Vitex Manufacturing Corp. v. Caribtex Corp.

377 F.2d 795 (3rd Cir. 1967)

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Nature of the Case

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Facts

Vitex (P) operated a plant in the Virgin Islands for chemically shower-proofing cloth. Caribtex (D) contracted with P for the processing of 125,000 yards of cloth at $0.26 per yard. Woolens imported from the Virgin Islands could avoid tariffs if the finished value exceeded the importation value by at least 50%. The island government imposed quotas on each producer so that Congress would not be predisposed to change the situation. In 1963, P closed its plant for lack of customers. Thereafter, D acquired some Italian wool and P agreed to process the material because it had not yet filled its quota. P reopened its plant, ordered the chemicals, and made all the necessary preparations. D did not deliver the wool because it was unsure of the tariff status of that wool. P sued for lost profits. The court found that P’s gross profits would have been $31,250 and that its costs would have been $10,136. The trial court found that the loss of profits was $21,114. D appealed; the trial court erred in disregarding P’s overhead expenses including those continuous expenses for employee salaries, purchasing chemicals, and the like.