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Houston Dairy, Inc. v. John Hancock Mutual Life Insurance Co.

United States Court of Appeals, Fifth Circuit
643 F.2d 1185 (1981)


Houston Dairy, Inc. (Houston Dairy) (plaintiff) applied for a loan from John Hancock Mutual Life Insurance Co. (John Hancock) (defendant). On December 30, 1977, John Hancock agreed to lend Houston Dairy $800,000 at 9.25 percent interest if Houston Dairy would return a commitment letter with a $16,000 good faith deposit within seven days. Houston Dairy did not return the letter and deposit within seven days, but rather sent its acceptance and the $16,000 after eighteen days. Upon receiving the communication from Houston Dairy, John Hancock deposited the check. Additionally, attorneys for Houston Dairy and John Hancock met to discuss procedures for closing the loan. No other communication was exchanged between John Hancock and Houston Dairy. On January 30, 1978, Houston Dairy was able to obtain a loan at a 9.0 percent interest rate from a state bank. On January 31st, Houston Dairy informed John Hancock of this fact and sought a refund of its $16,000 deposit. Houston Dairy argued that since it did not accept John Hancock’s original offer within the required seven day time period, its acceptance after eighteen days was actually a counteroffer. Houston Dairy argued that since it never received communication of John Hancock’s acceptance of the counteroffer, the counteroffer was never actually accepted and Houston Dairy was entitled to a return of its deposit. John Hancock refused to return the deposit, and Houston Dairy brought suit against John Hancock in Mississippi state court. The case was removed to federal district court. The district court ruled there was a binding contract between the parties and entered judgment for John Hancock. Houston Dairy appealed.

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