Service Auto Supply Co. of Puerto Rico v. Harte & Co., Inc.

Citation533 F.2d 23
Decision Date14 April 1976
Docket NumberNo. 75-1145,75-1145
PartiesSERVICE AUTO SUPPLY CO. OF PUERTO RICO, Plaintiff-Appellee, v. HARTE & COMPANY, INC., Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Harvey Reich, New York City, with whom John J. Sobolewski and Aranow, Brodsky, Bohlinger, Benetar & Einhorn, New York City, were on brief, for defendant-appellant.

Harry E. Woods, Santurce, P. R., with whom Philip E. Roberts and Baker & Woods, Santurce, P. R., were on brief, for plaintiff-appellee.

Before COFFIN, Chief Judge, MATTHES ** and CAMPBELL, Circuit Judges.

COFFIN, Chief Judge.

This is an appeal by defendant Harte & Company, Inc. from a judgment in the amount of $86,623.30, following a jury verdict as to damages in a breach of contract action. Plaintiff-appellee, Service Auto Supply Co. of Puerto Rico, was, at the time of the events leading to this suit, known as Cle-Ware Industries, Inc. of Puerto Rico (Cle-Ware). Cle-Ware was a wholesaler of automotive accessories and Harte a New York manufacturer of plastic products, including car mats for the front and rear sections of automobiles. The contract, for alleged breach of which Cle-Ware brought suit, was for the delivery of car mats ordered in three purchase orders in the spring of 1969. The total price to Cle-Ware was $41,823.60, the recovery of which Harte sought by counterclaim.

The case was tried to a jury. Three witnesses testified for plaintiff Cle-Ware; the sole defense witness was Harte's president, Strauss. Various letters and other documents were introduced into evidence. At the close of all the evidence, the court granted plaintiff's motion for a directed verdict as to liability and its motion to dismiss defendant's counterclaim except for $8,000, the amount received by plaintiff in 1972 when it sold the goods to a third party. The critical issues are whether the court erred in directing the verdict as to liability and in so dismissing the counterclaim; and whether the jury's verdict as to damages was supported by the evidence.

The most troublesome issue lies in the direction of the verdict for plaintiff on liability. 1 While such a direction in favor of the party having the burden of proof is rare, it is permitted where that party "has established his case by testimony that the jury is not at liberty to disbelieve." 2 But the standard of proof to be met is a strict one. The Supreme Court in Brady v. Southern Ry. Co., 320 U.S. 476, 479, 64 S.Ct. 232, 234, 88 L.Ed. 239, 243 (1943), has defined the evidence meriting such a sudden death result as "such that without weighing the credibility of the witnesses there can be but one reasonable conclusion as to the verdict." In Federal Insurance Co. v. Summers, 403 F.2d 971, 975-76 (1968), we said:

"It is a rare case where the proponent is entitled to a directed verdict, Roche v. New Hampshire Nat'l Bank, 192 F.2d 203 (1st Cir. 1951), and indeed, the only case, where a directed verdict would be warranted would be where the proponent's . . . evidence establishing a prima facie case is uncontradicted and unimpeached. See, e. g., Chesapeake & O. R. Co. v. Martin, 283 U.S. 209, 51 S.Ct. 453, 75 L.Ed. 983 (1931); National Dynamics Corp. v. Petersen Publishing Co., 185 F.Supp. 573 (S.D.N.Y.1960). See generally 5 Moore's Federal Practice 2319 (2d ed. 1968). Even where the proponent's evidence is uncontradicted, a directed verdict would not be proper if the evidence gives rise to conflicting inferences, see, e. g., Readnour v. Commercial Standard Ins. Co., 253 F.2d 907 (10th Cir. 1958), or where the case is totally dependent on the credibility of a witness. See, e. g., Powers v. Continental Cas. Co., 301 F.2d 386 (8th Cir. 1962); Polhemus v. Water Island, Inc., 252 F.2d 924 (3rd Cir. 1958)."

In ordinary cases, such as this one, where the issues are factual, oral testimony is dominant, and the testimony from each side is likely to be given by witnesses who are committed in their views to one party or the other, whether or not legally "interested", the making of a motion for directed verdict by a party having the burden is a long shot gamble. In the generality of cases, it saves perhaps a few hours of jury time but nothing else. Affirmance requires the most detailed combing of the record and exposition by the appellate court. Reversal means an entire new trial and possibly another appeal. Perhaps its only merit is that if made and refused, the motion preserves, for a plaintiff, the issue of sufficiency of defendant's evidence in the event of a verdict for defendant. While counsel may feel obligated to make the motion, we advise caution on the part of the court.

The plaintiff's evidence consisted of the testimony of Michaels, who had been Harte's exclusive sales representative in Puerto Rico; 3 of Kaplan, the former president of Cle-Ware; and of Maldonado, Cle-Ware's former general manager. Their testimony can be summarized as follows. In late 1968 Cle-Ware's predecessor, Economy Auto Supply Co., had purchased some car mats from Harte, had complained about them, and Harte had arranged a transfer of the mats to another buyer, indemnifying Cle-Ware against any loss. Other companies had had similar complaints. On the very date when written evidence of the indemnification undertaking was given Cle-Ware, March 31, 1969, 4 Cle-Ware entered into a series of new orders, the first two carrying the notations "First quality merchandise only. Shipment will not be accepted with more than 2% 'seconds' or defectives. All new open front cartons."

The first shipment arrived in Puerto Rico on June 4. Shortly thereafter it was inspected by Michaels, Kaplan, and Maldonado. They testified that they opened at random approximately one fourth of the cartons in the shipment, and found that the mats had been shipped in smaller cartons without an open end front (for use on display shelves), were wrinkled or curled in cartons too small to contain them flat, were of varying shades within each set of two, had holes or bubbles, and some were lacking manufacturer's labels.

Within a few days of this first shipment, Kaplan and Michaels visited Harte's New York headquarters, seeing Senie, the sales manager, and Shedlin, the Vice President. Kaplan complained about the one shipment that had been made. The testimony of Michaels and Kaplan varied in detail about what was said at this meeting, but both agreed that further decision was held in abeyance until Senie went to Puerto Rico to look into the problem. Kaplan said that after this meeting, on the same day, he saw Strauss, and merely presented his problem to him, knowing that others were closer to the situation.

Senie wrote Michaels on June 17 that he would be coming to Puerto Rico within a few days. He came, viewed at least the first two shipments, offered Cle-Ware a rebate of $2.25 a set (each set carrying a price to Cle-Ware of from $3.85 to $6.65), and, this being refused by Kaplan, said he would go back to Harte and see what further action could be taken. Subsequently, Kaplan and Michaels inspected the third and fourth shipments (about June 19 and July 3), sampling about 25 per cent of the cartons and finding the same predominance of defective mats and cartons.

This, apparently, was the end of attempted settlement. On July 10, Senie wrote Michaels a mea culpa letter, saying both had been guilty of poor planning, in effect having looked on Puerto Rico as a dumping ground, and that, henceforth, only first quality goods should be programmed. On July 11, Kaplan cabled Harte, insisting on removal of the goods and payment of the excise taxes paid and damages suffered by Cle-Ware. Strauss called Kaplan at about this time and offered to take back the goods, if Cle-Ware would abandon any claim for damages. Failing that, Strauss (according to Kaplan) would flood Puerto Rico with low price car mats. Kaplan wrote Strauss on July 14 that Senie had not produced on his offer to increase the discount or remove the merchandise in late June; he warned of the continuation of large accumulating expenses and demanded immediate action. The suit was filed August 1. 5

Harte's witness its President, Strauss testified that he was aware of only one prior complaint concerning its products in Puerto Rico. He did not know of the indemnity arrangement with Cle-Ware in early 1969. The first time he knew of Cle-Ware's current complaint was on June 13, 1969, when Kaplan phoned him while in New York. Strauss said that Kaplan, having been unable to see Senie and Shedlin, wanted to see him. Kaplan came into his office, samples under each arm, and complaining about the cartons not revealing the product within, about colors of individual sets not matching, and about the mats being curled in...

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