## Facts

- Morris Goldstein, a metals dealer, negotiated by telephone to buy 20,000 pounds of nickel cathodes from Stainless Processing Co. at $4.60 per pound, F.O.B. Chicago.
- Stainless repeatedly asked for money “on account.” Goldstein refused but agreed to send a $20,000 check as a good-faith deposit if Stainless would only hold it as security.
- Goldstein testified the parties agreed Stainless would not cash the check; Stainless would hold it until Goldstein inspected and approved the nickel, then return it when Goldstein paid the full price by a single certified check at pickup.
- Stainless mailed a written “confirmation of sale” stating “$20,000.00 deposit. Balance by certified check at time of pickup,” without mentioning any escrow arrangement.
- Goldstein mailed Stainless a letter enclosing the $20,000 check and stating: “This check is to be held in escrow,” asking Stainless to sign and return a copy.
- At the same time Goldstein mailed the check, he instructed his bank to stop payment on it.
- When Stainless received the check, it attempted to deposit it rather than hold it, and learned payment had been stopped.
- Stainless then notified Goldstein it considered the deal cancelled.
- Nickel prices rose. Goldstein bought substitute nickel elsewhere, allegedly paying about $23,000 more than the contract price, and sued for damages.
- In a diversity action, after Goldstein presented his evidence, the district court directed a verdict for Stainless (and its principal, David Fiterman). Goldstein appealed.

## Issues

1. Whether the district court properly directed a verdict for Stainless when Goldstein’s evidence, if believed, supported a contract term requiring Stainless to hold the $20,000 check in escrow rather than cash it.
2. Whether Stainless’s attempt to deposit the check and subsequent cancellation could be found by a jury to be a breach or anticipatory repudiation of the parties’ agreement.
3. Whether Goldstein’s stop-payment order on the check barred his claim as a matter of law, or instead presented a factual question tied to the disputed “escrow vs. deposit” term and the parties’ conduct.

## Decision

- The Seventh Circuit reversed the directed verdict and remanded for further proceedings.
- Viewing the evidence and reasonable inferences in Goldstein’s favor (as required on review of a directed verdict), the court held a reasonable jury could find that the parties’ agreement required Stainless to hold the check in escrow.
- Because the contract terms and the parties’ alleged breaches depended on disputed facts (including the meaning of the $20,000 payment and the effect of the stop-payment), those matters should have been submitted to the jury rather than resolved as a matter of law.

## Legal Principles

- A directed verdict is improper if, taking the nonmoving party’s evidence as true and drawing reasonable inferences in that party’s favor, a reasonable jury could find for that party.
- In a sale-of-goods dispute under the UCC, conflicting evidence about whether a payment was a cashable “deposit” or an escrowed security device can create a jury question on contract terms and performance obligations.
- Conflicting writings and oral understandings about a material term (here, the handling of the $20,000 check) generally present fact questions on what the parties agreed to, and whether later conduct was consistent with that agreement.
- A stop-payment order may support an inference of nonperformance, but whether it constitutes a material breach can depend on the parties’ agreement about when and how the check could be used, and on the sequence of events.
- If a seller breaches or repudiates a sales contract, the buyer may seek UCC remedies such as cover damages, subject to proof and fact findings on breach, causation, and reasonableness.

## Conclusion

The Seventh Circuit held that the district court should not have taken the case from the jury: Goldstein’s evidence could support a finding that the $20,000 check was to be held in escrow, that Stainless breached by attempting to deposit it and cancelling the deal, and that Goldstein could pursue damages (including cover) depending on the jury’s resolution of the disputed contract terms and conduct.


Goldstein v. Stainless Processing Co., 465 F.2d 392 (1972)