Pittsburgh-Des Moines Steel Co. v. Brookhaven Manor Water Co., PITTSBURGH-DES

Citation532 F.2d 572,18 U.C.C.Rep. 931
Decision Date02 March 1976
Docket NumberNo. 75-1009,PITTSBURGH-DES,75-1009
Parties18 UCC Rep.Serv. 931 MOINES STEEL CO., Plaintiff-Counter-Defendant-Appellant, v. BROOKHAVEN MANOR WATER CO., Defendant-Counter-Plaintiff-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Robert G. Schloerb, Ellen J. Kerschner, Chicago, Ill., for appellant.

B. John Mix, Jr., Chicago, Ill., for appellee.

Before CLARK, Associate Justice (Retired), * and CUMMINGS and PELL, Circuit Judges.

PELL, Circuit Judge.

This is an appeal by the Pittsburgh-Des Moines Steel Company (hereinafter PDM) from the district court's entry of a judgment notwithstanding the verdict against PDM on its complaint for repudiation of contract and for Brookhaven Manor Water Company (hereinafter Brookhaven) on its counterclaim for breach of contract and from the district court's subsequent adjudgment of damages. The questions raised on appeal are whether the district court erred in entering judgment notwithstanding the verdict in favor of Brookhaven on the liability issue and whether error was committed in the district court's subsequent assessment of damages against PDM.

The record discloses the following series of events. On July 24, 1968, PDM, a designer, fabricator, and engineer of steel products, submitted a proposal to Brookhaven for the construction of a one-million-gallon water tank for $175,000. The original proposal incorporated, as terms of payment, 60 percent upon receipt of materials in PDM's plant, 30 percent upon completion of erection, and 10 percent upon completion of testing, or within 30 days after the tank had been made ready for testing. The original terms were not satisfactory to Brookhaven's president, Irving Betke, and were subsequently changed. The altered payment term provided that 100% of the contract price was due and payable within 30 days after the tank had been tested and accepted. The altered proposal was signed and accepted by Brookhaven on November 26, 1968.

Sometime during the following month Norman Knuttel, PDM's district manager who had prepared and signed the original and revised proposals, talked to a representative of the Arbanas Construction Company which company had contracted with Brookhaven for the construction of the tank foundation. Knuttel was informed that Brookhaven had received a loan from Diversified Finance Corporation. Although this information as to the receipt of the loan was incorrect, Brookhaven had negotiated with Diversified for a loan for the purpose of the construction which negotiations continued into the following year. Under date of January 3, 1969, PDM's credit manager wrote Diversified with a copy to Betke which letter in part was as follows:

"(W)e hereby request a letter assuring that $175,000.00 for payment of the referenced project will be held in escrow and fully committed to payment to us upon completion of referenced elevated tank.

"As a matter of good business we are holding this order in abeyance until receipt of such notification."

The contract contained no provision for escrow financing. Brookhaven, through Betke, took no action upon the receipt of the copy of the letter. Subsequently, after further correspondence and meetings, resulting primarily from Brookhaven's not having secured a planned loan of $275,000.00 from Diversified Finance, PDM's credit manager sent an air mail, special delivery letter to Betke, dated March 19, 1969, which suggested that Betke "mail us your personal guarantee of payment of $175,000.00 as per the contract, to protect us in the interim between now and the time your loan is completed."

While the contract specified the payment of the amount mentioned no later than 30 days after completion of the tank, it was silent as to any reference to a personal guarantee by Betke. The letter concluded as follows:

"Upon receipt of such guarantee, we could immediately set in motion our shop fabrication which would result in earlier completion of your new tank.

"When your loan is completed we will still require a letter of instructions to be forwarded from you to your bank, or other financial institution which extends this loan, that $175,000.00 is to be held in escrow for disbursement only to Pittsburgh-Des Moines Steel Company in accordance with our contract."

The construction of the water tower was scheduled to begin on April 15, 1969. A crew had been scheduled for the site three months previously, and a crew was ready to appear there on April 15, 1969. As matters transpired, however, the tank was never installed at Brookhaven's site. On March 31, 1969, Betke sent PDM Comptroller Harry Kelly his personal financial statement, but he did not send PDM his personal guarantee for the loan. After Betke failed to provide his personal guarantee of the $175,000.00 contract price, PDM took no further steps toward performance. 1 On April 22, 1969, Kelley, PDM Secretary-Treasurer Tom Morris, PDM Sales Manager Dwight Long, and Betke attended a meeting on the Brookhaven premises. Although the record reveals somewhat inconsistent versions of the details of that meeting, it appears that Morris told Betke that PDM would complete the fabrication of the tank and deliver it to the job site within a matter of weeks but that Betke replied that he had no need for the tank until the following year.

Further efforts to implement the contract broke down completely after April 22, 1969. Brookhaven's installation of the reinforced concrete foundation for the tank had been accomplished at a cost to it of $18,895. Subsequent to the March meeting, Brookhaven purchased additional land and developed two wells which provided an adequate water supply. Brookhaven later sold all its assets, including both equipment and land, to the City of Darien. At the trial of the damages issue, an expert in demolition testified that the cost of removing the reinforced concrete foundation would be about $7,000. On the basis of this testimony, which was proffered upon the legal theory that Brookhaven had a right to recover the cost of the removal, the district court found that the total amount of damages sustained by Brookhaven was the sum of $25,895.00 and entered judgment in its favor for that amount.

I. The Grant of Judgment Notwithstanding the Verdict
A. Compliance with Rule 50(b)

The initial issue in this appeal is whether the district court erred in granting judgment notwithstanding the verdict in favor of Brookhaven. Citing appropriate authority, appellant PDM contends that a motion for directed verdict is a prerequisite to a motion for judgment n. o. v. and that the district court had no judicial power to enter judgment for Brookhaven, inasmuch as the latter had not renewed its motion for a directed verdict at the close of all the evidence nor had it moved for a directed verdict as to its counter-claim. 2 Brookhaven argues that matters not raised below cannot be urged for the first time on appeal and that sound policy analysis should induce this court to prevent PDM from gaining a "tactical victor(y) at the expense of substantive interests." 5A Moore, Federal Practice P 50.08 at 2359 (2d ed. 1975).

We note that PDM, prior to raising on this appeal the question of compliance with Fed.R.Civ.P. 50(b), filed eight written memoranda, including one to this court in an earlier effort to gain appellate review, without any focus on the question of the lack of judicial power in the district court to grant judgment n.o.v. The only reference in the record which has come to our attention regarding the failure of Brookhaven to file motions for directed verdict at the close of all of the evidence is the statement in PDM's reply to Brookhaven's post-trial motion in which it was asserted, "It is significant that at the end of all of the evidence the defendant did not again move for a directed verdict in its favor." In the context of the reply in which PDM referred to the evidence supporting a verdict in its favor, it appears clear to us that PDM was doing nothing more than contending that Brookhaven obviously regarded as fruitless any effort at renewing its motion, having "fully argued its motion for a directed verdict (at the close of the plaintiff's evidence), which the court denied." The passing reference to the failure is no substitute for bringing to the attention of the trial court the claim that it lacked the power to entertain the motion. There would have been no necessity for discussing the merits of the motion in the reply except upon an arguendo basis. The plain fact is that there was exhibited no awareness by any of the participants in this case at the trial court level, including the judge, that there had been any violation of Rule 50(b).

We do not view favorably the raising of an issue, particularly a technical one, for the first time on appeal. Moran v. Raymond Corp., 484 F.2d 1008, 1011 (7th Cir. 1973), cert. denied, 415 U.S. 932, 94 S.Ct. 1445, 39 L.Ed.2d 490 (1974). We have no reason for thinking that as a matter of fact there was a conscious waiver for tactical or other reasons by PDM. As we have already indicated, there was, if anything, a lack of awareness of the possibility of a violation of the rule. Even though non-jurisdictional procedural rules would ordinarily be of the type that would be waived on appeal as a matter of law by not being brought to the attention of the trial court, there is an underlying rationale or reason for compliance with the requirement that the motion for directed verdict be filed at the end of all of the evidence if the right to move for judgment n.o.v. is to be permitted.

"One reason why a motion for a directed verdict is a prerequisite to a motion for judgment notwithstanding a verdict is stated by Judge Gardener in Mutual Ben. Health & Accident Ass'n v. Thomas, (123 F.2d 353, 355 (8th Cir. 1941)) as follows:

'It is only where a litigant has made motion for a directed verdict that he may ask the court to enter judgment non obstante...

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