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Brunswick Corp. v. Steel Warehouse Co.

October 10, 1962

BRUNSWICK CORPORATION, PLAINTIFF-APPELLEE,
v.
STEEL WAREHOUSE CO., INC., DEFENDANT-APPELLANT



Author: Duffy

Before HASTINGS, Chief Judge, and DUFFY and SCHNACKENBERG, Circuit Judges.

DUFFY, Circuit Judge.

Plaintiff is a Delaware corporation with its principal place of business at Chicago, Illinois. Defendant is an Indiana corporation with its principal place of business at South Bend, Indiana. Spincraft, Inc. of Milwaukee, Wisconsin, was one of plaintiff's suppliers.

This suit arises from a purchase from Spincraft, Inc. by defendant Steel Warehouse Co. of approximately 900,000 pounds of steel sheets in November 1959. Plaintiff claims there were no warranties made or given to Steel Warehouse Co. and that Steel Warehouse Co. breached the contract by not paying for the steel at the agreed price.

Defendant Steel Warehouse Co. denied it breached the contract, and in a counterclaim alleged the steel sheets were warranted by plaintiff to be 11 gauge, hot rolled, pickled and oiled, commercial quality, prime, clean, flat, low carbon with no laminations and no rust, and that the steel sold failed to live up to such specifications.

The complaint alleged that in the fall of 1959, during the pendency of a steel strike, plaintiff authorized Spincraft, Inc. to purchase steel sheets of various sizes all smaller than those ordinarily used in the manufacture of parts for plaintiff; that more than 500 tons of such steel sheets were purchased at a cost of $112,673.78 or over $10 per cwt. The complaint further alleged that the steel sheets thus purchased could not economically be used, and plaintiff authorized Spincraft, Inc. to sell said steel sheets. That on or about November 20, 1959, defendant verbally agreed to purchase said steel sheets at $8.85 per cwt. and Spincraft, Inc. agreed to sell to defendant at that price.

The jury found the issues for the plaintiff Brunswick and assessed damages at $46,592.80. On the counterclaim, the jury also found the issues in favor of plaintiff Brunswick.

Plaintiff is not a dealer or warehouser of steel. It is a manufacturer which bought the steel to be incorporated into its products. Spincraft had been manufacturing elevator wheels for the Brunswick bowling machine. Due to the steel strike it was unable to purchase the size of steel sheets customarily used. The steel "circles" which plaintiff ordinarily purchased from the mills were not available from any source. Spincraft welded the smaller sized sheets together and attempted to produce pin setter wheels from the welded material. These efforts were unsuccessful. The proofs showed the welds would not stand up. Brunswick requested Spincraft to sell the steel sheets as early as possible.

Actually, it was plaintiff's assignor Spincraft who sold the steel sheets to defendant. However, the rights and liabilities of Spincraft, Inc. insofar as the issues in this case are concerned, were assumed by plaintiff Brunswick. At times throughout the briefs, Brunswick is referred to when the transaction referred to was actually carried on by Spincraft.

The steel sheets which plaintiff was unable to use were segregated and piled near one of Spincraft's loading doors. They remained there until a portion thereof was later picked up by defendant.

The defendant learned that these sheets of steel were available and contacted Spincraft by telephone and talked to Ralph Fink, the vice president of Spincraft in charge of finance. Without inspecting the steel, defendant agreed to pay $8.85 cwt. and agreed to assume the burden and the expense of removing the lot from Spincraft's factory in Milwaukee. About 900,000 pounds of steel were involved. Exact weights were to be ascertained after the steel was loaded upon trucks.

There is a sharp conflict in the testimony as to just what was said in the telephone conversations. The president of defendant testified that Fink, in the first telephone conversation, said he had 450 tons of 11 gauge, hot rolled, pickled and oiled, commercial quality steel, and that in a subsequent conversation he told Fink that they were buying hot rolled, pickled and oiled, commercial quality steel, free from rust, no laminations, flat and clean.

Fink testified he told the defendant that the lot of steel sheets had been purchased by Spincraft as 11 gauge, hot rolled steel; that some of it was pickled and the balance of about 78,000 pounds was at a steel pickling plant in Chicago; that some of it was material which had been purchased by Otis Elevator Company from sources in the eastern part of the country with which Spincraft would not normally have dealings. Fink testified Spincraft had purchased the material as 11 gauge, hot rolled, pickled and oiled steel and apparently that Otis had done the same, but that he was in no position to guarantee it in any shape or manner and would not make any kind of representations or warranties.

Defendant prepared a purchase order dated November 24, 1959. It described the steel as 11 GA. HRPO CQ Prime Steel $8.85/cwt; the order also stated: "This material must be prime, ...


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