163 F.2d 643 (2nd Cir. 1947), 260, Alaska Pac. Salmon Co. v. Reynolds Metals Co.

Docket Nº:260.
Citation:163 F.2d 643
Case Date:September 18, 1947
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 643

163 F.2d 643 (2nd Cir. 1947)




No. 260.

Circuit Court of Appeals, Second Circuit.

September 18, 1947

Page 644

This is an appeal by plaintiff from a judgment, adverse to it, in an action, tried by judge and jury, for damages for alleged breach of warranty in the sale by defendant to plaintiff of laminated ply-metal boxes for use by plaintiff in packaging plaintiff's dehydrated soup mixtures. 1

Page 645

Plaintiff is a successful corporation, extensively engaged in the manufacture of food products for many years. It entered the soup business in 1940, making canned dehydrated soups marketed under the trade-name 'Minute Man.'

Negotiations between Allen, representing plaintiff, and Gibbins, representing defendant, began in February 1941. Allen, on March 13, signed an order for ten million boxes, a superseding order for forty million boxes on March 15, and another superseding order for one hundred million boxes on March 17. At the trial, Allen testified that both parties knew these were not bona fide orders; Gibbins testified to the contrary.

The March 17 order reads as follows: 2

"To Reynolds Metals Company "Incorporated "Central Sales Division "1259 S. Campbell Ave., "Chicago, Ill. Western Sales Division Eastern Sales Division 345 Ninth St., 19 Rector St., San Francisco, Calif. New York, N. Y. ------------------------------------------------------------------------------- Please enter our order for the following material at the prices, Customer's Order No. and on the terms stated Date 1/17/41 hereon. ------------------------------------------------------------------------------- Ship to: Invoice to: Dry-Pack Corporation Alaska Pacific Salmon Co. (in pencil) of Seattle Wash. ------------------------------------------------------------------------------- Street Street 155 E. 44th Street ------------------------------------------------------------------------------- City Sodus, New York City New York, N. Y. ------------------------------------------------------------------------------- Routing Terms Cheapest Way Net 30 days ------------------------------------------------------ F. O. B. Our plant New York ------------------------------------------------------------------------------- To be shipped on or Special Billing Instructions about See attached instructions ----------------------- Purpose or Application Copies of invoices required of Product Packing Soup Mix ------------------------------------------------------------------------------- Quantity Description and Size Price ------------------------------------------------------------------------------- 100,000,000 (one hundred million) SEAL END STYLE $5.00 CONTAINERS SIZE 2 7/8" wide, 3 5/8" high, 7/8" per M. deep MADE OF 15 POINT SHINY SILVER FINISH PLY METAL PRINTED--RED, WHITE AND BLUE-- As per art work submitted and (in pencil) approved. WD 1335 (in pencil) All in accordance with conditions set forth in our formal acknowledgment and letter of March 18, 1941 Art Work and Plates

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Special Instructions and Manufacturing Remarks are to be Detailed on Reverse Side of This Form. Machine Application

"Promises, understandings, and/or agreements not embodied herein, or in a separate written agreement between Seller and Buyer, are not a part of this order, and cannot become a part of any contract subsequently found hereupon. This order is not binding upon Seller unless and until accepted by Seller on its signed Acknowledgement Copy of its Production Order hereon. This order is given by Buyer, and if accepted by Seller, will be filled by Seller upon the terms and conditions set forth on the reverse of this page which are hereby expressly made a part hereof.'





'Salesman Order No. . . .

Reverse side of order:

'Manufacturing Remarks

Finish of Metal





Special Instructions

Packing or Special Shipping Instructions

"Terms and Conditions'

'1. Seller will not be responsible for failure or delay in delivery, due fires, strikes, breakdown, delays of carriers, limited production, or causes beyond its control, or in any event, for consequential damages to Buyer for Seller's failure or delay in delivery.

'2. When this order is accepted, delivery will be made hereunder subject to the customary commercial tolerance of 10% plus or minus in yield and quantity.

'3. It is agreed that all goods manufactured under this order, and remaining on hand at date specified for final delivery, shall be shipped and invoiced without further notice.

'4. Orders accepted are not subject to cancellation by Buyer without Seller's written consent.

'5. Any alterations called for are to be at the expense of Buyer.

'6. Seller undertakes that products sold hereunder to Buyer shall correspond to the specifications on the front hereof; and Seller hereby expressly excludes all, any,

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or other, warranties, guarantees, or representations whatsoever.

'7. Advice by Seller regarding designs or wording on wrappers, cartons, labels, or on other materials sold to Buyer, which relate to products of Buyer, shall not impose any liability on Seller, or relieve Buyer of any duty, under contracts, laws or regulations relating to products of Buyer.'

The previous order for 40,000,000 boxes was on the same printed form.

There was testimony at the trial as follows: In the negotiations before March 17, (a) defendant knew the purpose for which the boxes were to be used by plaintiff, knew that plaintiff required boxes which would prevent 'wicking,' and knew that plaintiff was relying on defendant to supply boxes suitable for that purpose; and (b) defendant had orally assured plaintiff that defendant would supply boxes which would achieve those results. There was also testimony that before March 17, defendant had made tests to ascertain whether the boxes would thus be suitable and had reported the results of those tests before March 17 to plaintiff; and that plaintiff was sufficiently satisfied with those results to make its offer of March 17, as a bona fide offer, without awaiting the outcome of further tests, 3 although the parties arranged that further tests were to be made by defendant.

On March 18, defendant wrote plaintiff a letter reading as follows: 'We wish to acknowledge and thank you for your order given our Mr. Henry Gibbins, Jr., which calls for 100,000,000 seal and style Ply-Metal containers at $5.00 per thousand to be used in connection with the packaging and merchandising of your dehydrated soups. Our formal acknowledgment of your order is enclosed and the conditions of the order are supplemented as follows: (1) The conditions as set forth in our formal acknowledgment are part of the terms under which the order is accepted. (2) That since it is not possible for you to estimate the period of time wherein the entire quantity shall be produced, it will be understood that any radical increase or decrease in prevailing costs of raw materials will increase or decrease the selling price proportionately. (3) That after we get this production under way and should we devise methods or procedures that will enable us to produce this container at a cost less than originally estimated, the saving will be passed on to you. (4) That after the completion and delivery of the first ten million cartons which will be made of our regular Ply-Metal material (shiny aluminum finish inside and outside) and provided the existing demands of the United States Government on the aluminum industry on future productions the new Reynolds plastic finish or its equivalent as a substitute for aluminum on the outside. (5) That as long as it is possible for us to secure any aluminum, we will retain the aluminum liner on the inside of your container and no substitution will be made unless we have developed a suitable protective material for the purpose and provided you give us full permission to use the substitute; that as soon as the aluminum situation is modified to permit the general use of aluminum for domestic purposes, we will reinstate the Ply-Metal specifications with aluminum on both sides of the paper board. (6) That complete printing instructions in lots not less than 10,000,000 containers will be given us at least eight weeks before any anticipated delivery. When present day conditions are modified, this period can be reduced to four weeks. (7) That either your company or, as mentioned by you, The Bank of California of Seattle, Washington, will furnish our Credit Department with such financial information that will properly establish a credit relation to enable us to send our regular term of net thirty days f.o.b. our plant, New York.

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Keep in mind it is the intention of the Reynolds Metals Company to render every cooperation and assistance necessary to help you make this venture a success. The vast facilities of this company are your assurance the Reynolds Metals Company will always be in a position to give you the finest quality workmanship and the best possible service for the least amount of money.' The 'formal acknowledgment' enclosed with this letter is as follows:

"REYNOLDS METALS COMPANY "(A Delaware Corporation) "General Offices Date of Order Customer's Order No. Invoice No. 1/17/41 WD-1335 Date March 18, 1941 Sold to: ALASKA PACIFIC SALMON OF SEATTLE, WASH. 155 East 44th Street New York, N. Y. Shipped to and Destination: DRY-PACK CORPORATION Sodus, New York. From New York Expect to ship 10,000,000 as soon as possible, F.O.B. Our Plant balance as...

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