Intermeat, Inc. v. American Poultry Inc.

American Poultry Incorporated (defendant), an Ohio corporation, sold meat wholesale in various states. American Poultry’s New York clients comprised 25 to 30 percent (up to $7 million in sales per year) of its business. One of its suppliers was Intermeat, Inc. (plaintiff), a New York corporation doing business in New York. In its business with American Poultry, Intermeat prepared a contract on its form and sent it to American Poultry in Ohio. The form contract contained an arbitration clause requiring the parties to submit disputes to arbitration in New York. American Poultry signed and returned some of these contracts. In other cases, American Poultry received the contracts and did not sign and return them but kept them, did not object to their terms, and complied with the contract terms. American Poultry had also submitted to arbitration in New York on prior occasions. In January 1974, American Poultry ordered two loads (30 long tons) of a specific type of Australian beef from Intermeat to be delivered from Australia to Philadelphia. Intermeat sent a form contract as it had in the past, and American Poultry kept it without signing and without objecting. American Poultry transferred the meat from Philadelphia to its plant in Cleveland, Ohio. After inspecting the meat, American Poultry rejected it as nonconforming. American Poultry paid Intermeat the difference between the contract price and what it was able to sell the beef for in the marketplace. Intermeat sued American Poultry in the New York Supreme Court to recover the shortfall. [Editor’s Note: In New York, the supreme court is the court of the first instance, i.e., the trial court.] The action was removed to the federal district court in New York based on diversity jurisdiction. The district court intended to dismiss the case for lack of personal jurisdiction over American Poultry. However, Intermeat sought to attach property of American Poultry, a debt owed by one of its New York customers, which the court allowed. Intermeat asserted that the district court then had quasi in rem jurisdiction over the proceedings. The district court agreed, heard the matter, and entered judgment in Intermeat’s favor. American Poultry appealed.