Lazarus v. American Motors Corp.

• Decision Date: 01 October 1963
• Citation: 123 N.W.2d 548,21 Wis.2d 76
• Parties: Louis LAZARUS, a sole trader d/b/a Sea Coast Steel Supply Co., Appellant, v. AMERICAN MOTORS CORPORATION, a foreign corp., Respondent.
• Court: Wisconsin Supreme Court

Page 548

123 N.W.2d 548

21 Wis.2d 76

Louis LAZARUS, a sole trader d/b/a Sea Coast Steel Supply Co., Appellant, v. AMERICAN MOTORS CORPORATION, a foreign corp., Respondent.

Supreme Court of Wisconsin.

Oct. 1, 1963.

This appeal is from a judgment in favor of the defendant dismissing the complaint of the plaintiff, Louis Lazarus, doing business as Sea Coast Steel Supply Co.

This litigation began as a suit for damages for the loss of profit by Mr. Lazarus in connection with an alleged contract in which Mr. Lazarus was the seller and the defendant American Motors was the buyer. Mr. Lazarus complains that American Motors broke its contract by refusing to accept delivery of steel in spite of the existence of a valid sales contract between the parties.

On January 4, 1960, American Motors issued a purchase order addressed to Jackson Steel Corporation for steel in various quantities and sizes to be delivered by January 15, 1960. Ralston Steel Corporation, Skokie, Illinois, was designated as the place of delivery, since American Motors was not equipped to handle certain processing and storage which was done on their behalf by Ralston Steel Corporation. The purchase order contained the following provisions, among others:

'In accepting this order you agree to all of the terms and conditions set forth both on face and reverse side hereof. You further agree that either the delivery of any item covered by this order or the written approval of this order shall constitute an acceptance thereof.

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'This material is for immediate shipment only to sizes, gauges, and quality specified. Any variance subjects any or all of this order to cancellation. All deliveries to be completed on or before 1-15-60.'

The pertinent background facts are that there had been a nationwide steel strike in 1959, and at the time of the disputed sales contract, the supply of steel was short. Jackson Steel had previously done business with Sea Coast Steel Supply Co., which is a sole proprietorship operated by Mr. Lazarus. Sea Coast had supplied Jackson Steel with steel in the past but had had difficulty obtaining payment. Jackson Steel asked Sea Coast to supply the steel described in the purchase order issued by American Motors. Sea Coast was willing to supply the steel to American Motors but not to Jackson Steel because of the unfavorable past credit experience. Sea Coast wanted payment directly from American Motors and was willing to pay a commission to Jackson Steel. At the trial, Mr. Lazarus testified that he actually paid a commission to Mr. Harris, an officer of Jackson Steel.

On January 12, 1960, after a conversation between the plaintiff and a representative of American Motors, a changed purchase order was issued, naming Sea Coast Steel Supply in place of Jackon Steel.

On January 15, 1960, the name of the vendor in the purchase order was somehow changed back from Sea Coast to Jackson Steel, but there was no testimony at the trial to explain the purpose of such change.

On January 22, 1960, the purchase order was again changed so as to extend the delivery date to January 25, 1960. Although this change order was received by Sea Coast, it still bore the name of Jackson Steel; Mr. Lazarus testified that the thought that the order had been changed back to Jackson Steel never occurred to him. On January 25, 1960, American Motors addressed a letter to Jackson Steel, with a copy directed to Sea Coast Steel, which extended the delivery date through Saturday, January 30.

Numerous deliveries of steel were made by Sea Coast to Ralston Steel pursuant to the purchase order, and payment was made by American Motors directly to Sea Coast. However, 565 tons of steel included in the purchase order were not delivered by Sea Coast, and such steel is the subject of this dispute.

On January 26, 1960, Sea Coast issued purchase orders for the 565 tons of steel to Union Steel Corporation of Chicago. The purchase orders to Union Steel also specified Ralston Steel at Skokie, Illinois, as the place of delivery. The orders were acknowledged by Union Steel on the same day. Sea Coast's purchase orders provided, 'This order is being given with the understanding that all of the above material must be loaded on trucks, ready to roll by Friday, January 29, 1960 (early Friday morning).' The acknowledgements bore Union Steel's notation directed to Sea Coast, 'You will release by 12 noon January 28, 1960, or cancel at no charge.'

On Wednesday, January 27, Mr. Lazarus telephoned Henry Lerman, an employee of Ralston Steel, to advise him of the impending delivery to Ralston Steel on Saturday, January 30. Mr. Lerman told Mr. Lazarus that Ralston Steel would not be open January 30th. Mr. Lazarus requested that Mr. Lerman arrange to have the plant open to accept delivery of the steel and asked Mr. Lerman to telephone him with respect to whether such arrangements could be made. Mr. Lerman said that he would talk to Mr. Rubin, an officer of Ralston, and to Mr. Foulks, the purchasing agent for American Motors; he would then call Mr. Lazarus back.

On Thursday, January 28, Mr. Lazarus placed telephone calls to Mr. Lerman and to Mr. Rubin, but neither called back. Mr. Lazarus also called and talked to Mr. Foulks, who Lazarus descirbed as 'quite explosive.' Mr. Foulks informed Mr. Lazarus that there was plenty of steel available at a price cheaper than prescribed by the American Motors purchase order and that he would not facilitate the delivery. Mr. Foulks said, 'If you can't get the steel in there by Friday, why just forget it, you've shipped enough.'

After the conversation with Mr. Foulks, Mr. Lazarus cancelled his orders with Union Steel for the 565 tons of steel. Mr. Lazarus explained the cancellation by saying that he realized after the conversation with Mr. Foulks that the delivery could not be consummated. He said that if he had disregarded the conversation with Mr. Foulks, Union Steel would have started loading the steel on trucks for delivery Friday night and all day Saturday. Mr. Lazarus explained that once loaded on the trucks, he would have owned the steel and would have been 'stuck with it' because the market had dropped. He claimed that his cancellation action was taken to minimize damages.

On Friday, at 5 o'clock p. m., Mr. Lerman called Mr. Lazarus. Mr. Lerman said that he had talked to Mr. Foulks, and Mr. Foulks had directed him to remain open on Saturday to receive any further shipments. Although Mr. Foulks denied directing Ralston Steel concerning its working hours, Mr. Foulks admitted that there may have been other instances in which he had requested Ralston Steel to stay open to receive a late shipment. The trial judge in his memorandum decision stated that Ralston Steel could have received the 565 tons of steel in one working day. Mr. Lazarus acknowledged that Ralston Steel was in fact open on that Saturday.

When Mr. Lerman telephoned at 5 o'clock p. m. Friday, Mr. Lazarus pointed out to him that because trucks for shipping the steel were scarce, it was too late for Sea Coast to be able to deliver the steel.

Mr. Lazarus testified that he had agreed to pay Mr. Harris of Jackson Steel a commission on the sale of the steel to American Motors. Mr. Lazarus claimed that he paid Mr. Harris $8,200 as a commission for steel that he had actually delivered and $8,600 as a commission for steel which was not delivered. Mr. Lazarus claimed that the commission of $8,600 was paid out of what he expected to realize from his profit on the sale of the 565 tons to American Motors.

Mr. Lazarus testified that the commission agreement required him to pay Jackson Steel 50 percent of his profit. Although Mr. Lazarus claimed that his profit was to be $41,200, he paid only $8,600 instead of one-half of $41,200 because the latter figure was not net profit. He said he had other commission payments to make to people who were 'going along' with him on payment, abiding the outcome of this action.

The plaintiff requested that the trial court determine the amount of his damages assuming that there was a valid sales contract existing between the parties. The trial court made this finding and accepted the measure of damages computed by Sea Coast. The defendant did not file a notice of review. Sec. 274.12(1) and (2), Stats.

Henry C. Friend, Milwaukee, Frankenstein, Lewis & Feierberg,...