Comeq, Inc. v. Mitternight Boiler Works, Inc.

• Citation: 456 So.2d 264
• Parties: 39 UCC Rep.Serv. 488 COMEQ, INC. v. MITTERNIGHT BOILER WORKS, INC., a Corporation. MITTERNIGHT BOILER WORKS, INC., a Corporation v. COMEQ, INC. 82-1134, 82-1261.
• Decision Date: 27 July 1984
• Court: Supreme Court of Alabama

Page 264

456 So.2d 264

39 UCC Rep.Serv. 488

COMEQ, INC. v. MITTERNIGHT BOILER WORKS, INC., a Corporation.

MITTERNIGHT BOILER WORKS, INC., a Corporation v. COMEQ, INC.

82-1134, 82-1261.

Supreme Court of Alabama.

July 27, 1984.

Caine O'Rear III of Hand, Arendall, Bedsole, Greaves & Johnston, Mobile, for appellant/cross-appellee Comeq, Inc.

Joseph M. Allen, Jr. and Craig S. Pittman of Hamilton, Butler, Riddick, Tarlton & Allen, Mobile, for appellee/cross-appellant Mitternight.

EMBRY, Justice.

The Facts

Appellant, Comeq, Inc., is a machine tool importer and distributor with offices in Baltimore, Maryland. Its business is the purchase and reselling of heavy machinery and equipment purchased by Comeq from various manufacturers.

One machine sold by Comeq is an "angle bending roll" manufactured by a company called "Swedish Tool," which markets its products under the name of "Roundo." That machine is used in the steel fabricating industry to roll angles, channels and beams into circular shapes to be used for supports. It is a standard machine, listed in the Roundo catalog and manufactured pursuant to standard specifications. Of approximately 420 machines sold by Comeq prior to March 1978, about 300 were angle bending rolls. In the year prior to March 1978, Comeq sold approximately 70 to 80 machines.

Beginning in 1974, Comeq made a number of contacts with appellee and cross-appellant Mitternight Boiler Works, Inc., in an effort to sell Mitternight one or more angle bending rolls. In October of 1977, specific negotiations ensued and on 22 March 1978, Comeq delivered to Mitternight a telex offering to sell a specific model of the roll for $74,424, plus $2,226 for a digital readout.

By return telex, Mitternight accepted Comeq's offer to sell one model R7S:

"Consider this wire to be our firm commitment to purchase from you one model R7S Roundo Angle Bending Roll per quoted specifications for $74,424.00 firm. P.O. Number will follow upon completion of IDB procedures. Advise adjusted Ocean Freight FAS Port of Mobile and discount for 90 per cent advance payment pendant mounted digital readout of roll position is also req'd per quoted additional $2,226. We appreciate your long attention to this matter."

This acceptance was received by Comeq on 27 March 1978.

On 28 March 1978, Comeq committed in writing to Roundo to purchase an angle bending roll to fulfill its contract with Mitternight. The cost of the machine to Comeq was $52,578.25.

On 29 March 1978, after Comeq was committed to purchase the machine from Roundo, Mitternight advised Comeq it would not purchase the R7S as agreed. The machine ordered by Comeq for resale to Mitternight was indeed purchased by Comeq from Roundo and was later sold by Comeq to another customer. The sale price for the machine was the same as it would have been to Mitternight.

In September of 1978, Comeq sued Mitternight for breach of contract. It claimed as damages the profit lost on the agreed sale due to Mitternight's alleged breach. The case proceeded to trial. Mitternight made an oral motion for directed verdict at the conclusion of the plaintiff's evidence. The ground set forth for that motion was that there was no evidence of a binding contract. It did not touch upon plaintiff's theory of damages.

At the conclusion of the evidence, the court expressed concern over whether Comeq's theory of damages was appropriate under Alabama law. It advised counsel for both parties it would charge the jury as to Comeq's lost-profit theory of damages but that, in the event of a verdict in favor of Comeq, it would consider setting aside such a verdict on the basis that only nominal damages were recoverable. Consequently, it reasoned, if it was reversed on appeal, the jury verdict could be reinstated without the necessity of a new trial.

The trial court then charged the jury as to Comeq's lost-profit theory of damages. It also instructed the jury that, in the event of a verdict in favor of Comeq, the rate of interest to be applied was six per cent.

After deliberating, the jury found Mitternight had breached the contract, and it rendered a verdict for Comeq in the amount of $30,951.75. That verdict was based on the profit lost on the sale plus interest at the rate of six per cent per annum from September 1978. Judgment was entered on the verdict and costs were taxed against Mitternight.

Mitternight then filed motions for new trial and for judgment notwithstanding the verdict, both grounded on the damages issue. Comeq filed a post-trial motion requesting the court to enter judgment calculated on the basis of twelve per cent interest from the date of breach of contract, rather than six per cent interest, calculated from the date of judgment as charged.

Comeq's motion for amendment of the judgment regarding interest was denied, but Mitternight's motion for judgment notwithstanding the verdict was granted. In granting that motion, the court set aside the judgment for $30,951.75 and entered judgment in favor of Comeq for the nominal sum of $100 plus costs.

By its ruling, the trial court determined: (1) evidence was sufficient to support the determination that a contract existed and that Mitternight had breached it; and (2) Comeq was not entitled under § 7-2-708, Code 1975, to recover the profit lost on the sale.

Comeq appeals to this court from the final judgment entered by the trial court and also from that court's denial of its motion to recalculate the interest.

Mitternight cross-appeals, alleging the trial court erred to reversal by failing to determine the evidence insufficient to support a finding that a contract existed between the parties.

I

Three issues are presented on appeal. First, Mitternight, in its cross-appeal, contends the trial court erred in determining that a contract existed between Mitternight and Comeq.

There was ample evidence at trial that the parties agreed to a contract of sale. Comeq's telex of 22 March 1978 stated, "We offer you one new Roundo angle bending roll size R7S." Mitternight responded by telex of 27 March 1978, "Consider this wire to be our firm commitment to purchase from you one model R7S Roundo angle bending roll." Alabama's Commercial Code sets forth a flexible rule regarding the formation of a contract for the sale of goods:

"(1) A contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

"....

"(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis of giving an appropriate remedy."

Section 7-2-204, Code 1975. The Code also provides that:

"(1) A definite and reasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms."

Section 7-2-207, Code 1975.

Mitternight's telex of 27 March 1978 was not expressly conditioned upon Comeq's assent to any different or additional terms. It clearly constituted an acceptance of Comeq's previous offer. Therefore, the trial court correctly submitted the question of the existence of a contract to the jury for determination. Mitternight's motions for directed verdict were properly denied and, likewise, the trial court was correct in refusing to set aside the jury's finding that a contract existed and that it had been breached by Mitternight.

II

Comeq contends the trial court erred in the construction of § 7-2-708, Code 1975. That section provides:

"(1) Subject to subsection (2) and to the provisions of this article with respect to proof of market price (section 7-2-723), the measure of damages for nonacceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this article (section 7-2-710), but less expenses saved in consequence of the buyer's breach.

"(2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this article (section 7-2-710), due allowance for costs reasonably incurred and due credit for payments or proceeds or resale."

Mitternight claims that any lost-profit damages to which Comeq is entitled must be computed in accord with U.C.C. § 2-708(1), which requires that a set-off be made for all profits received by plaintiff as a result of sale to a third party of the machine ordered for Mitternight.

Comeq cites U.C.C. § 2-708(2) as the proper measure,...