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October 30, 1956


The opinion of the court was delivered by: John E. Miller, District Judge.


This case was tried to the Court, without a jury, on October 2, 1956, and at the conclusion of the trial the Court took the case under advisement in order to study the exhibits introduced by the parties. And now the Court, having considered the pleadings, ore tenus testimony of the witnesses, exhibits, and briefs of the parties, makes and files herein its findings of fact and conclusions of law, separately stated.

Findings of Fact


The plaintiff is a Nevada corporation. The defendants, B.T. Fooks, Gulnare Fooks, and Frances Sue Fooks are citizens of Arkansas and residents of the Western District of Arkansas, El Dorado Division, and are doing business as a partnership under the name Grapette Products Company. (Hereafter the Grapette Products Company will be referred to as the defendant.) The Grapette Company, Inc., is an Arkansas corporation doing business in the El Dorado Division of the Western District of Arkansas. The amount in controversy, exclusive of interest and costs, exceeds the sum of $3,000.


After some preliminary negotiations, on December 31, 1952, the plaintiff entered into an agreement with defendant, said agreement being guaranteed by The Grapette Company, Inc., under which plaintiff agreed to sell to defendant thirty thousand gross of glass bottles manufactured especially for defendant, said bottles to be packed in labeled paper cartons. Among other things the contract provides:


"Sale of Goods

    "The `Seller' hereby agrees to sell to the `Buyer'
  and the `Buyer' hereby agrees to purchase from the
  `Seller' thirty thousand (30,000) gross `Clown'
  design bottles fourteen and seven-eights (14 7/8)
  ounces in weight plus or minus one-half (½) ounce at
  the price of Seven Dollars and Nineteen Cents ($7.19)
  per gross packed in one dozen `C' style cases;
  provided, however, if the `Buyer' desires a bottom
  pad added, making this an `L' style case, then in
  such event the price shall be Seven Dollars and
  Thirty-three cents ($7.33) per gross, packed in one
  dozen `L' style cases.
    "The prices quoted above are f.o.b. Camden,


"Delivery and Payment

    "Delivery shall be made at Camden, Arkansas as
    "Ten thousand (10,000) gross on a `make and ship'
  basis, payable net cash thirty (30) days or one
  percent (1%) cash discount in ten (10) days from date
  of each invoice, with Los Angeles exchange.

Initial production did not begin until the molds for the bottles were received, and apparently the first bottles were produced on March 21, 1953 (plaintiff's Exhibit No. 2). Thereafter plaintiff continued to produce the bottles under the contract.

On May 6, 1953, defendant placed an additional order with plaintiff for 20,000 gross of clown-design bottles. On June 23, 1953, defendant ordered 5,000 empty cartons from plaintiff to be used in replacing cartons that had been damaged in shipment, storage, etc. On June 26, 1953, plaintiff acknowledged the order for 5,000 cartons, stating that "We have placed an order with our box supplier for cartons to be delivered Monday, June 29." These cartons were ordered by plaintiff from Southwest Box Company on June 25, 1953 (plaintiff's Exhibit 2-A), and apparently were delivered to plaintiff on July 1, 1953, along with another order of 23,000 cartons from Southwest Box Company (plaintiff's Exhibit 2 indicates receipt of 28,123 cartons on July 1, and plaintiff's Exhibit 2 indicates that plaintiff had requested shipment from Southwest Box Company of the 5,000 cartons on June 29 and also 23,000 cartons on July 1). It appears from plaintiff's Exhibit 2 that these two orders were both filled on July 1.

However, for some unexplained reason only 2,500 of these cartons were shipped by plaintiff to defendant. In this connection, plaintiff's Exhibit 2 shows the shipment of these cartons (see lower right-hand corner of page 2 of the Exhibit), but the exhibit does not show the date on which the shipment was made.

On July 13, 1953, at 9:32 a.m., defendant sent plaintiff the following telegram: "Stop manufacture Grapette Products clown bottles until further notice. Advise Western Union inventory glass on hand. Our warehouses are full."

On July 14 defendant sent plaintiff the following telegram: "Do not ship bottles until further notice. Our warehouses and plant completely filled. No place to unload. Situation should be alleviated in week or ten days. You will be advised." On the same day, Dolphus McCord, plaintiff's Sales Representative, contacted Mr. B.T. Fooks, partner and General Manager of defendant, and informed him of the balance of cartons and bottles which plaintiff had on hand. Fooks informed McCord that the situation would be alleviated in a short time.

On August 7, 1953, M.R. Kerr, Vice President of plaintiff corporation, wrote Mr. Fooks as follows:

    "We wish to review our initial order status with
  your good company. On July 13, our Oklahoma plant
  received the following wire and we quote:
    "`Stop manufacture Grapette Clown bottle until
  further notice. Advise warehouse inventory glass on
    "Our Mr. R.F. Kalbus 'phoned you and gave you a
  preliminary analysis of our stock on hand and
  material inventory position; then our Mr. D.W. McCord
  made a trip into Camden to discuss your situation and
  await further instructions.
    "A correct analysis of the balance remaining to be
  shipped against the original contract shows that, as
  of August 1, there is an open balance of 9691 gross
  yet to be delivered under

  this contract. We have stock on hand, of filled
  glass, of 1381 gross and packing supplies on hand
  that would bring this up to approximately 6,000
    "We were advised by Mr. McCord, after his personal
  visit to Camden, that this total quantity of 6,000
  gross should be sufficient stock to meet the glass
  requirements of your company through the month of
  September along with the glass that you now have on
    "We were advised that you were going to analyze
  your production, sales and stock on hand and would
  then advise us of your findings so that we may
  intelligently schedule production and have ample
  stock on hand to meet your requirements as a result
  of this analysis. Therefore, we would appreciate your
  advising us of the results of this analysis if it has
  already been made. If there is any additional
  information that we can supply you that will assist
  you in making this analysis please do not hesitate to
  contact the writer.
    "May we express our appreciation for the
  opportunity of doing business with you and looking
  forward to being of further assistance, we are"

On August 15, 1953, McCord talked to Fooks regarding a complaint on some over-sized bottles, and also discussed the possibility of filling the empty cartons.

On August 28, 1953, Mr. Fooks wrote to plaintiff explaining the difficulties defendant had experienced in estimating the amount of raw material inventory to be carried and in estimating the volume of business to be expected. After explaining some of the problems incurred by defendant, Fooks stated:

    "The foregoing information has been given you so
  that you might be familiar with our operation due to
  the request which we are making of you as follows:
    "Our present account with you amounts to
  $14,007.46, also the amount of 1,381 gross of glass
  which you have on hand at your factory at $7.33
  amounting to $10,122.73 which, when shipped, will
  reflect a balance due you of $24,130.19.
    "We will be glad to make payment of $9,130.19
  immediately provided you are willing to carry the
  amount of $15,000.00 on trade acceptance without
  interest or on open account until May 1st, in which
  event we will begin the removal of the 1,381 gross of
  glass which you have on hand immediately.
    "We do not have room to store this glass, but will
  go to the expense of leasing another building to
  store glass from your factory if proposition
  submitted is satisfactory.
    "We dislike making such a request, but the
  condition as set out above was beyond our control. We
  believe that the volume business given your company
  in the past and the future business you will receive,

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