Before KERNER, DUFFY and SWAIM, Circuit Judges.
This is an appeal from a judgment for a deficiency after retaking and resale by the seller's assignee of property sold to the defendants on an Indiana conditional sales contract. 94 F.Supp. 328. The plaintiff, Bulldog Concrete Forms Sales Corporation, is an Illinois corporation with its principal place of business in Chicago. The contract in suit was assigned to the plaintiff by Bulldog Concrete Forms, Inc., a New York corporation, from which the defendants, William C. Taylor, Robert L. Taylor and Perry Weddell, partners, doing business as Taylor Bros. purchased the property which consisted of steel forms for use in the construction of concrete basements and foundations. Bulldog of New York is the manufacturer of the forms while Bulldog of Chicago is the sales agency. The defendants were residents of Indiana and had their principal place of business in South Bend, Indiana.
In February 1948 the defendants had a subcontract to construct concrete basements or foundations for a large number of housing units on a housing project which was being built near South Bend. During that month William L. Taylor first saw samples of these steel forms at a show in Chicago and a salesman of the plaintiff explained their use to him. On or about April 9, 1948, the defendants rented the steel forms here in question from Bulldog of New York and continued to use them on a rental basis until June 10th when they, by William C. Taylor, one of the partners, executed a conditional sales contract to purchase the forms for a total price of $12,782.95. On this amount the defendants were credited with $1,900.00 which they had paid as rental on the forms and with an additional $500.00 which they paid at that time. This left a balance of $10,882.95, which the contract made payable in ten equal instalments of $1,088.30. The defendants defaulted on the first payment, due July 15, 1948. The conditional sales contract expressly provided that the defendants agreed that, in case the vendor, on default of the vendee, retook possession of the property and sold it, the vendees, the defendants, would pay balance which was not satisfied from the proceeds of the sale.
Prior to the execution of the purchase contract the defendants used these steel forms in the construction of 32 basements. William C. Taylor testified that from the use of the forms, prior to the execution of the purchase agreement, the defendants found that the forms were unsatisfactory and that the defendants' superintendent thought that it would be better to bore holes in the forms so that they could be bolted together to prevent their spreading. Victor Ludwig, the president of the plaintiff company, refused to permit the partners to do this unless they purchased the forms. The partners then executed the contract of purchase, bored the holes in the forms and continued to use the forms in the construction of 38 more basements.
According to the testimony of Taylor the use of these steel forms was still unsatisfactory and the defendants, therefore, returned to the use of plywood forms. Taylor testified that erecting and dismantling the steel forms for each basement cost them approximately $250.00, as compared with a cost of $59.00 when the plywood forms were used; that when they used the steel forms they were able to construct not more than 3 or 4 basements a week while their contract called for 10 basements per week; and that, finally, even after the forms were bolted together, they spread to such an extent that the foundations did not meet the specifications for the houses that were to be erected on them.
Throughout the period during which the defendants were using the steel forms different agents of the plaintiff, including Ludwig, came to South Bend and conferred with and advised the defendants on the problem of using these forms.
In the last week of July, after the defendants had failed to meet the July 15th payment on the contract, Mr. Judwig, acting for the plaintiff, went out to the housing project near South Bend and told Taylor that the plaintiff would have to have some money on the contract or the forms. The defendants were not then using the forms and Taylor told Ludwig that if he wanted to, Ludwig could take the forms and get them on their way to New York. Ludwig replied that Taylor didn't need to send the forms back to New York, that they could be delivered by Taylor to the company's warehouse in Chicago. Taylor agreed to this and did deliver the forms, on the partners truck, to the plaintiff's warehouse in Chicago on August 3 and August 5, 1948. On August 10, 1948, Bulldog of New York assigned the conditional sales contract to the plaintiff.
On August 18th the plaintiff, by registered mail, informed the defendants of plaintiff's intention to sell the forms, pursuant to the provisions of the Indiana Conditional Sales Act, at a public sale to be held August 30, 1948, at 2:00 P.M., and that the defendants would be held responsible for any deficiency. The first letter failed to name the place where the sale would be held. In a registered letter, dated August 20th, the defendants were informed that the sale would be held in Room 900, 33 North La Salle Street, Chicago. Room 900 was the designation of a suite of law offices which included the law office of Milton T. Raynor who was then acting as the attorney for the plaintiff. Both of these letters were addressed to "Mr. William C. Taylor, c/o Taylor Brothers, 3535 E. McKinley Road, South Bend, Indiana," and both letters were signed by Milton T. Raynor, who stated in the first letter that he had been retained by Bulldog Concrete Forms, Inc., to take the necessary legal steps to enforce the conditional sales contract.
On August 25th the plaintiff caused notice of the sale to be published in the Chicago Daily Law Bulletin, a newspaper published in Chicago, Illinois, and copies of the notice to be posted in three places in Chicago, to-wit, the bulletin board of the Chicago Daily Law Bulletin, 34 North La Salle Street, Chicago, at the Randolph Street entrance of the County Building, and at the Washington Street entrance of the City Hall in Chicago. This notice so posted and published was as follows:
Public Notice Is Hereby Given pursuant to the Indiana Conditional Sales Act, that certain steel concrete forms retaken under a conditional sales agreement and used in the construction of houses, will be sold at public auction to the highest bidder, at the office of Milton T. Raynor, 33 N. La Salle Street, Room 900, Monday, August 30, 1948, at 2:00 P.M.
The concrete forms may be inspected at the Duro-Industries Warehouse, 502 S. Canal Street, at ...