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REFRIGERATION SALES CO. v. MITCHELL-JACKSON

November 18, 1983

REFRIGERATION SALES CO., INC., PLAINTIFF.
v.
MITCHELL-JACKSON, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Refrigeration Sales Co. ("Refrigeration") has brought this two-count diversity action against Mitchell-Jackson, Inc. ("Mitchell-Jackson") and its President Alfred L. Jackson ("Jackson"), seeking damages for loss of and damage to goods and equipment stored in Mitchell-Jackson's warehouse. Count I alleges Mitchell-Jackson is liable for conversion of the goods and equipment, while Count II alleges Jackson is liable for conversion both in his individual capacity and as alter ego of Mitchell-Jackson. Defendants now move for summary judgment under Fed.R.Civ.P. ("Rule") 56. For the reasons stated in this memorandum opinion and order, defendants' motion is granted.

Facts*fn1

From before 1960 to 1979 Refrigeration, headquartered in New York, stored goods and equipment (for convenience in reference and because the usage conforms to the UCC and the documents in this case, this opinion will simply use the collective term "goods") at Mitchell-Jackson's warehouse in Chicago (so the goods were more readily available for sale in this area). Each time Mitchell-Jackson received goods from Refrigeration, it issued a non-negotiable warehouse receipt ("Receipt") on the reverse of which were listed the "Terms and Conditions" of the bailment. Receipt § 10(b), its only relevant provision, reads:

  Claims by the depositor must be presented in
  writing within a reasonable time, and in no event
  longer than 60 days after delivery of the goods.
  No action may be maintained by the depositor
  against the warehouseman for loss or damage to
  goods covered hereunder unless commenced within
  12 months next after date of delivery by the
  warehouseman.

Dissatisfied with the service it was receiving from Mitchell-Jackson, Refrigeration sent a July 3, 1979 certified letter to Mitchell-Jackson ordering it to ship all of Refrigeration's goods then in storage to another warehouse. When Mitchell-Jackson complied in October and December 1979,*fn2 Refrigeration's employee William Hughes ("Hughes") discovered Mitchell-Jackson claimed to have been storing less of Refrigeration's goods than it should have been holding according to Refrigeration's records. Hughes also examined a portion of the goods actually delivered by Mitchell-Jackson to the other warehouse, and he found them unsaleable because of their rusty and dirty condition.

Jackson (Mitchell-Jackson's president, chief executive officer and manager) has testified he discovered a discrepancy between Refrigeration's books and Mitchell-Jackson's about September 1977 (Jackson Dep. 110-11). Jackson neither ordered a physical inventory nor adjusted Refrigeration's bills to conform to Refrigeration's records (id. 114). Neither side has offered an explanation of the discrepancy.*fn3

Refrigeration failed to comply with Receipt § 10(b)'s timetable in both respects:

    1. It did not present a written claim for the
  value of the lost and damaged goods to
  Mitchell-Jackson within 60 days of the final
  delivery by Mitchell-Jackson.
    2. It did not file a lawsuit against
  Mitchell-Jackson within a year of the final
  delivery date.

Instead it filed this lawsuit in October 1981, nearly two years after the final delivery date.

Issues and the Applicable Law

Defendants' motion for summary judgment is based on two independent arguments, either of which would cause defendants to prevail:

    1. Refrigeration's two-fold noncompliance with
  Receipt § 10(b)'s timetable is fatal to its claim.
    2. In any event Refrigeration's evidence is
  incapable of establishing vital elements of the
  tort of conversion for each type of damages
  claimed.

Both sides agree this Court must look to Illinois law for its rules of decision, though they reach that destination by differing routes. Defendants contend an Illinois court would choose Illinois law because Illinois was the place of performance of the contract (citing Southwest Forest Industries v. Sharfstein, 482 F.2d 915, 919 (7th Cir. 1972), a case of doubtful current significance given the apparent movement of Illinois law toward the "most significant relationship" test in contract as well as tort cases). Refrigeration, rejecting the contract characterization in favor of its tort theory of recovery, retorts an Illinois court would choose Illinois ...


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