Kuss Mach. Tool & Die Co. v. El-Tronics, Inc.

• Decision Date: 30 June 1958
• Citation: 393 Pa. 353,143 A.2d 38
• Parties: KUSS MACHINE TOOL & DIE CO., Inc., .v EL-TRONICS, Inc., Appellant.
• Court: Pennsylvania Supreme Court

143 A.2d 38

393 Pa. 353

KUSS MACHINE TOOL & DIE CO., Inc., .v EL-TRONICS, Inc., Appellant.

Supreme Court of Pennsylvania.

June 30, 1958.

The opinion of President Judge Hangan follows:

This case came on for trial before the writer of this opinion sitting without a jury; and, by stipulation of counsel, was submitted to a Master.

The Master, after taking testimony, filed a Report, Supplemental Report and Additional Supplemental Report, in which he found in favor of plaintiff. Defendant filed exceptions to the Master's reports, which after argument were dismissed by the court en banc. From this action of the court defendant has appealed to the Supreme Court of Pennsylvania; and this opinion is written in accordance with Rule 43 of the Supreme Court Rules.

The Master, Herbert A. Barton, Esquire, a very capable and experienced attorney, filed a comprehensive report. The facts found by him were supported by competent evidence; and, in accordance with the terms of the stipulation of reference they are final and conclusive. These facts are substantially as follows:

Defendant El-Tronics, Inc., had a contract with an agency of the United States Government, which required defendant to supply, inter alia, certain metal relay racks. These racks had to be fabricated in accordance with certain plans and specifications provided by the Government; and they were not therefore, available in the open market and had to be custom made. Bids were originally taken by defendant and a sub-contract was awarded. The racks which were made by the sub-contractor were not acceptable to the Government and were rejected.

As a result of the foregoing, defendant fell behind in its obligation to the Government and speed became an important factor in the fabrication of the racks. It was at this stage that defendant's agent, Mr. Long, negotiated with Fred Kuss, president of plaintiff corporation, as to the fabrication of the racks by plaintiff. Kuss suggested that defendant might to able to fulfill its contract with the Government by the purchase of certain racks which were regularly made by plaintiff; but defendant found that these racks would not comply with the Government's plans and specifications. Plaintiff thereupon agreed to fabricate racks for defendant in strict accordance with the Government's plans and specifications.

When Mr. Long asked Mr. Kuss for a price for the racks, Mr. Kuss stated that he was not in a position to quote a price at that time; and, inasmuch as speedy production of the racks was essential to defendant, the purchase order essential to defendant, plaintiff by defendant provided that 'Prices [were] to be established between Fred Kuss, Jr., and Frank Long at a later date.'

Plaintiff thereupon proceeded to fabricate the racks. During the process of doing so certain problems arose, which plaintiff's representatives discussed with defendant's representatives, resulting in various changes in the plans and specifications. There is no question but that the racks, as finally fabricated and supplied to defendant, were properly made; and the only controversy between the parties is whether the price charged by plaintiff was reasonable.

The legal situation here presented can be considered in either of two aspects. On the one hand, it could be found that the negotiations between the parties resulted in an express contract, with no price specified; in which case the buyer must pay a reasonable price (see Sec. 9 of the Uniform Sales Act of May 19, 1915, P.L. 453, 69 P.S. § 81, which was still in effect when this contract was negotiated). On the other hand, it may be concluded that since the price had not been determined by the negotiations of the parties, the terms were too vague to constitute a contract, inasmuch as price is an essential part of a contract. However, under such circumstances, plaintiff would be entitled to recover in quasi contract on a quantum valebant basis, in view of the fact that plaintiff actually manufactured the racks and that they were received and accepted by defendant. It therefore follows that, whether we conclude that the negotiations between the parties resulted in an express contract or a quasi contract, plaintiff is entitled to recover a 'reasonable price' for the racks.

Under ordinary circumstances the reasonable price of merchandise is the market price; but, as the Master properly found, there was no market price for the merchandise here in question. To explain how plaintiff arrived at the price it charged defendant, the following evidence was produced by plaintiff:

Plaintiff maintains an elaborate cost accounting system which enables it to ascertain the exact cost of labor and material used in any particular job. As part of this cost accounting system, plaintiff offered in evidence the records applicalbe to the fabrication of the racks in question. By this method plaintiff proved the exact cost to it of fabricating the racks. Plaintiff then added a profit of ten per cent of the total cost of the racks; and then billed defendant for the cost and profit.

On the issue of the actual cost of the racks to plaintiff and plaintiff's profit thereon, defendant offered evidence in contradiction of plaintiff's...