Continental Copper & Steel Industries v. Bloom

• Decision Date: 30 April 1953
• Citation: Continental Copper & Steel Industries v. Bloom, 96 A.2d 758, 139 Conn. 700 (Conn. 1953)
• Court: Connecticut Supreme Court
• Parties: CONTINENTAL COPPER & STEEL INDUSTRIES, Inc. v. BLOOM. Supreme Court of Errors of Connecticut

Page 758

96 A.2d 758

139 Conn. 700

CONTINENTAL COPPER & STEEL INDUSTRIES, Inc. v.BLOOM.

Supreme Court of Errors of Connecticut.

April 30, 1953.

John W. Joy, Hartford, William M. Pomerantz, Hartford, for appellant, defendant.

Harry W. Hultgren, Jr., Hartford (Richard T. Steele, Hartford, on the brief), for appellee, plaintiff.

Before BROWN, C. J., and JENNINGS, BALDWIN, INGLIS and O'SULLIVAN, JJ.

BALDWIN, Associate Justice.

The plaintiff brought suit against the defendant for his refusal to accept and pay for certain fuel oil tanks which the plaintiff had manufactured pursuant to a contract with him.The court rendered judgment for the plaintiff and the defendant has appealed.

The defendant was a dealer in fuel oil tanks which he purchased from suppliers and sold to building contractors.In September, 1947, it was virtually impossible to obtain steel and there was a consequent shortage of fuel oil tanks.The plaintiff was engaged chiefly in the fabrication of steel pipe and had steel plate available for that purpose.It also had some facilities for manufacturing tanks.The defendant needed tanks.He knew that the plaintiff had a supply of steel suitable for their manufacture but that it had had only a limited experience in the fabrication of fuel oil tanks.On September 12, 1947, the defendant submitted a purchase order for thirty 275-gallon, twenty 500-gallon and ten 1000-gallon fuel oil tanks, notwithstanding the fact that the plaintiff had tried to discourage the defendant from so doing.The only basis on which the plaintiff would and did accept the order was at a price of cost of manufacture plus 10 per cent profit.The defendant knew that this price would not be competitive with the prices of regular tank manufacturers.

In October, after some of the smaller tanks had been completed, the plaintiff advised the defendant that the price of the 275-gallon tanks would be 50 per cent over the market price at that time.The defendant's accountant checked the plaintiff's costs of manufacture.The defendant complained about the high price but made no objection to the plaintiff's methods of accounting costs.At this time, the plaintiff told the defendant that the price of the 500- and 1000-gallon tanks would be more comparable to, yet much higher than, the published price for such tanks.The defendant knew that the fittings and heads for these tanks had been ordered from the suppliers but had not yet been received and that the plaintiff was proceeding to manufacture the tanks.He did not tell the plaintiff to stop.On November 13, 1947, the defendant took delivery and paid for twenty-nine of the 275-gallon tanks.He did nothing until February 17, 1948, to inform himself of the costs of the larger tanks, nor did the plaintiff advise him of them.On that date, the plaintiff notified the defendant that the tanks were ready for delivery and sent an invoice stating the price of the 500-gallon tanks as $134.77 each and the 1000-gallon tanks at $233.75 each.The published prices for such tanks, when there was no shortage of steel, were $65 and $89, respectively.The defendant refused to accept the tanks.

On June 22, 1948, the plaintiff advised the defendant that it had sold one 1000-gallon tank for $234 and sent the defendant a credit memorandum for this amount.On September 29, 1948, the plaintiff notified the defendant that unless he would pick up the remaining tanks in ten days they would be sold.The defendant still refusing to accept the tanks, the plaintiff's sales force attempted to dispose of them in the open market.By April 14, 1949, the plaintiff had sold all of the tanks at the best price it could obtain, which was less than the contract price.The court rendered judgment for $3148.31, which represented the difference between the contract price and the amount received by the plaintiff for the sale of the tanks, on the defendant's account, with interest.

The defendant's first claim is that under a contract fixing the price on a cost-plus basis no greater amount can be charged than is reasonable.A cost- plus contract, so-called, is one wherein one of the parties undertakes to pay all costs incurred by the other party in the performance of his contract and a fixed fee over and above such costs.People ex rel. Kerner v. Keeney, 399 Ill. 611, 616, 78 N.E.2d 252;Standard Oil Co. v. Fontenot, 198 La. 644, 671, 4 So.2d 634.The court has found, and its finding has not been questioned that the parties agreed upon the cost-plus method of payment for performance by the plaintiff.SeeGeneral Statutes § 6624.'Courts of law must allow parties to make their own contracts, and...