Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19840719_0040448.C02.htm/qx
Timestamp: 2016-12-10 15:07:02
Document Index: 197359609

Matched Legal Cases: ['§ 1', '§ 213', '§ 1', '§ 2', '§ 1338', '§ 1338', '§ 188', '§ 463']

| Wallace Steel Inc. v. Ingersoll-Rand Co.
Wallace Steel Inc. v. Ingersoll-Rand Co.
WALLACE STEEL, INC., PLAINTIFF-APPELLANT-CROSS-APPELLEE,v.INGERSOLL-RAND COMPANY, DEFENDANT-APPELLEE-CROSS-APPELLANT
Appeal and cross-appeal from an order and judgment of the United States District Court for the Northern District of New York (Munson, C.J.) which reduced a jury verdict in favor of plaintiff by $762,921. Reversed and remanded with instructions to reinstate the verdict.
Timbers, Van Graafeiland and Cardamone, Circuit Judges.
On September 9, 1974, Wallace and Ingersoll entered into a written contract pursuant to which Wallace was to supply Ingersoll with crushed motor block for the latter's foundry. The contract is in the form of a written proposal by Wallace to "sell and deliver" to Ingersoll steel scrap (the "Processed Material") recovered from dirty motor blocks (the "Raw Material") through a process of breaking, cleaning, sorting, and drying. The Processed Material was to be sold by Wallace and purchased by Ingersoll in specified monthly amounts for a period of five years.Any amount of Processed Material not ordered by Ingersoll in any month, or which exceeded the total monthly amount Ingersoll was permitted to order under the contract, could be sold by Wallace "for its own account" to others.
The issue on appeal is whether, upon Ingersoll's concededly wrongful termination of the contract thirty-two months prior to its expiration date, Wallace was entitled to recover damages, not only for the 10% loss of profits incorporated in the Purchase Price formula, but also for the loss of the sixty-six pounds per ton of aluminum and the other valuable byproducts. By means of a special verdict, the jury resolved this issue in favor of Wallace. To the extent that the verdict included an award for the loss of byproducts other than aluminum, the district court disagreed. The $762,921 reduction in the jury verdict was the result of this disagreement. Ingersoll contends that this reduction was justified under the parol evidence rule and the consequential damage rule of the Uniform Commercial Code, § 1-106(1). It also contends that the amount of the reduction should have been increased to include the amount awarded for the loss of aluminum byproducts. We find no merit in these contentions.
The parol evidence rule provides in substance that, where the parties have reduced their agreement to writing, evidence of prior or contemporaneous agreements may not be offered to contradict, vary, or subtract from the terms of the writing. See Aratari v. Chrysler Corp., 35 A.D.2d 1077, 316 N.Y.S.2d 680 (1970); Restatement (Second) of Contracts § 213 (1981). That rule was not violated in this case.
Under the express terms of the contract, Wallace was required to purchase enough Raw Material so that it could satisfy Ingersoll's normal requirements for Processed Material. A "purchase" includes taking by "sale . . . or any other voluntary transaction creating an interest in property." U.C.C. § 1-201(32). That portion of the Raw Material which was converted into Processed Material was to be sold to Ingersoll with appropriate warranties, and could be rejected by Ingersoll if it was not as warranted. "A 'sale' consists in the passing of title from the seller to the buyer for a price." U.C.C. § 2-106(1); see DeSimon v. Ogden Associates, 88 A.D.2d 472, 478, 454 N.Y.S.2d 721 (1982). Such oral testimony as the district court permitted to be introduced did not vary the terms of the contract. It merely confirmed the clear import of the written language, i.e., that portion of the Raw Material which was purchased by Wallace and not sold to Ingersoll remained the property of Wallace.
In fixing damages for breach of contract, the intent is to put the plaintiff in as good a position as he would have been in had the defendant abided by his agreement, New York Water Service Corp. v. City of New York, 4 A.D.2d 209, 213, 163 N.Y.S.2d 538 (1957) (citing 5 Williston on Contracts [rev. ed.] § 1338, now 11 Jaeger, Williston on Contracts § 1338 (1968)), i.e., to award plaintiff the value to him of the defendant's performance, Hollwedel v. Duffy-Mott Co., 238 A.D. 468, 470, 264 N.Y.S. 745, rev'd on other grounds, 263 N.Y. 95 (1933). Had Ingersoll performed its contract as agreed, Wallace would have continued to retain the byproducts from its processing of Raw Material for the balance of the five-year period. Having been deprived of this byproduct by Ingersoll's breach, Wallace was entitled to recover the reasonable value of what it had lost. "The Uniform Commercial Code allows the seller actual damages where liquidated damages have not been stipulated. . . ." Procter & Gamble Distributing Co. v. Lawrence American Field Warehousing Corp., 16 N.Y.2d 344, 354, 266 N.Y.S.2d 785, 213 N.E.2d 873 (1965); see Neri v. Retail Marine Corp., 30 N.Y.2d 393, 397-40, 334 N.Y.S.2d 165, 285 N.E.2d 311 (1972).
The value of personal property may be proved by showing its market value. Richardson on Evidence, § 188, at 161 (10th ed. 1973); 2 Wigmore on Evidence § 463 (Chadbourn rev. 1979). Proof of the value of the byproducts in this manner did not unlawfully enlarge the damage picture by encompassing within its framework unrelated and unanticipated transactions with third parties. "For evidential purposes, sale value is nothing more than the nature or quality of the article as measured by the money which others show themselves willing to lay out in purchasing it." Id.
In determining the amount of Wallace's damages, it was, of course, necessary for the jury to decide how many tons of Processed Material Ingersoll would have been required to purchase during the thirty-two months following Ingersoll's breach of the contract. Under the basic terms of the contract, Ingersoll was obligated to purchase at least 1,300 tons per month. Although, an addendum to the contract provided that Ingersoll could reduce its purchases to 650 tons per month if its production requirements were reduced as the resuult of reduced consumer demand for Ingersoll's products, Ingersoll offered no proof of such reduced demand during the thirty-two month period. Indeed, it offered no evidence of any kind.Under the circumstances, the jury quite properly computed Wallace's damages on the basis of monthly purchases of 1,300 tons, and there is no merit in Ingersoll's cross-appeal on this issue.