Hammond Corp. v. General Electric Credit Corp., 73 C 2532.
| Decision Date | 30 April 1974 |
| Docket Number | No. 73 C 2532.,73 C 2532. |
| Citation | 374 F. Supp. 1356 |
| Parties | HAMMOND CORPORATION, a Delaware corporation, Plaintiff, v. GENERAL ELECTRIC CREDIT CORPORATION, a New York corporation, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
William T. Hart, Aaron J. Kramer, Schiff, Hardin & Waite, Chicago, Ill., for plaintiff.
George W. McBurney, Jerrold E. Fink, Sidley & Austin, Chicago, Ill., for defendant.
The plaintiff, Hammond Corporation (Hammond), a Delaware corporation having its principal place of business in Illinois, brings this diversity action under 28 U.S.C. § 1332, against the General Electric Credit Corporation (GECC), a New York corporation having its principal place of business in Connecticut. The plaintiff has filed a two count complaint seeking compensatory damages of $94,215.75 in the first count, for the alleged breach of several financing contracts, and a declaratory judgment in the second, finding that the plaintiff is not liable to the defendant for a like amount under a separate guaranty agreement. The defendant moves to transfer the instant suit pursuant to 28 U.S.C. § 1404(a) to the federal district court for the District of Massachusetts. For the reasons set forth hereinafter, we find that the defendant's motion must be denied.
The plaintiff, Hammond, is engaged in the manufacture and sale of electronic organs and related products. It sells these organs exclusively at wholesale to independent musical instrument dealers who in turn offer the organs to the public at retail. The defendant is in the commercial financing business and has entered into a number of so-called floor plan financing agreements with various independent dealers who sell Hammond organs. These agreements provide that the defendant will pay the invoice costs of goods shipped to the various dealers for which the dealer gives a security interest in such goods shipped in addition to promising to pay the defendant out of the proceeds of the retail sales of the financed inventory. It has been the plaintiff's standard policy to supplement this formal agreement by promising that if, for any reason, the creditor should repossess new Hammond organs from dealers, the plaintiff would, upon tender, repurchase the organs at the invoice price.
The defendant entered into one such floor plan financing agreement in March 1970 with Melody Ranch, Inc. (Melody), a Massachusetts corporation which owns several Massachusetts retail outlets which sell new Hammond organs. Under the original floor plan financing agreement between Melody and GECC, the defendant refused to extend credit to more than $150,000 worth of inventory. Accordingly, in order to permit Melody to obtain an additional $100,000 of financing from the defendant, the plaintiff, on September 14, 1972, issued a written guaranty to the defendant, which provided that:
Hammond Organ Company hereby guarantees payment in event of default of payment by the above referenced company Melody on a floor plan line of credit for an amount not to exceed one hundred thousand dollars $100,000 for products manufactured by the Hammond Organ Company.
The plaintiff in its guaranty agreement expressly distinguished this additional $100,000 of financing from prior commitments, stating that the guarantee would not extend to the original $150,000 of credit. It also provided that the defendant must conduct inventory inspections every 30 days and notify the plaintiff of any sales made out of trust for which payment was refused within 15 days as conditions precedent for recovery. The term "out of trust" refers to financed sales made without an accounting to GECC.
Based upon the plaintiff's written guaranty, the defendant agreed to expand Melody's line of credit. It was soon discovered, however, that Melody was making substantial sales out of trust in violation of the floor plan agreement. In response to these improprieties the defendant sent Melody a notice of default and indicated that it was terminating the financing agreements on January 11, 1973. Thereafter, on January 15, 1973, the defendant notified the plaintiff that Melody had made $50,224.11 worth of sales out of trust covered by the guaranty agreement and requested reimbursement in that amount.
Subsequent to this January 15, 1973 request for funds, a dispute arose between the parties as to first, the exact amount of sales which Melody made out of trust, and, second, whether the defendant had complied with the conditions necessary to establish liability under the guaranty agreement. On February 6, 1973, the defendant revealed that it had previously erred and that the amount of Melody's out of trust sales was in reality $94,215.75, and it increased its demand upon the plaintiff to that amount. The plaintiff contends that the defendant has been unwilling or unable to document that figure or, for that matter, any other figure. The plaintiff further maintains that the defendant failed to make the necessary inventory checks or to give the plaintiff timely notice of the default as required by the guaranty agreement and therefore is not entitled to the $94,215.75, even if that was the proper amount.
The parties attempted to resolve their differences through negotiations, but apparently were unyielding as to their respective positions. Accordingly, in an unilateral attempt to recover monies which it deemed due and owing, the defendant claimed a set-off from separate payments owed to the plaintiff on behalf of other GECC financed Hammond organ dealers representing totally unrelated sales. Thus instead of tendering $106,821.21, which was the invoiced amount billed by the plaintiff on June 1, 1973, the defendant sent a check to the plaintiff on June 20, 1973, for $12,605.46, which represented the difference between the current invoice amount and the plaintiff's alleged liability under the Melody guaranty agreement. Responding to what the plaintiff characterizes as unjustifiable extra-legal self help, the plaintiff filed this suit requesting in count one the $94,215.75 withheld by the defendant and, in count 2, declaratory relief finding that the plaintiff is not accountable to the defendant for the $94,215.75 under the guaranty agreement.
Based upon the aforementioned facts, the defendant has offered seven considerations in support of its motion to transfer. These considerations are:
To continue reading
Request your trial
-
Rouse Woodstock v. Surety Federal Sav. & Loan Ass'n
...also loses some of its force if the pending action includes different parties and different issues. Hammond Corp. v. General Electric Credit Corp., 374 F.Supp. 1356, 1360 (N.D.Ill. 1974). If the suit in the transferee court covers a broader area than the action in the transferor court, incl......
-
Blumenthal v. Management Assistance, Inc.
...since the pendency of state actions does not relate to convenience of parties in the federal forum. Hammond Corp. v. General Electric Credit Corp., 374 F.Supp. 1356 (D.C.Ill.1974). The rationale behind a transfer to a forum where a related case is pending is to allow consolidation of the re......
-
SECURITIES & E. COM'N v. First Nat. Finance Corp.
...822, 76 S.Ct. 49, 100 L.Ed. 735 (1955); Butterick Company, Inc. v. Will, 316 F.2d 111 (7th Cir. 1963); Hammond Corp. v. General Electric Credit Corp., 374 F.Supp. 1356 (N. D.Ill.1974). Where The Action Might Have Been Brought The parties have not disputed that this action might have been br......
-
CONTINENTAL ILLINOIS NAT. BANK & TRUST v. Stanley
...States Code.2 It is unlikely that this case would be joined with the bankruptcy proceedings. See Hammond Corp. v. General Electric Credit Corp., 374 F.Supp. 1356, 1359-60 (N.D.Ill. 1974). This Court notes that the original obligors on the loan have brought suit against Continental and sever......