Reconstruction Finance Corp. v. COMMERCIAL UNION, ETC.

• Decision Date: 16 April 1954
• Citation: 123 F. Supp. 748
• Parties: RECONSTRUCTION FINANCE CORP. v. COMMERCIAL UNION OF AMERICA CORP. COMMERCIAL UNION OF AMERICA CORP. v. RECONSTRUCTION FINANCE CORP.
• Court: U.S. District Court — Southern District of New York

123 F. Supp. 748

RECONSTRUCTION FINANCE CORP. v. COMMERCIAL UNION OF AMERICA CORP.

COMMERCIAL UNION OF AMERICA CORP. v. RECONSTRUCTION FINANCE CORP.

United States District Court, S. D. New York.

March 25, 1954.

On the Merits. April 16, 1954.

C. R. L. Hemmersley, Montclair, N. J., for Reconstruction Finance Corporation, by A. Glaser, of counsel.

Alexander D. Diamond, New York City, for Commercial Union of America Corp.

GODDARD, District Judge.

Motion by Commercial Union on March 18th to reopen the case to take the testimony of O'Halloran, an employee of the Foreign Economic Administration and United States Commercial Company at the time of the transaction. He was not called at the trial.

The Reconstruction Finance Corporation filed its suit on April 13, 1949, and Commercial Union filed its action on June 26, 1952. Several pretrial conferences were held from December, 1952 to June, 1953, at which numerous documents were marked for identification, some of which were authored by O'Halloran. The trial began on January 12, 1954, and ran for four days, ending on January 15th, during which no application for an adjournment was made. Briefs were filed by both sides on February 15, and 17th. Now Commercial Union seeks to reopen the case. It has not been shown that O'Halloran was unavailable previously nor that any attempt to locate him was ever made until now.

After a case has been closed, whether or not it should be reopened is within the sound discretion of the trial court. Philadelphia & Trenton R. R. Co. v. Stimpson, 14 Pet. 448, 39 U.S. 448, 10 L.Ed. 535. Though it may be permitted in a proper case, it has been called a "pernicious practice". Missouri Pac. Ry. Co. v. Oleson, 8 Cir., 213 F. 329. Where a party has not shown diligence in procuring a witness, the reopening of the case may be denied. Cincinnati, N. O. & T. Ry. Co. v. Cox, 6 Cir., 143 F. 110.

I do not think that Commercial Union has been properly diligent in obtaining this witness, and I deny the motion to reopen the case.

Settle order on notice.

On the Merits.

The Reconstruction Finance Corporation hereinafter referred to as the R. F.C. filed its suit for breach of contract against the Commercial Union of America Corporation hereinafter referred to as Commercial Union on April 13, 1949, to which Commercial Union filed its answer. Subsequently, on June 26, 1952, Commercial Union filed a complaint against the R.F.C. for failure to pay an alleged account stated. To this complaint R.F.C. filed an answer and counterclaimed in this suit for the same damages which were the subject of its own suit.

Since both suits arise out of the same transaction, the purchase and sale of certain garbanzos Mexican chickpeas, Commercial Union's claim should have been asserted as a counterclaim in the action by the R.F.C., not in an independent action. cf. Rule 13(a), Fed. Rules Civ.Proc. 28 U.S.C.A. However, both suits have been consolidated for trial, and I shall overlook this error in procedure.

The R.F.C. sues for the increased amount agreed by Commercial Union to be paid over the original purchase price for the garbanzos, less certain credits to be allowed to Commercial Union. Commercial Union denies liability on the amended contract, charging duress in obtaining its acceptance. Commercial Union in its suit alleges an account stated between itself and the United States Commercial Company hereinafter referred to as the U.S.C.C. allegedly entered into on August 13, 1946, wherein it claims that the U.S.C.C. agreed to pay Commercial Union for certain expenses incurred by Commercial Union subsequent to the purchase of the garbanzos. The expenses involved therein are the same items for which the R.F.C. would allow credits against its claim, but the amounts are in dispute. The R.F.C. denies that there was an account stated.

The R.F.C. sues, and is sued, as the statutory transferee of the capital stock, assets and liabilities of the U.S.C.C., pursuant to Executive Order No. 9630, 50 U.S.C.A.Appendix, § 601 note (10 F.R. 12245).

On January 10, 1945, Commercial Union sent a telegram to J. A. O'Halloran of the Foreign Economic Administration hereinafter referred to as the F.E. A., of which the U.S.C.C. was a part, offering to buy garbanzos, stating:

"* * * We are anxious to secure 7,000 tons or part of same and we hereby offer your firm hundred and ten dollars per metric ton F.O. B., New Orleans stop for your information above material is intended for shipment to Spain."

On January 19, 1945, O'Halloran replied by telegram:

"Referring your telegram January 10. We accept your bid of $110 per metric ton for approximately 3900 tons Mexican Garbanzos * * *. We are confirming this with the understanding * * * that the Barbanzos sic are intended for shipment to Spain. * * *"

This reply telegram also set forth additional terms of shipment and payment. By letter of January 25, 1945, on F.E.A. letterhead, C. N. Gibboney, Chief of the Food Production and Procurement Division, forwarded three copies of a confirmation of sale, S-11772, for signature by Commercial Union, two signed copies to be returned to the U.S.C.C., Food Production and Procurement Division. This confirmation of sale had the names of the U.S.C.C. and the Commercial Union typed in, and it stated in part:

"This will confirm our sale under the name and date shown above in accordance with the terms and conditions stated herein:"

The number was S-11772 and the date was January 19, 1945. It listed the terms of shipment and payment but made no mention of export or shipment to Spain.

By letter of January 26, 1945, addressed to the U.S.C.C., Commercial Union returned the two copies of S-11772 duly accepted. By letter of February 21, 1945, Commercial Union forwarded to O'Halloran a cheque for $5,000, drawn to the order of the U.S.C.C., on account of the purchase price. A draft, dated April 18, 1945, was drawn to the order of the U.S.C.C. for the balance of the purchase price, in the amount of $441,688.28, on the Chemical Bank & Trust Company, and payment was received by the U.S.C.C. on April 24th by cheque drawn to its order.

Meanwhile, between March 28th and April 18th, Commercial Union sold the garbanzos to customers, not in Spain, but in Cuba. It then made application to the F.E.A., the agency in charge of export licensing Act of Congress July 2, 1940, c. 508, 54 Stat. 714, for licenses to ship to Cuba. All were rejected, save five which were at first validated but then revoked.

On May 7th, O'Halloran wrote to Commercial Union, stating in part:

"This sale was made to you for shipment to Spain. We are now informed by your Mr. Antoniades and Mr. Horgan that you desire to export this quantity of garbanzos to Cuba. It has been determined that an export license cannot be approved for Cuba, however, we recommend that you make immediate application for an export license to Spain. If you are unable to export this merchandise to Spain, we shall repurchase it from you at the same price we sold to you thereby cancelling the contract."

To this, Commercial Union replied on May 12th, in part:

"Our negotiations prior to the purchase, were conducted with the intention of shipping the material in question to Spain. In the meantime, however, developments in connection with the lot in question makes this impossible or at least inadvisable. * * *

"We very much appreciate your offer to repurchase the material, which we cannot reconsider, as it has already been sold."

On July 23, 1945, Commercial Union wrote to Gibboney, stating:

"As advised by us at the time of purchase, this merchandise was intended for shipment to Spain. However, our buyers in Spain informed us that they were not interested at the price, and stated that their ideas of price were considerably below what we paid you for the material. * * *

"Under the circumstances, we have discussed with you the proposal to ship this merchandise to Cuba. We therefore await your advices in this connection."

On July 25th, Gibboney forwarded to Commercial Union a Sale Adjustment 363, in the form of a letter, which said:

"We refer to your letter of July 25, 1945, sic regarding the purchase from U. S. Commercial Company of 3900 tons of garbanzos covered by contract S-11772 dated January 19, 1945.

"In view of the fact that the garbanzos were sold to you specifically for shipment to Spain at a price figured to permit shipment to that country, we understand that you are agreeable to a change in the price to correspond with that given to other companies which have made shipments to Cuba. The price at which these other sales were made is $121.50 per metric ton. We will, therefore, be pleased to amend the above contract to change the price from $110 per metric ton basis to $121.50 per metric ton basis, allowing you for the expenses of storage, insurance, interest and inspection actually paid on these garbanzos by your sic from January 29, 1945 to date with an allowance of 30 days free charges. Interest at the rate of 3 percent per annum is to be paid by you on the additional amount due from the date of acceptance until payment is received.

"It is understood that the 3900 tons of garbanzos are committed by you to Cuban purchasers and that export licenses will be approved by Foreign Economic Administration for shipment of the full quantity of these garbanzos to Cuba within 100 days.

"This offer will be deemed accepted on receipt of a copy of this letter signed by an authorized officer of your company, together with a letter from a New York Bank guaranteeing payment of the additional amount due."

This was signed and accepted by Commercial Union and it is this agreement which is the basis of the suit by the R.F.C.

On July 31st, Commercial Union wrote to Gibboney enclosing a letter from the Chemical Bank & Trust Company which guaranteed the payment and stated in part:

"As we understand the situation, the garbanzos were purchased from the U. S. Commercial Company with the intention of

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