Delmo, Inc. v. Maxima Elec. Sales, Inc.

Decision Date22 June 1994
Docket NumberNo. 18775,18775
Citation878 S.W.2d 499
PartiesDELMO, INC., Third-Party Plaintiff/Respondent, v. MAXIMA ELECTRICAL SALES, INC., Third Party Defendant/Appellant.
CourtMissouri Court of Appeals

John R. Hopkins, Jr., Poplar Bluff, for third-party defendant/appellant.

Karen J. Miller, Poplar Bluff, for third-party plaintiff/respondent.

SHRUM, Judge.

Delmo, Inc., brought a third-party claim against Maxima Electrical Sales, Inc., and obtained a money judgment. Maxima appeals; we affirm.


Delmo is an electrical equipment distributor; Maxima is a marketing representative for equipment manufacturing firms that do not have their own sales forces. In the transaction that spawned this lawsuit, Delmo requested a price from Maxima for five electrical transformers. Maxima obtained prices from Cooper Power Systems, a manufacturer of electrical equipment, and used those prices to formulate a response to Delmo. Using Maxima's price quotation, Delmo prepared a bid for its customer, JEM Development Corp., Inc., which, in turn, submitted a bid on a federal government project in Boulder, Colorado.

Sometime in November 1989, soon after JEM was awarded the government contract, it became apparent to Delmo and Maxima that Cooper Power's price for four of the five transformers was vastly understated for the type of transformer JEM needed, and, as a result, the prices quoted by Maxima and Delmo were much too low. When Delmo advised JEM that the price on four of the transformers would be significantly higher than originally quoted, JEM canceled its agreement to purchase the four from Delmo and obtained them from another source, spending a total of $33,485 more than the original price quoted by Delmo. Later, when Delmo sued JEM over an unpaid open account, JEM counterclaimed alleging it had been damaged by its reliance on Delmo's price quotation on the four transformers.

Delmo then filed a third-party claim against Maxima, seeking recovery for any sum it might have to pay on JEM's counterclaim. In its petition against Maxima, Delmo alleged, in part:

"5. ... Delmo requested a bid from Maxima for four (4) 225 KVA Network transformers and one (1) 225 KVA Pad Mount transformers [sic] to meet certain government specifications for use at the National Institute of Standards, Boulder, Colorado. Thereafter, Delmo also requested an alternate bid for 300 KVA transformers rather than the 225 KVA transformers.

"6. Maxima submitted a bid of $9,206.00 for each of the said 225 KVA transformers "7. At the time said bid was requested, Maxima was provided with government specifications and requirements for said transformers.

and a bid of $9,943.00 each if the transformers were to be 300 KVA.

"8. Delmo relied on Maxima's quoted prices as set forth above in submitting its bid to the General Contractor, JEM, and Maxima knew or should have known that Delmo would so rely on its quoted prices.

"9. Subsequent to the submission of Delmo's bid to JEM, Maxima informed Delmo that it could not and would not supply the said transformers at the price previously quoted...."

Cooper Power was not a party to the lawsuit. At trial JEM confessed judgment for $12,000 on Delmo's account claim. After hearing evidence, the trial court entered a $33,485 judgment in favor of JEM on its counterclaim against Delmo and a judgment of like amount in favor of Delmo on its claim against Maxima. This appeal concerns only the judgment on Delmo's claim against Maxima, additional evidence of which follows.

JEM's president, John Dilks, testified he furnished Delmo with "a copy of the plans and specifications for this job and requested a quotation from them." Dilks identified Delmo's Exhibit 11 as the "drawings and specifications" for the Boulder project. 1 Although Dilks acknowledged that Exhibit 11 did not contain all the specifications for the project, he testified that Exhibit 11 described in detail the transformers required for the job and was sufficient for obtaining a price quotation.

Robert Hagemann, who handled the transaction for Delmo, testified his company had done business with Maxima previously. He said he telephoned Douglas McCullough, Maxima's president, and told him he needed a price on the transformers so he could provide JEM a bid for the Boulder project. Consistent with prior practice, Hagemann sent Maxima written descriptive material for the equipment. In this instance, Hagemann cut portions from pages 1 and 2 of the original of Exhibit 11 and "faxed" them to Maxima. Hagemann identified Delmo's Exhibit 1 as photocopies of the portions of Exhibit 11 that he excised and "faxed" to Maxima.

Exhibit 1 consists of four pages. Page 1 of Exhibit 1 contains what appears to be a drawing of an installed transformer; "General Notes" that state, in part, "New transformers shall be network transformers"; and the handwritten words (apparently added by Hagemann, although the record is unclear), "Room 2227" and "Floor plan and section are exact replicas for Room 3427."

Page 2 of Exhibit 1 consists of a photocopy of a drawing of Room 2227 and the following information:

"National Institute of Standards & Technology

Boulder Laboratories, Boulder, Colorado

Building No. 1 (Radio Bldg.) Transformer Replacement

Room 2227 (Wing 2)"

Page 3 of Exhibit 1 consists of "General Notes," one of which states "New transformer shall be pad-mounted," and what appears to be a side-view drawing of an installed transformer. Beneath the drawing is a handwritten notation (again, we assume, added by Hagemann), "Pit (South of Wing 5)."

Page 4 of Exhibit 1 appears to be an overhead view of the transformer described and illustrated on page 3. Included on page 4 is the following:

"National Institute of Standards & Technology

Boulder Laboratories, Boulder, Colorado

Building No. 1 (Radio Bldg.) Transformer Replacement

Pit (South of Wing 5)"

Hagemann identified Delmo's Exhibit 2, a three-page document, as Maxima's response In the margin of page 1 of Exhibit 2, immediately to the right of the "Base Bid" information, is this handwritten notation:

                to his request for a price quotation. 2  Dated August 17, 1989, page 1 of Exhibit 2 identifies its subject as "National Institute of Standards" and states
                "1--    9206.00
                 2--    9206.00
                 3--    6214.00
                      24,626.00  "

Hagemann testified the marginal notation was his, that he took the "9206.00" from "this spec sheet that was sent to me from Maxima," and that the "6214.00" was from "the last page."

The "transformer description sheets" referred to on page 1 of Exhibit 2 and the "spec sheet" and "last page" about which Hagemann testified appear in the record as pages 2 and 3 of Exhibit 2. Each is a preprinted form. Page 2 (what Hagemann called the "spec sheet") is a Cooper Power Systems "RTE Small Power 3 [phase] Secondary Substation Transformer Field Pricing Guide." Handwritten portions of the form identify the "Salesperson" as "Doug McCullough," the "Job Name" as "National Institute of Standards," the "Customer" as "Delmo, Inc.," the "Quantity" as "2." In a "Notes" section at the bottom of the form is the handwritten entry, "Option 2 has 2 additional units same. > 4.9Z" Following the preprinted words "Net Price" is the handwritten entry, "9206.00." In separate sections of the form designated "Ratings," "Terminations," "Accessories," and "Arresters," several boxes are marked with handwritten "x's." Near the top of the form is the preprinted statement, "Note: If transformer cannot be completely described below, contact Small Power."

Page 3 of Exhibit 2 (the "last page," to use Hagemann's terminology) is titled "SPD 3 [phase] Padmount Transformer Pricing Guide." Directly beneath the title is the statement, "(If unit cannot be completely described by the features on the page, please contact SPD)." There are blank spaces for items such as "Customer Name," "Salesman," and "Job Name," none of which is completed. There are a few handwritten markings on the form. Because of the poor reproduction quality of the copies of the form in the legal file, the only legible handwritten entry, which is in the space designated "Quote Price $," is "6214.00."

Asked about the instructions on each form regarding transformers that cannot be "completely described," Hagemann said, "I don't contact RTE. I contact Doug."

Hagemann testified he relied on Maxima's prices to prepare his bid for JEM. He admitted he "didn't look too closely" at the two pages attached to Maxima's price quotation. He said he "assumed" Maxima's prices were McCullough insisted that Delmo had sent Maxima insufficient information about the transformers. He testified that a former employee of Maxima, Eileen Hess, had handled the transaction for his company and that page 1 of Delmo's Exhibit 1 (the portion of Delmo's price quotation request that contained the "General Notes" that referred to "network transformers") "did not happen to be part of her file on this job." Asked what Delmo had sent, he replied, "Zero written specifications. Those three copies of a plan view, yes. Zero written specifications." He admitted, however, that if Maxima had received the General Notes that appear on page 1 of Exhibit 1, he could have determined the type of transformers for which a price was requested without what he referred to as "specifications."

                for four "network" transformers and one "padmount" transformer.  Hagemann said he had "no idea" at that time what a "network" transformer was or what one should cost and that he had no reason to think Maxima's price was "way off base."   Hagemann was asked if there was "anything on those attachments [the transformer description sheets] that would indicate to you that these were not network transformers or that they were not the transformers that were described in the plans or specs or whatever you want to call what you sent to Maxima?"   Hagemann replied, "I would think not."

McCullough was shown October 20, 1989,...

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