Lake River Corp. v. Carborundum Co.,

769 F.2D 1284 (7th Cir. 1985)


Carborundum (D) manufactured an abrasive powder used in making steel. Lake River (P) was under contract to provide distribution and warehouse services to in Illinois. D insisted that P install a new bagging system to handle the contract. P insisted upon an agreement for a minimum amount of business over three years in order to recover the cost of the new equipment. The total amount under the minimum would have equaled $533, 000 in billings. When the contract had expired only 12,000 tons of the 22,500 tons were ever bagged. P insisted that D owed it $241,000 under the contract. D refused, on the ground that the formula imposed a penalty. P sued D and D countersued for P's placing D's products under a lien. P had in its warehouse 500 tons of bagged Ferro Carbo, having a market value of $269,000, which it refused to release unless D paid the $241,000 due under the formula. The trial court gave P $42,000 in net damages, and both parties appealed.