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April 10, 1963


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

Plaintiffs, by complaint filed November 8, 1960, seek to recover $17,828.69*fn1 which they allege to be still owing them as a result of the sale of steel to defendants*fn2 in November and December, 1959.*fn3 The parties, on stipulation, have submitted the cause for the Court's determination on the pleadings, interrogatories and answers, and the briefs filed on the defendants' Motion for Summary Judgment.*fn4

The defendants plead an accord and satisfaction.*fn5 Plaintiffs challenge the validity of the accord, asserting fraud and false representations by the defendants that the steel was defective, which representations the plaintiffs relied on in executing the accord.*fn6 The plaintiffs claim that on May 20, 1960,*fn7 subsequent to the accord,*fn8 they learned that the rejected steel was not defective, but wholly acceptable according to Western European standards and could be deemed defective only under United States' standards, and that it was not until the price of steel dropped from $10.75 to $3 per hundred weight and defendants' account was six months delinquent that defendants saw fit to complain.

While the bases for a fact conclusion in this cause are not as plentiful as could be desired, the Court is convinced that the parties intended that the steel sold should be according to American standards, not Western European standards, and therefore defendant corporation perpetrated no fraud when it advised plaintiffs the steel was defective. For that reason, plaintiffs may not now maintain that the accord is vitiated by fraud.

The defendant corporation's Purchase Order No. 8659, dated November 10, 1959, states as a "condition":

    "5. Material must be as specified, prime domestic
  and free from all defects or full refund including
  freight and handling charges will be effected."
  (Emphasis supplied.)

Plaintiffs claim, however, that the typed portion of the order supersedes this fine print condition, as well as the fact that plaintiffs informed defendant corporation the steel was foreign steel.

Plaintiffs' own invoice No. 7423, dated November 30, 1959, describes the material purchased as "Open Hearth Hot Rolled Rounds AISI C-1035." (Emphasis supplied.) Defendants point out that AISI stands for American Iron and Steel Industries Standards.

Defendant corporation's Debit Memo No. 1011,*fn9 dated December 31, 1959, states:

    "This material has carbon content ranging from .55
  through .74 which was discovered by our customers

  production engineering process laboratory after
  delivery. Therefore is not as represented and
  purchased AISI C-1035.*fn10 Material being held in
  Chicago for your disposition." (Emphasis supplied.)

In support of the motion for summary judgment defendants also append correspondence and reports between the parties in respect to the defective steel bars. Defendants point out that as early as December 31, 1959, they rejected an entire shipment of 39,320# because of defective carbon content. Defendants forwarded to plaintiffs, on March 28, 1960, the findings made by the Pittsburgh Testing Laboratories,*fn11 stating defendants' rejection*fn12 of the material and requesting instruction for disposition of the steel. A letter of June 8, 1960,*fn13 to plaintiffs from defendants sets out the terms of the parties' accord agreement in the controversy, and a return letter of June 20, 1960, from plaintiffs to defendants, accepting the check for the agreed balance, states:

    "We regret that you found this material not to be
  within the applicable standard tolerances * *."*fn14

As defendants point out:

    "The transactions and dealings between the parties
  covered the period from November 10, 1959 through
  June 8, 1960 when they settled their disputes.
  Plaintiffs who are steel brokers had more than ample
  time and opportunity during this extended period to
  make known to the defendants their `foreign' position
  * * *. The parties dealt at arms length. There was no
  fraud, misstatement, intentional concealment,
  overreaching, or a mutual mistake of fact. Courts
  favor compromises of disputes and where a settlement
  is once shown, every presumption is indulged in its

Plaintiffs complain defendants' statement that "the designation AISI C-1035 on plaintiffs' confirmation of their purchase order indicates that this was intended to be a purchase of domestic steel and that AISI stands for American Iron and Steel ...

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