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November 29, 1973


The opinion of the court was delivered by: Robert D. Morgan, Chief Judge.


Plaintiff's complaint prays damages against the defendant for the breach of an alleged contract for the sale to defendant of certain pumping equipment. Defendant answered, generally denying the allegations. On the date set for a bench trial of the cause, defendant submitted a motion for leave to file an amended answer, pleading the statute of frauds as a defense to the complaint. That motion is under advisement with the case. The cause is before the court on the pending motion, the evidence adduced at the trial, and upon proposed findings of fact, conclusions of law, and briefs submitted by the respective parties.

The suit arose out of the following stipulated, or wholly uncontested, facts.

In mid-summer of 1972, General Electric Company, hereinafter "G.E.," was the principal contractor engaged in the construction of a nuclear power generating plant at Cordova, Illinois, for Commonwealth Edison Company. Defendant, a Delaware corporation, having its principal place of business in a state other that the State of Iowa, was employed by G.E. as the supervising contractor at the construction site.

Plaintiff is an Iowa corporation, with its principal place of business in Davenport, Iowa.

As of the time critical to this litigation, defendant previously, from time to time, had purchased substantial quantities of equipment from plaintiff for use in construction of the plant.

On Wednesday, July 5, 1972, Mr. Patton, the field purchasing agent for defendant, telephoned plaintiff to inquire about procurement of an emergency pumping system for the power plant. Following that telephone contact, arrangements were made for an agent of plaintiff to meet with defendant's officials at the plant site on the following morning to discuss the requirements. On that morning, Thursday, July 6, Mr. Vollrath, a sales representative for plaintiff, met at the plant site with Mr. Patton and Mr. John King, the latter being the project superintendent for defendant at the power plant. At that meeting, plaintiff's agent was advised that defendant would require two, or possibly three, portable, diesel-powered pumps, each capable of pumping 2,000 gallons per minute, and a quantity of high pressure hose sufficient to deliver given quantities of water, under given pressures, to various locations within the power plant. King described to Vollrath the specifications for equipment required by defendant, and supplied him with a handwritten sketch indicating the distances to be traversed between the proposed pumping site and the plant areas needed to be serviced thereby, and the required pressures and volumes of water discharge required at such locations within the plant. Defendant's agents also informed Vollrath that the equipment would have to be delivered at the plant not later than Monday, July 10, 1972, the fourth succeeding calendar day, with a weekend intervening.

Plaintiff was not at any material time advised as to either the specific purpose of the equipment or the crucial significance of the July 10 delivery condition. It now appears that operation of the plant requires substantial quantities of water to cool the nuclear reactors therein employed. In June, 1972, a breakdown of a part of the permanent water supply system had occurred at the plant. Because the cooling process is critical to operation, the Atomic Energy Commission had forbade operation of the plant until an auxiliary pumping system was available for emergency use in the event of any future failure. The specific delivery date was imposed as a condition for purchase in order that defendant might begin a previously scheduled shakedown operation of the plant immediately after July 10.

During those conversations on the morning of July 6, Vollrath showed King and Patton pumps displayed in a Hale Pump Company catalog, which were anticipated to be adequate to meet the defendant's needs. He estimated that the pumps displayed in the catalog would cost approximately $12,000 each. There was no other discussion related to the probable total cost of the equipment which defendant required. In that meeting and in subsequent telephone conversations the same day between Alter representatives and Patton, the Alter people recommended that metal pipe be used, at least in part, in place of the high pressure hose. Patton stated, in effect, that the system had to be completely portable for convenient storage when not in use, and that they would require the high pressure hose as a condition of sale.

On the same afternoon Alter representatives were advised by the Hale Company that Hale could not deliver the required pumps within the time limitation. Patton was advised by telephone of that fact and told that Alter would contact other suppliers to attempt to obtain the equipment required. Also, during the course of that afternoon, Alter was advised that the defendant would definitely require three pumps, each with the capacity of 2,000 gallons per minute previously specified. As the afternoon of July 6 progressed, Alter representatives, in effect, followed the sun across the country telephoning possible suppliers, working westward from the East coast of the United States. In the late afternoon, Tom Alter, plaintiff's president, telephoned a Mr. Bradford at Stang Hydronics, Inc., in Orange, California. Bradford advised him that Stang could supply: two pumps, which Stang could modify to meet the two thousand gallons-per-minute and the point-of-discharge specifications, and two smaller pumps, which, when modified, would compensate for the third pump required, and that Stang could obtain the high pressure hose required to fill defendant's needs. He also then advised Alter that a fifth pump, a primer pump, would be necessary to render the other pumps operable. Patton was advised immediately thereafter by telephone of the equipment which Stang could supply. In that conversation Mr. Patton gave Mr. Alter a purchase order number and instructed him to order shipment of the necessary equipment. Definite conditions of the order were specified that the pumps be diesel driven and mounted on wheels for portability, that the hose be cut into lengths suitable for facile handling and fitted with the proper connectors, and that delivery of the whole package be made not later than July 10, 1972. Upon receipt of those instructions, Alter telephoned Bradford and ordered immediate work and shipment.

To conform the pumps to the plaintiff's requirements it was necessary to modify the impellers to obtain the required discharge and pressure, to equip the pumps with diesel engines and to mount the same on wheel carriages. The impeller modification was to be accomplished in California, whereupon the pumps were to be shipped to Omaha, Nebraska, to a Stang outlet, for fitting with diesel engines, from which point they were to be shipped to plaintiff for mounting on the carriages. The hose was to be obtained by Stang from several sources, but principally from a supplier in Houston, Texas.

There is a dispute in the testimony as to whether on the late afternoon of July 6 a price for the package was mentioned. Mr. Alter testified that he advised Patton at that time that he could not give him a cost figure, but he would estimate that the total package could cost as much as $200,000. Patton denies that any figure was mentioned at that time, but he affirmed by his testimony that he did instruct Alter to order the equipment to be shipped on condition that it be delivered at the Cordova site not later than July 10.

In the late morning of Friday, July 7, Alter was advised by Bradford that the price of the package to plaintiff was about $155,000. Plaintiff applied a markup of approximately 35% and advised Patton that the total cost of the equipment to United would be $205,450. At about midafternoon Patton telephoned Alter and requested that shipment of the equipment be delayed until further notice. Mr. Alter than telephoned Bradford and was told that all of the pumps except the primer pump had already been shipped and that the hose had been processed and was then enroute. In view of the fact that all the pumps except the primer were on the way, Alter advised Bradford to ship the primer pump, because it was the key to operation of the whole system. Mr. Patton was advised immediately as to that status. The next contact between Mr. Alter and Patton was had at about 6 o'clock in the evening of the same day, July 7, when Mr. Alter returned a telephone call which Patton had made to Alter's home at about 4 o'clock in the afternoon. Mr. Alter was then advised that defendant would not accept delivery of the equipment and that shipment thereof should be halted. That telephoned advice was confirmed by a telegram from defendant, by Mr. Patton, which was delivered to Mr. Alter about 7:30 p. m. that day.

Mr. Alter immediately advised Bradford, by telephone and follow-up telegram, to intercept the shipments of the equipment and have the same returned to the respective sources of supply. Although Bradford had initially advised Alter that the order was non-cancellable, he did then intercept and obtain the return of the respective shipments to their points of origination.

In due course thereafter, plaintiff received from Stang an invoice for costs incurred by that company in the cancellation of the order. Such costs were substantially comprised of shipping costs incurred, labor costs of the several suppliers, and the costs of reclamation and restorage of the hose contained in the order. The invoice contained no claim for lost profits. Mr. Alter testified that that invoice was accepted by plaintiff as a legal ...

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