Chicago Daily News, Inc. v. Kohler

• Decision Date: 18 June 1935
• Docket Number: No. 22687.,22687.
• Citation: 360 Ill. 351,196 N.E. 445
• Parties: CHICAGO DAILY NEWS, Inc., v. KOHLER.
• Court: Illinois Supreme Court

360 Ill. 351

196 N.E. 445

CHICAGO DAILY NEWS, Inc.,

v.KOHLER.

No. 22687.

Supreme Court of Illinois.

April 12, 1935.

Rehearing Denied June 5, 1935.

Motion to Reconsider Denial of Rehearing Denied June 18, 1935.

Error to Third Branch Appellate Court, First District, on Error to Circuit Court, Cook County; John R. Caverly, Judge.

Suit by the Chicago Daily News, Incorporated, against G. A. Edward Kohler, wherein defendant pleaded a set-off, and Mary Everett Kohler, administratrix of the estate of G. A. Edward Kohler, deceased, was substituted as defendant. Judgment for plaintiff was affirmed by the Appellate Court, (276 Ill. App. 87), and defendant brings certiorari.

Reversed and remanded.Winston, Strawn & Shaw, of Chicago (Edward W. Everett, of Chicago, of counsel), for plaintiff in error.

Fisher, Boyden, Bell, Boyd & Marshall, of Chicago (Thomas L. Marshall and David A. Watts, both of Chicago, of counsel), for defendant in error.

FARTHING, Justice.

The Chicago Daily News, Inc., sued G. A. Edward Kohler in assumpsit in the circuit court of Cook county and alleged a breach of a written contract. Kohler pleaded the general issue and filed a plea of set-off. He died prior to the trial. His widow, Mary Everett Kohler, was substituted as administratrix of his estate. The jury found the plaintiff entitled to $48,700damages, and judgment was rendered upon the verdict. The Appellate Court for the First District affirmed the judgment. We granted a writ of certiorari, and the case is here for a further review.

The plaintiff publishes a newspaper in Chicago. G. A. Edward Kohler, doing business under the name of Kohler Brothers, at the time of the execution of the contract sued on was manufacturing the Kohler magazine reel, a patented apparatus for feeding paper to printing presses. His factory was located at Mishawaka, Ind. The reel was invented in the plant of the Chicago Daily News Company (not to be confused with the plaintiff, which was incorporated in 1925), by one Irving Stone, an employee, who assigned his rights to the invention to Kohler. On July 15, 1907, prior to the issuance of a patent, Kohler and his brother in writing granted a license to the Chicago Daily News Company ‘to use roll supports of the kind described and claimed in the application filed in United States patent office June 18, 1900, serial No. 20682, in connection with the plant of the Chicago Daily News in the city of Chicago, county of Cook and State of Illinois, the right to use these roll supports covering the printing of all papers printed on presses of the plant.’ On January 12, 1915, letters patent covering the reel were issued to Kohler. On July 27, 1927, Kohler submitted to the plaintiff a proposal providing in part:

‘We propose to furnish 72 Kohler magazine reels per specifications attached and made a part of this contract, for use in the plant of Chicago Daily News at Chicago, Illinois, subject to the following terms and conditions:

‘Price for each reel, four thousand dollars ($4,000.00) f. o. b. cars factory.

‘Total amount of contract Two hundred eighty-eight thousand ($288,000.00) dollars.

‘Terms of payment: Twenty per cent (20%) in cash upon acceptance of contract by purchaser;

‘Twenty per cent (20%) thirty (30) days thereafter;

‘Twenty per cent (20%) sixty (60) days thereafter;

‘Twenty per cent (20%) upon shipment;

‘Twenty per cent (20%) ninety (90) days after shipment.

‘Proportionate payments shall be made for partial shipments.

‘Payment in full shall not relieve Kohler Brothers of the guarantees covered by this contract.

‘Shipment shall be made on or about as specified 19.....

‘It is important that the installation of presses is not delayed because of delay in shipment of the reels, and the above shipping date is set accordingly. Purchaser, therefore, agrees to accept shipment on the specified date.

‘The apparatus covered by this proposal is built to meet the special requirements of the purchaser, is applicable for this installation only, and this contract is therefore not subject to cancellation for any cause whatsoever.

‘Foundation for reels, means for supporting belt shaft bearings on press structure, and drives for connecting the belt shaft to the press shall be furnished by purchaser in accordance with drawings approved by Kohler Brothers.

‘Purchaser shall furnish, or direct other interested parties to furnish, without expense to Kohler Brothers, all drawings, written data and dimensions which are in Kohler Brothers' opinion necessary for the installation and operation of the reels; and Kohler Brothers will furnish, without expense, the necessary drawings and data co-ordinating with the data so furnished.

‘Any delay in securing this data will constitute a proportionate extension of the specified shipping date.’

A letter accompanying it was expressly made a part of this proposal. In the letter Kohler credited the plaintiff with $90,000, thus reducing the sale price to $198,000, or $2,750 for each of the seventy-two reels. A further allowance of $18,000 was made for fifteen reels then in use in the plaintiff's pressroom, which were to be delivered to Kohler. The last paragraph of the letter refers to the $90,000 credit and says: ‘This allowance is made because of the privilege extended to you in the agreement dated July 15, 1907, conceding your right to use these reels in the plant of the Chicago Daily News.’ After deducting the two credits there remained $180,000 to be paid, and the plaintiff contends this fixed the price at $2,500 per unit for the seventy-two reels. On August 4, 1927, the plaintiff accepted the offer thus made.

The provisions of the contract concerning payment and shipment were modified on November 22, 1927, to read: ‘20% of the contract price in cash upon acceptance of contract by purchaser; 20% November 25, 1927; 10% February 1, 1928; 10% April 1, 1928; 10% June 1, 1928; 10% August 1, 1928; 10% October 1, 1928; 10% November 1, 1928. Shipment of eight (8) of these reels will be made on or about December 1, 1927. Shipment of the sixty-four (64) remaining reels to be made September 1, 1928.’ Prior to this modification, and on August 15, 1927, the plaintiff had notified Kohler to deliver eight reels on December 1, 1927. It stated that the other sixty-four reels must be ready when the presses were installed in its new building, and that it expected to have the plant in operation by January 1, 1929.

On November 23, 1927, Kohler accepted the plaintiff's order for two additional reels. In accepting this order he said: ‘We will treat this order separately from the contract for seventy-two Kohler magazine reels, and will bill them to you when delivered at the price stated in the contract,subject to terms thirty days.’ On November 30, 1927, confirming its order, the plaintiff wrote Kohler and said: ‘This letter will serve as confirmation of my verbal order to increase our original order by two (2) magazine reels, these reels to be delivered at the earliest possible date for erection in our experimental building on the West Side. These two reels to be priced at the same rate as the seventy-two (72) reels specified in our contract.’ The two reels were shipped to the plaintiff on January 6, 1928, and it paid Kohler $2,750, each, for them.

Thirty-eight reels were delivered under the original agreement. Of these, eight were shipped in December, 1927, and thirty between September 1 and December 3, 1928. Six payments, aggregating $144,000, were made to Kohler, as follows: Check dated September 7, 1927, for $36,000; check dated December 1, 1927, for $36,000; check dated February 2, 1928, for $18,000; check dated April 6, 1928, for $18,000; check dated June 19, 1928, for $18,000; check dated August 1, 1928, for $18,000.

From time to time prior to August 1, 1928, Kohler requested in express language both the percentage and the corresponding sum of money then due under the modified agreement of November 22, 1927. The plaintiff did not make the payments due on the first days of October and November, 1928.

The eight reels shipped in December, 1927, were installed in the plaintiff's plant. Between August 4, 1927 (the date of the original contract), and May 16, 1928, the plaintiff changed the design of its presses and pressrooms to economize space. On the day last named it wrote to Kohler and stated that these changes made the use of his magazine reels impossible. It informed Kohler that it would accept no more reels and instructed him to terminate deliveries and to discontinue work. ‘We hereby notify you,’ the letter continued, ‘that said contract is hereby finally canceled and terminated by us. We shall be glad to discuss with you, as your convenience, the matter of fair reimbursement of such outlay, if any, already made in connection with this contract.’ Kohler refused to assent to the cancellation. In his answer he stated that in reliance on the contract ‘we have ordered all these reels and the principal parts of all of them have now been manufactured and we are in position to deliver them in accordance with the contract.’

When the design of the printing presses was changed the plaintiff thought a two-arm reel could be used in place of the three-arm reel specified in the contract. This was an entirely different apparatus. Kohler submitted plans for a two-arm reel to be used with the new presses. Extended negotiations followed but no agreement for such reels was ever made and the original contract as modified remained in force. The plaintiff's own design was eventually used and the two-arm reels were constructed by a third party.

On July 17, 1928, the plaintiff offered to sell Kohler the sixty-four undelivered reels at $2,500 each. Receipt of this offer appears to have been the first actual notice to Kohler that the plaintiff intended to sell the undelivered reels, although he had known for three months that the plaintiff could not use them. In his reply on July 18 Kohler directed attention to clause 3 of the...