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Lipman v. Arlington Seating Co.

October 31, 1951


Author: Duffy

Before DUFFY, LINDLEY and SWAIM, Circuit Judges.

DUFFY, Circuit Judge.

Plaintiff brought this action to recover damages for breach of contract. After a trial to the court judgment was entered in favor of the plaintiff for $16,105.67, from which judgment defendant appeals.

Defendant, whose factory and office are located at Arlington Heights, Illinois, is a manufacturer of school desks and chairs. The bulk of its products is sold to approximately 100 jobbers throughout the United States, although on occasion defendant has sold direct to a non-jobber customer. Plaintiff, operating in northern California under the name Pacific States Sales Corporation, is a jobber of school furniture. In 1945 and 1946 plaintiff applied to defendant, asking for the right to sell its furniture in the area in which he operated, but each request was refused by defendant because of material shortages and production difficulties. However, in April of 1947 at a meeting between plaintiff and Charles F. Close, vice president of defendant, an understanding was reached that plaintiff could act as distributor and sell defendant's products in its sales area in California.

Beginning in May, 1947, and continuing until November 19, 1947, plaintiff sent defendant a number of orders for its school desks and chairs. Defendant acknowledged the receipt of each of such orders by a form acknowledgment. Its name and address were on the top of the form, then the customer's order number, and the statement, "Sold to Pacific States Sales Corp." The shipping instructions were to ship to Pacific States Sales Corp., c/o the name and address of the particular school customer. The defendant's order number followed and a notation that a 1% cash discount would be allowed for payment up through the 10th of the month following shipment. A description of the items ordered followed, with unit price, extension price, the amount of a 20% deduction, and then the net price.The following was stamped on the acknowledgment in red ink: "This is an exact copy of your order as entered on our books. If not correct please notify us at once." Near the bottom appeared: "This Is Not An Invoice. Acknowledgment of order only." The certificate that defendant was complying with the provisions of the Fair Labor Standards Act of 1938 followed.

The trial court concluded that the acknowledgment of the orders hereinbefore described, in the light of a letter written by defendant to plaintiff on January 26, 1948, and a telephone conversation between defendant's vice president and plaintiff of June 1, 1948, constituted a contract for sale and the shipment within a reasonable time of the designated items of school furniture, and that in failing to make shipment on some of the orders it became liable to plaintiff for damages.

The letter of January 26, 1948, contained in part:

"Mr. Lipman, as we have repeatedly told you, we are going to make every attempt to deliver your orders, * * *.

"We are entirely at the mercy of our raw material suppliers, and our steel situation not only has not improved, but has actually declined which we hope is only a temporary condition.

"We expect to ship another car for you in February and more cars after that as rapidly as we are able. We cannot do the impossible nor can we at any time guarantee delivery. All we can do is go along to the best of our ability which we are doing."

The pertinent part of the telephone conversation of June 1, 1948, was stated by plaintiff as: "I called Mr. Close to ask him when we could expect more shipments and he replied that he expected to make a shipment, a carload shipment, to us by the end of June. I also told Mr. Close * * * we would appreciate his efforts to get the shipment made as promptly as possible," and that Mr. Close said, "That he would make every effort to do so."

On November 19, 1947, defendant's vice president wrote a letter to plaintiff advising that defendant had arranged for a representation in northern California on an exclusive basis by another jobber, effective January 1, 1948. In part the letter stated: "If you would like, we would be glad to accept and fill in their regular turn, any orders for school desks which you place with us between now and the first of the year, as in fairness to you, we are offering this opportunity to close up pending business on which you have spent your time and effort."

Between November 19, 1947, and January 1, 1948, plaintiff sent to defendant 21 additional orders which were acknowledged in the same manner defendant had acknowledged those received prior to this period, except that on all but two of the acknowledgments was stamped, "All prices are subject to adjustment to prices in effect at time of shipment." As of November 22, 1947, when defendant's letter of November 19 was received by plaintiff, plaintiff had acknowledged orders for 1951 desks and 299 chairs which it had not delivered. After November 19, 1947, the defendant shipped a total of 938 desks. On the date of the commencement of this suit, orders for 4131 desks and 965 chairs were acknowledged and remained unfilled.

Plaintiff testified that the prices stated in the orders and those prices stated in the acknowledgments were not controlling. In answer to the question, "So that you did not know at the time you sent an order in what price you would be ...

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