Wednesday, December 18, 2013

Gruber v. S-M News Co. case brief

Gruber v. S-M News Co. case brief summary
126 F.Supp. 442 (1954)

Plaintiff sellers, in a diversity action, sought damages for breach of contract from defendant buyer for a failure to distribute Christmas cards printed-to-order.

The sellers were approached by the buyer's agent, who later died, and an oral agreement was made for the sellers to manufacture for the buyer 90,000 sets of 12 Christmas greeting cards for 1945. The designs involved the newly formed United Nations. The buyer, who had 700 wholesalers, showed the cards to only four, who each chose not to buy. The sellers claimed damages of $ 101,800.


  • The court awarded $ 17,854, after finding: 
  • (1) the statute of frauds was not a defense where other written materials showed the contract terms, 
  • (2) the agreement was a contract for distribution and return of 90,000 sets of cards, and not one for their sale, 
  • (3) the buyer did not exercise the promised "reasonable diligence" in showing the cards to only four wholesalers, 
  • (4) the salability of the cards may have been affected by world events after 1945, 
  • (5) the sellers could not show how many cards might have been sold, thus failing to carry their burden of showing certain profits, and 
  • (6) the buyer could not show that the sellers would have sustained a loss. 
  • Consequently, the court awarded the sellers their out-of-pocket expenses, minus the small amount they had been able to obtain to cover.

The court found that the sellers' expenditures for labor and material reasonably made in essential reliance on the buyer's promise was $ 19,934. From that sum was deducted the net amount realized by the sellers from sale of 40,000 sets at six cents a set which was $ 2,080. Accordingly, the sellers were entitled to $ 17,854 in damages.

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