Muller v. Groban

• Decision Date: 08 April 1965
• Docket Number: No. 14780.,14780.
• Parties: Juan E. MULLER, Domingo Occhiuto, and Ingeniero Enrique Pagliettini, d/b/a Bigua, S.R.L., Plaintiffs-Appellants, v. Raymond S. GROBAN, Dora Groban, and Sidney J. Groban, d/b/a Groban Supply Co., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

346 F.2d 263 (1965)

Juan E. MULLER, Domingo Occhiuto, and Ingeniero Enrique Pagliettini, d/b/a Bigua, S.R.L., Plaintiffs-Appellants, v. Raymond S. GROBAN, Dora Groban, and Sidney J. Groban, d/b/a Groban Supply Co., Defendants-Appellants.

No. 14780.

United States Court of Appeals Seventh Circuit.

April 8, 1965.

Thomas W. Bloss, George W. Rauch, Charles A. Kelly, Chicago, Ill. (Hubachek, Kelly, Miller & Rauch, Chicago, Ill., of counsel), for plaintiffs-appellants.

Irwin I. Zatz, Howard Arvey, Edwin A. Wahlen, Chicago, Ill. (Arvey, Hodes & Mantynband, Chicago, Ill., of counsel), for defendants-appellees.

Before DUFFY, CASTLE, and SWYGERT, Circuit Judges.

SWYGERT, Circuit Judge.

Plaintiffs Juan E. Muller, Domingo Occhiuto, and Ingeniero Enrique Pagliettini, d/b/a Bigua, S.R.L., an Argentine company, brought this diversity action against defendants Raymond S. Groban, Dora Groban, and Sidney J. Groban, d/b/a Groban Supply Co. of Chicago. The action was for breach of a contract in which the Groban company agreed to sell Bigua two unused marine engine assemblies. The complaint alleged that Groban shipped plaintiff used, partially reconditioned engine assemblies and that plaintiff's customers refused to accept them. Damages in the amount of $57,970, together with interest, was demanded. The complaint listed the separate items of damages. These included $3,590 as the difference between the purchase price of the assemblies and their actual value, $6,000 as the cost of replacement goods "for fulfillment of Plaintiffs' customer's contract," and $1,000 for shipping expenses of replaced items.

On its own motion the district court issued a rule to show cause why the complaint should not be dismissed for failure to allege in good faith the requisite jurisdictional amount. After once continuing the hearing on the rule to show cause, the court entered an order which recited that "as a matter of law and upon the face of the complaint, the consequential damages alleged therein are not a proper measure of damages." The complaint was dismissed for the reason that the amount in controversy, exclusive of interest and costs, did not exceed the sum of $10,000 as required by section 1332 of the Judicial Code, 28 U.S.C. § 1332.

The contract was attached as an exhibit to the complaint and indicates that the engine assemblies were being shipped to plaintiff's customer, Ramser-Brouch Maritima Y Pesquera, S.R.L., Buenos Aires. Plaintiff states that if permitted to prove its case, the bills of lading and invoices will show that the engines were shipped "c and f" to Buenos Aires from the United States Naval Surplus Stores in Norfolk, Virginia.¹ On this basis plaintiff claims that the contract was performed in Virginia. Defendant, on the other hand, says that performance occurred in Chicago, Illinois, from where the c and f documents of sale were forwarded to plaintiff.

Both parties recognize that in diversity cases, the federal courts apply the substantive law of the forum state, Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), including the conflicts of law rules of that state, Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). They also agree that under Illinois law the measure of damages for breach of contract is controlled by the law of the state where the contract is to be performed if the law of that state is different from the law of the state where the contract was executed. Benedict v. Dakin, 243 Ill. 384, 90 N.E. 712 (1909); Wm. J. Lemp Brewing Co. v. Ems Brewing Co., 164 F.2d 290 (7th Cir. 1947). The contestants part company, however, in asserting the place of performance of the contract in question — plaintiff contending that performance took place in Virginia and defendant contending that the contract was performed in Illinois. Plaintiff maintains that under the law of Virginia consequential damages such as plaintiff seeks are recoverable...