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Lambert Corp. v. Evans

decided: April 20, 1978.


Appeal from the United States District Court for the Eastern District of Wisconsin. No. 73-C-52 - Robert W. Warren, Judge.

Castle, Senior Circuit Judge, Cowen, Senior Judge,*fn* and Pell, Circuit Judge.

Author: Pell

PELL, Circuit Judge

After a bench trial in this diversity action, plaintiff-appellee Lambert Corporation was awarded judgment against defendants-appellants Evans and Haines, jointly and severally, in the amount of $43,012.41 plus costs and disbursements. The district court's judgment was based on a contract which it found had been entered by Lambert Corporation and the M-B Company, a business which appellants owned as partners. Lester Blumberg, whose title in the partnership was Vice President and General Manager, was the principal actor in the pertinent events for M-B. William Lambert acted for Lambert Corporation. Each had appropriate authority.

The contract in question involved the sale of Lambert Corporation's product line of industrial floor sweepers to M-B Company. Appellants defend on the basis that no enforceable agreement was ever made. The facts, which are not substantially disputed, and which, as found by the district court, we do not view as clearly erroneous, are as follows:

Lambert Corporation manufactured and distributed lawn sweepers, powered lawn vacuums, and garden tools for consumer use. The line of walk-behind floor sweepers involved in this case had been developed by Lambert as an outgrowth of its experience with its regular line of consumer products, and incorporated a patented dust control system. The line was designed for industrial use, and was sold through different channels to different customers than the rest of Lambert's products, which apparently resulted in marketing problems. Lambert never enjoyed any real success in marketing the line. In fact, by 1969, total sales of the products in the line had declined to the level of several hundred dollars. Accordingly, Lambert Corporation began in the late 1960's to attempt to sell the product line. Despite substantial efforts, nothing had come of these efforts as of May 1970.

At the suggestion of a business broker, William Lambert telephoned Evans in May 1970. Evans expressed interest in pursuing the matter further, and Lambert wrote him on May 25, 1970, offering for sale the product line "package," consisting of

all drawings; bills of material; supplier listings; U.S. and foreign patents; all tools, dies, jigs, and fixtures; and inventory (approximately $24,000 in cost) for a total of $85,000.

Haines, by letter of June 9, responded to Lambert, continuing to express definite interest, and requesting some additional information, at least part of which was provided in Lambert's letter to Haines of August 4.

On October 30, 1970, Blumberg visited the Lambert Corporation's offices and plant in Ohio, spending the entire business day there with William Lambert. There is no doubt that the purpose of the visit was to learn more about the proffered product line, that the two men spent the day pursuing that goal, and that no agreement was reached. Beyond this, the details of what was seen and discussed are not entirely clear, for Lambert and Blumberg gave differing testimony on the point. Because one of the arguments the appellants make here is that they never had learned enough about exactly what it was that Lambert Corporation was selling to have reached the point of agreeing to buy it, we take special note of the district court's finding that Blumberg's subsequent written report of his visit to Haines (dated November 11, 1970) indicated substantial knowledge on this score. Blumberg's letter to Haines also expressed the view that the Lambert products would fit "very nicely" into M-B's floor sweeper line, but judged their value to M-B to be no more than $20,000 plus inventory.

On December 7, 1970, William Lambert wrote a short letter to Blumberg inquiring about the status of M-B's evaluation of the proposal and offering to provide additional information. On December 17, Blumberg wrote a significant letter to Lambert:

Almost two months have gone by since we stopped to see you. We still remember the pleasant visit.

After some time, the discussions with our principals, Mr. Evans and Mr. Haines, were finally concluded and it leaves the final decision still somewhat up in the air because we are making a counter-proposal which you may or may not be interested in.

We do not feel that the package of the Sweeper and Engineering would be worth anymore than $20,000 to us and we would acquire the inventory on a pay as used basis. This has been worked out in the past several experiences we have had on this set-up whereby the inventory was consigned to us. We paid it as we invoiced the machines either once a month or quarterly as desired by the seller. The inventory then, was expected to be paid out in two ...

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