Opinion
October 5, 1967
Judgment herein appealed from, unanimously modified, on the law and on the facts, to the extent only of vacating the judgment on such counterclaim and directing a new trial solely on the issues raised by the defendants' counterclaim, and otherwise affirmed, with $50 costs and disbursements to abide the event. The plaintiff-appellant, a dealer in building products, arranged with the defendants-respondents, wood processing manufacturers, for the printing of raw plywood sheets which plaintiff imported from abroad. The arrangement is evidenced by two basic agreements, one of which might be termed the processing agreement and the other the lease agreement. Plaintiff purchased certain equipment which was installed with the consent of the defendants in the defendants' premises. This equipment was leased to the defendants. The agreement contained an option whereby the defendants could purchase the equipment for a stated sum at the termination of the lease agreement. The plaintiff had the option to cancel the lease if in any one year the defendants printed less than 50,000 plywood sheets in the aggregate either for plaintiff, for themselves or for others. Under the processing agreement dated, as was the lease agreement, January 11, 1961, defendants warranted that the printing work done by them would produce a high quality finish which would be equivalent to competitive goods sold in the United States. The plaintiff instituted this suit claiming a breach of warranty and sought to recover damages allegedly suffered by it. The defendants counterclaimed for a breach of the lease agreement. Defendants contended that the plaintiff arbitrarily and without just cause cancelled the lease agreement, and that standards as to the quality of work were arbitrarily set by the plaintiff. It was claimed that as a result of the alleged arbitrary cancellation of the agreement defendants suffered extensive damage. At the trial the court directed a verdict on the first claim contained in the plaintiff's first cause of action in the sum of $3,585.20 with interest from November 20, 1962, and the parties stipulated for the disposition of plaintiff's claims contained in the second and third causes of action by the entry of judgment in plaintiff's favor in the sum of $36,287.64 with interest from May 1, 1963. On the remaining separate claims in the complaint the jury found against the plaintiff and returned a verdict in favor of the defendants and against the plaintiff on the defendants' counterclaim in the sum of $92,856.00. Against this sum was offset the amount found for the plaintiff. There was a net balance of $52,983.16 in favor of the defendants with interest in the sum of $8,444.48 plus costs of $592.60, amounting in all to $62,020.24. The defendants' counterclaim for damages rested basically upon their contention that there was a wrongful termination of the lease. To sustain their position they had to show that in 1962 they printed at least 50,000 sheets of plywood for themselves, for the plaintiff or for others, that is 50,000 sheets in the aggregate, and this they failed to do. There is no solid evidence in the record which warrants a conclusion that the defendants did print 50,000 sheets in 1962, and accordingly there is no evidence to sustain the verdict in that respect. The evidence as to 50,000 sheets is based on speculation, aided in part by the mathematical calculations of the defendants through their counsel. Such a determination of the printing of 50,000 sheets runs counter to statements of the defendants' officers in examination before trial and contrary also to a statement contained in the bill of particulars in a companion action brought by these defendants as plaintiffs against the present plaintiff as defendant. There are subsidiary issues involved in determining whether 50,000 sheets were printed. That is to say, is it requisite that there be 50,000 sheets of merchantable quality in accordance with the warranty of a high quality finish equivalent to competitive goods sold in the United States, or are rejects also to be considered in reaching that total, if in fact 50,000 sheets were printed. Defendants assert plaintiff delivered an inferior quality of plywood and this contributed to the large number of rejects. Plaintiff urges, however, that under the processing agreements defendants had the right to refrain from printing any material which in defendants' opinion was unfit for the production of a high quality finish. The issue can be further explored on the retrial. The defendants also urged alternatively that even though plaintiff might have had the right to cancel the lease in the event 50,000 sheets were not printed that it waived this right by reason of a trial order for the printing of some 9,000 sheets of experimental skeleton printing. However, in the letter which gave the order the plaintiff expressly reserved all of its rights, and it cannot be said from this record that there was an intentional abandonment or relinquishment by the plaintiff of its right to cancel the agreement. Another issue arises from the fact that the parties during the course of the trial stipulated to the receipt of certain exhibits and stipulated to certain alleged facts. There is an ambiguity flowing from the stipulation in that there is a question whether from the language used proof of causation was required as to certain elements or was waived by the stipulation. In our view there is not sufficient evidence to show that the damages allegedly suffered by the defendants were causally connected with the plaintiff's termination of the equipment lease. Certainly as to some of the items there is almost a total lack of proof. There is a question if the stipulation waived the proof of causation. We note this merely for guidance in the new trial. In sum, the verdict on the counterclaim is not sustained by competent evidence and is against the weight of the credible evidence on this record.
Concur — Stevens, J.P., Eager, Capozzoli, Tilzer and McGivern, JJ.