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A.C. BECKEN CO. v. GEMEX CORPORATION

September 29, 1961

A.C. BECKEN CO., AN ILLINOIS CORPORATION, PLAINTIFF,
v.
GEMEX CORPORATION, A NEW JERSEY CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Miner, District Judge.

This matter having come on for hearing pursuant to mandate of the Court of Appeals for the Seventh Circuit (opinion reported at 272 F.2d 1), and the court having considered the evidence already in the record on the subject of plaintiff's damages, and the court having heard and examined the admissible evidence offered by defendant in an effort to affect plaintiff's prima facie proof of damages, and that offered by plaintiff in rebuttal, and the court having heard the arguments of counsel and having read the briefs submitted on the issue now before it, and the court being fully advised, the court enters its findings of fact and conclusions of law as follows:

Findings of Fact

Introductory

1. The evidence in the record concerning many of the factual questions on the damage issue before the court is conflicting and subject to varying degrees of credibility.

2. From an examination and analysis of the testimony and exhibits introduced and admitted into evidence at trial and pursuant to the conclusions of law hereinafter set forth, and from a careful examination of the weight to be accorded each item of evidence, the court finds that

(a) the plaintiff's prima facie estimated loss figure of $56,475.95 must be reduced by (i) a sum attributable to payment of salesmen's commissions not otherwise credited against plaintiff's estimates of gross purchases from defendant to the extent of estimated sales for which such commissions would be payable; (ii) a sum attributable to excessive estimation of increase in plaintiff's gross sales income from Gemex watchbands;

(b) the plaintiff's prima facie loss figure of $56,475.95 should not be reduced by

(i) any sum attributable to asserted general and administrative expense above that already credited by plaintiff against plaintiff's estimates of gross purchases from defendant;

(ii) any sum attributable to asserted cash discounts allowed by plaintiff to its customers;

(iii) any sum attributable to asserted increases in direct selling by defendant to retailers;

(iv) any sum attributable to asserted excessive estimation of cost of handling Gemex watchbands in plaintiff's inventory subsequent to August 2, 1956;

(v) Any sum atttributable to asserted excessive estimation of loss on Gemex watchbands closed out by plaintiff subsequent to August 2, 1956.

(c) the plaintiff's losses of profits on watchband sales for the years in question must be reduced by losses attributable to causes other than defendant's illegal acts.

Salesmen Commission Expense Not Already Deducted

3. Payment of commissions to salesmen on merchandise sold operates to increase plaintiff's otherwise cost of such merchandise and, correlatively, to decrease plaintiff's otherwise profits on such merchandise.

4. Plaintiff ordinarily paid and would ordinarily have paid a 10% commission on sales of watchbands.

5. One-third of plaintiff's sales and projected sales of Gemex watchbands were to an account concerning sales to which plaintiff paid its salesman a 5% commission plus a salary in an amount approximating an additional 5% of gross sales.

6. The Court of Appeals has, in its opinion (272 F.2d at page 5) approved such salary payment as an item of damage, and has reduced it by two-fifths pursuant to a concession by plaintiff referred to in the said opinion. The Court of Appeals having thus considered the salary payment matter in full on its merits and on its facts, this court has no power to make further factual findings as to some other proportion of such salary payment by which plaintiff should be compensated by defendant or, indeed, whether such salary payment was in reality a 5% commission not chargeable as damages.

7. Some sales of watchbands were and would have been attributable to mail order sales on which no salesmen's commissions are paid.

8. The evidence is insufficient to permit a finding as to the exact portion of plaintiff's Gemex watchband sales which were and would have been initiated by mail order, for the reasons, among others, that

(a) within two years after filing the instant suit plaintiff destroyed or otherwise made unavailable all its file copies of sales invoices;

(b) plaintiff's general testimony estimating that only 35% to 40% of its customers were called on by its salesmen in an effort to sell plaintiff's many types of merchandise (some 20,000) is insufficient to warrant the inference either that such customers represented or would have represented that same percentage of gross sales of Gemex watchbands, or that mail order sales receipts from sales of Gemex watchbands represented or would have represented the difference between that percentage and the total of gross sales;

(c) plaintiff's general testimony estimating that 45%, 50% or 60% of its gross sales of all types of merchandise were and would have been mail order sales is insufficient to warrant the inference that mail order sales of Gemex watchbands represented or would have represented that same percentage, and such inference is not credible in view of other evidence concerning the percentage of Gemex watchbands sold to but one account (Field's, 1/3) and the plaintiff's ordinary method of operation;

(d) plaintiff has also testified that its net sales of all types of merchandise in the fiscal year ending January 31, 1957, totaled $2,677,523, and that the customers which its salesmen never see account for "thousands of dollars worth of business";

(e) although the evidence is insufficient to permit of such finding, if the court were to consider that plaintiff's percentage of mail order sales of Gemex watchbands was and would have been the same percentage as its mail order sales of all merchandise, and if the court were to construe plaintiff's evidence concerning "thousands of dollars" as meaning a quarter of a million dollars, the said percentage would constitute no more than 10%;

(f) plaintiff has testified that 5% of salesmen's commissions are also paid on mail order sales of Gemex watchbands whenever a customer buys by mail order within six months of the time when a salesman personally secured an order from that customer;

(g) plaintiff's president testified that he could not tell how many sales of Gemex watchbands in 1955 were made without payment of the 10% commission and that any statement by him as to how many "would only be a guess";

(h) plaintiff has itself deducted 4.5% from all estimated gross sales as commission expense without evidence that the said percentage is an overall weighted average representing sales on commission and sales not on commission.

9. Salesmen's commissions in the amount equivalent to 4.5% of net sales have already been deducted by plaintiff in its damage computations as part of "selling, general and ...


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