In re Alloy Metal Wire Works, Inc., Bankruptcy No. 84-01922G
| Decision Date | 13 August 1985 |
| Docket Number | Adv. No. 85-0112G.,Bankruptcy No. 84-01922G |
| Citation | 52 BR 39 |
| Parties | In re ALLOY METAL WIRE WORKS, INC., Debtor. ALLOY METAL WIRE WORKS, INC., Plaintiff, v. ASSOCIATED SCREW AND MANUFACTURING CO., Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Kenneth F. Carobus, Philadelphia, Pa., for debtor/plaintiff, Alloy Metal Wire Works, Inc.
Sheridan P. Hunt, Jr., Medford, N.J., for defendant, Associated Screw and Mfg. Co.
Marvin Krasny, Adelman, Lavine, Krasny, Gold and Levin, Philadelphia, Pa., for Creditors' Committee.
On a debtor's complaint to collect an account receivable from a vendee, the predominant question is whether the vendee seasonably notified the debtor of an alleged breach in a sales contract within the meaning of 13 Pa.Cons.Stat.Ann. § 2607(c) (Purdon 1984) of the Uniform Commercial Code ("the UCC") of Pennsylvania. For the reasons set forth below, we conclude that there was no timely notification by the vendee of the breach.
We find the facts of this case as follows:1 The vendee, Associated Screw and Manufacturing Co. ("Associated"), ordered 3000 pounds of wire from the debtor for use in the manufacture of screws. After accepting the wire Associated began utilizing it to form screw blanks but it noticed that the blanks thusly produced were flawed with cracks rendering them unusable. In an effort to produce serviceable blanks, Associated's employees expended sixty man-hours and used a significant portion of the wire. Although the evidence clearly indicates that the screw blanks were useless, Associated failed to establish that this was caused by the debtor's failure to comply with the contract specifications.
Approximately one month after the wire was received by Associated, the debtor was forced to vacate its place of business due to its default under a lease although shortly thereafter the debtor resumed occupancy. At about this time an involuntary petition for relief under chapter 7 was filed against the debtor. The debtor acquiesced in the entry of the order for relief and several days later the case was converted to a chapter 11 proceeding at the debtor's behest.
Although Associated testified that it telephoned the debtor on three separate occasions to inform it of the allegedly nonconforming nature of the wire, this testimony lacks credibility. When two of the calls were allegedly placed, the debtor's usual staff were manning the phones. When the third call was reportedly made, security guards were on duty receiving all calls and relaying messages to the debtor. None of the calls reached the debtor with information that the merchandise was allegedly nonconforming. Associated made no effort to send the debtor notice of the nonconformity by writing or by any other means and notice of this nonconformity did not reach the debtor until the debtor filed the instant complaint more than a year after the delivery of the wire. Without previous notice to the debtor, Associated sold the unusable wire to a scrap dealer.
As a preliminary matter we first discuss our jurisdiction to hear the debtor's complaint on an account receivable. In a recent case we held that a debtor's complaint on an account receivable was a core matter under 28 U.S.C. § 157(b), thus allowing us to enter final orders on such disputes. Franklin Computer Corp. v. Harry Strauss & Sons, Inc. (In Re Franklin Computer Corp.), 50 B.R. 620 (Bankr. E.D.Pa.1985). We alternatively have jurisdiction under 28 U.S.C. § 157(c)(2) which allows us to hear matters and enter final orders with the consent of the parties. The parties have implicitly consented to our jurisdiction by failing to raise a timely objection.
The next issue arises under Associated's contention that it did not accept the goods in question since it never had a reasonable opportunity to inspect them. The parties agree that the governing rule of law is supplied by § 2606 of Pennsylvania's UCC:
To continue reading
Request your trial