AC Becken Co. v. Gemex Corporation

• Citation: 314 F.2d 839
• Decision Date: 09 April 1963
• Docket Number: 13759.,No. 13577,13578,13577
• Parties: A. C. BECKEN CO., an Illinois corporation, Plaintiff-Appellee, v. The GEMEX CORPORATION, a New Jersey corporation, Defendant-Appellant. A. C. BECKEN CO., etc., Plaintiff-Appellant, v. The GEMEX CORPORATION, etc., Defendant-Appellee. A. C. BECKEN CO., etc., Plaintiff-Appellee, v. The GEMEX CORPORATION, etc., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

314 F.2d 839 (1963)

A. C. BECKEN CO., an Illinois corporation, Plaintiff-Appellee, v. The GEMEX CORPORATION, a New Jersey corporation, Defendant-Appellant.

A. C. BECKEN CO., etc., Plaintiff-Appellant, v. The GEMEX CORPORATION, etc., Defendant-Appellee.

A. C. BECKEN CO., etc., Plaintiff-Appellee, v. The GEMEX CORPORATION, etc., Defendant-Appellant.

Nos. 13577, 13578, 13759.

United States Court of Appeals Seventh Circuit.

February 28, 1963.

Rehearing Denied April 9, 1963.

Lorentz B. Knouff, Marshall Patner, Dixon, Morse, Knouff & Holmes, Chicago, Ill., for A. C. Becken Co. Edward A. Haight, Britton A. Davis, William J. Marshall, Jr., Chicago, Ill., for Gemex Corp.

Before HASTINGS, Chief Judge, and SCHNACKENBERG and KILEY, Circuit Judges.

Rehearing Denied April 9, 1963, en banc.

SCHNACKENBERG, Circuit Judge.

On these appeals we review the action of the district court on remandment, as directed by us on a prior appeal of this case, A. C. Becken Co. v. Gemex Corp., 272 F.2d 1 (7 Cir., 1959). Upon remandment it was the duty of the district court to assess plaintiff's damages and enter judgment that plaintiff recover treble damages and costs of suit, including reasonable attorneys' fees, to be fixed by the court. The district court conducted a trial on the issue of damages, filed findings of fact and conclusions of law, assessed plaintiff's damages, and entered judgment for plaintiff for treble damages in the sum of $74,294.04 on September 29, 1961.¹ The court subsequently heard evidence, made findings of fact, filed conclusions of law and entered judgment for $25,000 for attorneys' fees and costs of suit in favor of plaintiff on April 12, 1962.

From both the judgments defendant has appealed. From the judgment of September 29, 1961, plaintiff also has appealed.

1. In our 1959 opinion, supra, at 5, we concluded that the court was led into error in finding as a fact and concluding as a matter of law that plaintiff was not damaged as a result of defendant's refusal to sell watch bands to it after August 2, 1956. We said "Damage was proved". We added,

"While the evidence now in the record might be sufficient to justify a direction to the district court to compute therefrom plaintiff\'s actual damages sustained and make an assessment accordingly, we feel that the ends of justice would be better served if this cause be remanded for the purpose of considering the evidence already in the record on the subject of plaintiff\'s damages, as well as any proper evidence to be offered by defendant, and rebuttal evidence of plaintiff, on subject of plaintiff\'s damages, and fixing the proper amount of said damages. Such proceedings we now direct."

The record before us shows that the district court on remandment proceeded along the lines suggested. It heard additional evidence which was devoted to actual occurrences during the time which elapsed while the case was being litigated upon appeal. The court thus put itself in a position where it had the benefit, not only of such projections as might have been reasonably based upon the facts appearing at the first trial, which were at that time projected by plaintiff to prove further damages, but it also had the superior advantage of evidence of conditions which had in fact occurred while the case had been on appeal. We concur in the conclusion of the district court that, under these circumstances, evidence of actual occurrences and experiences between the first and last hearings may be considered in connection with the estimates of future damage introduced at the first hearing. Thus, a forecast of tomorrow's weather is always subject to confirmation or modification by tomorrow's observation. While the evidence at the first hearing was a reliable basis for prognostication and was legally admissible to prove damage, no one can deny that to the extent future events modified its correctness, the entire evidence must be considered together. This the court did in this case and we find no error in that respect.

2. Plaintiff contends that on remandment the district court erred by considering a deduction for sales commissions in its computation of damages. In its own computation plaintiff had reduced anticipated lost profits by deducting an average figure for sales commissions, this figure being 4.5% which, according to plaintiff, was its "average of all sales, from sales on full 10% commission to sales on no commission at all". However, the district court did not agree and deducted an additional $11,669.02 as sales commissions, determining that one-half of plaintiff's sales were on full commission, resulting in a deduction of $11,002.22 as the difference above the 4.5% average for this amount. The court also determined that on one large account there was a 5% commission and deducted $666.80 as the difference above the 4.5% average. Plaintiff contends that the court left the 4.5% figure stand against all remaining sales even though they were not subject to any commission.

Recognizing these contentions, the court in finding 8 said:

"The evidence is insufficient to permit a finding as to the exact portion of plaintiff\'s Gemex watchband sales which were and would have been initiated by mail order, for the reasons, among others, that

"(a) within two years after filing the instant suit plaintiff destroyed or otherwise made unavailable all its file copies of sales invoices; * * *".

The destruction of these records is referred to by plaintiff in a brief manner:

"Defendant argues that it was prejudiced when plaintiff destroyed invoices kept for its own business purposes. Defendant did not make any discovery in this case until after the first appeal was over, and after plaintiff had put in its proof on damages. Defendant never made any discovery on plaintiff\'s purchases from any seller, or on sales to any buyer. Defendant simply repeats the statement that it was harmed, but never shows how."

We are convinced that in this respect the court acted properly. It was confronted with a difficult task and the difficulty was increased by plaintiff's destruction of its own records within two years after it had filed its suit. In the absence of these records and in view of the uncertainties presented, the court properly estimated this deduction on the basis of existing evidence and reasonable inferences to be drawn therefrom. Plaintiff is not entitled to complain of the results thus reached by the court. The situation which it created by the destruction of these records while the litigation was pending is akin to that created by a party refraining from calling a witness who would be able to testify about a material point. Such conduct is in itself an admission that the introduction of such evidence would be damaging to the party not producing it. Our attention has not been directed to any evidence in the record to explain why this destruction of records took place while this case was pendente lite. The law is well settled that these circumstances give rise to an inference that the records destroyed would have been unfavorable to plaintiff. It enhances the probative value of such evidence as the court relied upon to prove facts as to which the destroyed records would have been competent proof. 31 C.J.S. Evidence § 153, pp. 845-847.

The district court in determining the damages which plaintiff was entitled to recover correctly followed the principles of law applicable thereto and we cannot say that its findings of fact were clearly erroneous, under 28 U.S.C.A. Rule 52(a).

3. Defendant relies upon its alleged offer on April 14, 1958 to resume selling watchbands to plaintiff and contends that what had initially been a refusal to sell then became a mere refusal to buy, and that no award of damages sustained by plaintiff after that date should have been made. In other words, it is defendant's position that plaintiff's subsequent loss of profits cannot be attributed to the original wrong. We disagree.

Defendant's position is based upon the testimony of Ernst Keitel, a former sales representative, who testified that on April 14, 1958 he called upon Raymond Feare, plaintiff's jewelry buyer, and as "the new representative in the territory" solicited plaintiff's account as a wholesale distributor of Gemex watchbands. Prior to that date Keitel had never met Feare. He was making a call in his own territory, which he had taken over some months previously. He testified that "I was hoping that we could show him the line with the anticipation, of course, that they should again carry our line." Feare was not interested.

On...