Hodes v. HOFFMAN INTERNATIONAL CORPORATION

• Decision Date: 06 March 1968
• Docket Number: No. 63 Civ. 1446.,63 Civ. 1446.
• Citation: 280 F. Supp. 252
• Parties: Henry J. HODES, as Trustee of Glover Industries, Incorporated, a bankrupt corporation, Plaintiff, v. HOFFMAN INTERNATIONAL CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

280 F. Supp. 252

Henry J. HODES, as Trustee of Glover Industries, Incorporated, a bankrupt corporation, Plaintiff, v. HOFFMAN INTERNATIONAL CORPORATION, Defendant.

No. 63 Civ. 1446.

United States District Court S. D. New York.

March 6, 1968.

Rosen, Lotwin, Kantrowitz, Goldman & Gutin, New York City, for plaintiff, by Walter Kantrowitz, Irving Gutin, New York City, Theodore C. Beckett, Brewer & Myers, Bernard D. Craig, Levy & Craig, Kansas City, Mo.

Di Falco, Field, Florea & O'Rourke, New York City, for defendant, by Edward Cherney, New York City, William Griffin, Rich, May, & Billideau, Boston, Mass.

OPINION

POLLACK, District Judge.

This is a diversity case. The plaintiff sues for damages by reason of the defendant's breach of a contract for the purchase of 165 coin operated dry cleaning machines.

Glover Industries, Incorporated, was a Missouri corporation engaged in the business of manufacturing various types of machinery for dry cleaning, washing, drying and other related uses. Its principal place of business was at Kansas City, Missouri.

Defendant was and still is a corporation organized and existing under the laws of the State of Delaware with its principal place of business in New York City, New York. At the times relevant hereto the defendant was engaged in the business of manufacturing and distributing garment pressing and dry cleaning equipment and various other types of equipment and vending machines.

In 1962, the defendant ordered 525 coin operated dry cleaning machines from the plaintiff under various purchase orders. The first of these orders was placed on March 2, 1962 for a quantity of 150 machines; delivery thereof starting May 1, 1962 was to be at the rate of 50 machines per month and payment was to be made within 5 days after submission of invoices. On June 5, 1962 an order was placed for 375 additional machines. The existing delivery quotas for June and July, 1962 were increased by 75 machines spaced in specified quantities and the balance of 300 machines were to be delivered at the rate of 100 per month during the months of August, September and October, 1962.

The machines were ordered in two finishes. Two hundred and twenty five of the machines were ordered in the standard design, a black edge finish, at an agreed price of $2,385. per machine and 300 were ordered in a gilt edge finish with certain valve changes at an agreed price of $2,585. per machine.

It was part of the understanding between the parties that Glover would obtain material sufficient to have on hand four months supply of the material to enable it to keep up with the delivery schedule. Glover did purchase and keep such an inventory of materials on hand.

On July 18, the defendant unexpectedly notified Glover Industries, Incorporated that the defendant was "in a little bit of a bind;" "I am requesting that all steps be taken to immediately slow down on the machines which you now have on hand;" "Get this production down to zero," said the defendant. Glover was further notified by defendant, "Do not proceed on the 300 machine order until written confirmation is received by you." Parenthetically, this written go-ahead was never given. The explanation which the defendant gave was that it was getting too much equipment out into the field and its men did not have enough time to catch up on the installations but it assured Glover that the situation would be resolved within the next few weeks, at which time the defendant would issue further release orders for the equipment.

From the inception of the arrangements until November 2, 1962 Glover had manufactured and delivered to the defendant 158 machines which the defendant accepted and paid for at the price of $2,385. per machine.

On November 2, 1962, Glover became impatient for more delivery instructions and it wrote to the defendant that at the latter's request Glover had held up production of the machines for several months and now found itself in a position where pressure from Glover's suppliers and the burden of its inventories made it imperative to obtain a schedule from the defendant for completing the remaining 367 machines ordered by the defendant.

Between November 2, 1962 and November 29, 1962, defendant requisitioned 22 additional machines from Glover which were accepted by the defendant and also paid for at the price of $2,385. per machine. This left 345 machines remaining on order and quite clearly the defendant was not in a position to take and pay for them as required by the orders.

Defendant sought and obtained a conference with Glover for the purpose of seeking a modification of its obligations and on November 29, 1962, the parties met and entered into a new agreement. It is the breach of this new agreement which is the basis for the present law suit.

In this new agreement the defendant acknowledged its obligation to purchase from Glover the remaining 345 machines pursuant to the original purchase orders and that the defendant should have accepted and paid for them during May-October 1962. The new agreement then modified this obligation by providing for a reduced quantity to be delivered at a reduced delivery scale and at a price fixed in the agreement. The defendant thereby agreed to buy and pay for 195 standard design machines at a price of $2,585. each F.O.B. Glover's factory in Kansas City to be delivered at the rate of 15 machines per calendar month during the period December 1, 1962-December 31, 1963. The machines were to be shipped in accordance with the defendant's releases and would be sent freight collect and billed by sight draft with bill of lading attached. It was further provided in the new agreement that

"If Hoffman does take and pay for all 195 standard design machines at the price and within the time and at the rate of delivery specified in this paragraph, time being of the essence of this agreement, then Hoffman shall have no further liability or responsibility of any kind under the contracts"

previously described. (Emphasis supplied).

Upon receipt of the November 29 agreement prepared by Glover, the president of Hoffman telephoned Glover to clarify certain points. On December 3, 1962, a letter clarifying the November 29 agreement was mailed to the defendant and on December 5, 1962 the agreement of November 29, 1962 together with the clarification of December 3, 1962 both of which were signed by Glover, were in turn both countersigned "accepted" by the defendant and sent to Glover.

During the months of December 1962 and January 1963, Glover in compliance with the new agreement delivered to the defendant and the defendant accepted and paid for 30 machines at the new price of $2,585. per machine.

The defendant makes the contention that the contract dated November 29, 1962, plaintiff's exhibit 7, was entered into by the mutual mistake of the parties or by mistake of the defendant and the fraud of the plaintiff in providing for the price of $2,585. instead of a price of $2,385. for each machine. The defendant points to the fact that the so-called "standard" machine was priced in the initial orders early in 1962 at $2,385. and that it was for the so-called new design that defendant had agreed to pay the higher price in the June, 1962 orders. Defendant further contends that this price error so-called was called to the plaintiff's attention, but that the plaintiff refused to correct the contract to reflect the price of $2,385. and this refusal is assigned as a justification for the defendant's refusal to issue releases for the additional machines on order. Defendant goes further and claims that by reason of the error $6,000. was overpaid for the 30 machines delivered under the November 29, 1962 agreement and claims that it is entitled to a credit of this $6,000. in addition to the return of a deposit of $37,683. placed with Glover in connection with the orders. Defendant consequently demands judgment on its counterclaims for $43,683.

The issue with respect to the matter of the price agreed upon on November 29, 1962 raises essentially an issue of credibility and the Court, on the basis of the documents, the testimony and the demeanor evidence resolves such issue in favor of the plaintiff. The price of $2,585. per machine was the price that defendant undertook to pay in consideration of Glover's agreement to reduce the quantity of machines which the defendant was then bound to accept from 345 to 195.

The defendant's representative who negotiated the revision of the outstanding orders on November 29, 1962 reported to the president of the defendant what had occurred at the November 29, 1962 meeting where the revised arrangement was tentatively agreed upon. Memoranda contemporaneously drawn up reflected the matters discussed but not in complete detail; the matter of price, which the Court here finds was also discussed, was not mentioned on the memorandum. However, the confirmation letter, plaintiff's exhibit 7 dated November 29, 1962, clearly set forth in unmistakable terms Hoffman's agreement to purchase the 195 standard design machines at a price of $2,585. each, F.O.B. Glover's factory. This confirmation letter was addressed to Lewis S. List, the defendant's representative at the conference. It arrived at the defendant's office and the president reviewed the contract, signed it and sent it back to the defendant. Mr. List claimed that he did not see the letter until about the 9th or 10th of December, 1962. He claimed that about December 12th the president of the defendant telephoned to Mr. Glover with Mr. List on the line and registered a protest against the price at which the machines were being billed, asserting that it was a mistake but that Mr. Glover denied any mistake whatsoever. Mr. Glover testified that some such conversation took place a month later with no indication that Mr. List was listening in or participating. Regardless of when the talk occurred the subsequent acts of defendant were inconsistent with any claim of an...