Franklin Research & Develop. Corp. v. Swift Elec. Sup. Co.
| Citation | 340 F.2d 439 |
| Decision Date | 29 December 1964 |
| Docket Number | Docket 28799.,No. 3,3 |
| Parties | FRANKLIN RESEARCH AND DEVELOPMENT CORPORATION, Plaintiff-Appellee, v. SWIFT ELECTRICAL SUPPLY CO., Inc., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
John T. Moran, Jr., New York City (Clark, Carr & Ellis, New York City), for plaintiff-appellee.
Samuel Gottlieb, New York City (Gainsburg, Gottlieb, Levitan & Cole, Harry Giesow, New York City, of counsel), for defendant-appellant.
Before LUMBARD, Chief Judge, and MOORE and SMITH, Circuit Judges.
Defendant, Swift Electrical Supply Co., Inc. (Swift), appeals from a judgment of $24,970.62 awarded as damages for breach of contract in favor of plaintiff, Franklin Research and Development Corporation (Franklin) in a diversity suit after trial without a jury. Finding no error, we affirm.
Swift contends that no contract existed because the parties' communications expressed no meeting of the minds. It also argues that, assuming that a contract did exist, Franklin cannot recover the contract price because it disassembled the goods and sold various components.
Whether the law of New York or Connecticut applies need not be debated because the trial court concluded that in determining the validity of the alleged agreement "the result is the same under both New York law and Connecticut law."
Franklin is a manufacturer of electrical equipment. Swift is a wholesale dealer in electrical equipment. On April 16, 1959, Swensen, an electrical contractor, ordered 992 fluorescent light fixtures from Swift. These fixtures were to be installed by Swensen as ceiling lamps in a shopping center under construction at Wallkill, New York. The delivery date was "To be agreed upon Approximately ½ on June 15th." Swift communicated with Franklin as to manufacture of the fixtures and, after obtaining a satisfactory price, it asked to examine a sample.
On May 22, 1959, Robinson, a salesman for Franklin; Sodora, the president of Swift; Hennessey, a branch manager for Swift; and Swensen met at Swift's warehouse in Nanuet, New York, to examine the sample fixture supplied by Franklin. At this meeting Sodora signed an order for the purchase of the fixtures. No delivery date was specified in the order, which read in part as follows:
This order was acknowledged on May 29, 1959 by Fullerton, the manager of Franklin's Norwalk branch. The acknowledgment contained the following terms:
However, this acknowledgment was rejected by Swift on the ground that Franklin's reply did not reflect the correct cash discount to be given Swift. On June 20th Franklin sent Swift a corrected acknowledgment showing the discount to be "2% 10th and 25th — net 30 days". This second acknowledgment was never answered by Swift.
On August 18, 1959 and on September 15, 1959 Franklin wrote Swift requesting a definite delivery date, since Franklin desired to fit the order into its production schedule. In the letter of August 18th, Franklin also requested information as to the type and construction of the ceiling mountings desired for the fixtures. Since Swift never replied to these requests, Franklin put the order into an "indefinite hold" category until October 1959.
On October 13, 1959 Swift delivered to Franklin the following:
(a) A detailed delivery schedule and a request to proceed with manufacture of the fixtures. (The delivery schedule called for delivery of one-third of the fixtures on December 1, 1959, one-third on January 1, 1960 and the remainder on February 1, 1960.)
(b) Instructions concerning the construction of the ceiling mounts and hangings for the fixtures coupled with a request for certain structural modifications in the fixtures to conform to the hanging instructions.
(c) A request from Swensen to reduce the number of fixtures to 842, was granted. All other details of the transaction were to remain as outlined in the May and June communications.
Franklin proceeded to manufacture the fixtures and to order ballasts and plastic louvers for them. On December 15 Swift notified Franklin that the Wallkill project was behind schedule and that delivery of the fixtures should be suspended. However, no request was made to stop production.
About December 21st Swensen called Franklin to advise Franklin not to release any fixtures and not to proceed with the manufacture of any more than were in stock. On December 23rd Robinson received a letter from Swensen confirming the request to halt delivery on the first lot of 600 fixtures which Swensen "understood to be ready." A new delivery date was given of approximately February 15, 1960, but Swensen advised Franklin to resell the first lot of fixtures if Franklin had "another order" and that in the event of resale Swensen was willing "to take delivery as your Franklin's production warrants it." This letter further requested that a "stop" be put on production of the second lot of 242 fixtures.
Franklin packed all 842 of the fixtures during January 1960. By this time ballasts had been installed in each fixture and they were ready for delivery with the exception of the louvers which had been cancelled by Franklin after learning of the delay in the delivery date of the fixtures. Since Franklin had no storage room at its Norwalk plant, the fixtures were placed in a nearby public warehouse to await further instructions from Swift or Swensen.
On February 23, 1960 Franklin wrote Swift to advise that the fixtures had been placed in storage and requested a definite new delivery date. On March 7, 1960 Swift was again advised that the fixtures were in storage.
On March 7, 1960 Swift called Franklin to advise that the entire order would have to be cancelled due to the precarious financial condition of the Wallkill shopping center. This conversation was confirmed by Sodora in a letter to Franklin requesting that a "cancellation charge be submitted before any extra charges are added to those already owed."
On March 31, 1960 Franklin again advised Swift that the fixtures were completed and in storage at Norwalk. Franklin also stated that the fixtures could not be readily resold since they "were not a standard catalogue item," but that all possible efforts would be made to assist Swift in finding another buyer. Franklin further demanded payment for the fixtures.
Franklin paid storage charges on the fixtures up to July 1, 1960 and for the removal of the goods plus the transportation charges to Franklin's Massachusetts plant where Franklin had available space of its own. In addition, Franklin sold all of the ballasts at cost. It could sell only 121 of the fixtures, however, and these were sold only after modifications which cost Franklin from $31.48 to $39.96 per fixture.
Swift argues that the parties never entered into a binding agreement since Franklin's acknowledgment of Swift's order was in itself a counteroffer and thus an implicit rejection of the terms of the offer and emphasizes the variations between the order of May 22nd and Franklin's acknowledgment. For example:
(a) Swift's order states that it is "subject to approval of the owners" while Franklin's reply is silent on this point. However, the trial court found that Swift and Swensen represented that the owners had delegated power of approval to the intermediate purchasers. Thus final approval of the owners "was not a condition precedent which prevented consummation of the agreement"1 since Franklin was led to believe that such approval had already been secured.
(b) Swift's order states that the fixtures are to be supplied with "necessary hagings sic satisfactory to contractor" while Franklin's acknowledgment states that the "ceiling construction" of the fixtures was "to be advised." Here Franklin simply appears to have echoed Swift's original thought. This interpretation seems reasonable in view of the fact that the parties left the meeting of May 22nd having failed to settle the details of the construction of the hangings for the fixtures, and that it would be natural for them to confirm the existence of this open term in their communications.
Swift also argues that it was industry practice to regard a transaction as incomplete until a release to begin production had been given, and that the agreement reached by the parties in May 1959 was thus "no more than tentative" until Swift gave such a release.2 But delivery instructions were at most an "open" term to be settled by subsequent negotiation within the context of an already binding contract,3 and a definite schedule was given on October 13th. Moreover, the October 13th modification itself can stand as an independently enforceable contract of sale; the terms not discussed at that meeting can be incorporated from the May and June communications, to which the...
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