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filed: May 27, 1983.


No. 1343 Philadelphia, 1980, No. 1418 Philadelphia, 1980, Appeals from the Judgment of the Order of the Court of Common Pleas, Trial Division, of Philadelphia County, February Term, 1974, Law No 2007.


Richard Friedman, Philadelphia, for appellant (at No. 1343) and for appellee (at No. 1418).

Gilbert E. Toll, Philadelphia, for appellant (at No. 1418) and for appellee (at No. 1343).

Spaeth, Rowley and Cirillo, JJ.

Author: Rowley

[ 315 Pa. Super. Page 472]

These are cross-appeals from a judgment entered pursuant to an order of the court en banc. The court rendered a partial "Judgment N.O.V." in favor of the appellant in No. 1418, but otherwise affirmed the general decision entered by the trial judge who sat without a jury.

Merion Spring Company (hereafter "Merion" or "plaintiff"), appellant in No. 1418, commenced this action on February 14, 1974, by filing a complaint in assumpsit. Merion sought damages in the amount of $32,515.75 for breach of a contract for the sale of twenty-five automobile spring manufacturing machines. In April 1976, the defendant, appellant in No. 1343, Muelles Hnos. Garcia Torres, S.A. (hereafter "Muelles" or "defendant"),*fn1 a corporation formed and located in the Republic of Mexico, filed an answer averring that it had not breached the contract. Furthermore, by way of counterclaim, Muelles averred that Merion had breached the contract and prayed that judgment be entered in its favor in an amount in excess of $500,000.00, in large part representing a claim for lost profits. In December, 1978, the case was tried before the Honorable Calvin T. Wilson, sitting without a jury. Following two

[ 315 Pa. Super. Page 473]

    days of testimony, the trial judge returned a general decision in favor of Muelles on both the complaint and the counterclaim, assessing against plaintiff Merion the following damages:

Money Paid $20,000.00

Interest since breach Estimated

Maintaining Nonproductive Plant 2,300.00

Operating Loss 12,000.00

Loss [sic] Profits 200,000.00

Total $234,000.00

Muelles filed no exceptions to the trial judge's decision. However, Merion filed timely exceptions and was granted leave to file further exceptions within ten days of the completion and filing of the transcript of testimony. After the additional exceptions were filed, all were briefed and argued before a three-judge court en banc which included the trial judge. The court en banc entered what it styled as a "Judgment N.O.V." in favor of Merion with respect to the damages awarded for lost profits on the ground that such losses had not been proven with sufficient certainty to permit their inclusion in the decision returned against Merion. The court said:

The lost profits which are alleged by defendants [Muelles] are remote, are speculative and were not proved at trial to a degree of certainty that would warrant the grant of those damages. The court finds that defendant's business was unestablished and inoperable for spring manufacturing purposes prior to the time of the making of the contract. (Op.Ct. En Banc, p. 7)

Merion's remaining exceptions were dismissed and the court ordered that judgment be entered in favor of Muelles in the reduced amount of $34,000.00.

Muelles filed an appeal challenging 1) the propriety of the "Judgment N.O.V.," 2) the court's failure to award a specific amount for the interest element of the damages assessed and 3) mistakes or errors in the transcript of testimony. Merion also filed an appeal claiming that the trial court's conclusion that it had breached the contract was against the

[ 315 Pa. Super. Page 474]

    weight of the evidence and that the damages assessed for losses due to "nonproductive plant" and for "operating loss" were not supported by any competent evidence of record.


The agreement upon which these appeals are based is evidenced by two handwritten memoranda, signed by the parties, which were executed on May 21, 1972, in the Greyhound Bus Terminal in Philadelphia.*fn2 The memoranda set forth the agreement of the plaintiff to sell, and the defendant to buy, twenty-five automotive spring manufacturing machines for the sum of $42,250.00. One memorandum stated that the machines were to be "working and running" while the other stated only that they were to be "working." The machines had been purchased earlier by Merion at a public sale in Detroit. Merion first offered the machines for sale at the end of April, 1972, while they were still in Detroit. Muelles learned through a broker that the machinery was offered for sale and Muelles' president, Luis Garcia Torres, and its general manager, Emilio Cano Bazaldua, traveled to Detroit. There the two men made a superficial inspection of the equipment. At that time, the machines were partially disassembled and being prepared for shipment to Merion's plant in Philadelphia. Torres and Cano accepted Merion's invitation to inspect the machinery more thoroughly in Philadelphia and they visited Merion's plant accompanied by a Mr. Mota, an engineer hired in Detroit for the purpose of assisting in the inspection. At the end of this visit, the memoranda were signed.

[ 315 Pa. Super. Page 475]

Subsequent to the formation of the agreement and upon Merion's request, Muelles forwarded a check to Merion in the amount of $2,000.00 as a deposit on the full purchase price of the machinery. In an accompanying letter, Muelles stated that it expected the machines to be delivered "working and running to our satisfaction." On June 5, 1972, Merion responded, denying having committed itself to turn over the machinery in such condition as to satisfy Muelles, but stating that it would comply with the terms set out in the memoranda. Merion again wrote to Muelles on July 25, 1972, and demanded that Muelles pay the balance due on the purchase price or storage charges of $8,000.00 or forget about the transaction and forfeit the sum already paid. In response, Muelles offered information legitimizing the delays. It informed Merion that the Mexican government had altered the regulations governing the importation of machinery and that it was seeking legal advice as to how to proceed with respect to obtaining an import license.

Having failed to obtain the requested payment, on July 30, 1972, Merion again wrote to Muelles demanding this time only that the Mexican firm pay the additional deposit of $8,000.00 demanded on July 25. On August 30, 1972, Muelles sent a check to Merion in the amount of $6,000.00 and promised to send $2,000.00 more the following week. Muelles also informed Merion that it required six pictures and detailed specifications for each machine from Merion in order to procure the necessary import license. Muelles was tardy in sending the additional $2,000.00. On October 6, 1972, Merion demanded that Muelles pay the $2,000.00 plus one-half of the handling and loading charges, a total sum of $3,450.00. Merion stated that, should payment not be made within seven days, "we will assume that you are no longer interested in the equipment and you may consider your advance money as compensation for liquidated damages." These demands were renewed on October 18. On October 21, 1972, Muelles sent a check for $2,000.00. In an accompanying letter, Muelles agreed to pay the extra charges, but asked for an adjustment in the date from which these

[ 315 Pa. Super. Page 476]

    storage and handling charges began to accrue. Muelles also again sought the information it required to obtain an import license. Both by letter and cable, on October 30, Merion again demanded payment of $3,400.00.

On November 1, 1972, however, matters took a turn for the better. By letter, Merion assured Muelles that "we are trying to cooperate with you" and acknowledged receipt of the October 21st letter. After setting forth a calculation showing $36,150.00 due on account, Merion asked that Muelles pay $16,150.00. On November 16, 1972, Merion again wrote to Muelles stating that it was sending two pictures of each machine and "whatever information we had available to us." Merion stated that it performed these tasks as "a favor to you at no charge" but suggested that, if Muelles needed anything further along these lines, it contact someone else to do the work. Merion closed by saying, "we have done more than we should and insist upon payment of an additional $16,150.00 . . . ." This demand was renewed on December 1, 1972, and again Merion threatened to sell the equipment if payment was not tendered within seven days.

In January, 1973, a Merion representative then in Mexico received an additional $10,000.00 on account. Relations between the two parties were stable for two months, but in March, Merion twice demanded that Muelles make an additional payment of $8,000.00. During the Spring of 1973, Muelles completed construction of the plant intended to house the twenty-five machines. In June, 1973, Cano again visited Philadelphia in order to make a final inspection of the equipment and tender final payment of the balance then due. However, this inspection disclosed that some of the machines had been canibalized and some parts were missing. Moreover, some of the machines were missing altogether and few, if any, were in operable condition. Cano returned to Mexico without ...

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