author: WANGELIN, Senior District Judge.

text:
    COMPASS INSURANCE COMPANY, Plaintiff, v. H.P. MOORE, and Moore Flying, Inc., Caruthersville, Municipal Airport, Caruthersville, Missouri 63830, Defendants.
    No. S84-0285C (D).
    United States District Court, E.D. Missouri, Southeastern Division.
    Aug. 26, 1985.

      Jeffrey P. Hine, Oliver, Oliver, Waltz & Cook, Cape Girardeau, Mo., Jennifer P. Ewers, Conklin & Adler, LTD, Chicago, Ill., for plaintiff.
    Leo W. Nelsen, Lucas & Murphy P.C., St. Louis, Mo., for defendants.
   MEMORANDUM AND ORDER

WANGELIN, Senior District Judge.

This matter is before the Court upon the separate motions of both plaintiff and defendant for summary judgment. Both motions have been opposed and all positions have been thoroughly briefed.

On June 2, 1977, Mr. Chester Zukowski, on behalf of Hollywood Flying Service, Inc., signed a promissory note that resulted in an indebtedness to the Miami National Bank in the amount of Eighty Thousand Twenty Five Dollars and Thirty Cents ($80,025.30). On October 10, 1980 the aforementioned note was assigned by Miami National Bank to plaintiff Compass Insurance Company. Mr. Zukowski subsequently defaulted on the note and plaintiff obtained a judgment against Hollywood Flying Services in the amount of One Hundred Eleven Thousand Eighty Eight Dollars and Nine Cents ($111,088.09) together with interest accruing at the rate of Twelve Percent (12%) per annum from October 29, 1980 until the judgment is paid. This judgment was entered by the Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, on February 26, 1981.

Plaintiff, according to affidavits, then searched the F.A.A. records and found the airplane which is the subject matter of this action to be registered to Hollywood Flying Services. On February 25, 1982 a judgment lien was entered on the Cessna Model A1865 aircraft, Serial No. 18502751, bearing F.A.A. Registration No. N1096F, which was registered by the F.A.A. as owned by Hollywood Flying Services. The Order declaring Judgment Lien was subsequently recorded on June 8, 1982.

Simultaniously with the above, the Cessna aircraft was sold by Hollywood Flying Services to Sam Vives, d/b/a Mid-South Aircraft Sales; said sale taking place on August 20, 1979. On November 12, 1979, the Cessna was sold by Sam Vives, d/b/a Mid-South Aircraft Sales, to Mid-South Aircraft Sales. On May 11, 1981, the Cessna was sold by Mid-South Aircraft Sales to defendant Moore Flying, Inc. None of these transfers were recorded with the F.A.A. until June 30, 1983.

The facts of this matter being uncontroverted, the question before this Court is whether plaintiff or defendant has superior interest in the aircraft.

In 1938, Congress enacted the Federal Aviation Act to alleviate confusion caused by multiple state filing requirements of aircraft interests. It enacted § 503(a)(1) which directs the Secretary of Transportation to establish and maintain a system for recording “any conveyance which affects the title to, or any interest in, any civil aircraft of the United States.” 49 U.S.C. § 1403(a)(1).

Section 503(c) of the Act provides:
No conveyance or instrument, the recording of which is provided for by 503(a)(1) shall be valid in respect of such aircraft ... against any person other than the person by whom the conveyance or other instrument is made or given, his heir or divisee, or any person having actual notice thereof, until such conveyance or other instrument is filed for recordation in the offices of the Secretary of Transportation. 49 U.S.C. § 1403(a)(1) and § 503(c).

The purpose of this Act as articulated by the Director of Air Commerce in Hearing before the House Committee on Interstate and Foreign Commerce is:

To create a central clearinghouse for recordation of titles so that a person wherever he may be, will know where he can find ready access to claims against, or liens, or other legal interests in an aircraft.

In the case of Philko Aviation v. Shacket, 462 U.S. 406, 103 S.Ct. 2476, 76 L.Ed.2d 678 (1983), the Supreme Court clarified the controversy surrounding recorded interest against unrecorded interests. Philko involved the sale of an airplane to two different,parties. The first party paid full value and took possession of the aircraft but failed to record. The second party purchased the same aircraft, and finding no competing interest in a title search, recorded their interest and became the owner of record. The Supreme Court, in reasoning that § 503 pre-empted Illinois statutes to the contrary, found in favor of the second purchaser, i.e. the owner of record. The Court found that “any other construction would defeat the expressed Congressional purpose behind § 503. Philko, supra.

The present case is no different. Plaintiff insurance company acquired its interest in the aircraft after it had been sold. However, the purchasers failed to record their documents of sale. Thus, when plaintiff searched the records, it found title in Hollywood Flying Services, Inc. Had defendant recorded its interest at the time of sale or even within a year of purchase, plaintiff would have had notice that Hollywood no longer had an interest.

The purpose of recording is to avoid the very problems raised in this action. Defendant H.P. Moore and Moore Flying, Inc. failed to record its ownership interest in the aircraft with the F.A.A. before plaintiff Compass obtained a judgment lien on the aircraft. Defendants’ June 1983 attempted recordation, belatedly filed, is ineffective with respect to plaintiff Compass Insurance Company.

Defendants have argued that plaintiff must have had knowledge of the sales. In support, defendants cite Florida law to the effect that the judgment creditor stands in the shoes of the judgment debtor and as such plaintiff had constructive knowledge of the sale. This, however, simply was not the intent of Congress.

The purpose of § 506 is obvious from reading the Senate Reports on § 506. The Senate Reports state:

When the instrument has been filed for recordation under the Law, all persons are deemed to have notice of its existence and its effect on title to the property covered thereby. Consequently, to determine whether there are any encumberances on the aircraft, it is only necessary to consult these central files.

Hence, plaintiff by affidavit asserts that a diligent search was conducted and, as defendants have admitted, plaintiff found nothing because defendants failed to timely file. Furthermore, as the Philko ease makes clear, any Florida law which purports to alleviate the necessity of a filing to protect its interest is pre-empted by the very language of the F.A.A. as well as the Florida U.C.C. Philko Aviation, Inc. v. Shacket, supra. See also, Fla.Stat.Ann. § 679.302 and notes accompanying.

Where all relevant facts have been established and a party is entitled to judgment as a matter of law, summary judgment is appropriate. Fed.R.Civ.P. 56. In the present case, plaintiff is entitled to prevail. Hence, plaintiff’s motion for summary judgment will be granted and defendants’ motion for summary judgment will be denied.

Accordingly,

IT IS HEREBY ORDERED that plaintiff’s motion for summary judgment as to defendants H.P. Moore and Moore Flying, Inc. be and is GRANTED; and

IT IS FURTHER ORDERED that defendants’ motion for summary judgment as to plaintiff Compass Insurance Company be and is DENIED.


source: Caselaw Access Project

author: HAWKINS, District Judge.

license: Public Domain

text:
    FRAN WELCH REAL ESTATE SALES, INC., Plaintiff, v. SEABROOK ISLAND COMPANY, Defendant.
    Civ. A. No. 82-2762-1.
    United States District Court, D. South Carolina, Charleston Division.
    Sept. 6, 1985.

      Harry A. Swagart, III, Columbia, S.C., for plaintiff.
    Gerald A. Connell, Washington, D.C., and Robert H. Hood, Charleston, S.C., for defendant.
   ORDER

HAWKINS, District Judge.

This civil antitrust action came on for hearing before the court on January 17, 1984, upon plaintiff’s and defendant’s cross-motions for summary judgment pursuant to Rule 56(c) and (e) of the Federal Rules of Civil Procedure. The plaintiff, Fran Welch Real Estate Sales, Inc. (hereinafter “Fran Welch”), is a real estate brokerage firm which does business on Kiawah, Seabrook and John’s Islands, South Carolina. It was organized and licensed as a South Carolina corporation in February, 1981. This company is wholly owned by Mrs. Fran Welch and her husband.

The defendant, Seabrook Island Company (hereinafter “SIC”), is a South Carolina limited partnership. Since the early 1970’s, SIC, or its predecessors-in-interest, has engaged in the development, promotion, and management of Seabrook Island as a private, residential resort community. As part of its business, SIC offers real estate sales and agency services to the public in connection with properties on Seabrook Island.

Seabrook Island is a 2100-acre tract of land situated along the South Carolina Coast about twenty-three miles south of Charleston, South Carolina. This island has become one of the finest resort communities in the United States. Dwellings on Seabrook Island are confined to private, single and multi-family residences. Sea-brook Island offers its residents and guests a variety of recreational services and facilities, including golf, tennis, swimming, boating, fishing, and horseback riding. The success of Seabrook Island is attributable in large part to its natural beauty and private, non-commercial character.

This action arises out of dispute between Fran Welch and SIC over the latter’s business practices in the real estate brokerage business on Seabrook Island. The plaintiff’s complaint, containing five counts, was filed on October 29, 1982, Count one, premised on Section 1 of the Sherman Act, 15 U.S.C. § 1, charges that SIC participated in a contract, combination, or conspiracy which has restrained competition in the market for real estate brokerage services. Inter alia, Fran Welch alleges that SIC participated in five specific business practices which are per se violations of Section 1:

(1) Restrictive deed covenants which prohibit all “For Sale” and “For Rent” signs on Seabrook Island;
(2) SIC’s policies which govern access onto Seabrook Island;
(3) SIC’s real estate broker referral program;
(4) A “listback” provision in one of SIC’s sales contracts; and,
(5) Exclusive dealing contracts between Seabrook Island property owners and SIC.

Count two, brought pursuant to Section 2 of the Sherman Act, 15 U.S.C. § 2, alleges that SIC has monopolized the market for real estate brokerage services on Seabrook Island.

Count three is a claim under South Carolina common law for intentional interference with Fran Welch’s contractual relations.

Count four alleges that the acts complained of in counts one through three constitute unfair and deceptive trade practices in violation of the South Carolina Unfair Trade Practices Act (hereinafter “UTPA”), S.C.CODE ANN. §§ 39-5-10 et seq. (Law. Co-op 1985).

Count five sets forth a claim for a permanent and/or preliminary injunction against SIC.

SIC filed its answer on November. 22, 1982. It denied all material allegations of the complaint and set forth other defenses.

Fran Welch filed its motion for partial summary judgment, or, in the alternative for a preliminary injunction on April 25, 1983. It argues that the five practices in Count one are per se violations of the Sherman Act and, therefore, violations of the U.T.P.A. Alternatively, it asserts that it is entitled to a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure.

On June 20, 1983, SIC cross-moved for summary judgment on all counts. Following extensive discovery, by way of depositions and interrogatories and the submission of voluminous affidavits and memoranda, the court scheduled and heard oral arguments on January 17, 1984. At that time, it denied Fran Welch’s motion for partial summary judgment or, in the alternative, for a preliminary injunction. In addition, the court granted, in part, SIC’s cross-motion for summary judgment. This order sets forth the reasons for the court’s ruling.

At the outset, this court is mindful of the Supreme Court’s admonition that “summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot.” Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). On the other hand, Rule 56(e), Federal Rules of Civil Procedure, requires a party resisting a properly supported motion for summary judgment to demonstrate the substance of the naked assertions contained in the complaint: “[A]n adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule must set forth specific facts showing that there iS a génuine issue for trial.” Fed.R.Civ.P. 56(e) (emphasis added). In a case following the Poller decision, First National Bank of Arizona v. Cities Service Co., 391 U.S. 258, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) (Marshall, J.), the court rejected the arguments that antitrust litigants are immune from summary proceedings or exempt from the requirements of Rule 56(e). Plaintiffs should not be allowed

to get to a jury on the basis of the allegations in their complaints, coupled with the hope that something can be developed at trial in the way of evidence to support those allegations____ While we recognize the importance of preserving litigants’ rights to a trial on their claims, we are not prepared to extend those rights to the point of requiring that anyone who files an antitrust complaint setting forth a valid cause of action be entitled to a full-dress trial notwithstanding the absence of any significant probative evidence tending to support the complaint.

391 U.S. at 289-90, 88 S.Ct. at 1592-93.

Indeed, the courts of the Fourth Circuit have not hesitated to grant summary judgment in antitrust cases where the defendant specifically refutes the allegations of a complaint and the plaintiff fails to produce significant probative evidence tending to show the existence of the alleged violations. See e.g., Hester v. Martindale-Hubbell, Inc., 659 F.2d 433 (4th Cir.1981), cert. denied, 455 U.S. 981, 102 S.Ct. 1489, 71 L.Ed.2d 691 (1982); Principe v. McDonald’s Corp., 631 F.2d 303 (4th Cir. 1980); Central Chemical Corp. v. Agrico Chemical Co. 531 F.Supp. 533 (D.Md.1982); Human Resources Institute of Norfolk, Inc. v. Blue Cross of Va., 484 F.Supp. 520 (E.D.Va.1980).

In moving for summary judgment, the defendant, in addition to citation to pertinent legal precedent, has set forth by way of detailed affidavits and exhibits uncontroverted facts which establish its right to judgment as a matter of law on part of the plaintiff’s complaint. Fran Welch, in order to defeat this motion, must come forward with evidence which raises a genuine issue of material fact. It has failed to do this.

SECTION 1 CLAIMS

Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. And . the freedom guaranteed each and every business, no matter how small, is the freedom to compete — to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster. Implicit in such freedom is the notion that it cannot be foreclosed with respect to one sector of the economy because certain private citizens or groups believe that such foreclosure might promote greater competition in a more important sector of the economy.

United States v. Topco Associates, Inc., 405 U.S. 596, 610, 92 S.Ct. 1126, 1135, 31 L.Ed.2d 515 (1972) (Marshall, J.).

Section 1 of the Sherman Act provides in relevant part:

Every contract, combination in the form of trust or otherwise, or conspiracy, in the restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal____

15 U.S.C. § 1.

Read literally, Section 1 prohibits every agreement “in the restraint of trade.” The United States Supreme Court, however, in United States v. Joint Traffic Ass’n., 171 U.S. 505, 19 S.Ct. 25, 43 L.Ed. 259 (1898), recognized that Congress did not intend to prohibit “every ” agreement which restrains trade. The reason for rejecting such a literal construction was articulated by Mr. Justice Brandies in Board of Trade of City of Chicago v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683 (1918): “Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence.” 246 U.S. at 238, 38 S.Ct. at 243.

In order to properly administer the prohibition contained in Section 1, the courts developed two doctrines: (1) the rule of reason, and (2) the per se rule. Since Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911), most practices are analyzed under the so-called rule of reason. “As its name suggests, the rule of reason requires the factfinder to decide whether under all the circumstances of the case the restrictive practice imposes an unreasonable restraint on competition.” Arizona v. Maricopa County Medical Society, 457 U.S. 332, 343, 102 S.Ct. 2466, 2472, 73 L.Ed.2d 48 (1982) (Stevens, J.) (emphasis added).

The classic formulation of the rule of reason is found in Board of Trade of City of Chicago v. United States:

The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine that question the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts. This is not because a good intention will save an otherwise objectionable regulation or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences.

246 U.S. at 238, 38 S.Ct. at 243.

While a court must consider all the facts, the proper focus is “directly on the challenged restraint’s impact on competitive conditions.” National Society of Professional Engineers v. United States, 435 U.S. 679, 688, 98 S.Ct. 1355, 1363, 55 L.Ed.2d 637 (1978) (Stevens, J.). Simply stated, a court must determine a practice’s anticompetitive and procompetitive purposes and effects from all the facts and circumstances. If the anticompetitive features outweigh the procompetitive features, then the practice is an unreasonable restraint of trade.

This inquiry, however, into the reasonableness of a practice has high costs for the litigants and the judicial system:

Litigation of the effect or purpose of a practice often is extensive and complex. Judges often lack the expert understanding of industrial market structures and behavior to determine with any confidence a practice’s effect on competition. And the result of the process in any given case may provide little certainty or guidance about the legality of a practice in another context.

Arizona v. Maricopa County Medical Society, 457 U.S. 332, 343, 102 S.Ct. 2466, 2472, 73 L.Ed.2d 48 (1982) (citations omitted).

To reduce this cost, courts employ the use of per se rules:

[Tjhere are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints which are proscribed by the Sherman Act more certain to the benefit of everyone concerned, but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable — an inquiry so often wholly fruitless when undertaken.

Northern Pacific R. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958) (Black, J.).

Per se rules require a court to make generalizations about the social utility of a given business practice.

The probability that anticompetitive consequences will result from a practice and the severity of those consequences must be balanced against its procompetitive consequences. Cases that do not fit within the generalization may arise, but a per se rule reflects the judgment that such cases are not sufficiently common or important to justify the time and expense necessary to identify them.

Continental T.V., Inc. v. G.T.E. Sylvania, Inc., 433 U.S. 36, 50, n. 16, 97 S.Ct. 2549, 2557, n. 16, 53 L.Ed.2d 568 (1977). While a resort to per se rules is efficacious and beneficial to litigants, judges and the public, “[i]t is only after considerable experience with certain business relationships that courts classify them as per se violations of the Sherman Act.” United States v. Topco Associates, Inc., 405 U.S. 596, 607-8, 92 S.Ct. 1126, 1133, 31 L.Ed.2d 515 (1972). Once courts gain the experience, the presumption is conclusive; there is no justification that will save the restraint. Business certainty and litigation efficiency are favored even in cases where a trial might prove the restraint reasonable. “Because the presumption is a conclusive one, a new per se rule is not justified until the judiciary obtains considerable rule of reason experience with [the] particular type of restraint challenged.” Arizona v. Maricopa County Medical Society, 457 U.S. 332, 349, 102 S.Ct. 2466, 2475, n. 19, 73 L.Ed.2d 48 (1982) (emphasis added).

Therefore, the clear mandate is that a practice is not subject to per se classification unless it is predicated by considerable rule of reason experience. This is not to say that per se rules must be created for each industry. Rather, the focus is on the challenged practice, whatever the business setting.

Covenants Against the Use of Signs.

Property on Seabrook Island is and has been sold subject to a set of protective covenants agreed to by SIC and each property owner. These covenants contain a number of provisions governing the appearance of property on the island. The covenants prohibit all commercial signs, including “For Rent” and “For Sale” signs. The covenants also prohibit, inter alia, walls and fences, antennas and flag poles, outbuildings (such as trailers, campers, shacks, and tents), and visible garbage or rubbish receptacles.

Fran Welch has moved for summary judgment regarding the covenants insofar as they prohibit its use of “For Sale” and “For Rent” signs on the island, alleging that the covenants are, alternatively, per se violations of Section 1 of the Sherman Act or violations under the rule of reason. SIC has cross-moved for summary judgment.

The covenant’s restrictions on real estate signs are one aspect of an integrated set of restrictions, all of which are aimed at preserving a consistent and pleasing physical appearance of property on the island. SIC has adduced evidence that the sole purpose of the covenants was aesthetic, designed to preserve the natural beauty and noncommercial character of the island, and that the covenants were not intended to harm the business of any real estate agents or brokers. Despite considerable discovery, the plaintiff has come forward with no contrary evidence. The anti-sign covenants apply without discrimination to all real estate agents, and prevent SIC as well as Fran Welch from utilizing signs on the island.

The restrictions against signs benefit the island’s residents, who desire and support them. The covenants were endorsed on January 14, 1983, by a unanimous resolution of the Board of Directors of the Sea-brook Island Property Owners Association, an independent governing body controlled by the island’s property owners and not by SIC. Property owners have purchased their homes on the island in reliance on the expectation that the protective covenants would keep not only their own property, but their neighbors’ as well, free of commercial signs.

The uncontradicted evidence, including admissions by Fran Welch, herself, establishes that real estate agents have at their disposal a variety of effective means other than lawn signs by which to advertise their services, solicit business, and sell properties on Seabrook Island. These include, among others, direct mailings, newspaper and magazine advertisements, radio and television advertisements, billboard advertisements, listings in telephone and real estate directories, open houses, telephone solicitations, participation in multiple listing services, conveniently located offices, personal or social contacts, and word-of-mouth.

Other resort developments in the Charleston area also enforce restrictions against commercial signs, and the Sea-brook Island covenants assist that development to maintain its competitive position against such developments as Kiawah Island and others.

In summary, the Seabrook Island covenants against commercial signs serve a legitimate purpose, and the plaintiff has come forward with no evidence that the covenants have anticompetitive purposes. Nor is there evidence of anticompetitive effect from the nondiscriminatory denial of one advertising medium to all comers, since a variety of other promotional means are available to real estate brokers competing on Seabrook Island. Advertising restrictions that are anticompetitive neither in purpose nor in effect have been held not to violate the Sherman Act. Gough v. Rossmoor Corp., 585 F.2d 381 (9th Cir.1978), cert. denied, 440 U.S. 936, 99 S.Ct. 1280, 59 L.Ed.2d 494 (1979); ALW, Inc. v. United Airlines, Inc., 510 F.2d 52 (9th Cir.1975).

Fran Welch relies principally on Cantor v. Multiple Listing Service of Dutchess County, Inc., 568 F.Supp. 424 (S.D.N.Y. 1983), but that case is clearly inapposite. In Cantor, an association of competing real estate agent brokers formed a multiple listing service whose by-laws required that members utilize the service’s standard sign and no others. 568 F.Supp. at 427-28. In contrast, the covenants at issue here prohibit all signs, including the defendant’s as well as the plaintiff’s. In Cantor, the bylaws’ prohibition on some signs while permitting others allowed the court to conclude that the restriction’s purpose was not aesthetic; the permitted signs were as unsightly as the prohibited signs. Here, the blanket prohibition on all signs is consistent with the covenants’ aesthetic purpose. Finally, the Cantor restrictions were imposed by a group of horizontal competitors, without the participation of the property owners. Horizontal restraints are particularly suspect under Section 1 of the Sherman Act. United States v. Topco Associates, 405 U.S. 596, 608, 92 S.Ct. 1126, 1133, 31 L.Ed.2d 515 (1972). Here, by contrast, the protective covenants are not alleged to be the product of an agreement between SIC and any other competitor, and they are joined in and desired by the property owners themselves.

In summary, there is no genuine dispute as to any issue of material fact regarding the protective covenants, and the plaintiff’s motion for summary judgment regarding the covenants should, therefore, be denied, and the defendant’s motion should be granted.

Access Policies.

The plaintiff alleges that SIC has used its asserted control over Seabrook Island’s security access procedures to inhibit competition from other real estate agents, and has moved for summary judgment. SIC has cross-moved for summary judgment. The plaintiff’s claim is that SIC has used the island’s access control system at its main gate to prevent or inhibit the ability of competing agents to gain admittance to the island.

The privacy and security of Seabrook Island is highly regarded and valued by the property owners, enhancing both the enjoyment and resale value of their properties, and is a positive selling point to many potential buyers considering the purchase of Seabrook Island properties. The plaintiff itself has promoted Seabrook Island properties on the basis of the island’s “privacy” and the fact that access is assertedly “severely restricted.”

The plaintiff has presented no evidence that the island’s access policies and procedures unreasonably impede the ability of brokers to enter the island and conduct business. The policies are routinely and willingly complied with by most outside brokers, and there is no evidence that they are applied in a discriminatory manner or with an intent to cause business harm to particular brokers, including the plaintiff.

There is no evidence in this record of a pattern or practice of misuse of the island’s security procedures for anticompetitive purposes. The plaintiff has identified no instances in which its agents were denied access to the island, and only one alleged instance of “rude” treatment of one of its rental clients. The only other evidence of misuse of access procedures is the statement of another Charleston agent that its personnel experienced difficulty in obtaining access on two occasions, only one of which resulted in denial of access. Even if true, these allegations, which encompass a period of several years, are insufficient to establish systematic or deliberate misuse of the island’s security system.

Fran Welch also complains that it and other real estate brokers are limited to no more than three agents on the island at one time, and that SIC agents are issued passes while other agents must obtain clearance at the security gate. The plaintiff’s president, however, was unable to identify any instance in which the three-agent rule deprived the plaintiff’s employees of access to the island. The plaintiff’s president maintains no records, and could not recall at her deposition, as to how many times she herself has gained access to the island. No inference of discrimination or anticompetitive motive can be drawn from the issuance of permanent passes to SIC agents but not to outside agents. SIC presumably knows the identity and trustworthiness of its own employees, and they can be permitted to come and go without compromising the island’s security procedures. SIC cannot vouch for the credentials of employees of other firms, and it is reasonable to require that such persons present identification and evidence of authorization before being admitted through the island’s security gate.

The island’s system of controlled access was adopted and established by the Board of Directors of the Property Owners Association solely for the purpose of maintaining privacy and security on the island by reasonably regulating the manner and conditions under which entry is permitted and not for the purpose of harming or causing competitive injury to the plaintiff or any other real estate broker. Access policies and procedures, which are the responsibility of the Property Owners Association and not the defendant, have been consistently supported by the property owners.

The plaintiff has cited no cases treating analogous claims as per se violations; the access policy allegation must therefore be judged under the rule of reason. Because the plaintiff has come forward with no evidence that the Seabrook Island access policies are anticompetitive in either purpose or effect, and because the uncontradicted evidence is to the contrary, the plaintiff’s motion for summary judgment should be denied, and the defendant’s motion should be granted.

Broker Referral Policy.

SIC has maintained different policies, at different times, with respect to its relationship with competing real estate brokers. At the present time, SIC is a member of the Charleston Multiple Listing Service (“MLS”), and accepts referrals from other brokers, including the plaintiff, who are also members of the MLS.

Prior to joining the MLS, SIC maintained a broker referral policy whereby other real estate brokers were invited (after written application and approval by SIC) to refer potential buyers for SIC listings. If a sale was made, SIC would pay the referring broker a referral fee. SIC at one time made its broker referral program available only to brokers who did not accept listings of their own on Seabrook Island. SIC deleted that requirement in August 1982, pri- or to the filing of this lawsuit.

Fran Welch alleges that the now-discontinued condition in SIC’s broker referral program constitutes a per se violation of Section 1 of the Sherman Act, and has moved for summary judgment.

The plaintiff’s claim is based on the contention that the SIC broker referral policy is analogous to an illegal group boycott. Such a boycott occurs when “businessmen concert their actions in order to deprive others of access to merchandise which the latter wish to sell to the public____” United States v. General Motors Corp., 384 U.S. 127, 146, 86 S.Ct. 1321, 1331, 16 L.Ed.2d 415 (1966). A boycott “depriv[es] petitioners of a valuable business service which they needed in order to compete effectively____” Silver v. New York Stock Exchange, 373 U.S. 341, 347, 83 S.Ct. 1246, 1252, 10 L.Ed.2d 389 (1963).

Two hallmarks of an illegal group boycott therefore are (1) denial to the plaintiff of access to a competitively useful commodity (2) which is caused by a collective refusal to deal with the plaintiff. There is evidence of neither element in this record.

There is no evidence that Fran Welch has been denied access to real estate on Sea-brook Island for sale or rent to its clients. The SIC policy of accepting referrals only from brokers who did not themselves list property on the island, if anything, facilitated the plaintiff’s access to its own listings on the island by reducing the number of brokers competing with the plaintiff for those listings.

Fran Welch argues that the broker referral policy shrinks the inventory of listings by other brokers on Seabrook Island available to Fran Welch for co-brokerage. As of July 20, 1982, only 59 brokers in the Charleston area and the rest of South Carolina had signed up for the referral program. One of the plaintiff’s witnesses estimates that there are 300-600 real estate agents in the Charleston area alone. The plaintiff has presented no evidence that it has actually experienced difficulty in obtaining access to properties on a co-brokerage basis. In the absence of evidence that SIC’s policies denied the plaintiff access to the product it wished to sell, it cannot be concluded that the policy injured either competition or the plaintiff. Gibbons, Inc. v. Crawford Fitting Co., 704 F.2d 787, 792 (5th Cir.1983).

The second element of a group boycott— refusal to deal with the plaintiff — is also absent from this record. The participating brokers did not refuse to deal with Fran Welch; they refused to accept listings for Seabrook Island property. There is thus no evidence that the policy was directed at, or injured, the plaintiff.

SIC has presented evidence that its limitation on listing brokers was pursuant to legitimate and reasonable business purposes. SIC believed that brokers with their own listings on Seabrook Island would make every effort to sell those listings to any prospective buyers, thus realizing a full commission. SIC believed that such brokers would refer prospective buyers to SIC only as a last resort, because, the referring broker would then receive only a share of the sales commission rather than the entire commission. SIC believed that such unenthusiastic referrals would not substantially augment its own sales efforts. The plaintiff has come forward with no evidence of an anticompetitive purpose for the broker referral policy. Anticompetitive purpose is another identifying mark of a per se illegal group boycott, and there is no evidence of such a purpose here. McQuade Tours, Inc. v. Consolidated Air Tour Manual Committee, 467 F.2d 178, 187 (5th Cir.1972), cert. denied, 409 U.S. 1109, 93 S.Ct. 912, 34 L.Ed.2d 690 (1973).

In summary, there is no evidence that SIC’s now-discontinued condition on its broker referral program denied the plaintiff access to Seabrook Island properties, that it constituted a collective refusal to deal with the plaintiff, or that it had an anticompetitive purpose. The plaintiff’s motion for summary judgment on this issue should be denied, and the defendant’s motion should be granted.

Listback Tying Arrangements.

Fran Welch alleges that SIC has violated Section 1 of the Sherman Act by conditioning the sale of land on Seabrook Island on the purchasing builders’ agreement to utilize the real estate brokerage services of SIC. Although this claim has not been pled in the complaint, both parties have moved for summary judgment. The plaintiff asserts that these alleged “list-back” agreements constitute tying arrangements that are illegal per se. An illegal tying arrangement requires a showing that the defendant possesses “ ‘appreciable economic power’ in the market for the tying product.” United States Steel Corp. v. Fortner Enterprises, Inc., 429 U.S. 610, 611-12, 97 S.Ct. 861, 863-64, 51 L.Ed.2d 80 (1977). There is at present insufficient evidence in this record to permit a determination of the relevant market in which the tying arrangement is alleged to have occurred, or of SIC’s economic power, if any, in that market. Both motions for summary judgment should therefore be denied, without prejudice to either party’s renewal of its motion for summary judgment after more discovery has been completed.

Exclusive Dealing Contracts.

The complaint alleges that SIC has violated Section 1 of the Sherman Act by inducing certain Seabrook Island property owners to enter into agreements giving SIC the exclusive right to list and sell their property on the island.

Exclusive listing agreements are a form of exclusive dealing contracts, and it is settled law that exclusive dealing contracts are not illegal per se. See, e.g., Satellite Television & Associated Resources, Inc. v. Continental Cablevision of Virginia, Inc., 1982-2 Trade Cas. (CCH) ¶ 64, 733 (E.D.Va.1982), aff'd, 714 F.2d 351 (4th Cir.1983). Rather, such contracts are judged by the rule of reason, which requires an assessment of whether a particular practice, on balance, promotes or suppresses competition. Board of Trade of City of Chicago v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed. 683 (1918); National Society of Professional Engineers v. United States, 435 U.S. 679, 691, 98 S.Ct. 1355, 1365, 55 L.Ed.2d 637 (1978). In applying the rule of reason to exclusive dealing agreements, courts have focused on the extent to which “performance of the contract will foreclose competition in a substantial share of the relevant market.” Satellite Television, 1982-2 Trade Cas. at ¶ 71,566; Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 327, 81 S.Ct. 623, 628, 5 L.Ed.2d 580 (1961).

Assessment of the degree of market foreclosure caused by an exclusive dealing contract requires delineation of the relevant product and geographic markets in which such foreclosure has allegedly occurred. The plaintiff has to date come forward with no evidence that Seabrook Island is a relevant geographic market, other than the conclusory assertions of its own president and of one other Charleston area real estate agent. The court will reserve judgment on this issue pending further discovery in connection with the plaintiff’s claims under Section 2 of the Sherman Act. Even assuming arguendo that Seabrook Island is a relevant geographic market, however, the undisputed material facts establish that SIC’s exclusive listing agreements do not substantially foreclose competition.

SIC’s exclusive listing agreements are of short duration; they expire after six months. Competing real estate agents can and do compete with SIC for exclusive listings initially and upon the expiration of the agreement, if no buyer has been found. It is highly unlikely that agreements of such a short term unreasonably restrain competition. See, e.g., FTC v. Motion Picture Advertising Service Co., 344 U.S. 392, 73 S.Ct. 361, 97 L.Ed. 426 (1953); Fleer Corp. v. Topps Chewing Gum, Inc., 658 F.2d 139 (3d Cir.1981), cert. denied, 455 U.S. 1019, 102 S.Ct. 1715, 72 L.Ed.2d 137 (1982); Lawlor v. National Screen Service Corp., 270 F.2d 146 (3d Cir.1959), cert. denied, 362 U.S. 922, 80 S.Ct. 676, 4 L.Ed.2d 742 (1960). Many new listing opportunities arise as new properties come on the market and as existing exclusive listing agreements expire. Given the steady supply of new listing opportunities, SIC’s exclusive listing agreements cannot reasonably be viewed as a substantial restraint on competition. American Football League v. National Football League, 205 F.Supp. 60 (D.Md. 1962), aff'd, 323 F.2d 124 (4th Cir.1963).

Ease of entry in an industry also negates any inference of competitive injury from exclusive dealing agreements. Columbia Broadcasting System, Inc. v. FTC, 414 F.2d 974 (7th Cir.1969), cert. denied, 397 U.S. 907, 90 S.Ct. 903, 25 L.Ed.2d 88 (1970). The real estate industry in the Charleston area is characterized by negligible entry barriers, numerous competitors, and frequent new entry. New real estate agents are constantly licensed in South Carolina and enter the marketplace. Such agents are able to obtain listings through relatively inexpensive means. A number of Charleston area agents, including Fran Welch, have competed with SIC on Sea-brook Island.

There are valid and procompetitive business reasons for exclusive listing agreements. Such agreements, as utilized on Seabrook Island, benefit both the real estate agent and the property seller, protecting the agent from the risk of a wasted investment of time and money and providing the property seller with assurance that the agent will utilize his or her best efforts to market the property.

For these reasons, the use of exclusive listing contracts is a common practice in the real estate industry and is recognized and accepted by real estate commissions throughout the country. The National Association of Realtors recommends the use of exclusive listing agreements, and recognizes that such agreements promote competition and the interests of sellers. Fran Welch itself solicits and utilizes exclusive listing agreements in selling property on Seabrook Island.

In summary, the plaintiff has failed to come forward with the facts that demonstrate the existence of disputed issues of material fact as to SIC’s use of exclusive listing agreements, and summary judgment for the defendant on this claim is warranted.

Miscellaneous Conduct.

The plaintiff alleges that SIC has engaged in various miscellaneous anticompetitive acts in connection with its asserted plan to restrain trade and eliminate competition, such as misinforming property owners, threatening sham trademark litigation, disparaging plaintiff’s business reputation, requiring brokers to dislcose confidential information, rudely treating plaintiff’s rental clients, manipulating its own amenities policies in a discriminatory manner, and changing its access policies with proper notification to outside brokers.

The plaintiff has produced virtually no evidence to support any of these contentions, either in isolation or in connection with any plan to restrain trade and eliminate competition, which plaintiff also has not shown. Nor has Fran Welch cited any cases to support its position that these activities rise to the level of per se violations. Judged, as they must be, under a rule of reason analysis, these acts, insofar as they may be true, have not been shown to be anticompetitive either in purpose or in effect. The plaintiff’s motion for summary judgment with respect to these acts should be denied, and the defendant’s motion should be granted.

SECTION 2 CLAIMS

Count 2 of the complaint alleges that SIC has violated Section 2 of the Sherman Act by monopolizing and attempting to monopolize a market consisting of Sea-brook Island. The defendant has moved for summary judgment as to Count 2. As noted above, there is insufficient evidence at present to permit a determination as to whether Seabrook Island does or does not constitute a relevant market, and the defendant’s motion, therefore, should be denied, without prejudice to its renewal of that motion after the close of discovery.

STATE LAW CLAIMS

Count 3 of the complaint alleges that SIC has intentionally interfered with the contractual relations of Fran Welch, and Count 4 of the complaint alleges that SIC has violated the South Carolina UTPA, S.C. CODE ANN. § 39-5-10 et seq. The plaintiff has moved for summary judgment on both Counts 3 and 4. Both of these claims seek to invoke this court’s pendent jurisdiction. As the court will retain jurisdiction over some of the plaintiff’s federal antitrust claims, the cross-motions for summary judgment regarding the pendent state claims should be denied at this time until the remaining federal claims are finally resolved.

INJUNCTIVE RELIEF

Fran Welch has moved for preliminary injunctive relief as to those claims for which it also seeks summary judgment. As summary judgment will be granted to the defendant for all of those claims with the exception of the list-back tying arrangement claim, the motion for a preliminary injunction as to those claims should be denied. The plaintiff’s motion for a preliminary injunction with regard to the tying arrangement claim should also be denied, as the plaintiff has failed to demonstrate either a probability of success on the merits or irreparable injury to itself. Blackwelder Furniture Co. of Statesville, Inc. v. Seilig Manufacturing Co., Inc., 550 F.2d 189 (4th Cir.1977); North Carolina State Ports Authority v. Dart Containerline Co. Ltd., 592 F.2d 749 (4th Cir.1979).

CONCLUSION

Based upon the above, it is, therefore,

ORDERED, that plaintiff’s motion for partial summary judgment, or, in the alternative, for a preliminary injunction be, and the same is hereby, denied. It is

ORDERED FURTHER, that defendant’s cross-motion for summary judgment be, and the same is hereby, granted as to Count 1 of the complaint, alleging violations of Section 1 of the Sherman Act, 15 U.S.C. § 1. It is

ORDERED FURTHER, that defendant’s cross-motion for summary judgment as to the plaintiff’s claim of tying brokerage services to the sale of land, and as to Count 2 of the complaint alleging violations of Section 2 of the Sherman Act, 15 U.S.C. § 2, be, and the same is hereby, denied, with leave for either party to renew its motion for summary judgment as to such claims upon completion of discovery. It is

ORDERED FURTHER, that defendant’s cross-motion for summary judgment as to Count 3 of the complaint, alleging intentional interference with contractual relations, and as to Count 4 of the complaint, alleging violations of the South Carolina Unfair Trade Practices Act, S.C.CODE ANN. § 39-5-10 et seq., be, and the same is hereby, denied at this time. Counts 3 and 4 of the complaint allege violations of state law and seek to invoke this court’s pendent jurisdiction. The court has at this time retained jurisdiction over certain of the plaintiff’s claims of violations of the Sherman Act and will, therefore, retain jurisdiction over the pendent state claims until such time as a final determination of these remaining federal claims is rendered.

AND IT IS SO ORDERED.

      . Plaintiff also argues that the deed covenants violate the rule of reason and, therefore, it is entitled to summary judgment.

      . Fran Welch’s complaint does not contain an allegation relating to this listback provision. Plaintiff formally moved to amend its pleading at the January 17th hearing to include this allegation.

      . The complaint also alleges that participation in SIC’s broker referral policy was also conditioned upon agreement by the participating brokers not to sell the listings of other brokers on Seabrook Island. No such requirement appears in any statement of the policy, and the plaintiff has presented no evidence that such a requirement actually existed. The defendant’s motion for summary judgment, therefore, should be granted with regard to this claim as well.


author: SAND, District Judge.

text:
    TRANSOIL (JERSEY) LTD., Plaintiff, v. ANSCHUTZ PETROLEUM MARKETING CORP., Defendant.
    No. 83 Civ. 7667 LBS.
    United States District Court, S.D. New York.
    Sept. 17, 1985.
    White & Case (Margaret Murphy, Alice Jump, New York City, of counsel), for plaintiff.
    Milgrim Thomajan Jacobs & Lee (Leo Kailas, New York City, of counsel), for defendant.
   SAND, District Judge.

This breach of contract action has been brought by one trader in the oil spot market against another such trader (the defendant Anschutz ceased its oil trading operation in January 1985) and has been tried to the.court and the following constitutes our findings of fact and conclusions of law pursuant to FRCP 52(a).

FACTS

(a) The parties.

Plaintiff Transoil (Jersey) Ltd., (hereafter Transoil), is a corporation formed under the laws of the Jersey Channel Islands with offices in Madrid, Miami and elsewhere. Defendant Anschutz Petroleum Marketing Corporation, (hereafter Anschutz), a Delaware corporation, at all times relevant to this dispute had its principal office in New York and a branch office in London.

(b) The oil.

The transaction in dispute involved an aborted sale of No. 6 fuel oil by Transoil to Anschutz. On October 9, 1981, Transoil’s marketing director in charge of oil trading, Carlos Gamboa, purchased approximately 50,000 to 60,000 metric tons of No. 6 fuel oil from another oil trading company, Yitol Trading SA, Inc. The No. 6 fuel oil was to be delivered to Transoil from Pajarito, Mexico, on board the vessel Polysunrise. Loading of the No. 6 fuel oil began in Pajarito on October 18, 1981 and was completed on October 3. Gamboa during this period of time tried unsuccessfully to resell the oil in its existent condition and had advised Vitol that upon completion of loading the vessel should be instructed to proceed to Free-port, Bahamas, to await further sailing orders.

No. 6 fuel oil of Mexican origin typically is more viscous than other fuel oils. In order to lower the viscosity of the cargo and thereby improve its marketability Gamboa decided to blend the fuel oil with number two fuel oil (also known as gas oil) in Freeport.

The resulting product it was anticipated would have met the requirements for European bunker fuel C.

On October 22, 1981, having received preliminary specifications of the Polysunrise cargo, and not having found a purchaser for that cargo in its existing state, Gamboa by telex instructed the Polysunrise to proceed to Freeport to top off the No. 6 fuel oil with approximately five percent gas oil. In his telex instructions Gamboa advised (Exhibit 4):

“Such gas oil to be evenly spread throughout loaded cargo tanks with the assistance of independent inspector Say-bolt. Ideally this blending to be made in an empty tank where simultaneously fuel oil on board will be blended proportionately 95/5 with gas oil being loaded from shore then recirculated to cargo tanks.”

A responding telex from Vitol stated:

“Owners will request the master to use his best efforts to have such five percent gas oil evenly spread throughout loaded cargo tanks. However, neither owner nor Vitol cannot (sic) take responsibility for proper blending of the cargo by such spreading as this is not provided for in the C/P (charterparty) nor in our sales/purchase contract.” (Exhibit T.)

Thus, what was contemplated was an “on board” blend. When two fuels of different viscosity are to be blended two procedures are possible. One procedure, more expensive and time consuming, is to discharge the cargo on board to shore storage tanks, blend the two oils in shore storage tanks by use of mixers in such tanks, then reload the blended fuel aboard the same vessel. Although this entails time and effort, and consequently expense, it is a procedure which has certain advantages in measuring the blended product or assuring homogeneity of the blended oil and enabling issuance of a single set of documents attesting to the quantity and quality of the reloaded product. When an on shore blend is done, no distinction is made in the documentation of the resulting product between a shore blend and unblended cargo according to the witness Vernon (TR 346). Adequate and marketable documentation is of particular importance to spot oil traders since ownership of the cargo may change hands several times on the strength of the documentation and without inspection while a vessel loaded with a cargo is in transit.

The second procedure: An on board blend obviates the need to discharge the already loaded cargo. The master of the vessel is instructed to spread the loaded cargo evenly throughout the ship tanks. The quality of the fuel oil on board is analyzed and the amount of gas oil needed to bring the fuel oil to the desired viscosity is calculated by means of a chart.

Next a “hand blend” would be performed in a laboratory, i.e., a sample of the fuel oil and the estimated percentage of gas oil would be blended to confirm that the contemplated mixture would result in the desired viscosity. Following the hand blend, proportionate amounts of gas oil would then be loaded on to the ship on a tank by tank basis. The gas oil would be loaded into the bottom of each tank and would rise through the heavier fuel in a natural blending process which would take approximately 22 to 24 hours to complete. To further assure mixing and homogeneity, the cargo would be circulated throughout the tanks of the ship. Transoil would generally do this for its on board blend for 48 hours after sailing and before discharge. These steps, plus the movement of a vessel while in transit, are the procedures intended to utilize the vessel itself as the blending mechanism.

The parties are not in agreement as to how prevalent the practice of “on board” blending is in the industry. One Transoil executive testified that the procedure was used in 30 to 35 percent of Transoil’s business. (Bent TR 33 & 40) While Carlos Gamboa estimated the percentage as 10 percent. (Gamboa TR 100) However, the broker who conducted the negotiations leading up to the sale in question, William Vernon, whose understanding of the process is of prime importance, since he functioned as the sole intermediary between the parties during the contract negotiations, testified that he had never been involved in an on board blend transaction. (Vernon 856, 357)

The two Anschutz employees, Egan and Anderson, also testified that despite years of experience in the industry they had never been involved in such a transaction (Anderson 403, Egan 492).

One ex-Saybolt inspector, Dowse, testified that his office handled approximately 600 cargoes per year of which no more than three or four were blended and of these about two per year involved an on board blend (TR 520).

Robert Lewis, a Saybolt inspector at Freeport for six years, testified that he could recall only four or five occasions when an on board blend had been done. Regardless of the precise percentages, suffice it to say that an on board blend, though known to the industry, was the exceptional procedure not normally contemplated in an oil trade.

(c) The Negotiations

On Friday October 23, 1981, the day the Polysunrise left Mexico for Freeport, an oil broker, William Vernon, who does business as Vernon Petroleum, Inc. (“VPI”) and has been in the oil business for almost 30 years telephoned Gamboa to see if Transoil had any oil to sell. Vernon testified that this conversation was the first occasion on which he learned of this oil, although it was Carlos Gamboa’s recollection that he had offered the cargo previously to Vernon either as is or as a blended fuel oil and that he had told Vernon that the blend would be done on board. (Vernon TR 119) Gamboa’s recollection as to this appears faulty. His contemporaneous notes have not been retained and I do not understand plaintiff to be relying on any alleged discussions between Vernon and Gamboa prior to October 23. (Plaintiff’s proposed findings of fact paragraph 17 et seq.)

Both parties are agreed, however, that on Friday, October 23, Gamboa and Vernon spoke, after which conversation Vernon “took the cargo to the marketplace” by telephone inquiries to potential buyers. One telephone call Vernon made was to Edmund Egan who had joined Anschutz a few months earlier as an oil broker and who Vernon knew from the time when they both had been employed by New England Petroleum Company. Vernon told Egan that there was a cargo available in the Caribbean of high sulphur No. 6 fuel oil. After conferring with Anschutz’ London office, Egan called Vernon back and advised that Anschutz was interested in acquiring a cargo meeting typical Bunker C quality specifications and negotiations commenced between Transoil and Anschutz conducted entirely through Vernon. Vernon described the specifications of the cargo including maximum viscosity of 3,500 degrees Redwood (a standard industry measurement of viscosity; the only specification at issue in this litigation).

Egan, Vernon and Gamboa took contemporaneous notes of their several conversations, but Vernon and Gamboa discarded their notes. Subsequent to the controversy having developed, Vernon prepared a note to the file, Exhibit AX, on October 31, 1981. This note explicitly states that it was being prepared “in view of the termination of this transaction ...” The most seriously disputed factual issue at trial was the extent, if at all, that Vernon disclosed to Egan that the specifications being discussed were the contemplated end result of an on board blend. Gamboa testified that he told Vernon on the afternoon of October 23, 1981 that the product Transoil was selling was a two-port load, i.e., Pajarito and Freeport, and an on board blend. Vernon testified that he immediately passed on to Egan all of the information he received from Gamboa. Vernon testified that the plan to load at Freeport and conduct an on board blend was not disclosed to Egan until late in the conversation, possibly even after the oil agreement was reached. (Vernon 354-5, 357) It appears that the last item open in the discussions related to price.

Vernon further testified that it was his understanding, based on the conversations of October 23, that a certificate of quality, based upon shore tank measurements, was going to be issued by the independent inspector at Freeport (Vernon 359 and 360) and that the independent inspector at Free-port would also be “certifying that the cargo on board the ship conformed to the specifications”. (Vernon 362)

Egan’s contemporaneous notes, which are Exhibit N, contain various specifications, reference to the loading port of Pajarito, the price of $176, the terms to be CIF, that for tariff purposes the cargo “must be EEC qualified” and various discharge port options available to Anschutz. There is no reference in the notes to Free-port or to an on board blend.

In his October 31 note to the file Vernon wrote that on Monday, October 26, 1981, Egan telephoned with questions concerning the transaction and that he, Vernon, had asked why the questions being raised as to blending had not been raised on the previous Friday, prior to the sending out of the telex confirming the deal. Vernon’s note states: “Mr. Egan stated that VPI had represented this cargo as a blended cargo, but he had assumed the blending was to be done in Mexico. I stated that I thought I had indicated the blending was to take place in the Caribbean, since I did not know where the blend was to take place. Mr. Egan stated that the first time he knew that the blending was to take place in Free-port was when he asked the position of the ships on Friday. I indicated that this was the time that he should have questioned the blending method if he had a problem with it. Mr. Egan said that there was nobody around to check with or he probably would have questioned the blending method.”

In several respects this memorandum differs from the trial testimony of both Vernon and Egan. What does seem clear, however, is that Egan’s notes do not reflect the totality of his October 23rd conversations with Vernon and that the parties are in sharp disagreement as to what was said and when it was said. Around 4:30 p.m. on October 23, 1981, the parties believed that an oral agreement had been reached and at 6:08 p.m. Vernon sent to Anschutz, with copies to Transoil, a confirmatory telex, Exhibit 9, which we append as Appendix A to this opinion.

The Vernon Telex of October 23

The Vernon telex is set forth as indicated in Appendix A here to. Most of the legal issues in this ease revolve around that telex, i.e., whether it manifests a meeting of the minds, whether it satisfies the statute of frauds requirement embodied in UCC Section 2-201 (the parties have stipulated that the UCC and New York Law controls this litigation) whether Transoil was ready, willing and able to perform pursuant to the terms of the telex at the time of Anschutz’ alleged anticipatory repudiation. Before addressing these issues, however, the post-telex conduct of the parties is relevant.

Post Telex Events

Egan had left the Anschutz office for the weekend prior to the arrival of the Vernon telex but Anderson, the Anschutz executive in charge of operations, was still at the office. It was his practice to check the terms of a broker’s telex with the trader who made the deal and then send an agreement on an Anschutz standard form directly to the other party. Anderson wrote questions to be taken up with Egan on his copy of the Vernon telex, Exhibit 5, one of which was “how will prod, be loaded and handled — Blenden (sic) on board, ashore?”

On Monday, October 26, Egan telephoned Vernon using a conference phone with Anderson, David Tobin (Anschutz’ general counsel) and another employee present. The parties are again in substantial disagreement as to what was said. Anschutz’ general counsel, John Tobin, testified that Vernon initially stated that it was his understanding that the cargo was to be discharged, blended ashore and then reloaded. (Tobin 452) But that he would confirm that understanding with Transoil.

Tobin claimed that he stated Anschutz could make a deal because it could “live with” such a blending procedure but there was no meeting of the minds on a two port load. (Tobin 452) As noted supra, Vernon’s note to the file, Exhibit AX, contains a different version of the conversation. At trial Vernon testified that in the telephone conference call questions were put to him concerning the proposed blending process which he relayed to Gamboa. Gamboa responded to Vernon that he “would be happy to discuss it (Anschutz) once they opened their letter of credit”, the letter of credit being called for by the terms of the agreement embodied in the Vernon telex.

On October 26 Gamboa made arrangements with Lewis of Saybolt, nominating that company to perform the on board blend and issue an inspection report. Next Gamboa purchased the gas oil he believed was needed to achieve the desired blend, approximately 25,000 barrels, plus or minus 20 percent, at Transoil’s options. That Monday morning a copy of the Vernon telex was forwarded to Anschutz’ London office but it is not clear on whose authority at Anschutz this action was taken.

Although Transoil claimed otherwise pri- or to the trial, it appears that there was no decrease in the market price for No. 6 fuel oil between Friday, October 23, and Monday, October 26th. Egan testified to his belief that in the interim the price had risen a dollar per ton. Of course, the market softened thereafter (TR 287) so that the price at which Transoil eventually resold the cargo was $9 per ton less than the anticipated price to Anschutz.

Anderson testified that on October 26 he telephoned Saybolt and spoke with the Freeport manager, Robert Lewis. At his deposition Lewis could not recall this conversation. Exhibits reflect two calls from Anschutz to Saybolt on that date. Anderson testified that after being advised of Transoil’s blending methods he asked Lewis his opinion of the likelihood of success and that Lewis told him that he would not certify the quality of the material on board the vessel and that he did not believe that the blend would work. (Anderson 412) Since Lewis had no recollection of this conversation, we do not rely on Anderson’s testimony for the truth of what Lewis is alleged to have said.

At the close of business on October 26th the blending procedure was still being discussed and Transoil sent Vernon a telex to be forwarded to Anschutz confirming the nomination of the vessel Polysunrise to carry the cargo, requesting information as to discharge points, stating that the blend was to take place at Freeport and asking that Anschutz open the letter of credit required under the agreement. The telex, Exhibit 14, concluded “notice is hereby given that material which is to be blended at Freeport, Bahamas, to satisfy specs sold to Anschutz Petroleum Marketing Corp., will not be prepared until required L/C (letter of credit) is duly opened. In view that our agreement calls for title to pass from Tran-soil Jersey Limited to Anschutz Corp. at the flange connection at Freeport, any demurrage resulting from Anschutz’ failure to comply with the terms of our agreement will be solely for their account.

Anschutz in turn responded with a telex, Exhibit 15, denying that a contract was formed, as set forth in Vernon’s confirmation of October 23rd, denying responsibility for demurrage as asserted in the Transoil telex and stating:

“As further discussed we will use our best efforts to reach a mutually satisfactory solution to this situation and enter into a contract reflecting such situation.”

On Tuesday, October 27, 1981, discussion continued: Gamboa speaking to Vernon, who relayed the information to Anschutz. Gamboa seeking to allay the concern Anschutz had expressed about the homogeneity of the product to be blended as Transoil proposed offered to change the deal to a “delivered deal” whereby Transoil would guarantee the quantity and quality at the discharge port rather than at the load port if Anschutz would pay Transoil for the potential in transit loss of oil. In “delivered deals” industry practice is for the buyer to pay a 5 percent surcharge to compensate for the physical loss of product in transit.

Alternatively, Gamboa offered to permit the Polysunrise to stay in Freeport an additional 48 hours, so that the cargo could be recirculated throughout the ship before sailing, on condition that Anschutz pay the consequent demurrage which was at the rate of $12,000 per day. It was also suggested that Anschutz’ operation manager, Anderson, could observe the blending and testing in Freeport. By the end of the day on October 27th, Anschutz advised Transoil that it was preparing a response to Tran-soil’s proposals and that Anderson had made arrangements to meet with Gamboa in Freeport.

Events In Freeport

The Polysunrise arrived in Freeport on the evening of October 26, 1981. Loading of the gas oil was to commence on Wednesday, October 28th, and Gamboa flew to Freeport early that morning, not having heard from Anschutz and not knowing whether an Anschutz representative was coming.

On arrival Gamboa went to the Saybolt office in Freeport where he learned that the No. 6 fuel oil was of a higher viscosity than Vitol had previously reported. Gamboa arranged for the purchase of additional gas oil to adjust for this. A compatibility test was run on a composite sample of the fuel oil on board the Polysunrise which indicated that the cargo had the highest possibility rating, i.e., that it comingled easily. A laboratory hand blend test was done, following which Gamboa discussed the loading and blending procedures with the ship’s master and the Saybolt inspector. The master suggested that, contrary to Gamboa’s original intentions, the cargo not be circulated immediately after sailing but be circulated at the end of the voyage. Gamboa who testified that he had not received word from Anschutz at that time (and made no effort to contact Anschutz directly) agreed to the master’s suggestion and then left for the airport to return to Miami. At 3:45 p.m. on October 28 the Polysunrise commenced loading of gas oil.

In fact, at 10:05 p.m. on October 28, Anschutz had sent a proposed agreement to Transoil offering to buy the fuel oil at the same price and quantity as contained in the October 23rd Vernon telex but provided that quality would be determined in each individual tank of the vessel both at load port and discharge. Anschutz had the option to discharge at two ports and, therefore, to sell portions of the cargo to two different buyers. There was concern that if uniformity were lacking a portion of the cargo might not meet specifications. This concern existed because Transoil did not guarantee the homogeneity of the product (TR 287) and because an on shore blending was more likely to be homogenous than an on board blending (TR 258)

At 1:00 p.m. on October 28, 1981, Anderson arrived at Freeport for the purpose of supervising the blending and testing of the cargo. He tried unsuccessfully to reach Gamboa. Anderson telephoned the hotel at which someone had told him Gamboa was staying and was told Gamboa had checked out. Anderson also tried unsuccessfully to reach Gamboa through Saybolt and.the refinery. (Anderson 395)

Gamboa telephoned Anderson between 4:00 and 5:00 p.m. and told him that the vessel was about to sail and that it was too late to do anything further in Freeport. Gamboa and Anderson appear to have had a singularly uninformative conversation. Anderson did not mention the Anschutz telex and Gamboa made no offer except to invite Anderson to come to Transoil’s Miami office.

The vessel appears to have completed loading at 7:15 p.m. on October 28th and sailed at 2:15 a.m. on October 29th, according to the Saybolt report, Exhibit 17. Defendant’s proposed finding number 42 states these times to be 7:15 p.m. on October 27th and 2:15 a.m. on the 28th, but this appears contrary to the documentation. It was, therefore, physically possible for Gamboa at the time he spoke to Anderson to have delayed the sailing of the Polysunrise. Gamboa had telephoned Anderson from the airport because he had learned from Transoil’s Miami office that Anderson was in Freeport. He testified that he had not learned of the Anschutz counterproposal, nor did he inquire as to this. (TR 283)

We find his testimony that he made no inquiry of his office as to the contents of the Anschutz telex difficult to accept and indeed find it more plausible to conclude that Transoil decided that its best strategy was to break off negotiations with Anschutz and have the vessel sail as soon as possible. There’s no question that Gamboa could have delayed the sailing, (TR 28) although, of course, there is the demurrage rate of $12,000 a day which was of concern. Anderson called his New York office and spoke with Tobin and Egan, who told him not to meet with Gamboa in Florida but to return to New York.

The Saybolt Inspection Report

The Vernon telex, Appendix A hereto, included as one of the terms of the sale the following:

“A single certificate of quantity and quality will be issued after product is loaded at second port, Freeport, Bahamas” ...

Anschutz contends that Transoil never intended to comply with this requirement and that the report actually issued by Say-bolt, Exhibit 17, is not the certificate called for by the telex. Anschutz contends that a disclaimer appearing as a legend in the upper right hand corner stating “report of analysis performed and submitted by supplier or consignee” results in the certificate not being an independent Saybolt certificate as called for by the agreement.

Transoil points to the evidence indicating that the notation was always placed on Saybolt reports from Freeport, where Say-bolt did not have its own laboratory. The tests were performed, Transoil claims, at the facilities of the Bahamas Oil Refinery Company (BORCO) by BORCO personnel and witnessed by a Saybolt inspector. It was, therefore, an independent Saybolt certificate acceptable to the industry as such.

Charles Dowse, formerly Saybolt’s general manager in the Caribbean, testified that if the tests had been witnessed the report would have said so. (Dowse 528)

Robert Lewis, the Saybolt inspector who actually issued the certificate, testified (by telephone deposition with the consent of the parties) that he had no independent recollection of the matter, that the analysis would normally be witnessed by Saybolt personnel. He testified that there was at one time a company policy to disclose the presence of an inspector explicitly on the report — Exhibit 17 contains no such disclosure — but he did not remember if that policy was in effect at the time the report was issued.

The Saybolt certificate is attacked by Anschutz on two further grounds. As to quantity, Anschutz contends that this had to be determined by shore tank measurements (Gamboa 228-229, Vernon 360, Lewis 578-579) and both former Saybolt employees (Dowse at 538 and Lewis at 31) testified that the hullage reports contained in Exhibit 17 do not constitute a Saybolt certificate of quantity.

Transoil counters (plaintiff’s proposed finding number 57) that the loaded quantity of the cargo at Freeport “was not a material term of the contract” and was included in the Saybolt report “as a matter of custom and for the sake of completeness.”

Most significant, however, in view of the central dispute between parties, is the validity of the Saybolt certificate as to the quality of the cargo after the gas oil was loaded at Freeport. It is Transoil’s claim that the Saybolt report, based on an analysis of the No. 6 fuel aboard the Polysunrise, on arrival and the results of a hand blend analysis done prior to loading is an accurate reflection of the quality of the product after the gas oil was loaded, acceptable in the industry as a certificate of quality. Transoil urges that samples taken from the ship immediately after the gas oil is loaded, and before the two products are blended, will not reflect the true quality of the cargo because such samples will not reflect the right portions of gas oil and fuel oil. (Transoil’s proposed finding 58.)

Anschutz points to the hypothetical nature of the analysis done, i.e., that the hand blend indicates what the cargo should be like if actually mixed and blended aboard the vessel in the same fashion as done in the laboratory and not the true condition of the cargo actually aboard the vessel when it sailed from Freeport. Dowse, asked if the laboratory hand blend reflected the actual condition of the cargo, replied “not necessarily” (Dowse 524) and Lewis agreed that he was not certifying that the cargo met any specification “before it sailed or that it would meet any specification “before it sailed or that it would meet any specification upon its arrival.” (Lewis 45)

This is so because if the master does not cause the gas oil to be added to the individual tanks in proper proportion, or if there is inadequate recirculation or some error in the hand blend analysis is made, the results will not meet expectations.

Transoil Resells the Cargo

On October 29 Transoil sent a telex to Anschutz rejecting the latter’s “offer” and stating the specifications derived from the Saybolt report which were within the parameters of the Vernon October 23 telex (The Transoil telex, Exhibit 23) reduced the specifications for viscosity from 3,500 to 3,450 contrary to the Saybolt report. Anschutz contends that this was done to create the appearance of a margin for error which did not, in fact exist. (Transoil also offered to guarantee the quality at the discharge point without additional cost to Anschutz.)

On October 29 Anschutz sent a telex to Transoil withdrawing its October 28th of-" fer. On October 30 Transoil sent a telex to Anschutz stating that unless Anschutz accepted Transoil’s proposed amendment to have quality determined at discharge by the close of business on October 30 Tran-soil would hold Anschutz liable for breach of contract. On October 30 Anschutz’ counsel Tobin replied by telex that there was no contract and that Vernon was acting only as Transoil’s “broker and agent”. On October 30 Vernon telexed stating that he had acted as broker for both parties.

On or about November 13, 1981, Transoil sold the cargo to two purchasers, Tampa Oil Limited and Vitol, at $167 per metric ton, as I have indicated, $9 per ton less than the contemplated price to Anschutz. The terms of this sale called for a quantity and quality determination to be made at Rotterdam by an independent inspector.

During the Transatlantic voyage the blended fuel oil was recirculated through the ship’s tanks. At discharge two questions arose which Transoil characterized as minor and which it says was satisfactorily resolved. The first related to the homogeneity and uniformity of the product. Vitol complained to Transoil on December 3 that on examining the product on outturn it found that the product was not homogeneous. Vitol, in fact, blended the product in its own shore tanks. The specifications on outturn for the other parcel exceeded .the contract specifications for viscosity but the customer had agreed to be bound by an inspection of the entire ship’s composite rather than the particular parcel it had purchased. This possible contingency was precisely the problem that had caused concern to Anschutz during the conversations previously referred to. The second issue which arose related to the custom status of the cargo which was initially denied EEC certification.

Conclusions of Law

To the extent that resolution of this controversy turns on oral testimony as to the events in question, the versions are strongly conflicting. Whether lack of clear recollection, genuine misunderstanding or the passage of time, colored by self interest, accounts for the varying versions is difficult to assess. However, certain reasonably clear circumstances taken together with the key contemporaneous documents, the Vernon October 23 telex and the Say-bolt report, enable resolution of this controversy.

The issue to which counsel devoted considerable attention relate to the questions whether as a matter of custom and practice in the industry the broker, here William Vernon, acts as agent for both parties with the consequence that the confirmatory telex which he sent is a writing subscribed to by both parties, including the party to be charged, and satisfies the statute of frauds. Transoil contends that it does. Anschutz points to its practice of sending its own telex with its own standard provisions and urges that it does not. For the reasons which I will indicate, the court finds it unnecessary to resolve that issue, although I will have some comments as to how that issue should be treated by the industry in the future.

For the purposes of this opinion, however, we assume arguendo that Vernon was, in fact, functioning as an agent for both parties and that were the other requirements of contract formation and breach of contract present that the telex would satisfy the statute of frauds.

Anschutz asserts that, apart from all other defenses, there was no “meeting of the minds” or agreement between the parties as to the material terms of a contract on October 23, 1981. We agree.

First, it must be remembered that all discussions on October 23rd were conducted through Vernon, never any direct communication between Egan and Gamboa before a contract was allegedly made. For there to have been a meeting of the minds, it is necessary for the plaintiff to establish that Gamboa made full disclosure of the method of blending to Vernon and that Vernon passed this information on to Egan. The situation is complicated by Vernon’s acknowledged lack of familiarity with on board blending and Egan’s then recent employment by Anschutz.

Significant discrepancies exist between the testimony of Vernon and Gamboa. For example, as I believe I have noted, Gamboa asserts that he told Vernon of an intent to have an on board blend prior to October 23rd. (Gamboa 119) Vernon denies this and testifies that he was not told about the load at Freeport or the on board blend until later in the October 23rd negotiation, possibly even after the alleged oral agreement had been reached (Vernon 354, 355, 357) and possibly even after Egan had already left for the weekend.

The method of blending and the documentation of cargo were certainly material terms to the contract. Even were the blending a simple matter of mixing two compatible substances with an absolute assurance of the result of such mixture, Anschutz had a legitimate concern whether the cargo it was purchasing, and for which it had to post a letter of credit and take title in the proposed CIF transaction, would be freely marketable even as the vessel was in transit. Anderson’s query on the October 23rd telex, which he received on that date, after Egan had already left, as to the method of blending indicates a concern with this question prior to any discussion with Egan or communication with London and prior to any alleged softening in the market price.

Transoil suggests that Anschutz simply overruled Egan on a deal he had made and, indeed, Transoil seeks to bolster this contention by testimony from its chief executive officer, Eduardo Bent, that at a trade convention and social gathering in October 1981 Bent asked why Anschutz had walked away from the deal and that Egan apologized and said that he was new with the company and was overruled. Egan denied this conversation. In any event, we place little or no weight on this alleged admission made by one confronted at a cocktail party.

But Anschutz appears to the court to have made genuine efforts to meet real concerns — for example, sending Anderson to Freeport — and we do not find that these concerns were pretextual to escape a deal made by a new employee.

Both parties point to the Vernon telex itself as reflecting their version of what transpired. The best that can be said of the telex is that it reflects Vernon’s lack of familiarity with on board blending. The telex describes the cargo simply as No. 6 fuel oil and makes no mention of an on board blending, although, since such a procedure is somewhat unusual in the industry, it would be appropriate to note it. Moreover, the telex makes no reference to the product as being “blended” which would be an unnecessary term if applied to an on shore blend.

Vernon acknowledged that “in retrospect I should have said on board blend.” (Vernon 326) Bent also testified that he usually discloses that the product is an on board blend although he doesn’t believe it is necessary to do so. (Bent 77) Paragraph 6 of the telex provides for á single certificate of quantity and quality after the product is loaded at the second port. As we discuss later, such a proviso is more suggestive of a shore tank blending than an on board blend.

Further to this point, paragraph 10 provides that title will pass, and with it of course risk of loss, “at the time the oil passes the flange connection between the shore facility and the vessel at the second load port, Freeport, Bahamas.”

If there is a shore tank blending, all of the cargo, in fact, passes through the flange at the second load port. If there is an on board blending, the cargo loaded at the first load port never passes the flange at the second load port.

This provision alone would make understandable Anschutz’ doubts as to the blending procedure contemplated by Transoil and as reflected by the Vernon telex. Transoil points to the provision in paragraph 12 for EEC customs exemption applicable only if the cargo is regarded as coming from a third-world country (i.e., Mexico) rather than an EUR-1 which would apply to a cargo originating solely from the Bahamas and to Vernon’s post dispute note to the file and oral testimony as indicating that the parties in fact had a meeting of the minds. Gamboa testified that if an on shore blending was contemplated there would be no reference to two ports.

But on balance, although the issue is not free from doubt, we find Gamboa’s testimony less than candid and trustworthy and Vernon’s testimony to be inconsistent, equivocal and to a considerable extent reflecting his contemporaneous lack of familiarity with the blending procedures contemplated by Transoil. We conclude that Tran-soil has not sustained its burden of proving that there was a meeting of the minds on October 23rd as to material terms of the contract, i.e., the nature of the product being sold, its quality and documentation.

Closely related to this issue is the question whether Transoil was ready, willing and able to perform the obligations which it alleges were incurred by virtue of the October 23 telex. We find that it was not.

Under the terms of the Vernon telex the contract was to be CIF. Anschutz was entitled at the time that it was to have proffered the letter of credit and assumed title to be assured that the cargo met specifications — not that it was in the process of being prepared to meet specifications.

Thus, Gamboa testified “it is generally not the concern of the buyer to discuss how it’s going to be done (i.e., the blending performed) because he’s not buying the cargo until the quality is met.” (Gamboa 137) Under the Vernon telex terms, Anschutz had the right to designate two discharge points thus permitting Anschutz to sell the cargo to two different purchasers at the two different ports. Anschutz had a concern that, although the hand blend indicated what the overall viscosity of the cargo would be, individual tanks of the vessel would not meet contract specification either because there had been some inaccuracy in the loading of the gas oil, the hand blend test, or because of inadequate circulation of the oil. The amount of gas oil to be added by Transoil allowed no margin for error, i.e., it was intended to meet but not exceed the contract specifications.

Plaintiff’s rebuttal expert, Mr. Lewis, testified if you do not allow some margin “you are asking for trouble.” This risk, the risk of failure to meet specifications because of one of the circumstances noted above, the seller was to bear and it could not require the buyer to acquire title or to post a letter of credit at an earlier time. Anschutz had the right to know before it posted its funds that any portion of the cargo sold to a third-party would meet the requisite specifications which were those established for Grade C European bunker fuel.

A further test, a ship’s composite after reloading and blending, taken from various levels of the ship’s tanks would disclose the quality of the blended product. The only ship’s composite in the Saybolt report is of the cargo loaded in Mexico. No ship’s composite was done in Freeport after the gas oil was loaded because it takes approximately two days for the gas oil to rise through the No. 6 oil and unless this occurs the product is not blended and would not meet the specifications.

Moreover, Anschutz had the right to be assured that it would have documentation which would enable it to sell all or a part of the cargo while the vessel was in transit on the strength of a single independent certificate that the cargo on board met the requisite specification. When Gamboa, knowing that Anderson was in Freeport to inspect the loading procedures and testing permitted the Polysunrise to sail without more, he took a risk. Rather than incur the possible expense of a few day’s demurrage and that Anschutz might not, in any event, accept the cargo he permitted her to sail while possible reconciliation of the parties’ positions were still under discussion.

We hold that Transoil was not ready, willing and able to perform its material obligations under the agreement because it could not furnish the single certificate of quality called for by the October 23rd telex.

Of course, Anschutz’ alleged repudiation, while excusing a formal tender, does not as Transoil itself acknowledges, relieve Tran-soil of the obligation to demonstrate that it was ready, willing and able to perform.

These conclusions render it unnecessary for us to resolve the issue upon which, as I have already noted, the parties placed considerable emphasis during this litigation, that is, whether under the custom and usage of the spot oil trading market the broker acts as an agent for both buyer and seller with the consequence that the confirmatory telex which is sent by the broker after oral negotiations have led to an agreement was a writing subscribed by the party to be charged which satisfies the statute of frauds and the UCC Section 2-201.

We decline to opine on this question recognizing its importance to the industry and that whatever we say on the question in this suit would be dictum, since we have concluded that in any event no contract was formed, because there was no meeting of the minds, and that even if a contract was formed Transoil has not demonstrated that it was ready, willing and able to perform in accordance with the alleged terms of that contract. Until the issue is definitively resolved in a suit in which its resolution is crucial to the merits of the case (perhaps with the benefit of amicus briefs from industry associations) we would recommend — if the oil spot trading industry would permit a gratuitous suggestion— that traders make explicit at the outset of negotiations with a broker the broker’s authority and insure that any limitation on such authority is communicated to the other party to the negotiations. The issue is one which should perhaps also be addressed by any appropriate industry trade association independently of any pending litigation.

For the reasons stated above, judgment will enter for the defendant dismissing the complaint. So ordered.

APPENDIX A

6161

WU INFOMASTER

YPI MFRD

028071A296 1804EST

148365

VPI MFRD

APMANYK

OCTOBER 23, 1981

TO: ANSCHUTZ PETROLEUM MARKETING CORPORATION

666 FIFTH AVENUE

NEW YORK, NY 10019

ATTN: MR. ED EGAN

CC: TRANSOIL (JERSEY) LTD.

ST. HELIER

MADRID, SPAIN

ATTN: MR. ED BENT

CC: TRANSOIL BROKERAGE

345 PALERMO

CORAL GABLES, FLORIDA

ATTN: MR. CARLOS GAMBOA

THIS IS TO CONFIRM THAT TRANSOIL (JERSEY) LTD. (HEREINAFTER CALLED SELLER) HAS SOLD NO. 6 FUEL OIL TO ANSCHUTZ PETROLEUM MARKETING CORPORATION (HEREINAFTER CALLED BUYER) UNDER THE FOLLOWING TERMS AND CONDITIONS:

1. PRODUCT: NO. 6 FUEL OIL

2. PRICE: USD 176 PER METRIC TON C.I.F. ROTTERDAM

3. QUANTITY: 50,000 METRIC TONS PLUS OR MINUS 10 PERCENT SELLER’S OPTION

4. QUALITY: PRODUCT WILL MEET THE FOLLOWING SPECIFICATIONS:

MIN MAX TYPICAL

API GRAVITY AT 60 DEGS F 11 20 14

VISCOSITY REDWOOD 1 AT 100 DEGS F 3500

FLASH POINT DEGS F 150

POUR POINT DEGS F 60

SULPHUR, WT. PCT. 3.5 3.0

BS&W PCT. 1.0

VANADIUM PPM 300 235

5. METHOD AND PLACE OF DELIVERY: DELIVERED VIA SELLER’S VESSEL-POLY SUNRISE-C.I.F. ROTTERDAM. VESSEL CHARTERED WITH OPTIONS FOR DELIVERY TO SCANDANAVIA INCLUDING DENMARK WITHIN I.W.L. LIMITATIONS, GIBRALTER/HAMBURG RANGE FOR NWE AND EUROMED EXCLUDING LEBANON, ISRAEL, TURKEY AND SYRIA. BUYER HAS TWO PORT DISCHARGE OPTION AND FREIGHT FOR DELIVERY TO PORTS OTHER THAN ROTTERDAM WILL BE CALCULATED ON THE BASIS OF WORLDSCALE 65 WITH LOADPORT FREEPORT, BAHAMAS USED FOR THESE CALCULATIONS.

6. INSPECTION: THE QUALITY AND QUANTITY OF THIS PRODUCT WILL BE DETERMINED BY INDEPENDENT PETROLEUM INSPECTORS BASED UPON PRODUCT LOADED AT PAJARITOS, MEXICO AND FREEPORT, BAHAMAS. A SINGLE CERTIFICATE OF QUANTITY AND QUALITY WILL BE ISSUED AFTER PRODUCT IS LOADED AT SECOND PORT, FREEPORT, BAHAMAS AND THIS DOCUMENT SHALL BE CONSIDERED FINAL AND BINDING BY BOTH BUYER AND SELLER. SAYBOLT TO INSPECT FOR QUANTITY AND QUALITY AND COSTS WILL BE SHARED EQUALLY BETWEEN BUYER AND SELLER.

7. DELIVERY PERIOD: NOVEMBER 10/25, 1981 C.I.F. ROTTERDAM.

8. PAYMENT: IN U.S. DOLLARS PROMPTLY UPON PRESENTATION OF INVOICE AND DOCUMENTS AGAINST AN IRREVOCABLE OR STANDBY LETTER OF CREDIT OPENED WITH A FIRST CLASS BANK ACCEPTABLE TO SELLER AND THEIR BANK PARIBAS, GENEVA. IN THE EVENT DOCUMENTS ARE UNAVAILABLE WITHIN 15 DAYS FROM PAJARITOS, MEXICO B/LADING DATE PAYMENT WILL BE MADE UPON BASIS OF SELLER’S LETTER OF INDEMNITY FOR DOCUMENTS.

9. DEMURRAGE: LAYTIME ALLOWED WILL BE 36 HOURS PLUS 6 HOURS NOTICE OF READINESS SHINC. DEMURRAGE, IF INCURRED, WILL BE AT WORLDSCALE 65 BASED UPON FREEPORT SINGLE LOADPORT.

10. TITLE AND RISK OF LOSS: TITLE AND RISK OF LOSS WILL PASS FROM ' THE SELLER TO BUYER AT THE TIME THE OIL PASSES THE FLANGE : CONNECTION BETWEEN THE SHORE FACILITY AND THE VESSEL AT THE SECOND LOADPORT, FREEPORT, BAHAMAS.

11. MEASUREMENT: SHORE TANK MEASUREMENTS AT LOADING INSTALLATIONS WILL APPLY FOR DETERMINING VOLUME WHICH WILL BE CONVERTED AT 60 DEGREES F.

12. EEC: SELLER WILL SUPPLY A-l CERTIFICATE WHICH WILL QUALIFY PRODUCT FOR EXEMPTION OF EEC DUTY. IN THE EVENT THAT THIS DOCUMENT PROVES UNACCEPTABLE TO OBTAIN THE DUTY EXEMPTION, SELLER WILL BE RESPONSIBLE TO REIMBURSE BUYER FOR THESE DUTIES IF INCURRED.

13. OTHER TERMS: ALL OTHER TERMS TO BE IN ACCORDANCE WITH INCO TERMS 1980 PLUS AMENDMENTS AND ACCORDING TO ENGLISH LAW WITH ARBITRATION LONDON UNDER ICC RULES.

THANK YOU FOR THE OPPORTUNITY OF SERVING YOU AS BROKERS.

BEST REGARDS

BILL VERNON

V.P.I.

TLX. 643657

VPI MFRD


author: FILIPPINE, District Judge.

text:
    Josephine LOCKHART, Plaintiff, v. Thomas J. MANGOGNA, et al., Defendants.
    No. 82-379C(2).
    United States District Court, E.D. Missouri.
    Sept. 23, 1985.
    Theodora W. Weston, St. Louis, Mo., for plaintiff.
    Judith A. Ronzio, St. Louis, Mo., for defendants.
   MEMORANDUM AND ORDER

FILIPPINE, District Judge.

This matter is before the Court on plaintiff’s motion for new trial, motion to alter or amend judgment, and motion to make additional findings of fact and suggestions in support thereof.

In support of her motion plaintiff argues that the Court’s reliance on Haythe v. Decker Realty Co., 468 F.2d 336 (7th Cir. 1972), was a misapplication of the law to the facts of the case at bar. Plaintiff incorrectly states that the Court primarily relied on Haythe “in holding that if plaintiff had been white/male that in all likelihood the transaction with LRA would not have been consummated with her.” The Court cited Haythe for the proposition that “the mere fact that a black person and a white person are competing for the purchase of property and the white person is ultimately sold the property is not enough to show racial discrimination under Title VIII,” and for the proposition that one must look at the circumstances surrounding the transaction in determining whether or not there has been a violation of Title VIII. Lockhart v. Mangogna, No. 82-379C(2) at 6-7 (E.D.Mo. June 10, 1985). The Court believes that its reliance on this case was proper and not a misapplication of law to fact.

Plaintiff also argues in support of her motion that a number of the factual findings made by the Court were clearly erroneous. The Court, having carefully reviewed these findings, finds that they are the correct findings to be adduced from the evidence presented at trial.

Accordingly,

IT IS HEREBY ORDERED that plaintiffs motion for new trial, motion to alter or amend judgment, and motion to make additional findings of fact be and are DENIED.