Title: FLEMING CO. OF NEBRASKA, INC. v. Michals

State: nebraska

Issuer: Nebraska Supreme Court

Document:

433 N.W.2d 505 (1988) 230 Neb. 753 FLEMING CO. OF NEBRASKA, INC., Appellant, v. Forrest R. MICHALS, Sr., Appellee. No. 87-333. Supreme Court of Nebraska. December 30, 1988. *506 Terry R. Wittler, of Cline, Williams, Wright, Johnson & Oldfather, Lincoln, for appellant. Gary L. Dolan, of Knudsen, Berkheimer, Richardson & Endacott, Lincoln, for appellee. BOSLAUGH, WHITE, CAPORALE, and SHANAHAN, JJ., and JAMES MURPHY, District Judge. SHANAHAN, Justice. The Fleming Co. of Nebraska, Inc., appeals from the judgment of the district court for Lancaster County, which, in a bifurcated bench trial on the question of a settlement, found that Fleming had a settlement agreement with Forrest R. Michals, Sr., precluding Fleming's action based on a claim disposed by the settlement agreement, and dismissed Fleming's action. "In a bench trial of a law action, factual findings by a trial court have the effect of a verdict and will not be set aside unless clearly erroneous." Alliance Nat. Bank v. State Surety Co., 223 Neb. 403, 404, 390 N.W.2d 487, 489 (1986). Michals was the president of two Nebraska corporations, Beer Mart, Inc., and Mike's IGA, Inc., which operated a grocery and liquor store under the name "Mr. `B' IGA." Michals was a guarantor of the corporations' indebtedness to Fleming. In March of 1984, Mr. "B" IGA closed on account of lack of business. On September 6, 1984, Michals' attorney wrote Fleming's attorney: I am enclosing a copy of a Complaint that our office will file on behalf of Mike's IGA, Beer Mart, Inc., Forrest R. Michals, Sr., and Forrest R. Michals, Jr., *507 against The Fleming Company of Nebraska, Inc. Our clients would consider not filing this action and giving release of the claims noted therein if they, in return, are given a complete release of all claims of The Fleming Company of Nebraska, or any related companies, who may have a claim against them. The "Complaint" mentioned in the foregoing letter apparently related to Michals' prospective antitrust suit against Fleming. On September 27, Fleming's lawyer stated in a letter to Michals' attorney: George Christatos was involved in the Michals corporations at their inception but had since been bought out by Michals. There was no further correspondence between the parties until October 17, when Fleming's attorney wrote Michals' lawyer: On October 29, 1984, Fleming filed this suit against Michals to recover on the guaranties. In his answer, Michals denied any default in the corporate debts owed Fleming and alleged Fleming's antitrust violations, misrepresentation, and a settlement agreement embodied in the letters of September 6 and 27. A settlement agreement is subject to the general principles of contract law. Omaha Nat. Bank v. Mullenax, 211 Neb. 830, 320 N.W.2d 755 (1982). To have a settlement agreement, there must be a definite offer and an unconditional acceptance. Zimmerman v. Martindale, 221 Neb. 344, 377 N.W.2d 94 (1985). Disposition of this appeal, we believe, is controlled by the not-so-recent decision Nebraska Seed Co. v. Harsh, 98 Neb. 89, 152 N.W. 310 (1915). In Nebraska Seed, the syllabus by the court includes: "A valid contract of sale may be made by correspondence, but courts will not construe as a binding agreement letters which the parties intended only as a preliminary negotiation." Harsh wrote to Nebraska Seed: "` "I have about 1,800 bu. or thereabouts of millet seed of which I am mailing you a sample. This millet is recleaned and was grown on sod and is good seed. I want $2.25 per cwt. for this seed f.o.b. Lowell."'" Id. at 89, 152 N.W. at 310. Nebraska Seed responded by telegram to Harsh: "`"Sample and letter received. Accept your offer. Millet like sample two twenty-five per hundred. Wire how soon can load."'" Id. at 90, 152 N.W. at 310. When Harsh did not deliver the millet, Nebraska Seed sued Harsh and obtained a verdict on account of Harsh's breach of contract for sale of the millet. However, this court reversed the judgment for Nebraska Seed and stated: 98 Neb. at 90-92, 152 N.W. at 311. See, also, Rhen Marshall, Inc. v. Purolator Filter Div., 211 Neb. 306, 318 N.W.2d 284 (1982); Neff v. World Publishing Company, 349 F.2d 235 (8th Cir.1965). In Ferrero Constr. v. Dennis Rourke Corp., 311 Md. 560, 536 A.2d 1137 (1988), Ferrero Construction sent a letter on March 12, 1984, to Dennis Rourke Corp. (Rourke), requiring that Rourke submit an offer by March 21, 1984, "`in order to be considered,'" and detailed the contents of the offer to be submitted. 311 Md. at 577, 536 A.2d at 1145. Rourke submitted the designated proposal within the allotted time. When Ferrero refused to carry out the transaction, Rourke filed an action seeking specific performance of the "contract" which resulted from Rourke's timely response to Ferrero's letter. In holding that there was no contract between the parties as the result of Ferrero's letter and Rourke's response, the court stated: See, further, Harvey v. Facey, [1893] App. Cas. 552 (P.C.), which is the basis for the preceding illustration. Michals made no definite offer in the September 6 letter. The letter stated that Michals "would consider" forbearance of an antitrust suit and a release of claims against Fleming in return for Fleming's release of claims against Michals. To paraphrase Michals' September 6 communication to Fleming, Michals would think about or reflect on forbearance of an antitrust action and a release of claims against Fleming in exchange for Fleming's release of claims against Michals. Michals' overture in the September 6 letter lacks an actual and definitive promise or obligation imposed on Michals. Fleming could not accept a nonexistent offer. If Michals' September 6 letter were an offer, then the proverb related by Heywood, "A penny for your thought," becomes a standard applicable in contract cases, even in these inflationary times, but that is another consideration. The September 6 letter did not constitute an offer, but was Michals' invitation for Fleming's submission of an offer. Although Fleming's response may have been an offer, and for our purposes we assume that Fleming's response was an *509 offer, Fleming's offer was withdrawn before Michals' acceptance. Without an offer and acceptance there was no settlement agreement precluding prosecution of Fleming's action. The district court's finding that a preclusive settlement agreement existed is incorrect as a matter of law and, therefore, clearly erroneous. The district court's judgment is reversed, and this matter is remanded for further proceedings. REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.