Sterling v. Gregory

A.E. Sterling (plaintiff) owned three orange groves in San Bernardino County known as the Upper Orchard, the Triangle, and Klondike. A. Gregory (defendant) entered into an agreement with Sterling to purchase all the oranges that Sterling grew in the Upper Orchard for one and one-quarter cents per pound. Sterling and Gregory also agreed that Gregory would handle, pack, ship, and sell all the oranges that Sterling grew in his Triangle and Klondike groves. Sterling broke his agreement to deliver oranges to Gregory from the Triangle and Klondike groves, instead selling those oranges to other buyers. Gregory had begun buying oranges from the Upper Orchard but stopped buying once Sterling began selling the Triangle and Klondike oranges elsewhere. Sterling was able to sell the remainder of the Upper Orchard oranges to other buyers, but at a lower cost. He sued Gregory for the difference between their contract price and the lower price at which he sold to other buyers. Gregory responded that his agreements with Sterling for all three orchards were part of one, indivisible contract. Gregory claimed that the price at which he agreed to purchase the Upper Orchard oranges was higher than market price as consideration for handling the fruit from the Triangle and Klondike groves. For this reason, Gregory rescinded the contract when Sterling breached. The trial court found in favor of Gregory. Sterling appealed, arguing that the contracts for the three orchards were separate contracts, rather than one contract.