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INTERNATIONAL ELECTRONICS COMPANY v. N.S.T. METAL PRODUCTS COMPANY (03/24/52)

March 24, 1952

INTERNATIONAL ELECTRONICS COMPANY, APPELLANT,
v.
N.S.T. METAL PRODUCTS COMPANY, INC.



Appeal, No. 241, Jan. T., 1951, from order of Court of Common Pleas No. 3 of Philadelphia County, Sept. T., 1948, No. 1617, in case of The International Electronics Company v. N.S.T. Metal Products Company, Inc. Order affirmed; reargument refused May 7, 1952.

COUNSEL

Sidney L. Wickenhaver, with him Charles A. Wolfe, and Montgomery, McCracken, Walker & Rhoads, for appellant.

Harry Shapiro, with him Roland J. Christy, Shapiro, Rosenfeld & Stalberg, Christy, Harry & Jones and Raspin, Espenshade & Heins, for appellee.

Before Drew, C.j., Stern, Stearne, Ladner and Chidsey, JJ.

Author: Chidsey

[ 370 Pa. Page 214]

OPINION BY MR. JUSTICE CHIDSEY

International Electronics Company, plaintiff, brought this action of replevin against N.S.T. Metal Products Company, Inc., defendant, to recover possession of goods in defendant's hands under a contract by the terms of which defendant was to manufacture magnetic tape recorder-reproducer units for plaintiff. To defendant's answer and amended net matter claiming

[ 370 Pa. Page 215]

    a right of possession and a special property right in the nature of a lien, plaintiff filed preliminary objections which were dismissed by the court below. From that order this appeal is taken.

Plaintiff corporation in engaged in the business of designing, manufacturing and selling an article known as a magnetic tape recorder-reproducer. Defendant corporation manufactures metal equipment. By contract of May, 1948, and amendment thereto of August, 1948, defendant agreed to manufacture the tape recorder-reproducer units for plaintiff. Under the contract defendant agreed to produce, jigs, dies, tools, etc., necessary to manufacture and supply the units and plaintiff agreed to reimburse defendant for this expense up to approximately $47,000, the estimated maximum tooling cost, and advance 51% thereof. Plaintiff was to pay for this production (tooling) equipment at "cost" of manufacture". In addition, sums were to be advanced to defendant by plaintiff for the purchase of raw materials and component parts to be used in the manufacture of the units. These advances were to be repaid by credit of a certain percentage against invoices rendered by defendant for completed units. The contract provided that title to all tooling, materials and parts and to all units produced from such materials and parts should be vested in plaintiff. Defendant was required to produce all the units which plaintiff might require for one year from June 1, 1948.

The contract also provided specifically for cancellation and stated that plaintiff, in its sole discretion, should have the right at any time to cancel, in whole or in part, any portion of any order or orders theretofore issued by it to defendant, by written or telegraphic notice. Cancellation under this section of the contract should be effective in the manner and upon the date specified in the notice. In the event of such cancellation, however, plaintiff would be required to pay defendant

[ 370 Pa. Page 216]

    cancellation and other charges, including general and administrative overhead expense, as provided is Schedule A attached. Upon cancellation, plaintiff was to take physical possession of all the production equipment, testing equipment (which was furnished by plaintiff), unfinished units, completed units, etc., and thereafter pay the charges and costs mentioned in the manner provided in the schedule.

Termination of the agreement was provided for by the contract in a section which gave to either party the right immediately to terminate the agreement in the event the other party became insolvent, made an assignment for the benefit of creditors, filed a petition in bankruptcy, was adjudicated insolvent or bankrupt after the filing of an ...


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