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Packard Englewood Motors Inc. v. Packard Motor Car Co.

decided: September 16, 1954.


Author: Maris

Before BIGGS, Chief Judge, and MARIS and GOODRICH, Circuit Judges.

MARIS, Circuit Judge.

The plaintiff, Packard Englewood Motors, Inc., a New Jersey corporation, brought this suit against the defendant, Packard Motor Car Company, Inc., a Michigan corporation, to recover for loss of profits sustained as a result of the defendant's alleged breach of contract. The suit was originally brought in the Superior Court of New Jersey and subsequently removed to the United States District Court for the District of New Jersey. A jury trial was waived and, after a trial by the court, judgment was entered in favor of the defendant and against the plaintiff. 116 F.Supp. 629. From the judgment so entered the plaintiff has taken the appeal now before us.

At the time of the transactions here in controversy the plaintiff was a retail dealer engaged in the sale of Packard automobiles in Englewood, New Jersey, under a dealer's sales agreement between it and the defendant, the latter being the manufacturer of Packard automobiles. At the end of 1947 the retail demand for automobiles was very great, but materials, particularly scrap cast iron, were still in short supply. The defendant, in order to increase its 1948 production of automobiles, conceived the plan of enlisting the aid of certain of its retail dealers, including the plaintiff, in securing additional scrap cast iron for its use in manufacturing cars. The plan involved offering to the cooperating dealers, as a consideration, to allot to each of them out of the increased production thus attained automobiles to sell in addition to his normal allotment on the basis of one additional or scrap bonus car for each ton of scrap cast iron delivered by him to the defendant.

Cooperating in this plan the plaintiff shipped to the defendant 53 tons of scrap cast iron on June 26, 1948 and 44 tons on July 27, 1948, thus becoming entitled to the allotment of 97 scrap bonus automobiles in addition to its normal allotments. Of these 97 cars the plaintiff received 34, 6 in October 1948, 24 in November and December 1948 and 4 in January 1949. Seven scrap bonus cars which were alloted to the plaintiff in 1948 for delivery in January and February 1949 were ordered but later rejected. On August 25, 1949 and again on December 22, 1949 the defendant offered the plaintiff 51 scrap bonus cars. The plaintiff did not order these cars, however, and the remaining 5 of the 97 scrap bonus cars to which the plaintiff was entitled were apparently never offered to it.

It was the plaintiff's contention in the district court that the defendant was obligated to deliver all 97 scrap bonus cars in 1948. It accordingly claimed as damages its loss of profit on the sale of 63 scrap bonus automobiles which were not delivered to it in 1948.*fn1 The defendant contended, on the other hand, that it was not obligated to deliver scrap bonus cars at any particular time and that its offer of the cars in August and December, 1949 was therefore in full compliance with the contract. The district court, holding that such a contract as the defendant contended for would be no contract at all, concluded that the defendant's obligation would have been fulfilled by the delivery of scrap bonus cars as late as December 29, 1949, and that since the plaintiff failed to order the scrap bonus cars offered by the defendant in August and December, 1949 the latter was guilty of no breach of contract.

In order to resolve this controversy we must turn to the letters and press releases which constituted the defendant's offer to the plaintiff. The defendant's proposal was contained in a general letter to its dealers in the New York zone,*fn2 dated December 18, 1947, reading as follows:

"As many of you know, cast iron scrap is an extremely critical item on today's market. For lack of sufficient gray iron many cars are not being produced that could otherwise be shipped to Dealers.

"Many Packard Dealers are daily accumulating scrap in the form of cylinder blocks and other parts cast from gray iron. This, of course, is now being sold through the usual channels. However, we believe that if this material can be handled on a direct basis between Packard Dealers and the Packard Factory, production can be greatly aided.

"So sure are we of this that we are prepared to offer Packard Dealers a special inducement in return for direct purchase of their scrap cast iron.Therefore, for each ton of scrap gray iron furnished us by a Dealer, one additional Packard car will be allotted to him. It is, of course, necessary that this offer be restricted to Zones within a given radius from Detroit, this radius being determined by the distance at which scrap can be handled and shipped on an economical basis. The following general rules will govern this arrangement:

"1. The Dealer will accumulate such case iron scrap as is suitable for cupola remelt. This will include iron castings of any description such as cylinder blocks, cylinder heads, manifolds, transmission cases, differential carrier cases, water pump housings, cast iron flywheels, etc.

"2. Crankshafts, camshafts, pistons, connecting rods and valves may be left in a junked engine assembly if desired, but these parts of forged steel or aluminum may not be thrown in separately to make up a ton. Spark plugs, generators, starting motors, carburetors, wiring harness and similar accessories must be removed.

"3. When a full ton of scrap iron has been collected, notify your Zone Office for instructions regarding shipment.

"4. Packard Motor Car Company will pay Packard Dealers the current Detroit market price for scrap cast iron and will pay the transportation ...

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