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Demian v. Charles A. Frank Associates

decided: February 4, 1982.

DEMIAN, LTD., PLAINTIFF-APPELLANT.
v.
CHARLES A. FRANK ASSOCIATES, CHARLES A. FRANK AND JAGUAR INTERNATIONAL, INC., DEFENDANTS-APPELLEES.



Appeal by plaintiff, Demian, Ltd., from a judgment of the Southern District of New York entered by Judge Charles L. Brieant dismissing after a non-jury trial its claim for breach of a contract to arrange for the manufacture, inspection and importation of leather garments from Korea. Defendants appeal the dismissal of their counterclaim for commissions and request an award of costs, damages and expenses. The judgment dismissing the complaint is vacated and the case remanded for further findings and decision. The dismissal of the counterclaim is affirmed. Defendants' request for an award of costs, damages and expenses is denied.

Before Lumbard, Mansfield and Van Graafeiland, Circuit Judges.

Author: Mansfield

In this diversity suit for damages for breach of a contract for services in the importation of men's leather and suede garments, plaintiff-appellant, Demian, Ltd. ("Demian"), the purchaser, appeals from a judgment of the Southern District of New York entered by Judge Charles L. Brieant in favor of the defendants Charles A. Frank Associates, Charles A. Frank and Jaguar International, Inc., New York residents and business organizations (herein collectively referred to as "Frank"), dismissing the complaint after a non-jury trial. We remand the case to the district court for further findings of fact, affirm the dismissal of Frank's counterclaim for commissions, and deny Frank's request for an award of costs, damages, and expenses, including attorneys' fees.

At all pertinent times Demian, a Pennsylvania corporation, was an importer of high grade men's leather garments for sale in the United States and Frank was a service organization with business acquaintances in the Orient. For a commission paid by American importers, Frank would locate manufacturers or sources of supply in the Far East and make arrangements for the manufacture of the goods in the Orient and their importation into the United States. To facilitate importation into the United States of goods made in Korea, Frank entered into an arrangement with K. C. Sun of Da Chong Hong Trading Co., Ltd. ("Sun") in Korea, whereby, for 50% of Frank's commission received for its services, Sun would locate Korean manufacturers and, following Frank's instructions, do anything further required to effectuate the manufacture, sale and importation of goods purchased by Frank's American clients. One of these clients was Demian.

After approving samples of leather jackets to be manufactured in Korea by Koreanna Moulson, Ltd., a manufacturer located by Frank and Sun, who submitted the samples for consideration, Demian placed two orders with Sun for the purchase of two styles meeting the specifications of the samples. Pursuant to arrangements made by Frank, Demian forwarded to Korea letters of credit in favor of Koreanna, to be honored upon presentation of a certificate by Sun that it had inspected the shipment of the leather jackets made by Koreanna and found them to be of merchantable quality, meeting the sample specifications.

Unfortunately Sun did not properly perform its inspection duties, issuing a certificate that released the purchase price to Koreanna against jackets that did not meet the specifications. In June 1980 Demian brought the present suit against Frank for breach of contract, alleging that in return for commission payments Frank had agreed to:

"(A) Assist plaintiff in the designing of leather jackets which were to be manufactured in the Republic of Korea;

"(B) Arrange for the manufacture of said jackets in the Republic of Korea;

"(C) Inspect said jackets upon completion of the manufacturing to insure that they complied with the standards and specifications required by plaintiff, and in accordance with the terms of a Letter of Credit opened by plaintiff.

"(D) Perform all services necessary to accomplish the importation of the jackets into the United States."

Frank entered a general denial and counterclaimed for a 5% commission "for his services."

At trial Michael Driban, President and owner of Demian, testified that, after Charles A. Frank had described his qualifications and his extensive experience in locating Oriental manufacturers, arranging for their manufacture of goods and importing garments into the United States, they entered into an arrangement under which Frank was to "oversee any program we would enter from start to finish." Frank stated:

"Q What do you mean, from start to finish?

"A From the placing of the orders to making sure that the work was done in time, to make sure the garments were packed in time, that every step of the production process was followed through, that the skins arrived in time to be cut, that the cutting was done in time, that the sewing was done in time, that the skins, when they arrived, were first quality, that when all was said and one (sic), the garments were inspected. Evenness of color, quality of skin, sewing details, etc., were packed, the documents were completed in a satisfactory manner, and that ...


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