1 F.3d 138 (2nd Cir. 1993), 1630, May Dept. Stores Co. v. International Leasing Corp., Inc.

Docket Nº:1630, Docket No. 93-7106.
Citation:1 F.3d 138
Party Name:MAY DEPARTMENT STORES COMPANY, doing business as Venture Stores, Plaintiff-Appellant, v. INTERNATIONAL LEASING CORP., INC., and Arnold Frumin, Defendants-Third-Party-Plaintiffs-Appellees, Willing Group, Inc., and Louis Goldstein, Third-Party-Defendants.
Case Date:August 03, 1993
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 138

1 F.3d 138 (2nd Cir. 1993)

MAY DEPARTMENT STORES COMPANY, doing business as Venture

Stores, Plaintiff-Appellant,

v.

INTERNATIONAL LEASING CORP., INC., and Arnold Frumin,

Defendants-Third-Party-Plaintiffs-Appellees,

Willing Group, Inc., and Louis Goldstein, Third-Party-Defendants.

No. 1630, Docket No. 93-7106.

United States Court of Appeals, Second Circuit

August 3, 1993

Argued June 17, 1993.

Warren S. Landau, Smithtown, NY (David M. Ardam, Spada, Ardam, & Ershowsky, P.C., Smithtown, NY, of counsel), for plaintiff-appellant.

William J. Coury, Brooklyn, NY (Samuel L. Hagan, Hagan, Poch & Coury, of counsel), for defendants-third-party-plaintiffs-appellees.

Before: KEARSE, MINER and ALTIMARI, Circuit Judges.

MINER, Circuit Judge:

Plaintiff-appellant May Department Stores Company ("May") brought this diversity action in June of 1988, in the United States District Court for the Southern District of New York (Haight, J.), against defendant-third-party-plaintiff-appellee International Leasing Corp., Inc. ("ILC") for breach of contract and against defendant-third-party-plaintiff-appellee Arnold Frumin for fraud. The gravamen of May's complaint was that ILC delivered less than the quantity of "Fruit of the Loom" men's underwear specified in a sales contract it entered into with May and that Frumin (ILC's vice president) had misrepresented to May that ILC could provide the quantity of underwear required by May in order to induce May to enter into the sales contract.

After discovery had been completed, both parties moved for summary judgment. In their motion for summary judgment, the defendants raised for the first time the affirmative defense of accord and satisfaction. In a Memorandum Opinion and Order dated December 28, 1992, the district court dismissed May's complaint and directed the entry of summary judgment for the defendants. The district court found that a settlement agreement sent by ILC to May was an accord and that May's unconditional negotiation of a check accompanying the settlement agreement was a satisfaction of the accord that served to extinguish any liability on the original sales contract. For the reasons set forth below, we hold that ILC failed to satisfy the elements of an accord and satisfaction and remand the case to the district court to determine

Page 139

what effect, if any, the settlement agreement had on the defendants' liability under the original sales contract.

BACKGROUND

In April of 1987, ILC entered into a sales contract to provide May with Fruit of the Loom men's underwear. Acting in accordance with the custom and usage of the underwear trade, May ordered the underwear in packages of three ("three-packs"): 6624 dozen three-packs of men's briefs; 3312 dozen three-packs of men's crew neck T-shirts; and 3312 dozen three-packs of men's V-neck T-shirts. The total contract price was $462,620.16. ILC, through an intermediary, purchased the underwear from third-party-defendants The Willing Group, Inc. and Louis Goldstein (collectively, "Willing"), which had acquired the underwear from Thomas Hoar, Inc., a distributor for Fruit of the Loom.

The underwear was delivered in two shipments during the first week of May 1987. Apparently, May's purchase order was misconstrued by someone in the distribution chain as a request for individual pieces of underwear rather than for three-packs of underwear. Consequently, May received only one-third of the quantity of underwear it ordered.

The parties disagree as to when May notified ILC of its dissatisfaction with ILC's performance and as to what assurances, if any, Frumin gave to May. May claimed that it immediately telephoned ILC to complain about the shortage and that Frumin assured May that the missing underwear would be shipped. Frumin denies making any assurances, and ILC claims that on May 19, May gave ILC notice that May had inspected the underwear shipment and found it to be satisfactory. On May 22, May authorized its bank to pay ILC the purchase price in full, pursuant to a letter of credit. ILC further claims that May did not orally notify ILC of the shortage until May 26 and did not provide written notification until July 2, 1987.

In an attempt to resolve the dispute without conceding liability, ILC drafted a settlement proposal and sent it (unsigned) to May in early August of 1987. Upon receiving ILC's settlement proposal, May made several revisions, signed it and returned it to ILC on August 5. On August 14, ILC prepared a new settlement proposal (the "Settlement...

To continue reading

FREE SIGN UP