Court Opinion

ID: 9477310
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:19:49.901757+00
Date Added: 2024-06-11T17:45:48.455594
License: Public Domain

KANNE, Circuit Judge,
dissenting:
I agree with the majority that the error in giving the instruction regarding the “unreasonably disproportionate” proviso in Illinois’ Uniform Commercial Code § 2-306(1) requires a reversal and new trial, “unless it is clear either that American Bakeries acted in good faith or that it acted in bad faith....” The fundamental problem is that there was no evidence of either good or bad faith as those terms are normally defined.1 For different reasons neither Empire Gas nor American Bakeries produced evidence of American Bakeries’ honesty or dishonesty or fair or unfair dealing in regard to its reduction of its requirements to zero.
As in Massey-Ferguson, Inc. v. Holland, 105 Ill.App.3d 648, 61 Ill.Dec. 142, 146, 434 N.E.2d 295, 299 (1982), “... the material testimony in this case did not reveal any lies, deceit, overreaching or other examples of dishonesty in fact in the transaction ... nor was any evidence adduced regarding reasonable commercial standards of fair *1343dealing in the trade.” In Massey-Ferguson, the Illinois Appellate Court found that a plaintiffs failure to introduce specific evidence as to bad faith constituted a failure to carry its burden of proof on the issue of bad faith.
The majority in the case before us assumes that Empire Gas bears the burden of proof on the issue of American Bakeries’ bad faith. The majority then presumes that Empire meets this burden of showing bad faith by simply presenting evidence that “American Bakeries had not got rid of its fleet of trucks and did have the financial wherewithal to go through with the conversion.” I do not agree that from this scant evidence “no reasonable jury could have failed to find bad faith,” and thus the district court’s failure to instruct the jury properly on this issue was not harmless error. In reality, at trial, Empire Gas was never required to shoulder — let alone carry —any actual burden of proof on bad faith.2 The majority thus transforms the seller’s theoretical burden of proof on bad faith (unarticulated to the jury) into an actual presumption of the buyer’s bad faith (articulated post-trial).
Empire Gas, if actually put to the test, may or may not be able to produce evidence of bad faith. Likewise, we do not know whether American Bakeries would be able to produce evidence to support a good faith reduction to zero. Absent the majority’s presumption, at trial no one knew, at least based on the evidence, that it had become American Bakeries’ burden to go forward with proof of its good faith.
Clearly American Bakeries’ reduction of its requirements for conversion units from 3,000 to zero was “unreasonably disproportionate” on its face. However, the court (correctly I believe) holds today that what appears to be a buyers’ unreasonably disproportionate reduction of requirements is not enough to determine liability under § 2-306 — evidence of a buyer’s good or bad faith is also necessary.
It is not this standard, but its practical application to the trial of this case, which causes me to part company with my brethren.
If, as the majority apparently holds — the seller has the burden of proof on the issue of the buyer’s bad faith — I would reverse and remand for new trial because Empire Gas did not bear that burden and the trial record discloses no facts ordinarily found necessary by Illinois courts to prove bad faith.
If, on the other hand, the majority actually holds (again correctly I believe) — a buyer’s assertion of an unreasonably disproportionate reduction in his requirements creates a bad faith presumption which may be rebutted by the buyer’s proof of good faith — I would also reverse and remand for a new trial because this new rebuttable presumption of bad faith was not the Illinois rule under which the trial was conducted.

. Section 1-201(19) which applies to all sections of the code defines good faith as "honesty in fact in the conduct or transaction concerned.” Section 2-103, which applies to sales, defines good faith as "honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.”

. The district court actually rejected the instruction tendered by American Bakeries which articulated Empire’s burden of proof regarding bad faith. American Bakeries’ tendered Instruction No. 19 reads in pertinent part as follows:
The buyer must exercise good faith in determining its requirements. Good faith means honesty in fact in the conduct or transaction concerned.
Even if an estimate is stated in a requirements contract, the buyer need not order more goods than the buyer in good faith determines it requires. This is so even if such good faith requirements are substantially less than a previously stated estimate or even if the buyer has no requirements at all.
The seller has the burden of proving that the buyer has set its requirements in bad faith.