Chicago Litho Plate Graining Co., Ltd. v. Allstate Can Co., 87-2111

• Decision Date: 28 January 1988
• Docket Number: No. 87-2111,87-2111
• Citation: 838 F.2d 927
• Parties: CHICAGO LITHO PLATE GRAINING COMPANY, LTD., Plaintiff-Appellee, v. ALLSTATE CAN COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 927

838 F.2d 927

CHICAGO LITHO PLATE GRAINING COMPANY, LTD., Plaintiff-Appellee, v. ALLSTATE CAN COMPANY, Defendant-Appellant.

No. 87-2111.

United States Court of Appeals Seventh Circuit.

Argued Jan. 5, 1988.

Decided Jan. 28, 1988.

Anthony Pinelli, Chicago, Ill., for defendant-appellant.

Steven B. Varick, McBride, Baker & Coles, Chicago, Ill., for plaintiff-appellee.

Before CUMMINGS, FLAUM and RIPPLE, Circuit Judges.

CUMMINGS, Circuit Judge.

By applying basic principles of contract formation and assignment, the magistrate found that the preponderance of the evidence mandated that defendant Allstate Can Company (Allstate) owed plaintiff Chicago Litho Plate Graining Company (Chicago Litho) $30,625.00 plus interest for failing to perform its side of a bargain. We agree, and affirm for the reasons that follow.

We begin by reciting both the stipulated and contested facts from the record on appeal. Chicago Litho, an Illinois corporation with its principal place of business in Chicago, sued Allstate, a foreign corporation with its principal place of business in Clifton, New Jersey, to recover charges for color separation services performed for Apollo Container Corporation (Apollo). Apollo, a brokerage firm in the packaging business, had assigned the product of these services with the concomitant duty to pay for them to Allstate, which now denies such assignment. These services were for six designs, five related to Christmas and one which depicted Halley's Comet.

Keith Armato, then a salesman for Apollo, contacted a company called Wyandot in 1984. Under an oral agreement, confirmed later by a purchase order, Wyandot purchased decorated tin cans from Apollo which they filled with popcorn and sold. In 1985, Armato obtained a new order from Wyandot for additional decorated tin cans. This order again was by verbal agreement, although a salesman from Wyandot gave Armato a purchase order number. Wyandot never sent the purchase order and subsequently backed out of the agreement after the cans were manufactured.

Armato received Wyandot's verbal agreement in August 1985. Apollo then provided Chicago Litho the order to make color separations and film designs which then were sent to a metal-decorating company for the fabrication of plates later given to Allstate for use in making the cans. Apollo earlier had hired Allstate to manufacture the tin cans. This work was completed by September 1985.

The president of Apollo, Shel Newberger, learned around September 3, 1985, that Armato either had gone to work for Allstate or that he had formed his own company, Unilith, Inc. Allstate requires its salespersons to work as "independents," yet as found by the magistrate, (1) Armato answers his business telephone by saying "Allstate," (2) Armato's business cards and stationery all state "Allstate," and (3) Allstate sets the prices on all orders that Armato takes.

Armato took the Apollo business he controlled with him when he left in early September. Two months later, when Newberger decided that his company could not survive financially, Apollo was liquidated for the benefit of creditors in November 1985.

Right after Armato left, Newberger began negotiating with Richard Papera at Allstate regarding Armato's accounts. They conversed frequently, and by September 30, 1985, Newberger believed that Apollo and Allstate had reached an agreement regarding the Apollo accounts involving Allstate. This understanding was reflected in a letter from Newberger to James Quigley, president of Chicago Litho, dated September 30, 1985, in which he stated that Allstate had agreed to assume responsibility for the Chicago Litho bill on the Christmas design cans. ¹ A copy of this letter was also sent to Papera at Allstate. Newberger then sent a second letter bearing that same date to Kranzten Studio, which had done the actual artwork for the films made by Chicago Litho, also informing Kranzten that Allstate would pay the Apollo bill for the matter in question. In both letters, Newberger enclosed the invoices previously sent to Apollo by Chicago Litho and Kranzten, respectively, and told them to rebill the amounts owed to Allstate. Allstate paid the Kranzten bill of $10,200.00, and Papera did not contact either Chicago Litho or Kranzten to say either that they should not bill Allstate or that Newberger had misstated the agreement with Allstate. Chicago Litho subsequently rebilled Allstate for $30,625.00.

Newberger sent an additional letter dated September 30, 1985, to Papera which discussed various orders. Regarding the Wyandot order, this letter said that:

The Apollo orders for Wyandot, Inc. will be taken over by Allstate. Allstate has agreed to pay all artwork, separations and plate costs and Apollo is to advise Chicago Litho and Krantzten [sic] Studios of this and see to it that these costs previously invoiced to Apollo, are transferred to Allstate.

(Pl.Ex. 4). The letter further stated that Apollo would receive the difference between the cost and selling price and that Allstate would make cans using the same designs for resale to its other customers, which included Apollo. Newberger concluded his letter by asking Papera to let him know if he had "any additions, corrections, or other thoughts, etc."

The telephone calls between Newberger and Papera continued after this letter was sent. On October 17, 1985, Papera wrote Newberger "in reply to your letter of September 30 * * * [w]e are in agreement on most of the points in your letter, but I will restate some and try to clarify others." Regarding the Wyandot designs, Papera stated that:

Allstate will assume all costs for artwork, separations and plates for the Wyandot designs, and the designs will then belong to Allstate. The costs for the above will not be offset by the in house orders for Wyandot and I can see no profits that we would remit to Apollo.

He concluded this letter by stating that this was his "understanding of our many conversations regarding this unfortunate problem with Keith [Armato]." (Pl.Ex. 6).

At trial, Newberger testified that he phoned for a change in a price given by Papera on an order that had nothing to do with the designs in question but that otherwise he accepted Papera's changes. This acceptance included the term that Apollo would not get the difference between cost and selling price. The consideration for this agreement apparently consisted of the films and designs which became the property of Allstate and which have not been returned by Allstate.

Papera testified in response that after he sent the October 17 letter to Newberger, he became concerned that Wyandot was not taking delivery of the cans. He was not successful in contacting someone at Wyandot who knew of this matter. He also talked to Armato who stated both that he had a verbal agreement with Wyandot and that Newberger should have the purchase order. On October 24, 1985, Papera allegedly wrote a letter to Newberger stating that their agreement was based on having an order from Wyandot and that until the problem was resolved, he felt "the bill for separations should stay with Apollo as we first agreed." Newberger testified he never received this letter. Papera, however, claimed that the letter should have been mailed by his uncle, who takes the office mail to the post office several times each day.

Allstate eventually sold $18,628.79 worth of cans, and Wyandot took approximately $5,000.00-$18,000.00 in cans. ² The rest, about 5,000 of the cans, were taken by Apollo. Allstate, however, paid neither Chicago Litho nor Apollo any portion of the price it received for these cans.

The case was first tried before Judge Bua on July 30, 1986, who entered judgment for Allstate. After the court entered judgment, Chicago Litho's counsel was contacted by Newberger, who represented that Allstate assumed Apollo's debt in a signed writing. Holding that had this representation been admitted into evidence at trial it might have mandated a different result, Judge Bua granted Chicago Litho's motion for a new trial on the basis of newly discovered evidence, pursuant to Fed.R.Civ.P. 60(b)(6), and assigned the case to Magistrate Bucklo for trial, with the agreement of the parties. After trial on April 22, 1987, Magistrate Bucklo entered judgment for Chicago Litho for the full amount of its claim, $30,625.00 plus interest. Allstate subsequently filed a timely motion for a new trial under Fed.R.Civ.P. 59(a)(2), which was denied. This appeal followed.

We review the district court's finding that Allstate agreed to a binding assignment of the contract between Apollo and Chicago Litho according to the "clearly erroneous" standard of Fed.R.Civ.P. 52(a), which imposes a heavy burden on Allstate as appellant. See Reeder-Baker v. Lincoln National Corp., 834 F.2d 1373, 1377 (7th Cir.1987). As the Supreme Court has stated:

If the district court's account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous.

Anderson v. City of Bessemer City, 470 U.S. 564, 573-574, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (citations omitted); United States v. Rotherham, 836 F.2d 359, 362 (7th Cir.1988). The question for the appellate court under Rule 52(a) is not whether it would have made the same findings as the trial court, but whether based on the evidence presented it is left with a definite and firm conviction that the trial court erred in its judgment. Hughes v. United Van Lines, 829 F.2d 1407, 1416 (7th Cir.1987).

Allstate contends first that its correspondence with Apollo was not sufficient to form a binding contract because Papera's October 17, 1985 letter contained different terms from those in Newberger's September 30, 1985 letter. Next,...