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L. W. Foster Sportswear Co. v. Goldblatt Bros. Inc.

February 2, 1966


Hastings, Chief Judge, and Kiley and Swygert, Circuit Judges.

Author: Kiley

KILEY, Circuit Judge.

This is a diversity action for recovery, under Count I, of a "balance due" on goods Foster, a Philadelphia clothing manufacturer, sold and delivered to Goldblatt of Chicago; and, under Count II, for damages for Goldblatt's alleged breach of contracts. The jury returned a verdict for Foster on Count I for $76,246.56; and a separate verdict for $20,830.26 in its favor on Count II. Judgment was entered on these verdicts. The district court ultimately granted Goldblatt's motion for judgment notwithstanding the verdict on Count I, entering judgment for Foster for $14,840.78, the amount defendant admitted was due plaintiff, plus interest; and denied Goldblatt's motion for judgment notwithstanding the verdict or a new trial on Count II, and Foster's motion to amend the original judgments on both counts to include 5% statutory interest. Foster has appealed and Goldblatt has cross-appealed. We reverse and reinstate the original judgment on Count I, and affirm the judgment on Count II.


Foster's suit covers transactions during the period from January 1, 1958, to May 27, 1959. The award under Count I arose out of sales of clothes, in paying for which Goldblatt made deductions, from Foster's invoices, for advertising allowances, cost of hangers, merchandise returned, freight charges against Goldblatt, differences in amounts stated in Goldblatt purchase orders and Foster invoices, and for reductions (markdowns) by Goldblatt in retailing Foster's merchandise. Goldblatt tendered the sum of $14,840.78 to Foster during the trial as the limit of its liability under Count I.

The district court, on Foster's motion at the close of all evidence, struck from Goldblatt's answer the basis for its defense of accord and satisfaction, but permitted to stand the alleged defenses of "account stated" and "estoppel." Later, however, the court submitted the question of accord and satisfaction to the jury. Then, notwithstanding the jury verdict, the district court sustained all three of Goldblatt's affirmative defenses as to Foster's claims under Count I, and reduced the jury verdict to the sum tendered.*fn1

Goldblatt had the burden of proving the defense of accord and satisfaction. One of the essentials of that defense is an assent or meeting of the minds, 1 I.L.P. Accord and Satisfaction § 4 (1953), a contract express or implied, 1 Am.Jur.2d Accord and Satisfaction § 4 (1962). The judgment notwithstanding the verdict on Count I therefore presents a question of law whether there is any evidence tending to prove that Foster did not assent to any or some of the reductions of its invoiced amounts. On this question we must, under the familiar rule, take only the evidence most favorable to Foster and draw the inferences in the light most favorable to it.

The district court's Memorandum in Support of Order stated that defendant's affirmative defenses rest upon substantially uncontroverted facts: Foster's claims were in dispute; Goldblatt sent its checks in a mode intended to state and settle the account in full; and 151 checks were accepted, cashed and the proceeds retained during a period of almost eighteen months with only the last of the 152 checks mailed being refused.

During the period in suit Goldblatt would order goods from Foster on written purchase orders and contracts. Foster would deliver the goods against the orders and send an invoice covering each delivery. A copy of the invoice would then be deposited by Foster with Textile Banking Company of New York, and Textile advanced sums of money to Foster against the invoices. Goldblatt's checks in payment of invoices would be made out to Textile and Foster and be sent direct to Textile, which applied the checks in reduction of its loans to Foster.

Each of the 152 Goldblatt checks relevant to Count I had a "voucher portion" on which were listed the invoice or invoices covered thereby, with the amounts thereof, and various debits claimed by Goldblatt, identified by the date, number and amount of each attached debit memo.*fn2 The check was made out for the net balance after deduction of the total debits from the total invoiced amounts, as shown on the voucher. The debits on a particular voucher did "not necessarily" relate to the invoice or invoices for which the check was being drawn. And the fact that an invoice number was listed on a voucher did not indicate that a claim would not be made against that invoice at a later time on another voucher. Foster received written notice from Textile of the amount of each debit deducted by Goldblatt. None of the checks except the 152nd, the last one sent by Goldblatt, was returned uncashed by Textile and Foster.*fn3

The testimony Goldblatt relied upon was that Foster agreed orally late in the fall of 1957 and again in early spring of 1958 and in 1959 with Goldblatt to the latter's markdown of prices of goods, and to its charging advertising and freight costs against Foster.

However, this testimony was contradicted by rebuttal testimony for Foster. And there was testimony by Goldblatt witnesses that debits of the kind charged against Foster under "usual practice" would be incorporated in the purchase order or by separate letter. But there was no provision in the purchase orders for the debits which Goldblatt deducted from the invoiced amounts, even though the alleged oral agreements usually preceded the sending of purchase orders.*fn4 And there was no separate letter.

We think the question of fact whether there were oral agreements authorizing the charging of the various debits was properly submitted to the jury. The jury could have decided, as it presumably did decide, that the evidence preponderated in favor of Foster. Thus there is no basis for sustaining the defense of accord and satisfaction on the theory of express agreement.

It is true that neither Foster nor Textile returned any Goldblatt checks, corresponding to the net balance on the vouchers, save the 152nd and last check. But there is testimony that in January, February, March, September, November and December of 1958, and in January, February and March of 1959, Foster by telephone and by letter complained of the debits taken and was assured on each occasion that if the debit memoranda were returned to Goldblatt, they would be "taken care of." Taking this testimony as true, we think the jury could have decided that there was no implied agreement by Foster that Goldblatt could deduct the claimed debits from the invoiced amounts charged for the Foster merchandise. We conclude that the question whether Foster implicitly assented to Goldblatt's taking the debits was for the jury. There is accordingly no room here for application of the rule stated in In re Estate of Cunningham, 311 Ill. 311, 315, 142 N.E. 740, 742 ...

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