Oregon Plywood Sales Corporation v. Sutherlin Plywood Corporation and Nordic Plywood, Inc.

This is a diversity case dealing with an output contract. Appellant, Oregon Plywood Sales Corporation, purchases plywood from plywood manufacturers, including its parent corporation, Oregon Plywood Corporation. Appellant’s method of operation is to secure orders from its customers and then place its own orders with a manufacturer who ships the goods to the ultimate purchaser.

Appellee, Sutherlin Plywood Corporation, had completed construction of a “plywood lay-up mill” at Sutherlin, Oregon, in October, 1953, but lacked working capital when the mill was completed. Robert F. Hofheins, Vice-President, Treasurer and a Director of Oregon Plywood Corporation, and Secretary, Treasurer and a Director of appellant Oregon Plywood Sales Corporation, discussed with Sutherlin its problem of lack of working capital. As a result of such discussions, certain documents were executed on December 17, 1953. The main document was a sales contract which provided in part as follows:

Other pertinent paragraphs of the sales contract we cite in the margin. In addition to the sales contract a loan agreement was executed between Sutherlin and Oregon Plywood Corporation which provided for two types of loans…