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ASSOCIATED HARDWARE SUPPLY CO. v. BIG WHEEL DISTRI

January 6, 1965

ASSOCIATED HARDWARE SUPPLY CO., a corporation, Plaintiff,
v.
The BIG WHEEL DISTRIBUTING COMPANY, a corporation, Defendant



The opinion of the court was delivered by: DUMBAULD

This case arose in the Court of Common Pleas of Allegheny County at No. 367 October Term, 1964 as a foreign attachment or garnishment proceeding. Removal duly followed, the creditor, Associated Hardware Supply Company, being a Pennsylvania corporation and the debtor, The Big Wheel Distributing Company, being a West Virginia corporation.

Plaintiff creditor seeks to recover $ 40,185.62 as the balance of an open unpaid account for merchandise sold and delivered, together with interest.

 Defendant debtor pleaded fraud and counterclaimed, alleging overpayment, and failure of plaintiff to furnish certain promotion assistance in merchandising the goods for profitable resale.

 After extensive discovery proceedings, plaintiff on November 5, 1964 filed a motion to dismiss the counterclaim, for judgment on the pleadings and for summary judgment for the amount of the debt and interest.

 Extensive briefs have been filed and argument heard. This opinion shall be deemed to contain the Court's findings of fact and conclusions of law.

 When the voluminous verbiage with which this case has been surrounded is penetrated and disentangled, the issue is seen to be one of price. Defendant contends that the goods were to be sold at cost plus 10 per cent, whereas plaintiff billed them at dealers' catalogue price (representing a 20 per cent mark-up) less 11 per cent. Defendant's counterclaim is based upon a recomputation at defendant's assumed price of all past transactions between the parties, and much of defendant's voluminous discovery aims to determine plaintiff's costs, which enter into the price as defendant would compute it. Defendant's allegations of fraud and misrepresentation are based on the lack of identity, allegedly asserted by plaintiff, between prices computed under plaintiff's method and defendant's method.

 What was the contract between the parties, as shown by the undisputed facts in the record?

 Plaintiff in a letter of February 9, 1962 [Ex. A to Complaint] made an offer, subject to a volume of $ 5,000 per week at catalogue price less 11 per cent discount. Defendant being a new corporate operation, personal liability of Mr. Irving Molever was insisted upon in the letter, together with a request for acknowledgement and signature. Apparently Molever did not sign the letter, but considered himself personally liable and later secured a release from such liability after defendant established a satisfactory payment history.

 However, dealings between the parties went ahead. Defendant ordered, received, retained, and paid for a large volume of merchandise, billed at catalogue price less 11 per cent discount.

 As calculated in plaintiff's brief, defendant's purchases from February 1962 through May 1964 aggregated $ 860,000. This figure apparently includes the unpaid amount of $ 40,185.62, to collect which the present suit was brought. Over $ 800,000 of merchandise was thus bought and paid for under billings computed under plaintiff's method.

 What effect did these dealings of the parties have upon their legal rights, in the light of the Uniform Commercial Code?

 The alleged misrepresentation or fraud on plaintiff's part we are unable to consider as anything more than normal commercial "puffing" which could not have misled as astute trader such as defendant's negotiator, Mr. Molever. We conclude that defendant simply later decided that is bargain was not a good one and decided not to pay because the agreed price was too high.

 Obviously, to say that cost plus 10 per cent is the same as catalogue price less 11 per cent is to indulge in approximation, and the mathematical relationships were as obvious to defendant as to plaintiff. We compute the price on defendant's theory as 1.1 times plaintiff's costs, whereas under plaintiff's system the price would be 1.068 times plaintiff's costs. Whether these are to be treated as substantially identical is obviously a matter of commercial judgment or opinion, and a ...


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