Superior Wire & Paper Products, Ltd. v. Talcott Tool & Machine, Inc.

441 A.2d 43, 184 Conn. 10, 31 U.C.C. Rep. Serv. (West) 101, 1981 Conn. LEXIS 505
CourtSupreme Court of Connecticut
DecidedApril 28, 1981
StatusPublished
Cited by40 cases

This text of 441 A.2d 43 (Superior Wire & Paper Products, Ltd. v. Talcott Tool & Machine, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Superior Wire & Paper Products, Ltd. v. Talcott Tool & Machine, Inc., 441 A.2d 43, 184 Conn. 10, 31 U.C.C. Rep. Serv. (West) 101, 1981 Conn. LEXIS 505 (Colo. 1981).

Opinion

Peters, J.

This ease arises out of a series of contracts for the sale of steel rod and wire. The plaintiff seller, Superior Wire and Paper Products, sued the defendant buyer, Taleott Tool and Machine, Inc., and the defendant guarantors, George Roy, Alan Roy and Roy Machinery & Sales, Inc., to recover the unpaid purchase price of shipments of steel. The defendants, by their answer and counterclaim, put into issue the conformity of the goods tendered, and sought damages for breach of warranty. The defendant guarantors also challenged the enforceability of their guaranty. The trial court found all of the issues for the plaintiff, and accordingly rendered a judgment for $110,994.04 in its favor. All the defendants have appealed.

The underlying facts found by the court and set forth in the memorandum of decision and the record are as follows. The plaintiff, Superior Wire and [12]*12Paper Products (hereinafter Superior) is a Canadian corporation that sells steel rod and wire. The defendant, Taleott Tool and Machine, Inc. (hereinafter Taleott), is a middleman that purchases steel for resale to its customers. Between March, 1974, and December, 1974, Superior sold Taleott more than $1,000,000 worth of steel rod and wire. These goods were sold on invoices requiring payment in thirty days.

At the end of June, 1974, Taleott owed $137,454.17. Concerned about the size of this debt, Superior’s president went to Talcott’s place of business to have a conversation with the defendant George Roy, an officer of Taleott. Several days later, on July 3, 1974, the defendants George Roy, Alan Roy and Roy Machinery & Sales, Inc., wrote Superior guaranteeing payment for goods ordered by Taleott from Superior. Some time subsequent to the guaranty, Taleott furnished Superior further security in the form of a letter of credit for $200,000 which expired at the end of September. At the time of the letter of credit, Talcott’s billings from Superior were $325,000. There were further shipments by Superior after expiration of the letter of credit.

In the fall of 1974, steel prices fell precipitously. By November, Superior had stopped receiving payments from Taleott. In December, Taleott notified Superior that discontent with the quality of Superior’s shipments was leading to rejections of Superior’s steel by Talcott’s customers. Taleott made no further payments to Superior thereafter.

The trial court concluded that the plaintiff had established its claim to the unpaid purchase price, that the defendants had not sustained their burden [13]*13of proof on their counterclaim and that the defendant guarantors were liable on their guaranty. Each of these conclusions is challenged on this appeal.

Before we consider the merits of these claims of error, it is well to place the parties’ claims into context. As contracts for the sale of goods, these transactions are governed by the provisions of article 2 of the Uniform Commercial Code. General Statutes § 42a-2-102. “Under article 2, the rights and liabilities of the parties are determined, at least in part, by the extent to which the contract has been executed. The buyer’s acceptance of goods, despite their alleged nonconformity, is a watershed. After acceptance, the buyer must pay for the goods at the contract rate; General Statutes § 42a-2-607 (1); and bears the burden of establishing their nonconformity. General Statutes § 42a-2-607 (4).” Stelco Industries, Inc. v. Cohen, 182 Conn. 561, 563-64, 438 A.2d 959 (1980). Acceptance does not, however, constitute a definitive election to waive all claims and defenses with respect to the accepted goods. If the buyer can demonstrate that he has been damaged by the nonconformity of the goods that he has accepted, he is entitled to recover such damages as he can prove. General Statutes §§ 42a-2-607 (3),1 42a-2-714.2 Alternatively, if the buyer can demonstrate that the goods are substantially nonconforming, he is entitled, with some qualifications, to revoke his acceptance and recover the purchase [14]*14price. General Statutes §42a-2-608.3 Whichever route the buyer elects, he is required to give timely notice to the seller within a reasonable time after he discovers or should have discovered the seller’s breach. General Statutes §§42a-2-607 (3) (a), 42a-2-608 (2).4

In the present case, the defendants contest neither the sale and delivery of goods pursuant to contracts of sale, nor the fact of the acceptance of the goods by the corporate defendant. The plain[15]*15tiff’s prima facie entitlement to recovery of the purchase price has therefore been established. The defendants can defeat this entitlement only by proving the nonconformity of the accepted goods. General Statutes §42a-2-607 (4).5

With respect to the defendants’ counterclaim, the defendants bear an even greater evidentiary burden. If they want to rely on the right conferred by § 42a-2-607 to sue for damages flowing from the acceptance of nonconforming goods, they must show not only that the goods were nonconforming, but that their nonconformity has resulted in measurable damages. Such damages include losses “resulting in the ordinary course of events from the seller’s breach”; General Statutes §42a-2-714 (1); or, more typically, damages measured by “the difference . . . between the value of the goods accepted and the value they would have had if they had been as warranted”; General Statutes § 42a-3-714 (2); augmented, in a proper case, by incidental or consequential damages. General Statutes §§42a-2-714 (3), 42a-2-715. Unless the goods delivered were totally worthless, these sections do not authorize recovery by the buyer as damages of the purchase price previously paid to the seller. Compare General Statutes §42a-2-711 (1). Rather, they contemplate that the buyer will prove an offset to the purchase price; see General Statutes § 42a-2-717; although the offset may, because of consequential losses, if proven, exceed the purchase price in amount. The record appears to indicate no financial claim by the defendants other than one for reimbursement of invoices previously paid, and storage and transportation [16]*16costs incidental thereto. The defendants’ counterclaim therefore does not state a cognizable claim for damages under the provisions of article 2.

Absent a claim for damages, the defendants’ counterclaim must rest on whatever right they have to revoke acceptance, pursuant to General Statutes § 42a-2-608. A buyer who justifiably revokes acceptance may recover “so much of the price as has been paid.” General Statutes §42a-2-711 (1). In order to revoke acceptance, however, the buyer must prove more than that the goods were nonconforming. He must show that their “nonconformity substantially impairs [their] value to him” (emphasis added) and that they were initially accepted because the buyer reasonably expected the seller to cure any defects or because the buyer could not immediately discover such defects. General Statutes § 42a-2-608 (1). These are the substantive standards against which the defendants’ counterclaim must be measured and they highlight the burden6 that the defendants had in the trial court and have on this appeal.

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Bluebook (online)
441 A.2d 43, 184 Conn. 10, 31 U.C.C. Rep. Serv. (West) 101, 1981 Conn. LEXIS 505, Counsel Stack Legal Research, https://law.counselstack.com/opinion/superior-wire-paper-products-ltd-v-talcott-tool-machine-inc-conn-1981.