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Nasco, Inc. v. Dahltron Corp.

OPINION FILED JULY 18, 1979.

NASCO, INC., PLAINTIFF-APPELLEE,

v.

DAHLTRON CORPORATION, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Winnebago County; the Hon. ALFORD PENNIMAN, Judge, presiding.

MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT:

The Dahltron Corporation, defendant, appeals from a judgment in the amount of $43,140.97 awarded to the plaintiff, Nasco, Inc., for alleged breach of an installment sales contract. In issue is whether the trial court erred in finding that Dahltron was guilty of an anticipatory breach of contract and whether the amount of the judgment is supported by the evidence.

In 1974 Dahltron was engaged in the marketing and sale of an invention known as "Tork-Ak," a device "intended to be used for applications requiring a slowing down mechanism from a power source without loss of torque power." Beginning in the spring of 1974 Nasco, Dahltron and the inventor held meetings at which they discussed the possibility of Nasco manufacturing the devices; and Dahltron supplied Nasco with specifications upon which to base price quotations. Nasco, after several preliminary quotations, sent the following to Dahltron on September 16, 1975:

"Supercedes [sic] previous quotation on this part,

500 or more 1" Tork-Ak, assembled in box with 501-0101-B Hub $55.00 ea

500 or more 1" Tork-Ak, assembled in box with 501-0103 Hub $46.85 ea"

The reverse side of Nasco's quotation form states:

"No. 2 - QUOTATIONS: * * * Until an order is accepted by Seller, quoted prices are subject to change without notice. All quotations unless otherwise stated are for immediate acceptance. Unless called for by customer's specifications, prices quoted do not include burring. All orders and contracts subject to acceptance at Seller's home office.

No. 4 - CANCELLATION: Orders may be cancelled or deliveries deferred only upon the condition that the Buyer assume immediate liability and make payment to the Seller for all work complete at the unit price; work in process on the basis of the percentage of completion thereof times the order unit price; raw material, unamortized tooling, engineering and other cancellation charges incurred on the basis of cost to the Seller plus handling and overhead charges. All cancellation charges to be determined at the time of cancellation or deferment."

On October 3, 1975, Dahltron sent Nasco purchase order No. 05-368 pursuant to the September 16 quotation, which stated:

"100 1" TORK-AK Assembled in box with Black Oxide finish $55.00/Unit

Units to be delivered A.S.A.P.

900 1" TORK-AK 501-0101 B HUB release per our schedule to be determined after receipt of initial shipment

8,000 lbs. 4-1/2" Rd 1215 1,000 lbs. 3" Rd 1215 To be sent by Dahltron with payment terms extended to Net 90 days."

Upon receiving this purchase order Nasco began preparation for the production of 1000 assembled units of the Tork-Ak device. Further, there was evidence that Dahltron knew that Nasco was beginning production.

At some time after October 3, 1975, Nasco shipped 25 Tork-Ak units to Fleetwood Systems, Inc., a customer of Dahltron. These units were returned to Dahltron because they would not work. According to Melvin Underhill, an officer of Nasco, the 25 units would, if operated, "hammer [themselves] to pieces." It became obvious that there was a defect in the design of the Tork-Ak unit, although there did not appear to be any defect in workmanship which could be attributed to Nasco. It became clear that the original design and specification for the Tork-Ak unit was faulty. A new design was then developed.

A "purchase order" from Dahltron, dated January 19, 1976, directed to Nasco contained the description "THIS PURCHASE ORDER CANCELS IN FULL PURCHASE ORDER 05-368" (the October 3, 1975, purchase order). On the same date Dahltron sent Nasco a purchase order:

"454 TA-100 units — Xylan coated — Packaged — Tested 59.87."

The order form also described several special things that Nasco was to ...


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