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Standard Packaging Corp. v. Continental Distilling Corp.

decided: May 17, 1967.


Smith and Freedman, Circuit Judges, and Wortendyke, District Judge.

Author: Wortendyke


WORTENDYKE, District Judge.

This is a seller's action against the buyer upon a book account for balance of price of goods sold and delivered, consisting of holiday boxes and bands for packaging individual liquor bottles. Jurisdiction is predicated upon the conceded diversity of citizenship of the parties and the minimum required amount involved.

Defendant buyer counterclaimed for the difference between the unpaid balance of the price and the amount of expenses incurred by the buyer in efforts to bring the goods sold into the condition of suitability for the purpose alleged to have been intended by the buyer and known to the seller when ordered. The buyer appeals from a judgment for $13,158.59 entered upon a directed verdict for the seller and against the buyer upon its counterclaim.

Error is assigned upon appellant's contention that the evidence presented a jury question respecting the alleged breach of seller's implied warranty of the fitness of the goods sold for the particular purpose intended by the buyer and disclosed to the seller. Reliance for support of this contention is placed upon Section 2-315 of the Pennsylvania Uniform Commercial Code, as amended 1959, Oct. 2, P.L. 1023, ยง 1, 12A P.S. 1-105. That section reads as follows:

"2-315. Implied Warranty; Fitness for Particular Purpose

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose."

Seller's case consisted of the invoices reflecting the sales and deliveries of the merchandise and of the reading into the record of written admissions by the buyer that (1) "plaintiff sold and delivered to defendant holiday boxes and bands for packaging liquor bottles and performed services in connection therewith in accordance with the invoices --;" (2) "the aggregate price to be paid by defendant as agreed between the parties for said boxes was $10,369.25;" (3) "defendant did not make any payments on account which have been accepted by plaintiff;" (4) "plaintiff did not sell nor was it consulted nor did it give defendant any advice on the type of or dimensions of the reshipper or reshipper cells to be used in connection with said gift boxes." Upon the presentation of the foregoing proofs, seller rested its case.

The evidence for the buyer has been comprehensively and accurately summarized by the trial judge in his opinion and order, dated November 2, 1966, denying appellant's motion for a new trial. So much of his opinion as we deem necessary for our decision will be found in the following excerpts from that summary.

"There is no dispute as to the price agreed upon by the parties ($10,369.25) or as to the specifications of the goods which were ordered and delivered. The goods consisted of thousands of individual 'holiday' boxes into each of which defendant was to place a bottle of its whiskey. Pursuant to defendant's purchase order, the individual boxes were circled by an acetate band, on which appeared certain information pertaining to the liquor as required by law. The idea was that this band could be easily removed by the ultimate purchaser so that the box would be free of commercial labeling when presented to the recipient as a gift. Each case was prepared for the reception of the ten or twelve boxes by the insertion of 'cells' which served as compartments for each package.

The insertion of the bottles into the boxes presented no difficulty. Unfortunately, though, when defendant's packers began to insert the individual boxes into the cells of the shipping case, many, if not most, of the acetate bands either ripped or were otherwise damaged. Since the goods could could not be shipped in this condition, defendant expended additional time, effort, and money in devising a solution of its problem. The solution, which was largely but not entirely successful, consisted of (1) enlarging the size of the cells in the shipping case in an attempt to accommodate the larger bulk of the holiday package, and (2) the insertion of the holiday boxes into glassine bags before they were placed in the shipping cells so as to reduce contact between the bands and the cell sides.

The defendant's usual year-round practice was to ship liquor bottles in compartmentalized cases without any wrapping or box. It was only during the holiday season that the bottles were first placed in special 'gift packages,' whose design was approved by defendant (and, in this case, executed by plaintiff), and then the boxes were inserted in the shipping cells. Defendant knew that the cells would have to be enlarged to contain the special boxes, and accordingly they were enlarged even before the difficulties with the acetate bands developed.

After the acetate bands began to tear, the cells were again enlarged, but the overall shipping-case being of finite dimensions, unlimited further enlargement would have been impossible. Furthermore, defendant's witness Boddorff testified that the cells could not be too large, else there would be danger of breakage. However, it was not until after the holiday boxes had been ...

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