Baumgold Brothers, Inc. v. Allan M. Fox Company, East

• Decision Date: 20 December 1973
• Docket Number: No. C 71-322.,C 71-322.
• Citation: 375 F. Supp. 807
• Parties: BAUMGOLD BROTHERS, INC., et al., Plaintiffs, v. ALLAN M. FOX COMPANY, EAST, and The United States of America, Defendants.
• Court: U.S. District Court — Northern District of Ohio

375 F. Supp. 807

BAUMGOLD BROTHERS, INC., et al., Plaintiffs, v. ALLAN M. FOX COMPANY, EAST and The United States of America, Defendants.

No. C 71-322.

United States District Court, N. D. Ohio, E. D.

December 20, 1973.

COPYRIGHT MATERIAL OMITTED

Ronald H. Isroff, Cleveland, Ohio, for plaintiffs.

Leonard B. Scharfeld, Cleveland, Ohio, for defendant Allan M. Fox Co.

Paul Brickner, Asst. U. S. Atty., Cleveland, Ohio, for defendant United States.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

BATTISTI, Chief Judge.

This is an action against the Allan M. Fox Company, East, seeking damages for breach of contract or, in the alternative, the conversion of property. Plaintiff is also suing the United States for breach of an insurance contract evolving from plaintiffs' shipment of merchandise by registered mail. The case came on for trial before this Court on September 13, 1973, the parties having waived their right to trial by jury. The Court makes the following findings of fact and conclusions of law in accordance with Rule 52(a), F.R.Civ.P.

FINDINGS OF FACT

1. Plaintiff Baumgold Brothers, Inc. (hereinafter Baumgold) is a citizen of New York, having its principal place of business in that state. It is engaged in the wholesale jewelry business.

2. Plaintiff Orion Insurance Company, Ltd. (hereinafter Orion) is a company registered under the laws of England, having its principal place of business in that country. It is engaged in the insurance business.

3. Plaintiff Leonard Toomey (hereinafter Toomey) is a citizen of England and is an underwriter at Lloyds, London, and a duly designated representative of the Underwriters at Lloyds, London (hereinafter Underwriters) who are individuals engaged in the insurance business.

4. Defendant Allan M. Fox Company, East (hereinafter Fox) was incorporated under the laws of the State of Ohio and at the relevant times in question was engaged in the retail jewelry business in that state.

5. Defendant United States of America (hereinafter United States) is a party to this action through the operation of the United States Postal Service.

6. On June 5, 1968, Fox mailed its purchase order to Baumgold requesting that a small selection of diamonds be "sent" to Fox for examination by a potential buyer. Delivery was requested on June 12, 1968.

7. Baumgold received the purchase order request on or before June 10, 1968.

8. Baumgold, as related by Mr. Theodore Baumgold, Treasurer of the plaintiff corporation, had previously done business with Fox. In 1967 Baumgold invoiced Fox for $1476.65 and shipped Fox merchandise on a memorandum basis valued at $16,406.00. Prior to June 10, 1968, Baumgold had invoiced Fox in the amount of $3323.35 and had sent merchandise worth $29,085.00 on memorandum. Mr. Baumgold further explained that in the jewelry trade a memorandum shipment permitted the retail jeweler the right to return merchandise to the wholesaler if the former was not able to procure a buyer.¹

9. Although Fox sent its purchase order, Baumgold determined from its prior course of dealing with Fox that an outright sale was not contemplated. Instead Baumgold treated the order as a request for a shipment on a memorandum basis.

10. On June 10, 1968, Theodore Baumgold, one of the principals authorized to fill orders, selected the diamonds and, in conformity with their established procedure, gave the merchandise to an employee, Mrs. Betty LoGiudice, for initial packaging and weight verification.

11. Mrs. LoGiudice wrapped the diamonds in paper and placed them in an envelope along with a copy of Baumgold's All Risk Memorandum,² a document intended to constitute the entire agreement of the parties.

12. Baumgold's shipping clerk, Mr. Charles Valverde, recorded a registry number for the shipment, 3067183, and Fox's name and address on a manifold, an official form provided by the Postal Service. Valverde placed the envelope containing the diamonds into a box, sealed the box, and affixed a mailing label addressed to Fox.

13. On June 10, 1968, Valverde placed the shipment under the control of the United States for delivery to Fox's place of business by registered and insured mail. A post office clerk signed and dated the original manifold and gave a copy to Valverde.

14. Baumgold, in addition, sent Fox a letter dated June 10, 1968, acknowledging the order and expressing its intent to ship the requested diamonds.

15. The actual declared value of the diamonds for the purpose of insurance with the United States during mailing, as determined by Baumgold's office manager, was $8000.00. The value to Baumgold, as evidenced by computing the per/carat price data contained on the All Risk Memorandum was $10,033.00. The former figure represents Baumgold's cost or inventory valuation.³

16. Mr. Chester Olinsky testified that on June 12, 1968, he was a postman with twenty years experience and was assigned a delivery route which included Fox's store. He further stated that on this date he tied three packages together which were addressed to Fox, filled out a white receipt slip and placed it with the bundle of packages for Fox. The receipt included registry number 3067183. Olinsky then gave the parcels to Mr. Howard Friedman for delivery.

17. Mr. Friedman, temporarily assigned to Olinsky's route, entered Fox's store during the morning of June 12, 1968, and placed the packages and other letters on a store counter. He uttered an expression intended to notify Fox personnel that the mail was being delivered. Friedman then left the store, leaving the mail on the counter, neglecting to ascertain whether a Fox employee was in the store, and failing to obtain a signed receipt for the Baumgold shipment sent to Fox by registered mail.

18. During the time that Friedman left the packages and letters on the counter, Mr. Allan Fox and Mrs. Ida Hirsch were working at their desks in the rear office of the store. They were not alerted to the presence of the mail until a customer entered the store and so informed them. Mr. Fox attended to the customer's needs. Mrs. Hirsch took the mail into the back office. She further testified, and the Court finds, that there were no packages on the counter at the time she was alerted to the presence of the mail.

19. On the afternoon of June 12, 1968, Friedman returned to the store to locate the mail receipt and to have it signed. He was permitted to search the office wastebaskets and the outside trash barrels but found neither the receipt nor the package wrappings.

20. Olinsky made a second white receipt slip on June 13, 1968, and on June 17, 1968, requested another Fox employee, Mrs. Ann Petti, now Woelper, to sign the receipt for three packages which Olinsky stated were delivered on June 12th. Woelper stated that she had no knowledge of the delivery, but signed the receipt on Olinsky's representation that the temporary postman had forgotten to obtain a signature.

21. During the afternoon of June 17, 1968, Woelper told Mr. Fox that she had signed a mail receipt for packages delivered on June 12th. Fox became angered, explaining that no packages had been delivered. He notified Olinsky and repeated attempts were made to recover the signed receipt.

22. On June 17, 1968, Fox notified Baumgold by an air mail postcard that the diamonds had not yet been delivered. Baumgold initiated a trace and subsequently submitted an indemnity claim to the United States. Baumgold's office manager made an undeliberate representation on the claim form that this shipment of diamonds was not commercially insured.⁴ The claim was rejected on the grounds that a receipt for the package was signed by Fox.

23. Orion insured Baumgold against loss or damage to its personal property in an amount up to $10,000.00. As a result of the loss of the diamonds, Orion reimbursed Baumgold in the amount of $750.00 and the parties entered into a subrogation agreement for that amount.

24. Underwriters insured Baumgold against loss or damage to its personal property in an amount up to $90,000.00. Underwriters reimbursed Baumgold in the amount of $6750.00 and entered into a subrogation agreement with Baumgold for that amount.

CONCLUSIONS OF LAW

1. Jurisdiction over Fox is based on diversity of citizenship, 28 U.S.C. § 1332.

2. Jurisdiction over the United States is pursuant to 28 U.S.C. § 1346(a)(2) which vests original jurisdiction in the district courts "concurrent with the Court of Claims of all claims not exceeding $10,000.00 founded . . . upon any contract . . . with the Government of the United States, or for damages . . . in respect to which claims the party would be entitled to redress against the United States." See Baumgold Brothers, Inc. v. Allan M. Fox Co.—East et al., 336 F. Supp. 175 (N.D.Ohio 1972).

3. The Uniform Commercial Code has been enacted in both Ohio and New York. The applicable provisions of the Code to this case are identical in each state, thus no conflict of law problem appears. Dorton v. Collins and Aikman Corp., 453 F.2d 1161, 1163 (6th Cir. 1972).

4. Baumgold and Fox were parties to a contract for the sale of goods. Under R.C. § 1302.09(A)(2), UCC § 2-206(1) (b), "an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods. . . ." Fox's purchase order constituted the offer in this transaction. Baumgold indicated its acceptance by two means. It sent a prompt response by mail acknowledging the order and promising performance; in addition it contemporaneously mailed the requested diamonds to Fox.

5. Baumgold's All Risk Memorandum enclosed with the shipment of diamonds constitutes a written integration of the contract in dispute. This form sets forth terms that are additional to and different from the terms of Fox's purchase order. At common law, the terms of a binding acceptance were required to be a mirror image of the terms...