Court Opinion

ID: 9472593
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:05:16.339572+00
Date Added: 2024-06-11T17:43:02.120915
License: Public Domain

CORNELIA G. KENNEDY, Circuit Judge,
dissenting.
Because I believe that the cancellation clause gave Reynolds the right to terminate the contract and that Reynolds did not waive reliance on it, I respectfully dissent.
The District Court refused to apply the cancellation clause of the purchase order apparently on the grounds that it was “a so-called boilerplate provision” whose application was questionable. The clause states that “Buyer may at its option cancel any unshipped merchandise or incompleted portion of this order at any time whether or not Seller is in default,” and that the buyer will pay the seller’s costs. Anodco argued in the District Court, not that this language is ambiguous, but that it should not be applied because the parties did not agree to it. Skoog, Anodco’s president, stated, however, that he read the cancellation clause in the purchase order, and did not object to it. “By failing to object the plaintiff might be deemed to have agreed that the purchase order superseded any earlier oral contract.” Ensign Painting Co. v. Alfred A. Smith, Inc., 385 Mich. 268, 272-273, 188 N.W.2d 534 (1971). Anodco also argues that he believed that the cancellation clause applied only to items purchased by quantity, but the language of the provision — “in-completed portion of this order” — does not support that interpretation. Last, Anodco suggests that Reynolds failed to pay Anod-co’s costs, although the costs for anodizing the bumpers delivered were all covered, because Anodco did not receive all the profits it could possibly have made under the contract. This interpretation of “costs” seems unreasonable and unjustified.
Anodco offered two procedural objections to considering the cancellation clause as authority for terminating the contract. First, Reynolds did not invoke the clause when cancelling; it stated instead that it no longer had requirements under the contract. Although I find no Michigan case directly on point I believe the Michigan Supreme Court would follow the decision of the United States Supreme Court in College Point Boat Corp. v. United States, 267 U.S. 12, 16, 45 S.Ct. 199, 201, 69 L.Ed. 490 (1924) (Brandeis, J.), where it said:
An unconditional right to cancel can be availed of for the purpose of terminating a contract, even after suit [is] brought, unless some intervening change in the position of the other party renders that course inequitable____ [T]he right to cancel was not lost by mere delay in exercising it.
Anodco also claims that Reynolds waived its defense under the cancellation clause and the panel agrees. However, I believe a fair reading of the record discloses that the waiver was limited to not submitting the issue to the jury. At trial, Reynolds twice moved unsuccessfully for a directed verdict on the grounds of the cancellation clause. One of those motions was made at the close of the evidence. Later that same day counsel met with the judge in chambers to discuss jury instructions.1 The following day the court granted a part of Reynolds’ motion for directed verdict, dismissing Anodco’s antitrust claim. The following colloquy then took place after the court had advised counsel of the time it would allow for final argument to the jury:
THE COURT: It is my understanding for the record that the Defendant is not *427relying upon the cancellation clause in the blanket purchase order as justification for the termination of the relationship with the Plaintiff.
MR. KAY: That’s correct, Your Hon- or.
THE COURT: And I understand, Mr. Kay, that you will not argue this matter and no reference would be made to the cancellation clause. And it is my further understanding, Mr. Heiden, that because the Defendant is abandoning that defense that you would make no reference to that cancellation clause.
MR. HEIDEN: That’s correct, Judge. And my understanding from being in chambers is that you were going to— have some words with your clerk, all that was agreeable to communicate that fact to the jury.
THE COURT: Very well. In addition I will advise the jury that counts two and three are no longer part of the case. As a consequence, the claim by American Bumper is no longer part of this case. By the same token the Defendant will make no reference to, no additional references to those facts. Is that correct, Mr. Kay?
MR. KAY: That’s correct, Your Hon- or. I just would urge the Court to make it clear to the jury in terms of the cancellation clause that the overall issue of whether or not it is a requirements contract and whether it covers anything more than diehromate final seal are entirely open issues. The fact that the cancellation clause isn’t in there doesn’t impair those issues.
I don’t know exactly how to express it. I feel the Court will do a little better job than I.
THE COURT: The Court has finalized the instructions that the Court intends to give. The exceptions to those instructions can be made after the Court gives the instructions. With permission of counsel, I would prefer to send the jury out and have them begin deliberations and at that time you may make any objections to the instructions for the record.
Following the verdict in favor of Anodco, Reynolds argued in its motion for judgment notwithstanding the verdict (which was combined with its motion for new trial) that it was entitled to a directed verdict on the basis of the cancellation clause. The District Judge denied the motion saying, “Reynolds waived this argument by withdrawing this defense at trial and taking the affirmative step of requesting this Court not to instruct the jury on this issue.” Since Reynolds is raising solely a legal issue with respect to the cancellation clause the second portion of the District Judge’s reason for denying a directed verdict is inapplicable.
Reynolds’ motion for judgment N.O.V. was filed May 21, 10 days after the judgment was entered and 22 days after the verdict. Thus its position that it did not abandon its right to a directed verdict on the basis of the cancellation clause is not raised for the first time on appeal. Counsel did make known to the trial judge that Reynolds continued to rely on that defense.
The focus of the Court’s and of counsel’s attention when the abandonment is supposed to have occurred was on the jury instructions and the jury arguments. It was reasonable for Reynolds’ counsel to assume that the judge’s statement in which he concurred related to the case as presented to the jury, and that he was not relying on the cancellation clause in his submission to the jury. To hold that counsel by this colloquy abandoned the issue altogether is unfair. Anodco was not prejudiced in any way by any misunderstanding as to what was meant. The meaning of the cancellation clause was unambiguous and should have been ruled upon as a matter of law by the court.
Accordingly, I dissent.

. Unfortunately, that conference is not included in the record; whether because it was not recorded or not ordered transcribed, we do not know.