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Allied Wire Products v. Marketing Techniques







APPEAL from the Circuit Court of Cook County; the Hon. THOMAS J. JANCZY, Judge, presiding.


Rehearing denied September 4, 1981.

Plaintiff, Allied Wire Products, Inc. (Allied) sued defendants Marketing Techniques, Inc. (Marketing) and George Vajdik (Vajdik) to recover amounts allegedly due and owing to Allied for its fabrication of certain products at Marketing's request. In its original complaint Allied sought judgment in the amount of $28,537.25 which included $606 in storage charges Allied assessed against Marketing for six days storage of 101 cartons at the rate of $1 per carton per day. Marketing denied Allied's allegations and counterclaimed for breach of an oral contract. In the counterclaim Marketing asked $260,000 in compensatory and punitive damages for loss of good will. Allied then filed count II of its complaint seeking $28,537.25 in damages on the basis of quantum meruit and an additional $55,000 for storage of cartons and parts inventory acquired in connection with Marketing's orders.

Plaintiff Mohawk Cartage Co. (Mohawk) brought action against Allied and Marketing to recover $712.50 in damages for services rendered. Mohawk's suit was subsequently consolidated with the suit between Allied and Marketing, and both actions were heard at a bench trial. Allied and Marketing stipulated that Mohawk had performed the services in question and that the value thereof was reasonable.

After trial the court dismissed Allied's complaint, finding Allied to have breached a contract with Marketing. The court also dismissed Marketing's counterclaim, finding that although Marketing proved the existence of a contract and a breach by Allied, it failed to prove its asserted damages. Marketing has not appealed that determination. The court entered judgment in favor of Mohawk against Marketing but subsequently amended its order, finding Allied to be primarily and Marketing secondarily liable to Mohawk. On timely post-trial motion of Allied, the trial court refused to reconsider its dismissal of Allied's complaint or to issue special findings of fact.

On appeal Allied contends (1) that the trial court erred in finding an enforceable contract between Allied and Marketing and in finding that Allied had breached that contract; (2) that the trial court should have entered judgment for Allied on the basis of quantum meruit; (3) that the trial court should have found that there was an account stated; and (4) that the trial court erred in finding Allied primarily liable to Mohawk.

For the reasons which follow, we affirm the judgments of the circuit court of Cook County.

The principal issue in the trial of this cause was whether Allied and Marketing had entered into an enforceable express oral contract for the production of certain advertising display stands.

The evidence established that in 1976 Allied was a 23-year-old Illinois corporation whose principal business was the fabrication of display stands and other items, including construction of prototypes, manufacture and design of parts, supervisory work, packaging and shipping. Reginald Shikami was a shareholder, director, president and chief executive officer of Allied. Defendant Marketing, an advertising-graphic arts company, was owned by defendant George Vajdik.

Early in 1976 Marketing received an opportunity to bid upon advertising display stands for two new television models (the black and white "Sportable" and the color "Colortrak") which RCA intended to introduce as part of its 1977 product line. The display stands were to be placed in dealers' showrooms featuring the televisions and were to coincide with newspaper, radio and television promotions of the new sets.

Shikami testified to the following:

In February 1976 Vajdik contacted him about the manufacture of the display racks. Vajdik showed sketches of the stands to Shikami who thereafter provided Vajdik with estimated costs of their production. On March 23, 1976, Vajdik picked up two prototypes fabricated by Allied. The prototypes underwent subsequent alterations.

On March 25, 1976, Vajdik, having shown the prototypes to RCA, called Shikami to tell him that Marketing might be awarded the contract based on the estimated figures of February 1976 which reflected the original and since discarded sketches. Shikami informed Vajdik that it was impossible to make the display units according to the estimated figures since there had been so many changes from the original sketches on which those figures had been based.

Vajdik then advised Shikami that RCA required 4,000 display units for the Colortraks and 3,000 for the Sportables by June. Shikami said that he could not produce that many units by June but that he would make whatever parts he could manage (e.g., x-braces, pockets and signholders) and would find sources for obtaining the rest of the parts so that Marketing could make its own arrangements with such sources. Vajdik agreed to this proposal and Shikami provided him with a list of potential suppliers of goods (e.g., tube steel) and services (processors, platers and packers) needed for the production of the display stands. Marketing issued all purchase orders as per quotations received from the various suppliers and issued its own checks to the suppliers in payment of their invoices.

On March 30, 1976, Shikami gave Vajdik estimated costs of $19.71 and $41.62 for the Sportable and Colortrak display units, respectively, per the verbal, unconfirmed estimates Shikami had received from suppliers. The exact costs were to be determined after the design and prototypes were examined by the suppliers. Further changes in the structure and composition of the display units, all as directed by RCA, were made with final changes coming as late as April 1976. Shikami denied that he ever agreed to furnish Marketing with completely fabricated display stands for the estimated unit costs quoted on March 30, 1976.

On May 27, 1976, Vajdik requested in writing to Shikami that Allied oversee "that all metal and fabricated parts received to be incorporated within this schedule." In May or June Shikami and Vajdik were informed by Vogel Tool that Vogel could not get the merchandise out on time because it had not been advised of the size of the order and the delivery schedule until it received the request from Vajdik. Vajdik then asked Shikami to help him find other sources to meet the delivery schedules. A few days later Shikami telephoned Vajdik and gave him other sources to contact. Later in June Shikami and Vajdik had trouble with their packing source and Shikami found a new packer. Vajdik asked Allied to help with the packing and Allied agreed.

In July Vajdik requested that Allied proceed with a rerun — i.e., a further order of identical units. Marketing did not send Allied a written purchase order for either the rerun or the original order. Shikami informed Vajdik that Allied could not proceed on a reorder unless it was paid for the work already done. Vajdik first insisted that Allied could not be paid until the entire order was completed but then stated that partial payment could be managed. At Vajdik's request, Allied sent Marketing a bill on August 12, 1976, for $29,684.51. According to Shikami, Vajdik did not object to the bill and Allied received payment of $5,000. As in the case of the original order, Shikami denied that he agreed to a per unit price on the rerun.

On September 7 or 8, 1976, Shikami told Vajdik that all orders had been shipped to RCA dealers including one last order of 101 units, and that he would like to pick up a check from Vajdik. Vajdik refused to give him a check. Shikami then called the trucking company, asked them to return the 101 units, stored the cartons and informed Marketing of the storage charges to come. Marketing refused to pay Allied for any of the units which had been made, or for the remaining cartons, or for packaging or storage. Marketing also refused to remove the cartons.

In support of his quantum meruit claim, Shikami gave a detailed account of the basis for the invoices he sent to Marketing. The invoices included charges for developing the prototypes and samples, fabricating parts, outside purchases, jigs and tooling, rental of machinery from Vogel ...

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