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DEUTSCH v. HOGE

February 15, 1949

DEUTSCH
v.
HOGE, et al.



The opinion of the court was delivered by: NEVIN

Plaintiff, at the time of filing his complaint herein was, and he still is, a citizen and resident of the State of New York. Defendants were and are citizens and residents of the State of Ohio, having their principal place of business in New Knoxville, Ohio, within the jurisdiction of this Court. The individual defendants are the sole owners of both the Hoge Brush Co., and The Hoge Lumber Co., (an Ohio corporation). It has been agreed between the parties that The Hoge Lumber Co., assume liability for any judgment which might be rendered in this case. In the interest of brevity, therefore, the defendants herein will be considered as a group and treated and referred to as 'defendants' without differentiating between the business and the individuals.

The complaint, filed April 29, 1947, contains three causes of action. In the first cause of action, plaintiff sought damages which he claimed he sustained by virtue of the breach of an alleged contract with the defendants by which defendants agreed to manufacture and sell to plaintiff certain brushes as in this cause of action set forth. In the second cause of action, plaintiff sought to recover on an open account for the delivery of certain materials to the defendants and in the third cause of action, plaintiff sought to recover damages for the breach by defendants of an alleged contract to sell plaintiff certain brushes, different from and other than those set forth in his first cause of action.

In their answer filed June 18, 1947, defendants deny that any contract ever existed between plaintiff and defendants as set forth by plaintiff in his first cause of action, but allege further that if it should be ultimately determined that there was such a contract, that it would fall within the provisions of the Statute of Frauds of both the States of Ohio and New York and that by reason thereof, any such contract would be of no legal effect and unenforceable.

 As to the second cause of action, liability is admitted on the part of defendants except for alleged proper credits upon the account, it being defendants' position that on the second cause of action, they are indebted to plaintiff in a net balance of $ 938.38, for which amount they offered to confess judgment.

 As to the third cause of action, defendants deny that any such contract as therein claimed ever existed between the parties and allege further that if there was any such contract, it was unenforceable by reason of the Statute of Frauds.

 On May 6, 1948, the cause came on for trial before the court, without a jury. During the progress of the trial (defendants not objecting) on May 12, 1948, plaintiff was granted leave to, and did, amend his complaint by striking out paragraph 25 thereof, and substituting in lieu of the original paragraph 25, the certain allegations as in the amendment contained. Paragraph 25 was contained in plaintiff's second cause of action.

 On May 12, 1948, there was also filed, a stipulation which recites that: 'It is stipulated by counsel for the plaintiff herein that if recovery is had on the first cause of action, that the plaintiff is not and shall not be entitled to recover upon the second cause of action.'

 (This stipulation is reaffirmed by plaintiff in his brief wherein (p. 68) it is stated: 'To sum it up, the defendants, in addition to the compensatory and special damages, owe the complainant * * * a total of $ 1372.32 plus interest at the rate of six percent from the date of the breach of the contract. If recovery is allowed upon the First Cause of Action, the total prayed for will include this sum'.)

 On May 18, 1948 (defendants not objecting) plaintiff was granted leave to amend complaint by striking from the amended complaint paragraph 19 thereof in its entirety (paragraph 19 is contained in the first cause of action) and substituting in lieu thereof a paragraph '19' to read as follows: '19. That by reason of the premises the plaintiff has been damaged in the following respects, to-wit: (a) That if the Court should determine that a contract came into existence on March 17, that the plaintiff has been damaged in the sum of $ 41,022.09, which sum is comprised of the fair market value of the merchandise required to be delivered under the defendants' contract with the plaintiff in the sum of $ 31,332.64, and which sum likewise represents the extent of the plaintiff's liability to the United States Government by reason of his default under the contract aforementioned, plus the profit which he should have realized upon said contract in the sum of $ 6,425.36, plus advances of $ 2,000.00 in cash against said contract, plus merchandise purchased for said contract in the sum of $ 1,264.09, but (b) If the Court should determine that a contract came into existence on March 27, then the plaintiff has been damaged in the sum of $ 34,596.73, which sum is comprised of the fair market value of the merchandise required to be delivered under the defendants' contract with the plaintiff in the sum of $ 31,332.64, and which sum likewise represents the extent of the plaintiff's liability to the United States Government by reason of default under the contract aforementioned, plus advances of $ 2,000.00 in cash against said contract, plus the cost of raw material purchased for said contract in the sum of $ 1,264.09, no part of which sums have been paid, although duly demanded.'

 At the time plaintiff rested his case in chief, defendants moved for dismissal as to the first and third causes of action 'separately as to each.' This motion, the court overruled. At the conclusion of the trial and after both sides had rested, defendants renewed their motion made at the time plaintiff rested in chief, for the dismissal as to the first and third causes of action. This motion the court overruled as to the first cause of action, but sustained as to the third cause of action, saying, after setting forth its reasons therefor, that 'Under the evidence in this case, it is the view of the Court that as to the third cause of action, plaintiff has failed to sustain the burden which rests upon him and that defendants' motion to dismiss the third cause of action is well taken, and that it should be, and it is, sustained, and the third cause of action is here and now dismissed.'

 No further consideration, therefore, will be given to the third cause of action.

 It is agreed by plaintiff that at the close of the entire case the position of plaintiff was not in all respects the same as that asserted by him in his complaint as filed. As to this, plaintiff in his brief (page 3 et seq.) makes, among others, the following statements: 'It will be evident, immediately, to the Court that the final position of the complainant at the close of all of the testimony is somewhat different from that which he asserted at the time of the filing of the complaint. * * * The pleadings embrace his changed position. The facts set out in the complaint apprised the defendants, in the alternative, of the position now maintained. * * * It had been the alternative position of the complainant that a bilateral agreement was made by and between the defendants through their agent, and the complainant, and that they were bound to manufacture and sell at the prices quoted for the specific goods. * * * However, the complainant recognizes that he did not stand upon his rights in respect of such agreement. He voluntarily relinquished his rights, under Ohio law, when he agreed to place a new order on March 27, 1941. By the placing of this order, under the decisions of the Ohio courts, he is deemed to have waived the breach and thereafter entered into a substitute contract. * * * The present position of the complainant conforming it to the proof, is as follows: (1) That the complainant, by his order of March 17, 1941 offered to purchase the various goods required to be manufactured under and in accordance with the Navy contract. (2) That there was a specific and express assent by the defendants to said offer to purchase. (3) That there was an assent as a matter of law to said offer to purchase. (4) That the defendants are estopped to deny the existence of the contract for manufacture, sale and purchase of the goods in question. (5) That the parties contracted with reference to the existence of the Navy contract, and that the penalties of default were expressly and specifically within the contemplation of the parties with respect to their own agreement. (6) That the defendants breached the contract. (7) That the damages flowing from said breach are comprised of the difference between the contract price and the fair market value of the merchandise at the time when performance was due; plus the consequential damages which were within the contemplation of the parties; together with the cost of merchandise and money advanced by the complainant, and with interest at the rate of six percent (6%) from the date of the breach. * * * In the light of all the proof, and in view of the fact that the complainant thereunder is standing upon the offer of March 27th and all of the acts and conversations subsequent thereto, the first issue before the Court is; What was the relation of the parties as to the offer of March 27, 1941.'

 Plaintiff submits further that 'The position of the defendants changed materially at the close of all the testimony. They admitted that a contract did exist between the parties, but they denied that it was the specific contract alleged by the complainant. They maintained that there was a collateral, verbal agreement to manufacture an experimental portion of the goods required to be delivered by the complainant under and by reason of the Navy contract. They contended, however, that this was a separate agreement and that performance related to it, rather than to the entire order which the complainant contends was accepted by the defendants.'

 Defendants in their brief (pp. 1, 2) say: 'As we analyze the present contentions of plaintiff, the issues therefore are: (1) Did Deutsch's offer of March 27, 1941, result in a contract? (a) by express acceptance, or (b) by acceptance implied from the subsequent acts of defendants, or (c) by estoppel. (2) If a contractual relationship did result, was it enforceable by reason of the provisions of the Statute of Frauds? (3) If an enforceable contract resulted, what damage does the evidence show plaintiff sustained?'

 It is not disputed that if an enforceable contract was in existence at any time prior to July 9th, as relates to the order of March 27th, 1941, that defendants were guilty of a breach thereof and are liable for the damages, if any, proximately suffered by plaintiff resulting therefrom.

 As is not unusual in cases of this character, there is a conflict in the testimony as given by, and on behalf of, the respective parties. In some instances and as to some matters the conflict is direct and sharp. There are some discrepancies in the testimony and some failures to recollect distinctly exact dates, conversations at given times and sequence of events. To some extent this is, no doubt, attributable to the fact that the occurrences themselves took place approximately seven years before the trial of the case.

 Counsel for the respective parties have argued at length, in their briefs, the question of the credibility of witnesses,' citing and quoting from the record and exhibits.

 It is the duty of the court to reconcile this testimony wherever this can be properly done and to give to the testimony of each witness such weight as the court deems it properly deserves, keeping in mind the applicable rules of law. Where, as here, issues of fact are raised the court, in the absence of a jury, is bound to follow the same 'instructions' it would give in a charge to the jury, were one present. This, the court, has done, in the instant case. In arriving at its conclusions as to the credibility of witnesses and the weight to be given to their testimony, the court has been materially aided by the written and documentary evidence offered and admitted as exhibits in the case.

 The facts as the court finds them to be upon the record in this case are sufficiently stated by the court in its Findings of Fact hereinafter set forth and made a part of this decision along with the court's Conclusions of Law. It would serve no useful purpose, therefore, to review them here.

 For present purposes the court deems it sufficient to say that it is of the opinion and so finds that plaintiff's order or offer to purchase of March 27, 1941, did result in a contract with defendants; that this result was brought about, as claimed by plaintiff, by a specific and express assent by defendants to plaintiff's offer to purchase; that there was an assent as a matter of law and that defendants by their conduct and assent are estopped to deny the existence of the contract for the manufacture, sale and purchase of the brushes in question herein.

 The court is further of the opinion and so finds from all the evidence in the case that the parties contracted with reference to the existence of the Navy contract and that the penalties of default were within the contemplation of the parties with respect to their own contract; that the contract is enforceable and does not fall within the Statute of Frauds and that defendants breached the contract to plaintiff's damage.

 The burden of proof was upon the plaintiff to prove his case and each and every essential element thereof by a preponderance of the evidence. In the view of the court, plaintiff has sustained this burden.

 The court agrees with the conclusion of plaintiff as expressed on p. 40 of his reply brief that: It does 'not see how the events and correspondence between the parties can be explained or understood upon any basis other than that a contract arose between the parties upon the basis of the order of March 27, 1941.'

 The rights and obligations of the parties became fixed as of the date of assent by defendants to the offer of March 27, 1941. This is not disputed in the event the court finds and rules (as it now has) that there was an acceptance of that offer.

 In its Notice and Demand for Payment (Exhibit 70) the Navy requested plaintiff to forward his check in the sum of $ 33,736.83, being the amount of 'excess cost' to the Government due to plaintiff's 'Inability to Complete Deliveries.'

 In his brief (p. 54) plaintiff says: 'Summing it up therefore, and deducting the two items erroneously included in the Navy deficiency assessment, the complainant's liability to the Navy is $ 31,693.63, which figure is obtained by eliminating from the deficiency assessment the two items erroneously included therein.'

 Plaintiff now claims, therefore, that he is entitled to damages, (being alleged compensatory damages) on his first cause of action in the sum of $ 31,693.63, and in addition thereto the sum of $ 1,372.32, which sum he alleges represents the difference between the merchandise and cash advanced to the defendants by plaintiff and the cost of the merchandise actually delivered under the contract in issue.

 Plaintiff now also claims that he is entitled on his first cause of action to a like sum of $ 31,693.63 as 'special damages.'

 Sometime after the final submission of the case, to-wit, on July 9, 1948, plaintiff filed a 'motion for leave to amend amended complaint' ┬ž stating therein that the amendment was sought 'to conform to the proof insofar as affects th prayers for damages under the first and second causes of action.'

 The proffered amendment reads as follows:

 '1. By striking from the amended complaint amended paragraph '19' thereof in its entirety, and for leave to substitute in lieu thereof the following paragraph 19:

 (19) That by reason of the premises the plaintiff has been damaged in the sum of $ 64,759.58, which sum is comprised of the following:

 (a) Compensatory damages in the sum of $ 31,693.63 computed upon the basis of the difference between the contract price of the merchandise required to be delivered but not actually delivered by the defendants under their contract with the complainant and,

 (b) Special damages in the sum of $ 31,693.63, which sum represents the liability of the complainant to the United States Government by reason of his default under his agreement with the Government arising out of the breach of the contract at issue,

 (c) Plus the sum of $ 1,372.32, which sum represents the difference between the merchandise and cash advanced to the defendants by the complainant, and the cost of the merchandise actually delivered under and by reason of the contract in issue,

 (d) Plus interest on the total amount as aforementioned at the rate of six percent per annum from the date of the breach of the agreement herein, no part of which sums have been paid, although duly demanded.

 2. Complainant further moves for leave to amend the amended complaint herein by striking out paragraph '25' thereof and substituting in lieu thereof the following paragraph 25;

 (25) That by reason of the premises the plaintiff has been damaged in the sum of $ 1,372.32, which sum is represented by the difference between the advances of cash and merchandise made to the defendants and the cost of the merchandise actually delivered by the defendants upon the prices agreed to be paid.'

 Defendants submit (1) that plaintiff is not entitled to any damages whatsoever; (2) that (Br. p. 49) 'if plaintiff has proved a contract in the case at bar, he can only recover nominal damages on his first cause of action;' (3) that 'even if we are incorrect in this, by reason of Deutsch's failure to minimize his damage by accepting defendants' offer of September, his recovery must be limited to a sum not exceeding $ 3,682.24;' (4) that because of the Navy 'error' the (Br. p. 42) 'amount would be $ 29,684.25 and not $ 31,693.63' as claimed (by plaintiff): and (5) that under any circumstances, plaintiff is not entitled to so-called 'special damages' ...


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