Jaeco Pump Co. v. Inject-O-Meter Manufacturing Co.

• Decision Date: 03 October 1972
• Docket Number: No. 72-1266.,72-1266.
• Citation: 467 F.2d 317
• Parties: JAECO PUMP COMPANY, a corporation, Plaintiff-Appellee, v. INJECT-O-METER MANUFACTURING COMPANY, a corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

467 F.2d 317 (1972)

JAECO PUMP COMPANY, a corporation, Plaintiff-Appellee, v. INJECT-O-METER MANUFACTURING COMPANY, a corporation, Defendant-Appellant.

No. 72-1266.

United States Court of Appeals, Tenth Circuit.

October 3, 1972.

Richard E. Ransom, P. A., Albuquerque, N. M. (William G. Gilstrap, Albuquerque, N. M., on the brief), for plaintiff-appellee.

Dan B. Buzzard, Clovis, N. M., for defendant-appellant.

Before SETH, HOLLOWAY and BARRETT, Circuit Judges.

BARRETT, Circuit Judge.

This is an appeal from a jury verdict awarded Jaeco Pump Company (Jaeco) against Inject-O-Meter Manufacturing Company (I-O-M) for damages for breach of contract (Count II), and for damages for unfair competition in manufacturing pumps (Count III). Count I was settled. I-O-M counterclaimed for damages for defective pumps and late shipments. The jury found for Jaeco on Counts II and III and against I-O-M on its counterclaim. The jury awarded Jaeco $17,750 compensatory damages for breach of contract, $5,350 compensatory damages and $1,000 exemplary damages for unfair competition.

Jaeco first approached I-O-M in 1967 because, whereas it wanted to broaden its pump market and enter the agricultural field, it felt that a firm established in the agricultural field, such as I-O-M, would be more effective in marketing its pumps. Jaeco and I-O-M entered into an agreement whereby I-O-M would purchase its agricultural proportioning pumps from Jaeco, and Jaeco would not sell its proportioning pumps in the agricultural field. Pursuant to this agreement, Jaeco worked with I-O-M in advertising the pumps, afforded it pricing advantages, demonstrated to I-O-M its art of manufacture and repair, and recognized I-O-M as its authorized factory representative. Jaeco also painted the pumps sold to I-O-M in accordance with I-O-M's requests and affixed I-O-M's name to each pump.

Jaeco honored its agreement not to solicit its own sales in the agricultural field. I-O-M, however, did not honor its agreement to buy its agricultural pumps from Jaeco, and, after gearing up for its own production during the latter part of 1969, it began selling its own pumps in 1970. I-O-M did not notify Jaeco that it was manufacturing and selling its own pumps. Jaeco first became aware of this in late 1970.

On December 20, 1969, shortly before I-O-M began selling its own pumps, it sent Jaeco a purchase order for 700 pumps. Only 345 of the 700 pumps were shipped and delivered.

I-O-M contends that: (1) the facts surrounding damages for breach of contract were not sufficiently before the jury; (2) the trial court erred in its instruction to the jury on the computation of damages; (3) the trial court erred in submitting the existence of a contract to the jury; and (4) the facts surrounding damages for unfair competition were not sufficiently before the jury.

I.

We shall first consider whether the facts surrounding damages were sufficiently before the jury and whether the trial court properly instructed the jury on the computation of damages.

I-O-M alleges that since there was no evidence of net profits before the jury, and that since the jury used Jaeco's gross profit ($50.00, i. e., sales price of $118.87 minus total costs of $69.00) to arrive at its damages of $17,750.00, ($50.00 times 355 unaccepted pumps to be manufactured by Jaeco in accordance with the purchase order) that: (1) the facts surrounding the issue of damages for breach of contract were not sufficiently before the jury; and (2) the trial court erroneously instructed the jury because Section 50A-2-708 was not applicable to the facts of this case. N.M.S.A. (1953 Comp.Repl.1962), § 50A-2-708, Uniform Commercial Code.

The trial court instructed the jury on damages as follows:

"The measure of damages for breach by the defendant as a buyer is the net profit, including a reasonable amount for overhead, which the plaintiff would have made had the defendant fully performed and due allowance for costs reasonably incurred and any other damages resulting from the breach." (T., Vol. V., p. 532).

During the course of the trial Jaeco introduced evidence that the sales price of the unaccepted pumps to be manufactured in accordance with the order was $118.87 each. Jaeco also showed that each pump cost $69.00. The parts for each pump cost $64.00. The labor required to assemble each pump cost $5.00. Jaeco further showed that its historical gross profit margin was approximately 41.5% of the selling price of each of its pumps.

Allan Levick, Jaeco's accountant, testified that Jaeco's gross profit was normally 41.5% of gross sales; that net profits are thereafter determined by deducting overhead, administrative and selling expenses from gross profits; that with respect to I-O-M's order for 700 pumps, after the order was in, there were no selling expenses; and that only the administrative expenses of Jaeco's business, unrelated to I-O-M's order, would have to be deducted from gross profits to obtain net profits.

Jury determinations and awards are presumed correct and will not be preempted unless they are clearly against the weight of the evidence. Champion Home Builders v. Shumate, 388 F.2d 806 (10th Cir. 1967). The jury's determination of damages will not be overruled merely because it computed them from Jaeco's gross profit figure and the gross profit figure happens to coincide with the Court's damage instruction. There was substantial evidence for the jury to apply the proper measure of damages.

I-O-M argues that Section 50A-2-708 was not applicable to the facts of this case in relation to the instruction on damages. I-O-M cites 25 C.J.S. Damages § 26 a (1966), and DeVries v. Starr, 393 F.2d 9 (10th Cir. 1968). It also cites a number of cases for the proposition that damages are not to be awarded whenever the evidence surrounding them is uncertain, contingent or speculative. We agree. However, the damages were definite and discernable. I-O-M's argument is based entirely on its allegation that since damages were not sufficiently before the jury, an instruction incorporating the mandates of Section 50A-2-708 was improper. We disagree...