Terry v. Dairymen’s League Co-Operative Association, Inc.

Malcolm Terry (plaintiff) had a business hauling milk from farms to the Margaretville, New York milk plant owned by the Dairymen’s League Co-Operative Association, Inc. (the association) (defendant). The farmers that Terry contracted with were all members of the association. The association closed another plant and redirected that plant’s milk supply to the Margaretville plant. The farmers that had been supplying the other plant were located further from the Margaretville plant. The association arranged for Terry and another driver, Williams, to start delivering the milk from the new group of farmers to the Margaretville plant, and the association offered an additional fee above the transport fee usually paid by the farms to compensate Terry and Williams for the longer drive from these farms to the Margaretville plant. Terry entered into oral agreements with a number of farmers along the new route to deliver their milk. The agreements were terminable at any time by either party. While each agreement was a standalone contract, the farmers acted cooperatively in coming to an agreement with Terry, because the route was only financially worth it to Terry if he had a significant number of deliveries along the same route. Eventually, several of the farms along Terry’s route stopped operating, and he complained to the association several times that without a higher payment, he could not afford to continue the route. Although the association was not a party to the contract, it intervened to help ensure its members had an option for delivery. The association made arrangements for Williams to take over Terry’s route. Terry filed suit against the association for inducing the farmers to breach their contracts with him. At trial, the jury was charged to find for the association unless the association had acted maliciously and without legal or social justification. The jury found for the association. Terry appealed, and the intermediate appellate court overturned the trial court’s findings. The association appealed to the New York Supreme Court.