Aztec Corporation v. Tubular Steel, Inc.

758 S.W.2d 793 (1988)

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Nature of the Case

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Facts

P got an order from its customer, Peabody World Trade, to supply 22,060 feet of 7-inch outside diameter, 29-pound pipe with long thread and couple. The pipe was to be accompanied by mill papers, certifying the physical and chemical composition of the pipe. The end finish on the pipe was critical in order that its segments could be screwed together for use in the oil field. D's operations manager, quoted P a price of $29.23 per foot to supply the pipe to which P orally agreed. A written purchase order was then mailed to D, reciting the quantity, price and specifications and other requisites, such as mill papers and thread protectors. D would not be able to fill the order from its own inventory after all, but that a personal friend of his, Jim LaBouve, had the pipe and could supply it. Time was critical to P's customer, Peabody, because the pipe was to be shipped out of the country from the port of Houston on a given date. In order to meet the deadline imposed by Peabody, D instructed P to wire payment directly to the account of LaBouve Drilling at a Houston bank. The funds were transferred, but the pipe that arrived at the port of Houston did not meet the specifications of the purchase order and was rejected by Peabody. D was able to find pipe that conformed to Peabody's specifications for $29.79 per foot, or $67,325. P was unable to obtain a refund from D or LaBouve of $64,739 paid for the nonconforming goods, it sued for its cost of cover and incidental expenses incurred in disposing of the pipe. The jury found that Chalaire was acting as the agent for D, that D did enter into a contract with P to supply pipe, that D warranted that the pipe would have long thread and couple and would have accompanying mill papers, that D failed to deliver pipe conforming to its contract or warranties, that such failure was a proximate cause of damage to P, that D made false representations to P that it had located pipe conforming to the contract specifications, that P relied on the false representations to its detriment, and that $35,000 would compensate P for its damage. Both parties appealed.