PHILLIPS, Circuit Judge:
Plaintiff appeals from the grant of summary judgment in favor of three individual and two corporate defendants against whom it had brought a diversity action alleging breach of contract and tortious interference with contractual relationships. The district court concluded as a matter of law that on certain undisputed facts before it on the defendants' motions for summary judgment no contract had come into existence between the alleged contracting parties so that there had been no breach and no tortious interference. Because summary judgment was not proper on the record before the district court, we reverse and remand for further proceedings.
The salient facts, as drawn from the record upon which the district court granted summary judgment,
During early 1974, the plaintiff Charbonnages de France
By May 16, 1974 these negotiations had reached the point that Charbonnages, Apex and Smith signed a letter of intent, dated that day, which summarized the arrangement above described and indicated the intention of the parties promptly to draw up formal documents memorializing the arrangement. One paragraph of the letter of intent stated Frank Smith's agreement not to negotiate with any outside group concerning the letter's subject during the period of formalizing the projected agreement. Between May 16 and May 30, 1974 the details of the proposed agreement were extensively discussed and negotiated by Charbonnages' attorney McCarthy, Apex's attorney Katz, Smith's attorney Johnson, and Smith's accountant Stevens. On May 31, 1974 the terms and conditions now incorporated in draft documents were reviewed in a meeting attended by various members of the Apex group, their lawyer Katz and one of their accountants. Following this review, Charbonnages' attorney McCarthy was contacted and told that the basic terms of the documents were acceptable from the Apex and Smith standpoints and that since only one or two final details needed to be worked out, McCarthy should take steps to arrange an early closing date with Charbonnages. McCarthy then went to Paris and between June 4 and June 7, 1974 reviewed the draft documents with Charbonnages. Following these discussions, Charbonnages took steps to make the proposed purchase price of four million dollars available for drawing down by Apex, and the draft documents were redrawn and dated June 16, 1974.
Then followed a meeting on June 17, 1974 in Pikeville, Kentucky, between McCarthy representing Charbonnages, Stevens the Smith accountant, and a representative of the Apex group, to review the transaction as now outlined in the draft documents. At the end of this meeting the persons in attendance were in essential agreement on the terms and conditions outlined in the June 16 drafts except for a major question concerning reimbursement by Apex to Smith of approximately $350,000 of the latter's tax liability for 1974. On June 18, 1974 Apex came up with a proposal to Smith for handling this problem and Smith came to New York on June 20, 1974 to discuss this. Following Smith's approval of the proposed solution, Smith and representatives of the Apex group went on the afternoon of June 20, 1974 to the New York offices of Charbonnages' attorneys and there reviewed with McCarthy the solution of the tax question and indicated that with this resolved the parties were in agreement on a proposal now embodied in documents totaling sixty-nine pages. It was then agreed that there should be a formal closing
Prior to the scheduled closing date, Smith let it be known to Apex and to Charbonnages' attorneys that he was not happy with various elements of the proposal and that he might not go through with the closing. Thereupon the July 12, 1974 closing was postponed. McCarthy having remained in France, Charbonnages instructed Bernstein, McCarthy's law partner, to attempt to salvage the agreement, and if necessary, to renegotiate it. Bernstein then telephoned Smith on July 12, 1974 and suggested that they meet to discuss the matter. When Smith agreed, Bernstein went to West Virginia where on July 15, 1974, accompanied by a member of the Apex group, he met with Smith at the Smith Brothers mine site. At this meeting Smith specifically identified various elements in the proposed three-way agreement that were not satisfactory to him. Among these was his dislike for use of New York banks to handle the escrow arrangements. He stated a preference for using his local bank in Pikeville, Kentucky. It was also learned at this meeting that, unknown to Charbonnages and Apex, Smith had, during the course of negotiations, removed approximately one million dollars in operating capital from Smith Brothers, although he wanted the purchase price of four million dollars to remain unchanged in the further negotiations. Smith then indicated that he would be willing to make a direct deal with Charbonnages if an arrangement could be made for Apex to step aside and the subsidiary agreements involved in the three-way arrangement eliminated or simplified. Acting on instructions from Charbonnages, Bernstein then indicated that Charbonnages would be willing to renegotiate the agreement and pay the purchase price of four million dollars directly to the Smith interests if that price could be justified in view of the diminution in working capital. To meet this problem Smith indicated in ensuing discussions that he would add to the equipment originally included in the three-way arrangement some additional equipment that he had personally purchased, and he represented that this would permit the opening of a second mine at considerably less cost than contemplated under the proposed arrangement in which Apex was involved. On this basis, discussion then turned to a price of four million dollars for all the shares of Smith Brothers plus the equipment so supplemented, with one million dollars to be placed in escrow with the Citizens Bank of Pikeville to assure compliance with the warranties under the agreement. A member of the Apex group present during these discussions indicated that the Apex group would work out its own arrangement with Charbonnages and go along with the renegotiated straight purchase and sale agreement. At this point Smith and Bernstein shook hands on the new proposal and Smith asked Bernstein to meet him the next day and to draw up the formal papers with Smith's attorney, Johnson, and his accountant, Stevens.
The following day, July 16, 1974, Bernstein met with Stevens and Smith in Pikeville, Kentucky and Smith brought in Ridenaur, of Smith's bank, to discuss the escrow arrangement. After an escrow agreement had been prepared from the earlier Apex agreement text, Ridenaur called in Smith's attorney, Johnson, who was also attorney for the bank. Johnson reviewed the escrow agreement for the bank and found it acceptable. At this time Bernstein showed Ridenaur and Smith a letter from a New York bank certifying that Charbonnages had the sum of four million dollars available for immediate use in the transaction. Bernstein and Johnson then met in Johnson's office on July 16 to write up a purchase and sale agreement reflecting the proposal settled upon by Smith and Bernstein the previous day. Smith was also
Because the last meeting of Charbonnages' Executive Committee during the summer was to take place on Friday, July 19, 1974, and Bernstein did not have power to accept the new proposal on behalf of Charbonnages, it became necessary to act on something less than the full draft proposal on which work was proceeding. Accordingly, on July 17, 1974, Bernstein prepared the text of a cable to be sent to Charbonnages setting out the essential terms of the new proposal for a direct sale from the Smith interests to Charbonnages that had been worked out between Smith and Bernstein on July 15, 1974. Bernstein discussed the draft with Johnson who was in agreement with it except for a reference in it to the Apex group. Because of the time constraints, Bernstein and a representative from the Apex group hand carried the proposed cable to Smith on July 18, 1974 at the site of a home Smith was building in Williamson, West Virginia. There Smith and his accountant, Stevens, reviewed the text of the cable. Smith insisted on several modifications to the text. He deleted a reference to Apex. In a provision dealing with sales of coal prior to formal closing he changed "at market price" to "at a price to be agreed." Finally, he insisted that there should be a cut-off date for Charbonnages to respond to the proposal and by agreement a date of July 25, 1974 was inserted in the text of the cable. Smith then signed Bernstein's original draft of the cable as modified at his direction and retained a carbon copy. Bernstein stated that he would send the cable as revised to Charbonnages for the meeting of its Executive Committee the next day and added that he thought Charbonnages would appreciate receiving a cable directly from Smith because there had been no previous exchange between the principals. Smith stated his intention to have his attorney examine the cable message and then to send it directly to Charbonnages. The text of the proposed cablegram as revised at Smith's direction read as follows, with the matter deleted from Bernstein's original draft marked through and the added matter underscored:
Smith never sent a cable, but Bernstein flew back to New York and on the evening of July 18, 1974 cabled the revised text with the added words that it was "the text of the telegram that Mr. Frank Smith is to send to you and of which we have in our possession a signed copy." The following day, July 19, 1974, Bernstein spoke by telephone to Charbonnages' financial director in France, who advised that Smith's proposal had been accepted by Charbonnages' Executive Committee. On the following Monday, July 22, 1974 Bernstein called Smith and told him that his proposal had been favorably acted upon, following this up on July 24, 1974 with a confirming mailgram of which a copy was sent to Smith's attorney, Johnson. The mailgram in its substantive parts read as follows:
The reference to "formal government approval" in the mailgram reflected the fact, known to all parties throughout the negotiations, that the French Government by its Ministries of Industry and Finance had to give formal approval for Charbonnages to invest funds outside France.
When Bernstein called Smith on July 22, 1974 to report acceptance by Charbonnages, Smith gave no indication that he did not intend to proceed in accordance with the proposal as accepted. Neither did Smith make any response to the confirming mailgram of July 24, 1974, either to Bernstein or to Charbonnages. On July 29, 1974 Bernstein telephoned Smith's attorney, Johnson, to discuss arrangements for completing the documentation of the agreement. Johnson did not indicate at that time that there was any question about proceeding, but instead indicated that because Smith's accountant, Stevens, was out of town, it would be better to wait until later in the week to make the arrangements. When Bernstein, however, called Stevens on August 2, 1974 to set up a meeting, he was informed for the first time that Smith had "changed his mind" and did not want to sell the mine. Bernstein called Smith by telephone three days later on August 5, 1974 and Smith confirmed that he had changed his mind and did not intend to go through with the sale. Bernstein immediately sent Smith a mailgram which advised him that Charbonnages intended to enforce its rights.
As it developed, on the same day that Bernstein was first notified of Smith's "change of mind," Smith signed an option agreement to sell the subject properties to the defendant, Continental Coal Sales Corporation (Continental) at a better price. Within a few days after the approval of the agreement by Charbonnages' Executive Committee, the French Government agencies gave their formal approval to the transaction, but this formal act by the French Government was not communicated to Smith because, as Bernstein put it, Smith had by then reneged on the deal. On August 7, 1974 Bernstein formally advised both Continental and Smith of Charbonnages' intent to enforce its contract. Continental exercised its option and purchased the Smith mining interests on September 24, 1974.
On October 16, 1974, Charbonnages brought this action for breach of contract by the defendants Smith, and tortious interference by Continental with plaintiff's contractual rights, seeking specific performance of the alleged contract or, in the alternative, damages of one hundred fifty million dollars.
In Chief Judge Parker's oft-cited formulation for this Court, summary judgment "should be granted only where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law." Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir. 1950) (reversing grant of summary judgment in contract breach case). It is not appropriate "even where there is no dispute as to the evidentiary facts but only as to the conclusions to be drawn therefrom." Pierce v. Ford Motor Co., 190 F.2d 910, 915 (4th Cir. 1951). The burden is on the moving party to "show" that there "is no genuine issue as to any material fact" and that he "is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). See Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Phoenix Savings & Loan, Inc. v. Aetna Casualty & Surety Co., 381 F.2d 245, 249 (4th Cir. 1967). In determining whether this showing has been made, we must assess the evidence as forecast in the documentary materials before the district court in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). This means that the assessment required is substantially similar to, although perhaps even more stringent than, that involved in the assessment of actual evidence on motions for directed verdict. See Pierce v. Ford Motor Co., 190 F.2d at 915. Where, as here, the nonmoving party would on trial carry the burden of proof, he is therefore entitled, as on motion for directed verdict, to have the credibility of his evidence as forecast assumed, his version of all that is in dispute accepted, all internal conflicts in it resolved favorably to him, the most favorable of possible alternative inferences from it drawn in his behalf; and finally, to be given the benefit of all favorable legal theories invoked by the evidence so considered. See generally 10 Wright & Miller, Federal Practice and Procedure: Civil § 2713, at 406-10, § 2716, at 431-32; see also Louis, Federal Summary Judgment Doctrine: A Critical Analysis, 83 Yale L.J. 745, 748-49 n.19 (1974). Implicit in these basic rules is a consequence, frequently expressed as a maxim, that summary judgment is seldom appropriate in cases wherein particular states of mind are decisive as elements of claim or defense. See, e. g., Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962); Denny v. Seaboard Lacquer, Inc., 487 F.2d 485, 491 (4th Cir. 1973). This reflects a general perception that whether as a matter of fact any particular state of mind exists can seldom be considered to be beyond reasonable dispute because this depends entirely upon the conflicting inferences to be drawn from evidence so likely to be circumstantial or, if direct, self-serving. See, e. g., Croley v. Matson Navigation Co., 434 F.2d 73, 75 (5th Cir. 1970) (importance of "demeanor" evidence); Empire Electronics Co. v. United States, 311 F.2d 175, 179-80 (2d Cir. 1962) (reliance on circumstantial evidence).
The essence of contract formation
In the district court's analysis,
The validity of this analysis depends upon the validity of the premise first stated: that French Government approval was a condition to Charbonnages' power to "accept" the Smith "offer." On this precise matter the district court erred
And the duty of both parties to perform may be conditioned upon such an event, if this is what is intended by the offer as accepted. 3A Corbin, Contracts § 629A (1950 & Supp.1971). In this case that may not have been the manifested intention of the parties, but the issue was one genuinely in dispute on the record before the district court. Without attempting to anticipate proof on the matter, if the course of dealings between these parties as revealed on the summary judgment record were presented as evidence to a trier of fact, it might readily infer a manifested mutual intention that French Government approval would, and could as a practical matter, only be sought after, not before the parties had entered into a contract otherwise binding them to performance.
With this critical premise revealed as a material fact genuinely in issue, the district court's further analysis leading to summary judgment necessarily fails. For if the power of acceptance were found as a matter of fact not intended to be contingent upon prior or contemporaneous French Government approval, a trier of fact might then further conclude that Smith's July 18, 1974 offer by cable was effectively accepted by Bernstein's telephonic and mailgram communications to Smith on July 22 and 24, 1974 reporting "favorable action" by Charbonnages' Executive Committee. Because this occurred before Smith's "change of mind" was first reported to Bernstein on August 2, 1974, a trier of fact might then find that as of the acceptance date there was the requisite manifestation of mutual assent to the cabled offer of July 18, 1974. On this interpretation of the manifested intentions of the parties, a contract would have been formed upon Charbonnages' acceptance, with the mutual promises of the parties providing the agreed exchange and the required consideration each for the other. Crowley v. Vaughan, 88 W.Va. 223, 225, 106 S.E. 539, 540 (1921). With such a contract formed, subsequent French Government approval would entitle either party to demand performance, while a failure of approval would discharge both from any obligation to perform.
By this analysis which necessarily focuses on the narrow but decisive point on which we find reversible error, we of course intimate no opinion on the merits of the case as it is remanded for further proceedings. We are not bound on review to consider only those specific grounds upon which the district court based its grant of summary judgment, but could affirm if we perceived alternative grounds.
First, our concentration on the culminating cable, telephonic, and mailgram communications that were treated by the district court as the decisive elements in determining whether "minds had met" does not indicate any perception on our part that only in these could there be found the requisite manifestation of mutual assent for contract formation on this record. While identifiable offer and acceptance are the classic mechanisms for contract formation, "manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined." Restatement (Second) of Contracts, supra § 22(2). Whether any such possibility exists in this case must of course await actual proofs.
Because of its conclusion that Smith's "revocation" forestalled any acceptance by plaintiff of Smith's "offer," the district court understandably did not address several points urged by defendants on appeal as alternative bases for upholding the summary judgment. Although we consider none to have merit as an alternative basis for affirmance, we will discuss three because they involve important issues that could surface for resolution by the trier of fact on remand.
The defendants urge that the terms in Smith's "offer" as cabled on July 18, 1974, were so uncertain that they created no power of acceptance in Charbonnages. An offer must be certain in its essential terms to create a power of acceptance; but this certainty need only be a reasonable certainty sufficient to allow a finding of breach and the giving of an appropriate remedy. Here again the issue is whether notwithstanding any uncertainty of terms, the parties nevertheless intended to conclude a binding agreement. See, e. g., Townsend v. Stick, 158 F.2d 142, 145 (4th Cir. 1946); Broemsen v. Agnic, 70 W.Va. 106, 108, 73 S.E. 253, 254 (1911); Restatement (Second) of Contracts, supra § 32. It could not be said as a matter of law on this record that the terms in Smith's cabled "offer" were so uncertain as to preclude binding acceptance, since terms not expressly contained in an operative offer may be inferred from other communications between the parties and from surrounding circumstances to round out the terms to which mutual assent was manifested.
The defendants have also argued somewhat ambiguously on appeal that as a matter of undisputed fact there was no effective communication of the Smith offer to Charbonnages, because Bernstein lacked agency power either to send it for Smith or to receive or accept it for Charbonnages. The district court apparently concluded either that as a matter of undisputed fact the offer was communicated, or that this was at least a matter in genuine dispute on the summary judgment record.
Finally, we note a contention made by Charbonnages on appeal related to an issue that could be critical in further proceedings. This is the suggestion that the summary judgment did not purport to affect Charbonnages' claim against Continental for tortious interference with contract. We disagree. It is plain from the district court's memorandum opinion
Whatever the ultimate merits of this typically difficult contract negotiation case, it involves serious business transactions carried on in presumed good faith by a
REVERSED AND REMANDED.
Although our analysis concentrates essentially on the culminating events in these parties' extended negotiations, the whole course is summarized because of its relevance in showing the existence of those genuine issues of material facts that requires reversal. The relevance will be apparent from our discussion.