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Welded Tube Co. v. Phoenix Steel Corp.

decided: March 13, 1975.

WELDED TUBE COMPANY OF AMERICA, APPELLANT,
v.
PHOENIX STEEL CORPORATION



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 69-2493).

Adams, Rosenn and Weis, Circuit Judges.

Author: Weis

Opinion OF THE COURT

WEIS, Circuit Judge.

The Pennsylvania law on artisans' liens is the principal subject of this appeal. Our review of the law as applied by the district court does not disclose error but a remand is required for limited findings on subsidiary issues.

The parties to this diversity suit entered into a "requirements contract" in 1965, the terms of which were embodied in an exchange of letters. The agreement provided that the Welded Tube Company was to fabricate structural tubing from steel coils which had been delivered to its Philadelphia plant by the Phoenix Steel Corporation. That company agreed to pay a certain scheduled amount for the tubing which it ordered as needed, the price dependent upon the quantity required each month. Payment was to be made by Phoenix within twenty to thirty days from the date on which Welded submitted the invoices. Welded had a similar arrangement with another steel company and also purchased steel on its own account for fabrication into tubing.

After some years of doing business according to the terms of this contract, Phoenix notified Welded in July, 1968 that it did not plan to continue in the tubing field and that it intended to conclude the arrangement between them. It offered Welded the opportunity to buy the steel on hand, but the parties were unable to agree upon a price. Phoenix continued to place orders for tubing until June 30, 1969, when it terminated the contract.

On June 30, 1969, there were no outstanding invoices for amounts owed to Welded, although some completed work had not yet been billed. Invoices for that material were duly prepared in the next few weeks and totaled $51,013.08.*fn1 Phoenix admits that it owes this amount and has offered to pay it.

Welded claimed that, in addition to the foregoing amount, it was entitled to substantial sums for the preliminary work which had been performed on the coils in its possession, and it refused to turn over the steel on hand to Phoenix. In August of 1969, Phoenix received an offer of $104 per ton for the quantity of steel remaining at the Welded plant but was unable to complete the sale because of Welded's refusal to yield possession.

On October 23, 1969, Welded filed the present suit, claiming (1) $51,013.08 for finished tubing, (2) $75,271.94 for preliminary work on partly used coils, and (3) $20,163.00 for storage and handling of the coils upon which no work had been performed. After efforts to settle the controversy failed, Welded advised that it proposed to dispose of this steel at a "public sale"*fn2 on November 23, 1970. Welded was the only bidder and bought the steel at an average price of $52.86 per ton. It later manufactured structural tubing from that material.

After the nonjury trial, the district judge made findings that:

1. Welded was not entitled to an artisan's lien;

2. Welded had wrongfully withheld possession of the steel from Phoenix;

3. the fair market value of the steel on June 30, 1969 ...


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