Lake River Corp. v. Carborundum Co.,

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

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Nature of the Case

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Facts

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.