790 F.2d 1098 (4th Cir. 1986), 85-1030, T & S Brass and Bronze Works, Inc. v. Pic-Air, Inc.
|Citation:||790 F.2d 1098|
|Party Name:||T & S BRASS AND BRONZE WORKS, INC., Appellee, v. PIC-AIR, INC., Appellant.|
|Case Date:||May 12, 1986|
|Court:||United States Courts of Appeals, Court of Appeals for the Fourth Circuit|
Argued Nov. 5, 1985.
[Copyrighted Material Omitted]
Vivian L. Crandall (E. Riley Anderson, Joyce, Anderson & Meredith, Oak Ridge, Tenn., on brief), for appellant.
Joseph M. Jenkins, Jr. (Horton, Drawdy, Ward & Johnson, P.A., Greenville, S.C., on brief), for appellee.
Before WIDENER and CHAPMAN, Circuit Judges, and BUTZNER, Senior Circuit Judge.
BUTZNER, Senior Circuit Judge:
In this diversity action for conversion and counterclaim for breach of contract, Pic-Air, Inc., appeals a judgment holding it liable to T & S Brass and Bronze Works, Inc., for $22,000, and holding T & S liable to Pic-Air for $14,931. We affirm the magistrate's judgment with but slight modification. 1
In February 1981, T & S Brass, a supplier of plumbing fixtures, paid Pic-Air $22,000 for the design and manufacture of
tooling to be used to cast zinc faucet handles for T & S. The tooling, which T & S owned, remained in the possession of Pic-Air, enabling it to produce handles for T & S under subsequent purchase orders.
In February 1983, T & S and Pic-Air contracted for the purchase of 52,500 faucet handles to be cast from the tooling. The handles were to be delivered by Pic-Air in four installments, beginning May 6, 1983. The contract specified that time was of the essence and that Pic-Air could not subcontract without first notifying T & S. The contract also provided that Pic-Air would deliver the tooling to T & S on demand.
On March 28 Pic-Air informed T & S by telephone that until T & S paid an outstanding invoice and agreed to pay an increased price for the handles, Pic-Air would not begin production. T & S agreed orally to both requests, and on March 30 Pic-Air ordered production to begin. T & S paid the invoice the following day.
On April 7, Pic-Air assured T & S that the May 6 installment would be delivered on time. Soon thereafter T & S learned that Pic-Air had subcontracted to a manufacturer in Taiwan, and in a letter dated April 14, T & S informed Pic-Air that the subcontracting violated the contract. Four days later T & S confirmed its oral agreement to pay the increased purchase price.
On April 21, Pic-Air notified T & S that the May 6 installment would not be delivered on time unless T & S agreed to pay the cost of air freight. Because delay would substantially disrupt its business, T & S agreed to pay for air freight and demanded assurance that subsequent installments would be on time. On April 26, Pic-Air gave the requested assurance, but on May 5 it notified T & S that the second installment of handles would not arrive on time unless T & S again agreed to pay for air freight. T & S agreed. Both the first and second installments arrived on time and were accepted.
On June 22, T & S received a third installment of more than 20,000 handles. The following day T & S phoned Pic-Air, informing it that at least 40 percent of the handles were unacceptably scratched and requesting return of the tooling. On June 27, representatives from Pic-Air came to T & S to examine the handles and discuss the problem. At this meeting T & S offered to sort the handles and return those that it could not use, charging Pic-Air for the costs of sorting. Alternatively, T & S offered to allow Pic-Air employees to sort the handles at the T & S facility. T & S told Pic-Air that it intended to change vendors, and it again demanded return of the tooling.
On June 29, Pic-Air notified T & S that the "slight imperfections" in the handles did not justify rejection and that Pic-Air did not authorize T & S to sort the handles. Pic-Air reiterated this position in a telex of July 5. Pic-Air did not respond to the demand for the tooling's return. T & S sorted the handles and used about half of them. In the later part of July, Pic-Air, without acknowledging that any of the parts were defective and without offering to pay sorting costs, asked T & S to return those handles that T & S claimed were defective. Pic-Air told T & S that its Taiwan subcontractor would replace the handles if in fact they were defective. T & S declined to return the handles on these terms.
On August 4, Pic-Air advised T & S that, because T & S had not paid for the prior three installments or for the air freight, Pic-Air would ship the outstanding fourth installment C.O.D., upon T & S's authorization.
By letter of August 8, Pic-Air for the first time acknowledged that improper packaging had caused scratches on some of the handles and again asked T & S to return the handles that it deemed defective. Pic-Air proposed that it would then determine whether or not these handles were defective and would replace the defective ones. Pic-Air expressly refused to pay the costs of sorting the handles. T & S did not return the defective handles.
On September 15, T & S filed this action against Pic-Air for conversion of the tooling. T & S sought damages of $22,000, the quoted purchase price for the tooling. Pic-Air counterclaimed for the air freight charges, the contract price of the three delivered installments, and the contract price on the fourth installment, which was never shipped.
The magistrate found that Pic-Air had converted the tooling as of April 14, 1983, the date of T & S's letter informing Pic-Air that it had breached the clause prohibiting subcontracting without prior notice. The magistrate entered judgment against Pic-Air for $22,000, plus prejudgment interest dating from April 14. The magistrate ruled that T & S was not liable for the air freight charges or for the price of the installment not shipped. The magistrate ruled that T & S's liability of $21,998 for the three delivered installments should be reduced by $6,792 for the defective handles and by $275 for the cost of sorting, resulting in a judgment against T & S of $14,931. The magistrate authorized T & S to sell the defective handles for scrap and apply the proceeds to Pic-Air's account if Pic-Air elected not to take possession of the handles in 60 days. Pic-Air appeals.
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