Opinion ID: 1475251
Heading Depth: 1
Heading Rank: 8

Heading: Special Cutting Loss.

Text: The master allowed Pittsburgh credit for $178,545.86 as a so-called special cutting loss. Pittsburgh based its claim on an alleged loss due to the following situation: Glass is sold by the glass industry in bracket sizes. Duplate required great quantities of 1/8 plate glass of a certain bracket in its manufacture of laminated glass for automobile purposes. In supplying Duplate orders. Pittsburgh was left with a large quantity of relatively small sizes in strips and brackets up to the 1' to 2'8 bracket, which it could not sell to Duplate, for which there was a restricted market and which sold for much less than the larger brackets. Pittsburgh contends that these strips and, smaller brackets sold for less than cost and that part of the loss should be allocated to Duplate sales. The plaintiff contends that the strips and small brackets sold for more than cost and that Pittsburgh's claim is for a loss of expected profits rather than for an actual loss. Their respective methods of determining the specific manufacturing cost per square foot of 1/8 plate glass for the year 1928 is set out below: Pittsburgh Plaintiff Actual Cost .......... $ .15590 $ .15590 Income Tax ........... .02267 ...... Interest on Investment .02553 ...... Patents .............. .12474 ...... ________ ________ Specific Cost of 1/8 plate glass per square foot ........ $ .32884 $ .15590 The average selling price in 1928 for the strips and smaller brackets was $ .20644 per square foot. If the specific manufacturing cost of 1/8 plate glass was $ .32884 per square foot, as contended by Pittsburgh, there was a loss; and if $ .15590 per square foot, as contended by the plaintiff, there was a profit. We have already discussed the issues as to allowances for income tax, interest on investment, and patents and have concluded that allowances were properly made for the first two items and improperly made for the last item. We would therefore recalculate the specific manufacturing cost per square foot of 1/8 plate glass for the year 1928 as follows: Actual Cost...................... $ .15590 Income Tax ...................... .02267 Interest on Investment .......... .02553 Patents ......................... ...... ________ Specific Cost of 1/8 plate glass per square foot ............... $ .20410 With a sale price of $ .20644 per square foot and a manufacturing cost of $ .20410, there was a slight margin of profit rather than a loss on the sale of strips and smaller brackets for the year 1928. The account must be restated so as to omit the allowance for special cutting loss in 1928, and if, in fact, no loss occurred on the sale of strips and smaller bracket glass during 1929 and the first five months in 1930, the account must be restated as of that period. The defendants contend that the District Court erred in awarding general damages to the plaintiff; that no damages should have been awarded, inasmuch as the defendants were precluded from examining the plaintiff's books; that the general damages awarded were in fact excessive; that no interest should have been allowed prior to the date of the master's report; and that costs should be apportioned between the plaintiff and the defendants. We shall discuss those contentions in the order mentioned.