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INDUSTRIAL MOLDED PLASTIC PRODUCTS v. J. GROSS & SON (02/23/79)

decided: February 23, 1979.

INDUSTRIAL MOLDED PLASTIC PRODUCTS, INC., APPELLANT,
v.
J. GROSS & SON, INC. INDUSTRIAL MOLDED PLASTIC PRODUCTS, INC. V. J. GROSS & SON, INC., APPELLANT



No. 643 October Term, 1978, No. 667 October Term, 1978, Appeals from the Order dated December 5, 1977, of the Court of Common Pleas, Philadelphia County, at No. 884, August Term, 1972.

COUNSEL

James D. Crawford and Eugene A. Spector, Philadelphia, for appellant at No. 643 and appellee at No. 667.

Alan C. Gershenson, Philadelphia, for appellant at No. 667 and appellee at No. 643.

Cercone, Hester and Hoffman, JJ. Cercone, President Judge, concurs in result.

Author: Hoffman

[ 263 Pa. Super. Page 518]

This is a breach of contract action brought by Industrial Molded Plastic Products, Inc. (Industrial) against J. Gross & Son, Inc. (Gross). In a non-jury trial below, the court awarded Industrial $2,494.52 damages representing lost profits. Industrial now contends that the proper measure of damages was the contract price of the goods. Gross has cross-appealed on the issue of liability, contending that the salesman who signed the contract lacked the authority to bind the corporate entity.

Industrial is in the business of manufacturing custom injection molded plastics by specification for various manufacturers. Industrial also manufactures various "fill-in" items during slack periods, such as electronic parts, industrial components, mirror clips, and plastic clothing clips. Industrial manufactured plastic clothing clips only for its house accounts of H. Daroff & Sons and Joseph H. Cohen & Sons. Gross is a wholesaler to the retail clothing industry, selling mostly sewing thread, but also other items such as zippers, snaps, and clips. Gross sold only a small amount of plastic clothing clips, never having more than $100-$200 worth of clips in inventory at any one time.

Sometime in the Fall of 1970, Mr. Stanley Waxman (Gross' President and sole stockholder) and his son Peter (a 22 year old salesman for Gross) appeared at the offices of Industrial's President, Mr. Judson T. Ulansey. They suggested to him that they might be able to market Industrial's plastic clothing clips in the retail clothing industry, in which they had an established sales force. At this initial meeting, there was no discussion of Peter Waxman's authority or lack thereof in the company. After this meeting, Stanley authorized Peter to purchase a "trial" amount of clips (not further specified) to test the market, but neither this authorization nor its limitation was communicated to Ulansey. All subsequent negotiations were between Ulansey and Peter Waxman only. Deceiving both his father and Ulansey, Peter

[ 263 Pa. Super. Page 519]

    held himself out as Vice-President of Gross, and on December 10, 1970, signed an agreement obligating Gross to purchase from Industrial five million plastic clothing clips during the calendar year of 1971, at a price of $7.50 per thousand units, delivery at Industrial's plant in Blooming Glen, Pennsylvania. Gross was granted an exclusive distributorship in the clips for the same time, excepting Industrial's two house accounts mentioned above. Before the execution of this agreement, Ulansey telephoned Stanley Waxman, who told Ulansey that Peter could act on behalf of Gross. There was no discussion of the specific terms of the agreement, such as the quantity purchased.

Industrial immediately began production of the five million clips during "fill-in" time. As they were manufactured, they were warehoused in Industrial's plant as per the contract. In February, 1971, Peter Waxman picked up and paid for 772,000 clips. Stanley Waxman, who had to sign Gross' check for payment, thought that this was the "trial amount" he had authorized Peter to buy. These were the only clips which Gross ever took into its possession. On numerous occasions during the year Ulansey urged Peter to pick up more of the clips, which were taking up more and more storage space at Industrial's plant as they were being manufactured. Peter told Ulansey that he was having difficulty selling the clips and that Gross had no warehousing capacity for the inventory that was being accumulated. At no time, however, did Peter repudiate the contract or request Industrial to halt production. By the end of 1971, production was completed and Industrial was warehousing 4,228,000 clips at its plant.

On January 19, 1972, Industrial sent Gross an invoice for the remaining clips of $31,710, less credit of $203.55, for a balance due of $31,506.45. However, Gross did not honor the invoice or pick up any more of the clips. Ulansey wrote to Stanley Waxman on February 7, 1972, requesting him to pick up the clips. Receiving no response, Ulansey wrote to Stanley Waxman ...


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