appeals for the Ninth Circuit

Supplemental Brief of Petitioner

To the Honorable Farl OC. Warren, Chief Justice, and to the

Honorable A ssocrale Justices of the Supreme Court of

the United States:

The Brief for the respondent in Opposition raises cer-

tain points and characterizes certain legal principles in

ao manner whieh requires further comment from the Peti-

tioner. It is the purpose of this Supplemental Brief to ake

such comment. This brief fs tiled in aecordance with the

provisions of Paragraph 4 of Rule 24 of the Supreme Court

of the United States.

»)

ARGUMENT

1. Respondent's Argument Gmphasizes the importance of the

Supreme Court.

Respondent's first argument (Brief, p. 8) characterizes

the change in CCC's raisin purchase program as normally

within the seope of the risks assumed by the Petitioner,

inplving that a government ageney such as CCC “normally”

has the right to interfere with performance of the parties

with whom it contracts unless there is an affirmative show.”

ing that CCC has agreed to limit its activities. As has been

pointed out in the Petition (p. 10) a contract not to hinder

or prevent performance is “nearly always” implied, and it

ix “assiunption of risk” by the other contracting party which

inust be affirmatively shown.

‘Respondent attempts to support its position by reference

to Title 15 USCA Section 7 1ic which grants CCC the power

to support: prices of agricultural commodities. Respondent

characterizes this power as a “duty”. It should be noted

that raisins are a “non-basic commodity”; that the statute -

does not require CCE to support prices of non-basie com-

“modities but only wives it discretion to do so: that under the

terms af the statute, and of its. Charter, CCC is also a pur-

chasing agent of the United States, The nature of CCC's

activities in the subject ease emphasizes that it was acting

‘principally in its role as a purehasing agenf in connection

with its 147 raisin program. Speeches of the Secretary of

Agriculture and of CCC officials, whieh: preceded the call

for bids, as well as the September 5 announcement, indicate

the lnnited nature of the program and the aim of CCC te

purchase only so many raisins. as could he disposed of in

designated outlets. Docket OC-%a_ (Plaintiff's Exhibit 5)

confirms this purpose. Contract. were made on the basis of

t-

3

competitive bidding which produced low prices. CCC officials

expressed themselves as delighted with tle low prices ob-

tained and refused to release packers from thei ir contracts.

Such “delight” and refusal to grant relief are certainly

attributes of commercial purchase rather than of price

support.

Respondent argues that the tentative nature of the state-

nents contained in the September 5 announcement of the

Secretary of Agriculture should have warned Rosenberg of

the possibility of change (Respondent's Brief p. 11). Every

suiTanent to which Respondent refers indicates that CCC

decal Weesihiias fess than the maximum announced. None of

the statements indicate that CCC would, in any event, ¢7-

cood the announced Inaximiuin of 61,000 tons, or that CCC

would enter inte competition with packers to acquire raisins

from growers or that COC would SUpport prices at arygiven

leved. The language of the announcement in these particulars

Is de finite and nnequivoecal, ¢

CCC's relianee on mere estimates of the raisin crop and of

the raisin surplus do net support Respondent's argument

that Rosenbergs assumed the. risk of change because of the

tentative nature of the program. The estimates were care.

fully prepared and amazingly accurate. The original esti-

nate of the surplus was 100,000 tons and CCC's announced

Program Was to take only GOL000 tons of this surplus. The

change in CCC's program was not the result of a change in

surplus estimates. The surplus In actuality departed very

litth: from: the estimates, The expanded CCC purchase pro-

cram aimed to acquire T21000 tons, a figure actually in

eXeess of the indicated surplus, whereas its original pro-

cram indiented that a surplus of almost 40,000 tons weuld

be deft overhanging the market

4

2. Respondent's Contentions Do Not Affect Petitioner's Arqument

That the Decision of the Court of Appeals Has Departed from

the Decisions of the Other Circuits and from the Usual Course

of Judicial Proceedings.

(a) MITIGATION OF DAMAGES.

Respondent argues that had Rosenberg stopped perform-

ance after CCC's purchase, it would have incurred no dam-

age because it expected no profit on its CCC contracts. The

principle of mitigation of damages on which Respondent

relies is discussed in the commentary accompanying Section

336 of the Restatement of Contracts (cited by Respondent,

Brief p. 13). Comment a indicates that an innocent con-

tracting party need not incur unreasonable inconvenience

or expense or disorganize his business in order to mitigate

damages after a breach of contract. The innocent party

should act only as a prudent man would. Respondent over-

looks the fact that the large tonnage represented by Rosen-

berg’s CCC contracts bore its share of Rosenberg’s piant

and overhead costs, and that the failure of Rosenberg to

participate in CCC's program would have shifted all these

costs ta its commercial sales. It would have-meant loss of

grower confidence and contracts because of Rosenberg’s

inability to dispose of its growers’ production, and thjs, in

the long run, would have seriously interfered with Rosen-

herg’s source of supply. It is also obvious that the failure

oof Rosenberg and of the nine other packers, which were in

a similar position, to participate in CCC's program would

have wrecked the program and brought disaster to the in-

dustry. When faced. with these consequences, no prudent

inan could stop performance as Respondent suggests Rosen-

berg should have done.

In its discussion of the issue of mitigation of damages,

Respondent ignores the established distinction between

those cases where the party breaching a contract repudiates

’

5

the contract and those cases in which the defaulting party

" continues to insist on performance. N one of the authorities

cited by Respondent deal with the latter situation. Warren

v. Stoddart, 105 U.S, 224, involves repudiation by the de-

faulting party. Simon v. Good Year Metallic Rubber Shoe

Co. 105 F.2d 573 (C.A. 6) is not concerned with breach of

contract, but is -based on deceit and misrepresentation.

Board of Trustees v. O. D. Wilson Co. 133 F.2d 399 (CLA.

D.C.) doés not involve breach of contract but deals with

the unilateral mistake of a bidder in omitting an item from

- his bid, followed by performance. .

‘Williston recognizes the distinction between a defaulting

party who repudiates his contract and one who continues

to insist on performance. He states:

“The situation must not be confused with one where

there has been a material breach of contract which does

not. however, indicate any intention to renounce or

repudiate the remainder of the contract. In such a case

the injured party has a genuine election offered him

of continuing performance or of ceasing to perform

and any action indicating an intention to continue will

operate as a conclusive choice, wot, indeed, depriving

him of a right of action for the breach which has al-

ready taken place, but depriving him of any excuse

for ceasing performance on his Gwn part. * * * but

Where the contract is totally renounced there can be ne

election between continuation and cessation of per-

formance.” 5 Williston Contracts (Rev. Ed.) £1334, p.

749. (Emphasis added.)

BuVi-Bar Petroleam Corp. « > Rrow, 40 F.2d 488 (CCA.

10, 1930) does not, as Respondent claims (Brief p. 14), sup-

port Respondent's position, but is good authority for the

proposition for which it was cited by Petitioner. On its facts,

it ix a repudiation case which holds that the innocent party

Inay accept repudiation by the defaulting party to a contract

; 6

at any time before the repudiation is withdrawn. “At page

492 of its opinion, the Court distinguishes cases such as the

instant one stating:

“The situation of the injured party where there has

been a breach which does not indicate an intention to

repudiate the remainder of the contract, and the situa--

tion of the injured party, where there has been a total

renunciation of the contract, differs in important par-

ticulars. In the former case, the injured party has a

genuine election either of continuing performance or

ceasing to perform. * * * On the other hand, where

the contract is wholly renounced there can be no real

election between continuation and cessation of per--

formance * * * because, after netice of renunciation the

other party cannot go on and complete an executory

contract and sue for any increased damages resulting

from his continuing to perform”.

(b) FAILURE TO FOLLOW PINDINGS.

Respondent attempts to explain the way in which the

Court of Appeals disregarded the findings of the trial court

by pointing out that under Rule 52(a) of the Federal Rules

of Civil Procedure the trial judge’s findings are conclusive

only if not “clearly erroneous.” In the instant case, the

Courtof Appeals simply ignored the findings of the District

Court without comment. At no place in its opinion i= there

any statement which indicates that findings of the trial

court were clearly erroneous. In view of the evidence in the

record, it could not make such a finding.

3. The Decision of the Court of Appeals on the Question of

Waiver Not Only Ignores the Findings of the Trial Court, but

is in Conflict with Another Decision in the Same Circuit.

Respondent's discussion of United States v. Lundstrom

(D. Ore, 1941) 55 Fed. Supp. ‘709, aff'd (CLCLA. 9, 1943)

139 F.2d 792 (Respondent's Brief p. 14, footnete) is eon-

7

fined to the Court of Appeals’ opinion. The Petition refers

to the District Court opinion, which is direetly in point.

Vouchers stating that payments received were “correct and

just” were signed by the claimant as a condition of receiving

progress payments, including a final payment, for moving

lumber. The District Court stated that neither signing the

vouchers nor acceptance of payment waived plaintiff’s claim

for damages for the additional expense occasioned bya

variance in the nature of the materials hauled, distinguish-

ing waiver of a “condition of a contract” from waiver of a

“claim for damages”. (53 Fed. Supp. at 711). Although the

Court of Appeals, as Respondent states, did find that the

defense of accord and satisfaction had not been properly —

presented by the Governinent, it also stated that the essen-

tials of accord and satisfaction were not present (139 F.2d

at (95), to that extent approving the District.Court opinion.

The other authorities which Respondent cites on page 14

of its brief were either cases in which the claimant made

deliveries in the absence of a contract or in excess of con-.

tract quantities, at a price stipulated as a condition of deliv-

ery, or cases where the Court found a waiver as a matter of

fact. In the instant case, the District Court found as a matter

of fact that there was no waiver. Moreover, the evidence

shows that the contracting officer of CCC with whom Rosen-

berg made arrangements for delivery lacked authority to

deal with price or to compromise Rosenberg’s claim, and

sought only to make arrangements for delivery and to effect

a miner waiver of carrying charges and a minor adjustment

for packaging (Reeord, pp. 617-618).

CONCLUSION

Respondent's Brief in Opposition fails to overcome the

arguments advanced in the: Petition for Certiorari. It is

—

respectfully submitted that each of the grounds stated in

the Petition is valid, and that Certiorari should be granted

so that the decision of the United States Court of Appeals

for the Ninth Circuit may be reviewed and corrected by this *

Honorable Court.

Dated at San Francisco, California this 30th day of Sep-

tember, 1957.

, Lioyp W. Din KELSPIEL

Epwarp W. Rosston

MELVILLE EnRLicu

Attorneys for Petitioner

Hecter, Furman, WuHite & McAvLirre

Of Counsel