Paramount Supply Co. v. Sherlin Corp.

• Decision Date: 18 June 1984
• Citation: 16 Ohio App.3d 176,475 N.E.2d 197,16 O.B.R. 186
• Parties: , 16 O.B.R. 186, 40 UCC Rep.Serv. 447 PARAMOUNT SUPPLY CO., Appellee and Appellant, v. SHERLIN CORPORATION et al., Appellants and Appellees. *
• Court: Ohio Court of Appeals

Page 176

16 Ohio App.3d 176

475 N.E.2d 197, 16 O.B.R. 186, 40 UCC Rep.Serv. 447

PARAMOUNT SUPPLY CO., Appellee and Appellant, v. SHERLIN CORPORATION et al., Appellants and Appellees. ^*

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

June 18, 1984.

Syllabus by the Court

1. When a trial court does not assume the role of fact finder, as in issuing summary judgment rulings, it has no duty to issue findings of fact under Civ.R. 52.

2. Private citizens are qualifiedly privileged to give information to proper government authorities for the prevention or detection of crime. In such a case, no recovery can be made for defamation, absent a showing that the speaker was moved by actual malice.

3. A party may purposely prevent another from performing a contract with a third person if that party, in good faith, (a) is asserting or protecting his own legally protected interest, and (b) believes that his own legal interest may be impaired or destroyed if the contract is performed.

4. An action for wrongful interference with another's contract requires proof that the actor's unprivileged conduct proximately caused the contractual disruption.

5. Customarily, reference to something "in the care of" another describes a legal relationship akin to that of ownership, tenancy or bailment. Thus, delivery to B at the proper place discharges the deliverer's liability, when a package is addressed to "A, in care of B."

6. Subsequent acts or agreements may modify or operate as a waiver of commercial sales contract terms. (R.C. 1302.12.)

Otto Miller, Cleveland, for Paramount Supply Co.

Willacy & LoPresti, Aubrey B. Willacy and Christine C. Covey, Cleveland, for Sherlin Corp. and Harry Seton.

Robert W. McIntyre, Cleveland, for third-party defendant-appellee, James Clemens.

MARKUS, Presiding Judge.

Plaintiff-seller (Paramount Corporation) filed this action against defendant-buyer (Sherlin Corporation) for an alleged breach of a sales contract. Sherlin answered, denying that it breached the contract. Additionally, Sherlin and its sole shareholder (Harry Seton) counterclaimed that Paramount and its general manager breached the contract, tortiously interfered with it, and defamed them. After the parties concluded extensive discovery, the court granted summary judgment motions which denied any relief to anyone.

Paramount, Sherlin, and Seton appeal. Each complains that the trial court erred substantively or procedurally in dismissing its claims and failing to grant its request for affirmative relief. We conclude as a matter of law that official action by the federal government prevented the parties from delivering the merchandise to its ultimate destination. However, a genuine issue of material fact remains whether Paramount had completed its contractual duties when the government rendered any further action impossible. If so, Paramount is entitled to judgment against Sherlin for Sherlin's refusal to pay the contract price.

In any event, the court properly granted summary judgment dismissing all other claims. Therefore, we reverse the summary judgment which denies Paramount any relief and remand that part of the case for trial. Otherwise, we affirm.

I

The pleadings, affidavits, depositions and supporting documents establish the following chronicle of events. In July 1980, a Kuwaiti businessman contacted Sherlin's president, Harry Seton, seeking to purchase two thousand Mack truck turbochargers. Seton, in turn, contacted the turbocharger manufacturer with an offer to purchase those parts. The manufacturer advised Seton that it did not sell automotive parts directly to purchasers and suggested that Seton contact its Ohio distributor, Paramount.

Thereafter, Sherlin and Paramount conducted negotiations for that purchase by telephone. Sherlin offered to buy, and Paramount agreed to sell, two thousand turbochargers for $311.49 each. However, the witnesses disagree whether Paramount also promised to ship those parts directly to Sherlin's customer in Kuwait in September. Sherlin claims that Paramount agreed to comply with terms of a letter of credit which Sherlin expected to receive from its Kuwaiti customer shortly. All witnesses concur that Sherlin's payment to Paramount would be made or secured by Sherlin's partial assignment of the proceeds from that letter of credit.

On July 22, 1980, Seton sent Paramount a Sherlin purchase order which purported to memorialize Sherlin's understanding of their oral agreement. It called for two thousand turbochargers at $311.49 each "[t]o be shipped direct to customer in Kuwait from [manufacturer's] plant." It also stated: "Shipments to be made according to instructions as specified in letter of credit."

Within ten days, Paramount's salesman brought a factory representative to meet with Seton, because the manufacturer could not provide two thousand turbochargers by September. Paramount contends that their meeting produced several agreed modifications to the sale terms, including a change in the dates and place of delivery. Sherlin asserts that the dates for delivery installments was the sole change made from the original purchase order. All parties agree that the shipment date for the first five hundred turbochargers was postponed at least one month.

On August 29, Sherlin mailed Paramount a second purchase order with a revised shipment schedule for the remaining one thousand five hundred units:

"PURCHASE ORDER

"1500 #185605 Switzer Turbo

"For export shipment to Kuwait at $311.49 each.

"To be shipped from factory on:

"500 pcs. 11-14-80

"500 pcs. 11-28-80

"500 pcs. 12-12-80

"Our customer letter to be issued thirty days prior to shipping date. Union Commerce Bank of Cleveland will forward to Paramount Supply our assignment of proceeds."

At approximately the same time, the bank sent Paramount a copy of Sherlin's partial assignment of the ultimate customer's initial letter of credit. A Kuwaiti correspondent bank executed that credit instrument on July 30. Sherlin executed its assignment on August 14, and the bank mailed them to Paramount on August 28. This letter of credit covered the Kuwaiti customer's purchase price from Sherlin for the first five hundred units. It exceeded Sherlin's price from Paramount for that merchandise by $26,865, which presumably represented Sherlin's profit on that part of the transaction.

This credit instrument authorized drafts for the invoice value of those goods upon presentation of described shipping documents:

"Complete set of clean 'Shipped on Board' Ocean bills of lading marked freight paid * * * evidencing shipment from U.S.A. to Kuwait C & F by steamer in transit. * * * "

The instrument also described with particularity other documentation and packing instructions for the merchandise, including markings with the Kuwaiti customer's name and "KUWAIT IN TRANSIT."

Paramount's general manager became suspicious that the turbochargers might be destined for Iran, in violation of then existing embargo laws. Seton told him that his Kuwaiti customer ultimately intended to purchase fourteen thousand of these turbochargers. He discovered that these parts were used on trucks manufactured only in the United States and Iran. Seton also told him that Sherlin exported goods to Iran prior to the Iranian embargo. Kuwait borders Iran along the Persian Gulf.

Consequently, Paramount's general manager contacted a federal customs' agent to express his concern and seek instructions. The customs' agent advised him to proceed with the transaction while the government attempted to trace the prospective shipment.

At Paramount's direction, the manufacturer delivered the first five hundred turbochargers to Paramount's offices in Ohio for further packaging in early October. Paramount claims that Sherlin then directed it to ship the merchandise to Sherlin in care of a New Jersey packing company, for special overseas packaging. Sherlin contends that it gave Paramount delivery instructions but never changed Paramount's contractual obligation to deliver the packaged units on board the departing vessel. Both versions find support in the evidentiary materials submitted to support the various summary judgment motions.

The New Jersey packing company prepared the units for overseas shipment and delivered them to a freight forwarder at the loading dock. Sherlin's Kuwaiti customer had selected both the New Jersey packing company and the freight forwarder by communications with both of them and Sherlin. The freight forwarder prepared shipping and customs documents which described Sherlin as the shipper and Sherlin's Kuwaiti customer as the consignee.

At that point, federal customs officers intervened and refused to permit the forwarder to load the merchandise on the ship. The freight forwarder then notified Sherlin and asked it to remove the merchandise or pay demurrage. Sherlin refused to accept responsibility for the merchandise and requested Paramount to cancel its invoices to Sherlin because the items "were never received." The freight forwarder sent the New Jersey packer's bill to the Kuwaiti customer.

Eventually Paramount arranged to sell the units to a New Jersey purchaser at a significant loss from Paramount's contract price with Sherlin. In turn, Sherlin lost its profit on the sale of these five hundred turbochargers to its Kuwaiti customer, plus its profit on the remaining one thousand five hundred units. Additionally, Sherlin claims that it lost profits on a further order from the same Kuwaiti businessman for another twelve thousand of the same model turbochargers. Finally, Sherlin and Seton claim that Paramount's contact with the federal customs agent defamed them and caused their personal and business reputations to suffer.

II

Defendants Sherlin and Seton first assign two claimed errors which challenge procedural aspects of the trial court's summary judgment rulings:

"1. The trial court abused its discretion and committed error prejudicial to appellants in...