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EDWARD KLEIN TRUCK & HEAVY EQUIP. CO. v. PITMAN MF

UNITED STATES DISTRICT COURT, WESTERN DISTRICT OF PENNSYLVANIA


March 24, 1981

EDWARD KLEIN TRUCK AND HEAVY EQUIPMENT COMPANY, INC., Plaintiff,
v.
PITMAN MANUFACTURING COMPANY, a division of A. B. Chance Co., Defendant

The opinion of the court was delivered by: KNOX

MEMORANDUM OPINION

Plaintiff, Edward Klein Truck and Heavy Equipment Company, Inc., a Pennsylvania corporation with its principal place of business in this district, filed this action on June 8, 1979 to recover damages for an alleged breach of a sales contract. Maury Klein is the general manager of the plaintiff and was acting on its behalf at all times. (Hereinafter the name Klein shall designate both). Klein alleges that Pitman Manufacturing Company, a Delaware corporation with its principal place of business in Missouri, breached a contract to sell to Klein certain truck bodies. Jurisdiction is premised on the diversity of the parties' citizenship and therefore Pennsylvania law applies to all substantive issues raised in this case. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938).

 Klein is in the business of buying and selling new and used construction equipment in wholesale and retail capacities. Pitman Manufacturing Company (hereinafter Pitman) is a division of A.B. Chance Company with a plant in York, Pennsylvania. Pitman's York plant fabricates and assembles utility bodies which are mounted onto truck chassis to be used primarily in the construction industry by workers to store and carry their tools. According to Klein, on March 2, 1977 plaintiff and defendant entered into a contract for the purchase by plaintiff of 286 truck utility bodies from defendant for $ 76,890. A $ 5000 deposit was paid by plaintiff with the balance to be paid by cashier's check upon pick up of the merchandise. The financial terms were subsequently modified to enable plaintiff to pick up the bodies and pay for them within 30 days according to the standard in the industry. By July 18, 1977, plaintiff had received only 177 of the truck bodies and reiterated its desire to purchase the remaining 109 bodies through a second purchase order to the defendant. Plaintiff contends that thereafter defendant attempted to unilaterally modify the contract of March 2, 1977 by offering to furnish the truck bodies to plaintiff in an unassembled form for a reduced price. Plaintiff rejected this modification and on June 1, 1978, received notice that defendant cancelled the contract. Plaintiff seeks damages for defendant's breach.

 According to plaintiff's theory of the events culminating in this lawsuit, the truck bodies had been labelled as obsolete by Pitman and were to be disposed of within one year according to company policy if no buyer was found for them. The scrap value of each body was between $ 20 and $ 30. Employees of Pitman contacted Klein and they entered into a contract by which Klein was to pay $ 350 each for the 108 inch bodies and $ 310 each for the 96 inch bodies. Included among these bodies were eleven 108 inch and 100 ninety-six inch bodies which were in unassembled pieces. Pitman was to assemble the bodies during its slow season late in October of that year. One week after the agreement was reached between plaintiff and defendant, Klein verbally contracted to sell one-half of the bodies to Fruehauf Corporation at twice the price Klein had agreed to pay. The other half were to be sold in the regular course of Klein's business.

 Klein made regular payments to Pitman from March 4, 1977 through June of 1977 but nonetheless, according to Klein, Pitman refused to assemble the 111 truck bodies which were in pieces. Rather, in August of 1977, Pitman notified Klein that it no longer had any inventory for the 108 inch bodies, that it would not be able to complete assembly until later than anticipated and offered to sell the parts at a reduced price. Again in October of 1977 Pitman offered to sell the parts at an even further reduced price, but since Klein lacked the facilities to assemble them and because the cost of assembly would exceed the contract price, Klein refused. In May of 1978 Klein picked up 5 assembled bodies on a C.O.D. basis, leaving 95 due under the contract. On June 1, 1979, Klein alleges that it learned for the first time that Pitman would not assemble any of the bodies. As a result of this breach, Klein seeks $ 71,280 in damages.

 Defendant contends that Klein failed to pay for the bodies within 30 days of delivery and this justified Pitman's cancellation of the contract in July of 1977. Pitman argues that the second purchase order received from the plaintiff on July 18, 1977 in which plaintiff offered to buy the remaining bodies at the same price and according to the same terms of the March 2, 1977 contract, constituted a new offer. Pitman avers that it rejected this offer but countered with an offer to assemble the bodies if plaintiff paid the $ 13,735 balance or, in the alternative, to sell the bodies unassembled at greatly reduced prices if plaintiff paid the entire balance of its account. During the ensuing months, Pitman continued to communicate with plaintiff in hopes of recouping the outstanding balance and maintains that it would have assembled the 95 remaining bodies if plaintiff had paid its account in full. When Pitman finally scrapped the bodies, Klein still owed $ 4260 to Pitman.

 A non-jury trial was held in Pittsburgh on December 2, 3 and 4 of 1980. Pursuant to Rule 52(b) of the Federal Rules of Civil Procedure, the court makes the following:

  Findings of Fact

 1. Plaintiff, Edward Klein Truck and Heavy Equipment Company, Inc., is a Pennsylvania corporation and maintains its principal place of business in Pennsylvania.

 2. Defendant, Pitman Manufacturing Company, is a division of A.B. Chance Co., a Delaware corporation with its principal place of business in Missouri. Pitman has a plant in York, Pennsylvania.

 3. In August of 1976, Pitman began contacting companies concerning the liquidation of certain inventory which it determined to be obsolete.

 4. After negotiations, Klein and Pitman entered into a contract on March 2, 1977 whereby Klein agreed to pay $ 76,890 for 286 truck bodies. This included, inter alia, eleven 108 inch utility bodies at $ 350 each and one hundred 96 inch utility bodies at $ 310 each. The terms of the contract were $ 5000 deposit upon acceptance with the balance to be paid by cashier's check upon pick up of the merchandise. (Plaintiff's Exhibit A)

 5. The sole dispute of this case concerns those utility bodies which were not assembled at the time of the contract. While no time for performance was specified in the contract, the parties agreed that these bodies would be assembled during the latter part of October, 1977, since this was generally a slow time for Pitman's business. The bodies were to be assembled by Pitman from inventory at its York plant.

 6. On February 23, 1977, plaintiff paid $ 5000 to defendant. (Plaintiff's Exhibit B)

 7. From March 2, 1977 to May 19, 1977, Pitman made available all 177 of the assembled truck bodies and Klein picked up the last shipment on May 19, 1977.

 8. At plaintiff's request, the C.O.D. terms of the contract were modified and Pitman permitted Klein to pick up the truck bodies without immediate payment. Klein and Pitman agreed to alter the terms so that Klein was to pay for the bodies within 30 days of delivery. Thirty days net was the standard in the industry. 9. Klein made the following payments to Pitman by June 30, 1977: February 23, 1977 $ 5000 (Plaintiff's Exhibit B) March 4, 1977 3600 ( " D) March 11, 1977 5120 ( " E) March 18, 1977 6880 ( " F) April 6, 1977 3840 ( " H) May 17, 1977 2240 ( " I) May 17, 1977 1680 ( " J) June 30, 1977 5000 ( " K)

19810324

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