author: LEVIN H. CAMPBELL, Circuit Judge.

text:
    GUTOR INTERNATIONAL AG, Plaintiff, Appellee, v. RAYMOND PACKER CO., INC., Defendant, Appellant.
    No. 73-1133.
    United States Court of Appeals, First Circuit.
    Argued Oct. 4, 1973.
    Decided March 22, 1974.

      Arnold Manthorne, Boston, Mass., with whom Warner & Stackpole, Boston, Mass., was on brief, for defendant, appellant.
    Shepard M. Remis, Boston, Mass., with whom Herrick, Smith, Donald, Farley & Ketchum, Boston, Mass., and Casey, Lane & Middendorf, New York City, were on brief, for plaintiff, appellee.
    Before COFFIN, Chief Judge, MOORE and CAMPBELL, Circuit Judges.

       Of the Second Circuit sitting by designation.

   LEVIN H. CAMPBELL, Circuit Judge.

Gutor International AG (Gutor), a Swiss corporation, brought a diversity action in the District of Massachusetts to recover the agreed price of 500 Ultra-vox dictating machines shipped to Raymond Packer Company, Inc. (Packer), a Massachusetts concern. Packer admitted that it had ordered and accepted the machines, but interposed defenses and two counterclaims. In one counterclaim Packer sought damages for Gutor’s alleged breach of an agreement making Packer the exclusive distributor in the United States for Ultravox machines. The other charged Gutor and Dictaphone International AG (Dictaphone), a wholly-owned subsidiary of Dictaphone Corp. (Dictaphone US), a Michigan corporation and a major American manufacturer of dictating equipment, with creating an international monopoly in dictating equipment, allocating territories, and refusing to deal with Packer, all in violation of the antitrust laws. Treble-damages were sought.

Gutor moved for summary judgment, which the district court granted. We affirm as to the action for the price of goods sold and delivered, but reverse and remand on both of Packer’s counterclaims.

From affidavits and the results of discovery proceedings, the following appears: On July 1, 1964, the Raymond Packer Company (the Packer firm), a proprietorship and the predecessor of Packer, entered into a written contract (the Agreement) with Direma Ltd. (Direma), a Swiss corporation which then manufactured and controlled the rights to Ultravox dictating machines. Described therein as agents, the Packer firm was to be Direma’s sole outlet and distributor in the United States. The Packer firm bound itself not to deal in competing products, to serve Direma faithfully as agents, to endeavor to extend the sale of the machines, and not to sell outside the United States. The Agreement automatically renewed itself for three year periods, prohibited assignment without written consent,, provided for termination on one month’s notice for default in observance of any of its terms, provided for damages for breach, and specified that the Agreement would be construed in accordance with Swiss law and that all “disputes arising between the contracting parties” would be referred to arbitration in Zurich.

In February, 1965, Direma sold its Ul-travox manufacturing, trademark and marketing rights to Gutor. The Packer firm did not grant formal permission to transfer the rights under the Agreement, but in December, 1964, Direma’s managing director advised Mr. Packer of the impending sale, and Mr. Packer did not object. In February Gutor itself notified the Packer firm that it would henceforth transact Ultravox business in Direma’s stead. It invited the Packer firm’s continued “close contact”. Thereafter, without complaint, the Packer firm bought Ultravox products from Gutor. In May, 1965, responding to a letter from the Packer firm Gutor wrote confirming “herewith that you have been entrusted with our agency in July 1964 and that you are the exclusive and only importer of our dictating equipment for the United States.” Gutor directed a potential customer to “our own agents in your territory”, to wit the Packer firm, and treated Packer as its exclusive agent until March, 1968.

In December, 1965, Gutor wrote Packer thanking it for its efforts and for sending an employee to its location in Switzerland for vocational training. Gutor went on,

“In view of the fact that in spite of your efforts you did not succeed in importing the 2700 machines, fixed in our agency agreement, we would like to discuss all questions which might contribute to achieve the fixed number of minimum 3600 dictating machines for 1966.” [Emphasis supplied.]

The letter referred to an addendum to the 1964 Agreement binding the Packer firm to purchase at least 700 machines in 1964, 2700 in 1965, and 3600 in 1966 and thereafter (subject to adjustment). Packer in fact bought only 342 in 1964, 1150 in 1965, 2080 in 1966 and 503 in 1967.

On October 25, 1967, Packer wrote Gutor ordering 1000 Ultravox machines, stating that the terms of cost and payment were to be “the same as on our last purchase of one thousand machines,” Gutor thereafter shipped 500 machines, but Gutor’s Managing Director, Schmidt, while thanking Packer for the order stated that the terms would have to be “Whole amount payable without discount, against shipping documents, . . . ”

Packer registered strenuous disapproval of the proposed change. Gutor replied that “no other agent” had ever had such “rock bottom prices and terms”. Gutor chided Packer for failing to meet its sales “target”, and denied promising the terms Packer wanted.

Packer’s next letter, of December 9, voiced a fear that Gutor had become intransigent over terms because it was planning to replace Packer as its agent, and inquired why two new model Ultra-vox machines had been sent to the New York office of Royal Typewriter rather than to Packer. Packer said that it had in the past three weeks stopped advertising and decided not to hire two new salesmen. “You can understand that with no possible future, I have no interest”.

There was further recrimination and expostulation. Gutor elaborated upon Packer’s alleged failure to sell in adequate volume. It explained that the machines were in Royal’s office because Gutor might license Royal to manufacture in the United States. Meanwhile Packer, by letter of January 17, 1968, flatly declined to accept the machines, which had by then arrived, unless the terms were “as were stated on the purchase order and as previously”. Packer also demanded written assurance “as to the future”, stating that it had lost money, and blaming its low volume on defects in the machines.

On January 29, 1968, Gutor notified Packer that it reluctantly agreed to the terms of payment and Packer, without waiting for assurances, accepted delivery of the 500 machines. It did not, however, pay for them, and has refused payment to date.

Although Gutor never gave express assurances, as late as February 26, 1968, it continued to notify (with copy to Packer) persons making inquiry that Packer was its exclusive IJ-S. sales agent. It was, however, in secret negotiation with Dictaphone, and in March 1968 announced arrangements for Dictaphone to acquire Gutor’s Ultravox business. In its letter of March 20, 1968, to Packer enclosing an announcement circular, Gutor contrasted Packer’s 1968 plans to sell 3600 machines with its “meagre results” — 500 machines — in 1967. Nothing was said about the future of Packer’s agency, and Packer’s president states that he waited hopefully until May for word from Dictaphone. Thereafter, as a result of his own inquiries, he learned that Dictaphone had no plans to include Packer in its distribution network of an improved Ultravox line and declined, indeed, to supply even spare parts to Packer except at retail prices. Certain other Ultravox dealers abroad were, however, retained.

Dictaphone US has since that time been the sole Ultravox dealer in the United States. Neither Dictaphone, Dictaphone US, nor Gutor has sold any Ultravox machines or parts to Packer except as a retail customer. Dictaphone US solicited Packer's former dealers and customers, apparently using customer lists supplied by Packer to Gutor.

After it had become clear that Packer could not obtain machines or parts from Gutor or Dictaphone, Packer contacted Direma, which was still the Swiss distributor of Ultravox. Direma declined to supply any machines or parts on the ground that this would violate the territorial restrictions in, and lead to loss of, its own distributorship. Following this refusal Efrem A. Gordon, then attorney for Packer, wrote to Direma on September 5, 1968, claiming that Direma was still bound under the 1964 Agreement because assignment required written consent, which was never given, and that Direma would have to supply parts or be liable for breach.

On March 2, 1971, Gutor brought the instant action for the price of the 500 machines. Packer filed its answer and counterclaims for breach of the Agreement and antitrust violations. Summary judgment was entered for Gutor on all issues, and this appeal followed.

I

The district court correctly entered summary judgment against Packer for the price of the delivered machines. F. R.Civ.P. 56. Packer accepted them and was liable at the contract rate. M.G.L. c. 106, § 2-607(1).

In defense, Packer attempted to show that purchasing the machines was so bound up with the future of its U1-travox franchise that cancellation of the latter entitled Packer to withhold payment. The point is not entirely specious. Discontinuance of the distributorship might well have left Packer without incentive or means to sell and service the machines. Indeed, Packer might not have accepted them if it had known of Gutor’s concealed plans. However, after Packer learned that it was no longer an Ultravox distributor, it never took timely action to revoke acceptance and hold or dispose of the machines for Gutor’s account. §§ 2-608, 2-610. See §§ 2-602, 2-608, 2-604. Cf. § 2-701 (official comment); § 2-106(2) (official comment 2). Alternatively it never gave timely notice to Gutor of an election to offset damages allegedly stemming from the distributorship termination directly against Gutor’s claim for the -price. § 2-717; see § 2-714. By failing to take appropriate action Packer forfeited whatever right, or claim of right, it might have had under the Uniform Commercial Code to treat Gutor’s alleged breach as a defense to nonpayment.

Packer’s resort to § 2-609 is of no avail. It provides, in part, that

“When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.” [Emphasis supplied.]

The italicized words are fatal to Packer’s argument. Section 2-609 might have permitted Packer to discontinue marketing efforts until Gutor assured continuation of its agency. Packer might even have declined to accept the machines while waiting for assurances. But § 2-609 does not terminate liability to pay for goods once in hand; it merely authorizes an insecure party to withhold possibly costly advance performance when the agreed return is in doubt.

Packer’s final argument against Gutor’s recovery of the' price of the machines is that it should not be compelled to pay in Swiss currency or its equivalent as of the payment date. It contends that it should pay in the equivalent of Swiss currency valued as of February 19, 1968; when the contract was allegedly broken. Packer adds that the district court treated it unfairly by deciding the point without further hearing. This latter argument is frivolous. Gutor in its complaint requested recovery “in the amount of sFr. 161’625.00, or the equivalent therefor in United States dollars computed at the official exchange rate existing on the date of judgment .” Packer did not contest the price and terms. If Packer believed that damages should be computed as of some date prior to the date of judgment, it should have made the point before or at the hearing on the motion for summary judgment. After judgment, if it wished to pursue the matter, Packer should have timely moved to alter or amend the judgment under Rule 59(e).

Gutor relies on the rule that when a debt is payable in foreign currency in a foreign country the proper date of conversion is the judgment or payment date and not the date on which the obligation arose. Deutsche Bank Filiale Nurnberg v. Humphrey, 272 U.S. 517, 519, 47 S.Ct. 166, 71 L.Ed. 383 (1926); Reissner v. Rogers, 107 U.S.App.D.C. 260, 276 F.2d S.Ct. 47, 5 L.Ed.2d 47 (1960). The 506, 511, cert. denied, 364 U.S. 816, 81 record is consistent with Gutor’s assertions and the court’s ruling. To the extent Packer was without later opportunity to persuade the court that payment was to be in the United States, thus possibly giving rise to a different rule, the fault was its own. We affirm the district court’s judgment on Gutor’s claim.

II

But the district court erred in its dismissal of Packer’s two counterclaims. Neither Gutor’s alleged breach of its obligations under the Agreement nor its alleged involvement in an antitrust conspiracy are proper defenses, as the district court correctly perceived. However, F.R.Civ.P. 13(c) provides that a counterclaim “may or may not diminish or defeat the recovery sought by the opposing party. It may claim relief exceeding in amount or different in kind from that sought in the pleading of the opposing party.” [Emphasis supplied.] Whatever its estimate of the defensive merits of the counterclaims, the court was obliged to view each as a separate cause of action, and to grant Packer its right to trial if there was “the slightest doubt as to the facts.” Peckham v. Ronrico Corp., 171 F.2d 653, 657 (1st Cir. 1948). Summary judgment is not to be a trial by affidavit. Walgren v. Howes, 482 F.2d 95, 98 (1st Cir. 1973J.

The counterclaim for breach of the 1964 Agreement presents the issues whether Direma’s rights and obligations were assigned by Direma to Gutor and, if so, whether Packer and Gutor became mutually bound by its terms. The outcome depends largely on inferences to be drawn from documents and the course of dealings between the parties. Packer is entitled to establish its side through testimony as well as documentary evidence. It was not bound to prove its case at the hearing on summary judgment. It only had to show, which it did, that it possibly had a case.

“On summary judgment the inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion.” United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).

Cf. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 472-473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). Although the Agreement provided that the rights and obligations of a contracting party could not be transferred without the written consent of the other contracting party, such a provision, at least under American law, is for the benefit of the obligor and may be waived by him, and a waiver may be inferred from the conduct of the parties. 4 A. Corbin, Contracts § 870 at 476; § 873 at 496 (1951). Packer’s uncomplaining acceptance of Gutor in place of Direma, the relationship that evolved .with Gutor in 1965 and thereafter, and the wording of certain letters lends support to Packer’s contentions of assignment of the Agreement and waiver of the “written consent” requirement. Moreover, the letters indicate at the very least that Gutor established and treated Packer as its exclusive U. S. agent, perhaps giving rise to an alternative claim, upon a theory of equitable estoppel or implied or quasi-contract, for any actual damages caused by unfair termination, if such should be found to have taken place. See, e. g., Robie v. Ofgant, 306 F.2d 656 (1st Cir. 1962); Jack’s Cookie Co. v. Brooks, 227 F.2d 935 (4th Cir. 1955), cert. denied, 351 U.S. 908, 76 S.Ct. 697, 100 L.Ed. 1443 (1956). 1 A. Corbin, Contracts, §§ 18, 19 (1963).

We find no merit in Gutor’s contention that the September 5, 1968, letter to Direma by Packer’s former attorney is a binding repudiation by Packer of any rights it may have against Gutor. The letter merely states legal contentions advanced by Packer’s attorney, at a time after the present controversy arose, when Packer, denied spare parts by Gutor and Dictaphone, was seeking assistance from any hopeful quarter. It does no more than assert Direma’s continued liability. Packer might be able to establish, in certain circumstances, both that Gutor was bound and Direma not yet released. 4 A. Corbin, Contracts §§ 870, 873, 890 (1951). It is not clear that the letter is entitled to any weight whatever. It is certainly not sufficient support for summary judgment against Packer’s counterclaim.

Should the district court determine that Gutor was bound under the Agreement, the question arises whether Packer’s claim must be submitted to a Swiss Court of Arbitration. Under the Agreement “[a] 11 disputes arising between the parties” are to be so “finally resolved”. But arbitration may be waived by the conduct of a demanding party. Ferber Co. v. Ondrick, 310 F.2d 462 (1st Cir. 1962), cert. denied, 373 U.S. 911, 83 S.Ct. 1300, 10 L.Ed.2d 412 (1963). While the “vigorous policy favoring arbitration” discourages a too-ready finding of waiver, Hilti, Inc. v. Oldach, 392 F.2d 368 (1st Cir. 1968), we think Gutor, having submitted unconditionally to the United States courts its claim for payment for machines sold to Packer under arrangements then in force between the two, may not now take advantage of the arbitration clause to urge judicial abstension to the prejudice of Packer. Cf. Dickstein v. duPont, 443 F.2d 783 (1st Cir. 1971); Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978, 989 (2d Cir. 1942).

Should the 1964 Agreement turn out to apply, Gutor’s claim for payment would itself appear to be arbitrable under the broad if somewhat indefinite language of the Agreement; the general policy favoring arbitration leads to a no-less inclusive reading of the arbitration clause. Submission of part of an arbitrable matter to a court waives the submittor’s right to insist upon arbitration of the remainder.

Moreover, practically and equitably, Packer’s claims based upon Gutor’s unceremonious termination of the distributorship cannot be divorced from the question of Gutor’s right to be paid. Fairness to Packer dictates that both questions — payment for the machines and damages, if any, for termination of the distributorship — be litigated in the same forum. If there is anything to Packer’s claim it would be unconscionable for Gutor to utilize our courts to collect its moneys while Packer is left to an uncertain Swiss remedy. Gutor brought suit in the District of Massachusetts and has insisted upon its right to relief here. Except for raising arbitration as a defense to Packer’s counterclaim, it has never itself proposed to arbitrate the matter of payment even were it to be found that Gutor was bound by the Agreement. While the question is a close one, we think that Gutor has waived its right to demand arbitration, and must be content to leave the fortunes of the entire litigation in the hands of the tribunal of its first choice. Cf. Ferber Co. v. Ondrick, 310 F.2d 462, 464-465 (1st Cir. 1962), cert. denied, 373 U.S. 911, 83 S.Ct. 1300, 10 L.Ed.2d 412 (1963). All related matters, including Packer’s possible claim in quasi-contract as well as its antitrust counterclaim, will be dealt with together in unified proceedings in one forum.

If upon remand, therefore, the court should decide that Gutor was bound by the Agreement (or by an equitable es-toppel or implied contract) all remaining issues, including but not limited to such questions as whether Gutor violated any legally binding undertaking, whether Packer was harmed, and the damages, if any, to which Packer is entitled, shall, unless the parties otherwise agree, be decided by the district court. The effect and meaning of the Agreement would apparently, under its terms, be construed in accordance with the laws of Switzerland, but we leave to the district court the conflict of law questions that may arise. Needless to say, our comments touching upon the merits are merely for the purposes of summary judgment; whether Packer prevails on either of its counterclaims will depend on what it is able to prove at trial and may turn, as well, on legal issues not here considered or resolved.

Ill

The district court ruled that summary judgment on Packer’s antitrust counterclaim was required because “antitrust violations, as a defense to a contract for goods sold and delivered, will not be . proper . . . unless the issue of the illegality of the contract is directly involved.” Its conclusion is cor-reet only if an antitrust cause of action stated in a permissive counterclaim is tantamount to an antitrust defense. See Kelly v. Kosuga, 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959).

The antitrust “defense” dealt with in Kelly was an allegation that the antitrust violation made the contract illegal and unenforceable. By such a defense, a party might maneuver an antitrust violation that cost him little or nothing into a right to avoid payment of a substantial debt. There is an overriding policy, in Justice Holmes’ phrase, of “preventing people from getting other people’s property for nothing when they purport to be buying it.” Continental Wall Paper Co. v. Louis Voight & Sons Co., 212 U.S. 227, 271, 29 S.Ct. 280, 296, 53 L.Ed. 486 (1909) (dissenting opinion). Only “where the judgment of the Court would itself be enforcing the precise conduct made unlawful by the Act” is an antitrust defense allowed. Kelly v. Kosuga, supra, 358 U.S. at 520, 79 S.Ct. at 432; Associated Press v. Taft-In-galls Corp., 340 F.2d 753 (6th Cir.), cert. denied, 382 U.S. 820, 86 S.Ct. 47, 15 L.Ed.2d 66 (1965).

On the other hand, a permissive counterclaim “is tantamount to an independent action, separately cognizable from the opposing party’s claim . . .” 3 J. Moore, Federal Practice U 13.23 (1972). The policy of the federal rules favors resolving all disputes between the parties in a single litigation, cf. Montecatini Edison, S.P.A. v. Ziegler, 486 F.2d 1279, 1282 (D.C.Cir.1973). While there has been a split of authority, with some courts approving and others rejecting the antitrust counterclaim, we think that the considerations expressed in Kelly and in our recent decision of Dickstein v. duPont, 443 F.2d 783 (1st Cir. 1971), do not justify outlawing antitrust counterclaims.

In Kelly the Court emphasized the undesirability of relieving from contractual obligations a party who may have sustained only inconsequential damage from the antitrust violation. That reasoning does not carry over to counterclaims, because the counterclaimant must prove damages just as in an independent action.

The Kelly Court also feared that allowing an antitrust violation to constitute a defense to a private contract would, by adding still another weapon to the arsenal, reach beyond what Congress would desire in a rational system of antitrust enforcement, see R. Posner, Economic Analysis of Law § 25.3 (1973). When Congress has delineated the remedies available, courts hesitate to create new ones. Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967). Again, however, this consideration is relevant only to antitrust defenses. A party bringing an antitrust counterclaim is requesting one of the remedies — treble damages for demonstrated loss — provided by Congress. The remedy is not enhanced by the claim’s status as counterclaim rather than a separate suit.

In Dickstein v. duPont, supra, we expressed concern not to “prolong and complicate” contract disputes, and not to discoúrage plaintiffs by the threat of complex and costly antitrust litigation. However, antitrust counterclaims need do neither. Contract litigation need be prolonged and complicated only if the antitrust claim is permitted as a defense by way of avoidance. When the antitrust cause is independently advanced as a counterclaim the contract action can proceed unimpeded, leaving the antitrust claim to be litigated in an appropriate fashion. Depending on circumstances, the court may order joint or separate trials and may advance the contract claim for immediate decision if it thinks best. Rules 13(i), 42(b) and 54(b). Similarly, although defendants may be able to make a credible threat to interpose a costly antitrust counterclaim, they may also threaten to file an independent action in antitrust if the other party brings an action in contract. The opportunity to bring the claim as a counterclaim does not usually increase the severity of the threat. In the instant case, however, the claim against Gutor was possible only because Gutor, a foreign entity, appeared in the jurisdiction to bring its suit on the contract. Even though in similar cases meritorious contract claims might be deterred, we believe that

“The plaintiff having, by his voluntary act in demanding justice from the defendant, submitted himself to the jurisdiction of the court, there is nothing arbitrary or unreasonable in treating him as being there for all purposes for which justice to the defendant requires his presence.”

Adam v. Saenger, 303 U.S. 59, 67-68, 58 S.Ct. 454, 458, 82 L.Ed. 649 (1938). See General Electric Co. v. Marvel Rare Metals Co., 287 U.S. 430, 53 S.Ct. 202, 77 L.Ed. 408 (1932).

Finally, while the courts should not create antitrust remedies not sanctioned by Congress, neither should they facilitate avoidance of the antitrust laws. Sobel, Antitrust Defenses to Contract Actions: A Question of Policy Priorities, 16 Antitrust Bull. 455 (1971). Packer appears to have stated a cause of action in antitrust but will be unable to litigate it except as a counterclaim. We see no reason to facilitate the collection of Gutor’s own claim while relieving Gutor of normal accountability for antitrust violations, if any. We hold that the antitrust counterclaim is maintainable.

Since the district court granted summary judgment on the antitrust counterclaim solely on its interpretation of Kelly, all alternative grounds of summary judgment remain open and we express no opinion on them.

Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. Pursuant to footnote 9, ante, enforcement of Gutor’s judgment is stayed until further order of the district court.

      . Paragraph 21 of the Agreement provided: “The Agreement hereby constituted shall be effective on first July 1964 and remain in force until 31st December 1967. It will he renewed automatically for successive periods of three years and can be terminated only if either of the contracting parties make default in the observance of any of the terms stipulated in the present Agreement . . . ”

      . Paragraph 18 of the Agreement provided: “The rights and obligations of the contracting parties resulting from the present Agreement may be transferred to third parties only with the official and written consent of the other contracting party.”

      . Paragraph 20 of the Agreement provided:
      “If any party violates any of the terms of the present Agreement, the party in opposition may give notice ... to terminate the Agreement . . . , and one month after the date of such notice the Agreement shall cease, provided notice is given immediately after the violation of the Agreement has been discovered.”

      . Paragraph 19 of the Agreement provided:
      “If either party makes default the other party will be entitled to claim a penalty for each violation .... In addition, the violated party [sic] will have the right to claim from the fallible party an indemnity for any damage . . . .” The “penalty” referred to could have been as high as the profit made from the violation, and the indemnity was to be an additional recovery.

      . Paragraph 23 of the Agreement provided: “This Agreement shall take effect and be construed in all respects in accordance with the laws of Switzerland, and in the event of any dispute or difference arising between the contracting parties as to the meaning or effect of this Agreement, the same shall be referred by the parties to Zurich, as the Seat of Jurisdiction. All disputes arising between the contracting parties will be finally resolved by a Court of Arbitration based on the Zurich Code of Civil Procedure.” [Emphasis deleted.]

      . On December 26, 1965, the Packer firm incorporated, transferring its assets to the present defendant, Packer. Neither Direma npr Gutor consented in writing to a transfer of rights under the Agreement.

      . These allowed credit, with the first 50% of the price due 20 days after delivery.

      . Packer first raised the issue on a motion, made 52 days after the entry of judgment, to reduce the amount of the supersedeas bond.

      . In view of our decision, infra, as to Packer’s counterclaims and in view of the possible difficulties Packer may face collecting any judgment on its counterclaims against Gutor, we grant leave to the district court to stay enforcement of the presently outstanding judgment on Gutor’s claim pending further proceedings. See F.R.Civ.P. 62(h). We are not to be understood as intimating that enforcement should necessarily be stayed, but leave the decision as to what is most just and equitable to the discretion of the district court.

      . As to the first counterclaim, in which Packer seeks damages for breach of the distributorship agreement, the court focussed upon its belief that the counterclaim was “a mere sham to avoid paying a lawful contract.” But assuming it was not a valid defense, the question remained whether the counterclaim stated an independent cause of action and whether there were material issues of fact as to which Packer was entitled to a trial. The court, of course, retained power under Rule 13 (i) to order separate trials and judgments so as to avoid inequitable delay, should that have been a problem.

      . Hussey Metal Division v. Lectromelt Furnace Division, 471 F.2d 556 (3d Cir. 1972) ; Coenen v. R. W. Pressprich & Co., Inc., 453 F.2d 1209 (2d Cir.), cert. denied, 406 U.S. 949, 92 S.Ct. 2045, 32 L.Ed.2d 337 (1972). Arbitrability is not destroyed by the one-sid-edness of the action for the price, see Trailways of New England, Inc. v. Amalgamated Ass’n of Street, Electric Ry. & Motor Coach Employees of America, AFL-CIO, Div. 1318, 353 F.2d 180 (1st Cir. 1965).

      . Hartford-Empire Co. v. Glenshaw Glass Co., 47 F.Supp. 711 (W.D.Pa.1942) ; American Car & Foundry Inv. Corp. v. Chandler-Groves Co., 2 F.R.D. 85 (E.D.Mich.1941) ; Brown Paper Mill Co. v. Agar Mfg. Corp., 1 F.R.D. 579 (S.D.N.Y.1941) ; Stewart-Warner Corp. v. Universal Lubricating Systems, Inc., 29 F.Supp. 846 (W.D.Pa.1939). Cf. Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376 (1944) (appears to allow private treble damages claim in counterclaim; permissive counterclaim not barred in a second suit.) All these cases preceded Kelly. For later cases see Lanier Business Products v. Graymar Co., 342 F.Supp. 1200, 1203 (D.Md. 1972) (not discussing Kelly) ; Alaska Barite Co. v. Freighters Inc., 54 F.R.D. 192, 195 (N.D.Cal.1972) (would not “extend” Kelly to counterclaims).

      . Ford Motor Co. v. Strickland, 302 F.Supp. 154 (S.D.Ga.1969) ; Barnsdall Refining Corp. v. Birnamwood Oil Co., 32 F.Supp. 314 (E.D.Wis.1940). Cf. Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 551, 22 S.Ct. 431, 46 L.Ed. 679 (1902).

      . Or if the parties demand a recalculation of the price, see Siegel v. Chicken Delight, Inc., 448 F.2d 43 (9th Cir. 1971), cert. denied, 405 U.S. 955, 92 S.Ct. 1172, 31 L.Ed.2d 232 (1972) ; Twin City Sportservice, Inc. v. Charles O. Finley & Co., Inc., 365 F.Supp. 235 (C.D.Cal.1972) (Mr. Justice Clark).

      . Packer alleges that Dictaphone’s acquisition of Ultravox rights eliminated Ultravox as a United States competitor of Dictaphone US; this appears to state a claim of attempting to monopolize and of decreasing competition by horizontal merger. Such claims may be tenable even though the market shares involved are extremely small. See Stanley Works v. FTC, 469 F.2d 498 (2d Cir. 1972), cert. denied 411 U.S. 928, 93 S.Ct. 2750, 37 L.Ed.2d 155 (1973). Packer has also presented a claim of concerted refusal to deal, a per se violation, see Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959), and of division of the market, usually illegal under United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed. 2d 1249 (1967) and United States v. Topco Associates, Inc., 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972). But cf. White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963). Conspiracies between American and foreign companies to divide markets, even though they involve foreign products, may violate our antitrust laws. Timkin Roller Bearing Co. v. United States, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951). Cf. Graham, Hermann & Marcus, Section 7 of the Clayton Act and Mergers Involving Foreign Interests, 23 Stan.L.Rev. 205 (1971) ; Comment, Antitrust Considerations in International Corporate Activity: Technical Assistance Agreements and Foreign Acquisitions, 12 B.C.Ind. & Com.L.Rev. 453 (1971) ; Department of Justice, Memorandum Concerning Antitrust & Foreign Commerce, 5 Trade Reg.Rep. If 50,129 (1972) ; Baker, Antitrust and the World Economy, 5 Trade Reg.Rep. If 50,161 (1973).

      . Although Packer brought a separate action against Dictaphone US, it is not clear that Packer will be able to obtain full relief, if it prevails, unless Gutor is also a party.

      . Even had Gutor not waived arbitration, the antitrust counterclaim would not be arbitrable. See the excellent discussion in Cobb v. Lewis, 488 F.2d 41, 47-50 (5th Cir. 1974).


source: Caselaw Access Project

author: KOELSCH, Circuit Judge: KILKENNY, Senior Circuit Judge

license: Public Domain

text:
    BEAR VALLEY MUTUAL WATER COMPANY, Plaintiff-Appellee, v. R. A. RIDDELL, District Director of Internal Revenue, Defendant-Appellant.
    No. 72-1800.
    United States Court of Appeals, Ninth Circuit.
    March 20, 1974.

      Ann E. Belanger, Atty. (argued), Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, U. S. Dept, of Justice, Washington, D. C., for defendant-appellant.
    Michael B. Arkin (argued), Thomas H. McPeters, of Surr & Hellyer, San Bernardino, Cal., for plaintiff-appellee.
    Before KOELSCH, BROWNING and KILKENNY, Circuit Judges.
   KOELSCH, Circuit Judge:

The government appeals from the granting of taxpayer’s motion to- amend judgment, Fed.R.Civ.P. 60(b)(6), the effect of which was to increase the amount of taxes which the government must refund beyond the amount already refunded pursuant to the original judgment.

The background of the present dispute is as follows :

Taxpayer is a nonprofit “mutual” irrigation company which distributes water free to its shareholders, covering the costs of capturing and distributing the water by other business operations, and by periodic “shareholder assessments.” The government assessed deficiencies against taxpayer for the fiscal years ending October 31 of 1958, 1959, and 1960, and collected approximately |31,000 in corporate income taxes allegedly due. Taxpayer filed claims for refund which were denied, and suit was brought to recover the overpayments.

The suit resulted in only a partial victory for the taxpayer. The district court rejected the government’s contention that the taxpayer realized income in distributing water to the shareholders, and agreed with the taxpayer that its expenses were properly deductible. However, the court held that shareholder assessments, which the taxpayer had characterized as nontaxable contributions to capital, were in part payments for the water distributed and therefore income to the taxpayer.

The district court adopted a formula for determining the proportion of the assessments includable in taxpayer’s income, redetermined taxpayer’s income in each of the disputed years, calculated the tax due, and entered judgment in taxpayer’s favor for the amounts overpaid. As a result of the court’s computations, the taxpayer was entitled to a refund of the entire amount paid for 1959, but to only a partial refund for 1958 and 1960, as the court’s calculations revealed net taxable income in those years.

The judgment was entered April 22, 1968, and was affirmed on June 9, 1970. Thereafter the taxpayer accepted the ordered refund and signed a satisfaction of judgment for the disputed years. However, on June 15, 1971, the taxpayer moved to amend the judgment to order refund of the taxes for 1958 and 1960 not refunded under the original judgment. The district court granted the motion and the government brought this appeal. We reverse.

The basis for the additional relief sought by taxpayer was the existence of net operating losses in 1953 and 1955 which because the years prior to 1953 were loss years, could be carried over to eliminate the remaining tax liability for 1958 and 1960. 26 U.S.C. § 172. The government opposed the amendment of judgment on the ground that taxpayer was precluded from recovery by its failure to assert the right to loss carryovers in its claim for refund or in the suit in district court.

As we agree with the government’s position, we do not reach the issue, which the parties have argued extensively, of whether Rule 60(b)(6) was used appropriately to amend the judgment in this case. The failure of the taxpayer to raise the issue of loss carryovers in his claim for refund precluded refund on that basis in the district court —we are certain that the district court could not grant relief to the taxpayer by amendment of the judgment which it could not appropriately grant in the original judgment.

“No suit can be maintained against the sovereign [for illegally collected taxes] unless it is strictly within the terms of the statute under which the sovereign has consented to be sued.” 10 Mertens, Law of Federal Income Taxation, § 58A.02, at 6. 28 U.S.C. § 1346 grants the district courts original jurisdiction to entertain suits for refund of illegally collected taxes. However, 26 U.S.C. § 7422(a) provides:

“(a) No Suit Prior to Filing Claim for Refund. — -No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected . until a claim for refund or credit has been duly filed with the Secretary or his delegate, according to the provisions of law in that regard, and the regulations of the Secretary or his delegate established in pursuance thereof.”

The applicable Treasury Regulation, 26 C.F.R. § 301.6402-2(b) provides:

“(b) Grounds set forth in claim. (1) No refund or credit will be allowed after the expiration of the statutory period of limitation applicable to the filing of a claim therefor except upon one or more of the grounds set forth in a claim filed before the expiration of such period. The claim must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof . . . .”

The long-established interpretation of these provisions is that the filing of a claim with the Internal Revenue Service is a jurisdictional prerequisite to a suit for refund, and, in the absence of a waiver by the government, the taxpayer cannot recover in its suit for refund on a different ground than that set forth in the claim for refund. Taxpayer’s claim for refund failed to include a right to a loss carryover from 1953 and 1955 to 1958 and 1960 among the grounds for contesting the tax liability, nor did it recite the facts necessary to support such a claim as required by § 301.6402-2(b). This failure is fatal to any subsequent recovery on that ground.

Taxpayer attempts to avoid the consequence of its noncompliance with § 7422(a) and § 301.6402-2(b) by contending that the issues raised by the claim for refund pertained to its entire tax history and of necessity had to be decided before taxpayer could know whether loss years existed in 1953 and 1955 which were available for carryover.

We are not persuaded. Taxpayer was aware when it filed claims for refund that under its theory of the law it had net operating losses in the years prior to 1955. The completion of the audit conducted throughout the litigation by the government some three years after judgment did not, as the taxpayer argues, “establish” the losses; the audit simply confirmed what the taxpayer thought to be the case from the outset. The fact that the losses were placed in some doubt because the district court did not accept taxpayer’s position on shareholder assessments does not relieve taxpayer of the responsibility of advancing all issues bearing on its tax liability for the disputed years in its claim for refund. Had taxpayer done so, the Service would have considered the loss carryovers in administratively reviewing the claim, as contemplated by § 7422(a), and might on that basis have granted refunds. If not, and the issue was litigated in the suit, the original judgment could have been held open until an audit, using the district court’s formula, determined whether taxpayer had losses in 1953 and 1955 and the amounts available for carryover. Taxpayer’s failure to follow the prescribed procedure, rather than an inevitable consequence of the nature of the issues and the government’s audit procedure, was simply a costly oversight. See Young v. United States, 203 F.2d 686 (8th Cir. 1953); Barry-Weh-miller Machine Co. v. Commissioner, 20 T.C. 705 (1953).

Finally, taxpayer contends that the government has waived its right to rely on the variance. We find no waiver in this case. The Court has made clear that in order to establish that the Service has waived compliance with the regulation’s requirement — that all grounds for refund be set out in the claim for refund—

“The showing should be unmistakable that the Commissioner has in fact seen fit to dispense with his formal requirements and to examine the merits of the claim. It is not enough that in some roundabout way the facts supporting the claim may have reached him. The Commissioner’s attention should have been focused on the merits of the particular dispute. The evidence should be clear that the Commissioner understood the specific claim that was made even though there was a departure from form in its submission.” Angelus Milling Co. v. Commissioner, 325 U.S. 293, 297-298, 65 S.Ct. 1162, 1165, 89 L.Ed. 1619 (1945).

Far from having the clear showing required by Angelus Milling, supra, we find no indication in the record, nor has the taxpayer pointed any out to us, that the Service focused attention on the merits of taxpayer’s claim of loss carryovers until after taxpayer’s motion to amend judgment. The Service then asserted the variance as a ground for denying the refund, thereby insisting on its right to compliance with the regulation. There is no evidence that the Service considered loss carryovers in originally denying the claim for refund, and the issue was not litigated. See Tucker v. Alexander, 275 U.S. 228, 48 S.Ct. 45, 72 L.Ed. 253 (1927).

This is not a situation such as that found in Brown v. United States, 427 F.2d 57 (9th Cir. 1970), where we held that the government, by interjecting a defense at trial different from that relied on in disallowing the claim, waived its right to object to the taxpayer’s response, which advanced a ground for recovery different from that set out in the claim for refund, but which was based on the government’s new position. Here the government’s position has been consistent throughout the entire litigation, and taxpayer has not been confronted with any surprises which would excuse compliance with the regulation.

The most that can be said for taxpayer’s contention of “waiver” is that the issues litigated affected taxpayer’s entire tax history, that the government was aware of that history, and that the Service’s knowledge of the tax law would necessarily lead it to an. awareness of the possible availability of loss' carryovers to the years in dispute. The government’s after-acquired awareness of the omitted basis for relief is insufficient to indicate an intent to waive compliance with the requirement of the regulation. The very point of the regulation is to promote orderly tax administration by requiring taxpayers to focus attention on the dispositive issues at the beginning of the process of administrative review, rather than requiring the Service to gradually sort out the legal basis for claims presented to it. We decline to undermine the purpose of the regulation by finding a waiver in the circumstances of this case. The Service is entitled to insist on compliance with the regulation. It has so insisted, and the additional refund should not have been granted.

The amended judgment entered December 16, 1971, is reversed.

KILKENNY, Senior Circuit Judge

(dissenting):

Since the government does not challenge the validity nor the amount of the refund awarded by the lower court, invited the litigation in the first instance and was at all times fully aware of the nature of appellee’s claims for net operating losses in prior years, I would hold that it is in no position to rely on formalities and would affirm on the authority of Tucker v. Alexander, 275 U.S. 228, 231, 48 S.Ct. 45, 72 L.Ed. 253 (1927), and Brown v. United States, 427 F.2d 57, 62 (CA 9 1970).

The lower court, in my opinion, did not abuse its discretion in amending the judgment under the provisions of Rule 60(b)(6), FRCivP.

      . The initial decision of the district court is reported at 283 F.Supp. 949 (C.D.Cal.1968), and this court’s affirmance is reported at 427 F.2d 713 (9th Cir. 1970).

      . United States v. Felt & Tarrant Co., 283 U.S. 269, 272, 51 S.Ct. 376, 75 L.Ed. 1025 (1931) ; Clement v. United States, 472 F.2d 776 (1st Cir. 1973) ; United States v. Freedman, 444 F.2d 1387 (9th Cir. 1971) ; Thompson v. United States, 308 F.2d 628, 634 (9th Cir. 1962) ; Nemours Corp. v. United States, 188 F.2d 745, 749 (3rd Cir. 1951).

      . Real Estate Title Co. v. United States, 309 U.S. 13, 60 S.Ct. 371, 84 L.Ed. 542 (1940) ; Tucker v. Alexander, 275 U.S. 228, 48 S.Ct. 45, 72 L.Ed. 253 (1927) ; Austin v. United States, 461 F.2d 733 (10th Cir. 1972) ; Bel v. United States, 452 F.2d 683, 695 (5th Cir. 1971) ; Stoller v. United States, 444 F.2d 1391 (5th Cir. 1971) ; Ladd v. Riddell, 309 F.2d 51, 54 (9th Cir. 1962) ; Scharpf v. United States, 157 F.Supp. 434 (D.Or.1956), aff’d, 250 F.2d 744 (9th Cir. 1957) ; Nem-ours Corp. v. United States, 188 F.2d 745, 750 (3rd Cir. 1951).

      . The grounds for refund stated in taxpayer’s claim for refund, on which it also relied in its suit in district court, were (a) that disallowed business expenses were properly deductible, (b) that shareholder assessments were nontaxable contributions to capital, (c) that taxpayer did not receive constructive irihome in distributing water, and (d) that taxpayer was not subject to an unrelated business income tax.

      . Taxpayer complains of the government’s refusal to conduct the audit on the basis of the district court’s decision until that decision was upheld by this court, thereby delaying the determination that taxpayer had loss years available for carryover. While we note that the figures and formula were equally available to taxpayer, the refusal is irrelevant because it in no way affected the dispositive issue, which was taxpayer’s failure to include the loss carryover ground in the claim for refund.

      . Recognizing that the purpose of the regulation is to inform the Commissioner of the basis for taxpayer’s claim and thereby expedite research into the merits of a claim,, the Court has held that the Commissioner may either insist on compliance with the regulation or waive compliance and inspect the merits of the claim. Having done so, the Commissioner may not thereafter rely on the variance in grounds to defend against a meritorious claim. See Angelus Milling Co. v. Commissioner, 325 U.S. 293, 65 S.Ct. 1162, 89 L.Ed. 1619 (1945) ; Tucker v. Alexander, 275 U.S. 228, 48 S.Ct. 45, 72 L.Ed. 253 (1927).

      . While we do not understand taxpayer to rely on the ground that the claim for refund was either formally or informally amended to include the omitted ground, we note in passing that there is nothing in the record to support such a conclusion, which would require that the amendment have occurred before the rejection of the original claims in November, 1964. See United States v. Garbutt Oil Co., 302 U.S. 523, 58 S.Ct. 320, 82 L.Ed. 405 (1938) ; United States v. Wells Fargo Bank, 393 F.2d 272, 275 (9th Cir. 1968).

      . Taxpayer contends that it comes within the Brown, rationale because the issues in this case were “injected” by the government in assessing a tax deficiency, thereby permitting taxpayer to respond with any basis for recovery available. Such an extension of the Brown, holding would render § 7422(a) and § 301.6402-2 (b) meaningless, and we decline to adopt it.


author: PER CURIAM:

text:
    COMPUTER PROPERTY CORPORATION, Plaintiff-Appellee, v. COLUMBIA DISTRIBUTING CORPORATION, Defendant-Appellant.
    No. 73-1599.
    United States Court of Appeals, Fourth Circuit.
    Argued Nov. 6, 1973.
    Decided March 26, 1974.

      Gene R. Ellison, Columbia, S. C. (Barnes, Austin & Ellison, Columbia, S. C., on brief), for defendant-appellant.
    H. Simmons Tate, Jr., Columbia, S. C. (Boyd, Knowlton, Tate & Finlay, Columbia, S. C., on brief), for plaintiff-appel-lee.
    Before HAYNSWORTH, Chief Judge, and WINTER and WIDENER, Circuit Judges.
   PER CURIAM:

This is a diversity case arising out of a contract for the lease of a computer in which the lessee defaulted and the lessor repossessed and later sold the equipment involved. The contract provided that it be construed in accordance with New Jersey law, to which the parties even now do not object; for liquidated damages consisting of accelerated rental payments until the end of the term upon default; for a credit to the lessee upon sale after default by the lessor for such part of the resale price as might be attributed to the period between the date of the sale and the end of the term; and for such additional damages upon default as may have resulted from the breach.

The district court awarded judgment to the plaintiff as follows:

Remainder of rental due $43,763.20

Interest on rental due 8,370.67

Value of missing parts 6,791.22

Cost of repairs 2,000.00

Attorneys’ fees (10%) 6,092.50

$67,017.59

The defendant appeals from that part of the judgment awarding accelerated rentals as liquidated damages, claiming it a penalty; from the award of attorneys’ fees; and from the action of the district court allowing it no credit under the contract on account of the sale by the lessor after repossession. Of course, if the accelerated rentals should fall, interest thereupon should likewise be reversed.

The district court held that the accelerated rentals as liquidated damages were not an unreasonable approximation of the lessor’s actual damages and loss of bargain, and that collection of these should not be denied as against a claim of penalty.

In affirming an award of payment of agreed upon accelerated monthly charges, greater than the minimum service charges, upon breach of a contract to supply bottled gas for a period of three years, the New Jersey court said:

“Parties to a contract may not fix a penalty for its breach. The settled rule in this state is that such contract is unlawful. Liquidated damages however are enforceable, and the intention of the parties will be carried out. The distinction between penalty and liquidated damages is to be tested by the reasonableness of the amount stipulated by the parties in the contract. If unconscionable, exorbitant or excessive under all the conditions and circumstances they are a penalty and not recoverable because the law limits recovery to indemnity from loss.” Suburban Gas Company v. Mollica, 131 N.J.L. 61, 34 A.2d 892 (1943).

Since the rentals here agreed upon as liquidated damages were not unreasonable, exorbitant, or excessive, we are of opinion their payment satisfies the rule expressed in Suburban Gas, supra. The general rule in New Jersey in such cases is that “. . . the agreement of the parties will be effectuated.” Wallis Iron Works v. Monmouth Park Association, 55 N.J.L. 132, 26 A. 140 (1893). “Their agreement will, however, be ascertained by considering, not only particular words in their contract, but the whole scope of their bargain, including the subject to which it relates.” 26 A. 140, 143.

The district court, in its written opinion, undertook just the analysis required by Wallis Iron Works and concluded that the “sum fixed is a reasonable approximation of CPC’s actual damages for the loss of its bargain.” With this conclusion, we are unable to disagree. We note parenthetically that the market for re-rental of the used computer was nonexistent, or at the very least very tenuous, thus bringing the case within the rule expressed in some New Jersey cases that liquidated damages agreed upon by contract may not be enforced unless actual damages are “uncertain in amount and not readily susceptible of proof.” Suburban Gas Company, supra, 34 A.2d p. 893. See also Westmount Country Club v. Kameny, 82 N.J.Super. 200, 197 A.2d 379 (1964), esp. p. 383.

In its determination that no part of the resale price of the computer should be credited to the lessee as “attributable to the period” between the date of sale and end of the term, the district court largely based its opinion on the fact that the resale price was less than the end of term book value, and that the projected end of term market value based on current sale price would be less than end of term book value. While the use of book value as evidence of value in ascertainment of damages may frequently not be a proper standard, its use here we do not believe to be reversible error, especially in the absence of any showing of end of term market value.

A clause of the lease provided that upon default the lessor could “[d]eclare due and payable such additional damages CPC may have suffered as a result of lessee’s breach.” The district court construed this clause as allowing attorneys’ fees to the plaintiff.

We do not agree. We are of opinion that the courts of New Jersey, if called upon, would not allow attorneys’ fees under the recited clause, the key words of which are “such additional damages.” Textileather Corp. v. American Mutual Liability Insurance Corp., 110 N.J.L. 483, 166 A. 214 (1933), is persuasive. In that case, an insurance policy required indemnity to the insured in different clauses for “liability imposed on him by law for damages on account of such injuries and for “all costs taxed against this employer in any legal proceeding.” These clauses were construed not to include attorneys’ fees. In Textileather, the New Jersey rule is stated that attorneys’ fees are not allowable against a party . . except ... as bound by his contract or as the statutes of the state provide.” 166 A. 214, 216. In Alexander’s Department Stores v. Arnold Constable Corp., 105 N.J.Super. 14, 250 A.2d 792 (1969), the court denied attorneys’ fees in a suit involving a lease which did not specifically provide for them. The court there said:

“It is settled law that attorneys’ fees are not cognizable as an item of damage in the same case in which they are incurred.” 250 A.2d 792, 802.

To the same effect is Liebeskind v. Metal Framed Aquarium Company, 58 N.J. Super. 504, 156 A.2d 701 (1959).

We are not persuaded, then, that the phrase “such additional damages,” in the absence in the lease of any reference to attorneys’ fees, entitled plaintiff to recover them. In New Jersey, as above recited, attorneys’ fees are not so cognizable as an item of damage.

The case will be remanded for entry of judgment for the plaintiff in an amount not to include attorneys’ fees.

Affirmed in part, reversed in part, and remanded.

      . Language of the lease applicable here to lessor’s rights and measure of damages in event of default follows :
      “16. Defaults of lessee.
      *3* (b) In any such event [default] CPC at its option, may declare lessee in default and
      (i) Declare due and payable without further notice as damages for breach and not as a penalty the entire amount of unpaid rentals for the System for the period ending on the first date as of which lessee could terminate this Agreement pursuant to Par. 4 hereof; and
      (ii) Take possession of and remove the System, using such reasonable force as may be necessary, and for such purpose enter on the premises where the same is located without liability, whereupon all rights of lessee in the same shall terminate.
      (iii) Declare due and payable such additional damages OPC may have suffered as a result of lessee’s breach.
      (c) In the event that OPO takes possession of the system pursuant to sub-section (b) (ii) of this Par. 16, OPO may sell or re-lease the system and the proceeds of any such sale or reletting shall be credited or refunded to the lessee to the extent of any amounts actually received by OPO attributable to the period between the date of consummation of such sale or effective date of such reletting and the first date as of which lessee could terminate this Agreement pursuant to Par. 4 hereof; provided, however, that such credit or refund shall not exceed the rental due from lessee during such period.


author: ADAMS, Circuit Judge:

text:
    GENERAL TEAMSTERS, CHAUFFEURS AND HELPERS, LOCAL UNION NO. 249, affiliated with International Brotherhood of Teamsters, Chauffeurs, Ware-housemen and Helpers of America, Appellant, v. BILL’S TRUCKING, INC., formerly known as Enick Trucking Inc.
    No. 73-1495.
    United States Court of Appeals, Third Circuit.
    Argued Nov. 29, 1973.
    Decided March 13, 1974.

      Frank P. G. Intrieri, Jubelirer, McKay, Pass & Intrieri, Pittsburgh, Pa., for appellant.
    Donald T. O’Connor, Randolph & O’Connor, Pittsburgh, Pa., for appellee.
    Before ADAMS and ROSENN, Circuit Judges, and SHERIDAN, District Judge.
   OPINION OF THE COURT

ADAMS, Circuit Judge:

The question to be resolved on this appeal is whether a collective bargaining agreement, entered into between a corporation and a union representing its employees, is necessarily terminated when all of the corporation’s capital stock is sold and the new owner then changes the name of the corporation. The district court, relying on NLRB v. Burns Intern. Security Services, Inc., dismissed the complaint on the ground that the labor agreement was so terminated, and the union has appealed.

Since the district court summarily dismissed the union’s complaint, we must view the facts in the light most favorable to the plaintiff union. In 1967, a collective bargaining contract was entered into by the General Teamsters Local Union (“the Union”) and Enick Trucking, Inc. (“ETI”). That contract, by its terms, was to remain in force for a period that included January 19, 1972. ETI was a motor carrier, and prior to January 18, 1972, all of its issued and outstanding stock was owned by one Walter Enick.

By an agreement of sale dated January 18, 1972, Enick agreed to sell all of his stock in ETI to one William Fiore, for cash. The sale was consummated on that same day, and Fiore thereafter transferred all the ETI stock to Diamond Excavating and Hauling, Inc. Fiore was the sole stockholder of Diamond. On the date Enick sold his ETI stock to Fiore, the only assets of ETI were certificates of public convenience issued by the Pennsylvania Public Utility Commission, several tractors and trailers, and a truck. The agreement of sale provided that all liabilities incurred by ETI prior to the January 18, 1972 closing were to be the responsibility of Enick.

Within 30 days of the sale of ETI stock to Fiore, the name of the corporation was changed to Bill’s Trucking, Inc. (“BTI”). BTI has engaged, since the sale, in the businesses of motor carriage, almost the identical business in which ETI was engaged.

The dispute in this case arises from the failure of BTI to retain in its employ nine truck drivers represented by the Union. These drivers had been employed by ETI, and the conditions of their employment were set forth in the collective bargaining contract between the Union and ETI. According to the complaint, the drivers were discharged by BTI on January 19, 1972, the day after the sale of ETI stock to Fiore.

The Union brought a breach of contract action against BTI, availing itself of the jurisdiction conferred by section 301 of the Labor-Management Relations Act (“LMRA”). The Union maintained that the collective bargaining contract between it and ETI survived the sale of the ETI stock to Fiore, that BTI thus was bound by that contract, and that the discharge of the nine drivers transgressed the terms of the contract. Accordingly, the Union sought damages for the allegedly wrongful discharge of the drivers.

BTI, besides controverting several of the factual allegations of the complaint, interposed a motion to dismiss. The district court, in dismissing the case, reasoned that since, under its view of Burns Security Services, supra, “a successor employer is not bound by the contract between the Union and its predecessor,” BTI was not obligated to honor the provisions of a collective bargaining agreement entered into by ETI and the Union. In so holding, the district court appears to have misapprehended the thrust of the Burns decision and, perhaps, the implications for this case of the labor law doctrine of “successorship.” Accordingly, we reverse.

Broadly stated, in the law of labor relations the successorship issue deals with the extent to which an employer is obligated to honor the legal relations established between another employer and a union. The question arises in various contexts, and no single formula for its resolution has been developed by the federal courts. The district court, in summarily rejecting the Union’s claim, relied exclusively on the Supreme Court’s recent treatment of the successorship concept in Burns Security Services, supra. As the Supreme Court emphasized, however, the decision in that ease was an exceedingly narrow one. The pronouncements laid down in Burns, therefore, can hardly be read to settle every successorship problem that may arise.

In Burns, Wackenhut, an employer, was under contract to provide security services at an airport. A union, the UPGW was certified as exclusive bargaining agent for the Wackenhut security employees, and negotiated a three-year collective bargaining agreement with Wackenhut. Wackenhut’s contract with the airport operator expired shortly thereafter, and, after competitive bidding, Burns Security Services was awarded the security contract by the airport operator. Burns retained 27 of the 42 Wackenhut employees at the airport, but declined to honor the terms of the UPGW collective agreement with respect to the retained employees. In addition, Burns refused to recognize or bargain with the UPGW.

The UPGW filed an unfair labor practice complaint with the Board pursuant to section 8 of the National Labor Relations Act, alleging that Burns was a “successor” to Wackenhut, and that therefore its refusal to honor the terms of the collective agreement, or to recognize and bargain with the Union, constituted unfair labor practices under section 8 of the National Labor Relations Act (“NLRA”).

After proceedings before the NLRB and in the court of appeals, the Supreme Court held, first, that Burns was obligated to recognize and bargain with the UPGW. This holding was predicated upon the fact that NLRB had certified the bargaining unit as an appropriate one, and the fact that Burns had retained a majority of the old Wackenhut employees.

The Supreme Court then focused upon the other question in dispute: whether Burns “was bound to observe the substantive terms of the collective-bargaining contract that the union had negotiated with Waekenhut and to which Burns had in no way agreed.”The Court, relying principally on the history and evident purpose of section 8(d) of the National Labor Relations Act, held that Burns was not bound by the terms of the UPGW-Wackenhut agreement. It stated that:

“[H]olding either the union or the new employer bound to the substantive terms of an old collective-bargaining contract may result in serious inequities.”

The district court here seized upon this holding in Bums, and magnified it into a sweeping interdiction against the enforcement of labor agreements against any putative “successor” employer. Analysis of the Burns opinion convinces us, however, that its significance is largely limited to the particular facts of that case and, in any event, that it is not controlling in the circumstances presented here.

Burns, it will be recalled, was an unfair labor practice case, not a suit under section 301 of the LMRA for breach of a labor agreement. The Supreme Court thus grounded its Burns decision, at least in part, on the policy voiced iñ section 8 of the National Labor Relations Act which expressly declines to “compel either party [to a labor negotiation] to agree to a proposal or require the making of a concession.” Section 8, of course, governs unfair labor practice proceedings, and thus the result in Bums may be viewed as following directly from the explicit statutory policy. The present proceeding, on the other hand, is not a section 8 case, and, though the policies embedded in that section may have some residual effect, they would not appear to be directly controlling in this breach of contract action.

Moreover, the prior and subsequent employers in Burns were, as the Supreme Court noted, entirely unrelated —there was no “succession” to the assets, stock or other corporate aspects of the prior employer. Indeed, even after Burns took over the security operation at the airport, both Burns and Wacken-hut continued as ongoing enterprises. These factual circumstances further limit the impact of Bums on the doctrine of successorship in general.

That there is no absolute bar to the enforcement of labor agreements against “successor” employers in section 301 actions, such as this, is amply illustrated by the decision in John Wiley and Sons, Inc. v. Livingston.

In Wiley a union brought an action pursuant to section 301 to compel arbitration under a collective bargaining agreement executed by a company which the defendant had acquired by merger. The Court, basing its decision in generous part on the strong national policy favoring arbitration, held that, in some circumstances, the terms of a predecessor’s labor agreement may be enforced against a successor employer in section 301 actions.

That the ramifications of Wiley survive Bums cannot be doubted. True, the Court in the latter case found no support in Wiley for the proposition that “Burns be treated under the collective-bargaining contract exactly as Wackenhut would have been if it had continued protecting the [airport].” But it was specifically emphasized in Bums that “Wiley arose in the context of a § 301 suit to compel arbitration, not in the context of an unfair labor practice proceeding where the Board is expressly limited by the provisions of § 8(d).”

Bums, then, cannot be read to foreclose absolutely the imposition upon a successor employer of the contract obligations entered into by its predecessor. The district court apparently thought otherwise, notwithstanding intimation by the Bums Court that a contract may survive “in a variety of circumstances involving a merger, stock acquisition, reorganization, or assets purchase. . ”

The district court’s misapprehension of the force of Bums led, understandably, to its. belief that, regardless of what might be proved at trial, the Union could not enforce against BTI its contract with ETI. Wiley and other cases seem to weigh in favor of remanding this case for a trial to determine first, whether BTI was, in fact, the same corporation with which the Union had a contract or, if not, whether there nonetheless existed such “substantial continuity of identity in the business enterprise” before and after the sale to Fiore that the terms of the contract may appropriately be deemed to have weathered that sale.

The Union’s pleadings and affidavits indicate that BTI, far from being a distinct corporate entity, was the “same corporation” as ETI. Were the district court to find, after considering the evidence, that such absolute identity of business enterprise existed, both our national labor law and general corporate law — and perhaps plain common sense —would require the enforcement against BTI of the Union-ETI contract. Should the district court determine that BTI was not the “same” corporation as ETI, the doctrine of sueeessorship, properly applied, may still require the imposition upon BTI of the contract terms.

In Golden State Bottling Co. v. NLRB decided after Burns, the Supreme Court noted that:

“When a new employer . . . has acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor’s business operations, those employees who have been retained will understandably view their job situations as unaltered.”

Likewise, when one person simply purchases all the capital stock of a company with outstanding labor contract obligations, the employees of the purchased company will naturally view their “job situations as unaltered.” In such a case — where an absolute identity or a “substantial continuity” of the business enterprises exists — those employees, except in unusual circumstances, may well be entitled to the contractual benefits of their pact with the prior employer.

The possible consequences of a contrary view could have disturbing implications. For example, an employer dissatisfied with the terms of a validly negotiated labor agreement might seek to avoid them by a sale of his business to a third party, in effect working a unilateral termination of the employees’ contract rights. This Court and other courts, aware of such possibility, have consistently held, in breach of contract cases under section 301, that a finding of “substantial continuity” may warrant the conclusion that a successor is bound by the terms of a prior employer’s labor contract.

In United Steelworkers v. Reliance Universal, Inc., a section 301 action brought by a union, this Court held that a collective bargaining agreement be- ' tween a union and an employer “remained the basic charter of labor relations,” as against a successor employer. The groundwork of the holding in Reliance was furnished by the fact that, after the sale of a plant to the successor, the business operation “continued without significant change.” Moreover, the Court imposed contractual obligations on the successor in the face of a provision in the agreement of sale that the “Buyer shall not assume any obligation of the . seller under any collective bargaining agreement. . . .”

The Ninth Circuit has consistently honored the principle that, in section 301 actions, a substantial continuity of business enterprise may justify the imposition of contract terms upon a successor employer. Thus in Wackenhut Corp. v. Int’l. Union, United Plant Guard Workers, there was enforced against a successor an arbitration provision negotiated by the prior employer, whose business and assets had been purchased by the successor. Likewise, in Teamsters, Chauffeurs, Warehousemen and Helpers v. Billington, another 301 case, the Ninth Circuit held a corporation bound to the labor contract of its predecessor, a sole proprietorship whose assets had been bought by the corporation.

These cases, read in the illumination provided by Wiley, Golden State Bottling, and the Supreme Court’s admonition that Bums be construed narrowly, convince us that the district court erred in holding that the Union could not conceivably prove a set of facts that would justify the imposition upon BTI of some or all of ETI’s labor obligations. The Union’s allegations, taken together, assert facts which, if found at trial to be true, indicate that ETI was in reality the same corporation with which the Union had a contract, or that BTI at least represented a “substantial continuity” of business enterprise from ETI to BTI. These factual circumstances, in a section 301 suit for breach of contract, would be sufficient foundation for a conclusion that the discharged drivers may recover whatever damages the contract terms provide.

This is not to suggest, of course, that in every case a successor employer may properly be held to the provisions of his predecessor’s labor contract. Thus, for example where a manufacturing company acquires the assets of another company, intending to put them to use in an entirely new enterprise, it might be inappropriate to bind the acquirer to contracts negotiated with unions whose members’ skills are of no utility in the new industry. But where, as here alleged, there is a simple purchase of stock, followed only by a change in corporate name and some minor changes in business operations, the policies of our national labor law weigh heavily in favor of a doctrine that preserves intact the employees’ bargained-for rights and duties, or at least a portion of them. Moreover, enjoyment of the fruits of the collective bargaining process — a surcease of industrial strife, the unimpeded flow of commerce— should not be made to turn on the wooden concept that labor contracts are terminated by any change in corporate identity, no matter how slight and insubstantial.

Summary judgment under Rule 56, Federal Rules of Civil Procedure, is available only when no genuine issue of material fact remains in a litigation.* Here, it remains to be decided whether there existed an identity or continuity of enterprise between ETI and BTI. Such determination may be made only after a hearing to determine the pertinent facts of this case.

Accordingly, the judgment of the district court will be reversed, and the case remanded for treatment consistent with this opinion.

      . 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972).

      . The district court treated the motion to dismiss as a motion for summary judgment.

      . The terms of the agreement were contained in the National Master Freight Agreement and the Local Cartage Supplement Agreement of the Teamsters Joint Council No. 40, Freight Division. Both of these agreements became effective on April 1, 1967.

      . The agreement provided, inter alia, that it “shall be binding upon the parties hereto, their successors, administrators, executors and assigns.”

      . BTI alleges that it offered employment to the nine drivers, but not under the conditions and terms of the ETI-Union agreement ; that this offer was refused; and that, in any event, ETI discharged the nine drivers on January 18, 1972, prior to the sale of ETI stock to Fiore.

      . 29 U.S.C. § 185.
      The Union also brought unfair labor practice charges against BTI before the National Labor Relations Board, which dismissed the charges. BTI argues that this fact, together with the holding in Bums Security Services should preclude entertainment of this 301 action. This contention is without merit. Cf. Smith v. Evening News Ass’n, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962). Of even less force is BTI’s contention that the Board order entered against ETI, in another Board proceeding brought by the Union should bar any action by the Union against BTI under section 301.

      . “Successorship,” as a generic term, refers to that matrix of labor law doctrine that is called into play “where the identity of the employer changes after the employees have won officially recognized collective power to press their demands against their prior employer.” Slicker, A Reconsideration of the Doctrine of Employer Successorship — -A Step Toward a Rational Approach, 57 Minn. L.Rev. 1051 (1973).

      . For example, the issue in any given succes-sorship case may involve, inter alia: (1) the survival of the union’s status as exclusive bargaining agent of the former employees and the new employer’s duty to recognize and bargain with this union; or (2) the power of the National Labor Relations Board to order the new employer to remedy unfair labor practices committed by the prior employer; or (3) the extent to which the new employer may be compelled to arbitrate under the former employer’s collective bargaining agreement; or (4) the extent to which the new employer is bound by the substantive provision of the collective agreement in effect at the time of succession. See Slicker, supra, at 1064. These questions may arise in the context of an unfair labor practice case, of a suit for breach of a labor agreement, or in an action to enforce an NLRB order.

      . Justice White, writing for the majority in Burns, noted that “Resolution [of that case] turns to a great extent on the precise facts involved. ...” 406 U.S. at 274, 92 S.Ct. at 1575.

      . Specifically, the union alleged violations of § 8(a)(1), (2) and (5), 29 U.S.C. § 158(a) (1), (2) and (5).

      . See 406 U.S. at 278-279, 92 S.Ct. 1571.

      . Id. at 282, 92 S.Ct. at 1579.

      . 29 U.S.C. § 158(d).

      . Id. at 288, 92 S.Ct. at 1582.

      . See Burns Security Services, supra, 406 U.S. at 282-283, 92 S.Ct. at 1579.

      . See Slicker, supra, at 1099.

      . Justice Rehnquist concurring and dissenting in Burns, observed that the majority “studiously avoids using the term ‘successor-ship’ . . 406 U.S. at 296, 92 S.Ct. at 1586, presumably because the case involved no corporate succession.

      . 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964).

      . See 376 U.S. at 549, 550, 84 S.Ct. 909; Cf. Gateway Coal Co. v. United Mine Workers of America, 414 U.S. 368, 94 S.Ct. 629, 38 L.Ed.2d 583 (1974) ; United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1961).

      . 376 U.S. at 548, 84 S.Ct. 909. Though the holding in Wiley was necessarily limited to establishing the successor’s contractual duty to arbitrate, the case, as a practical matter, implies more. This is manifest from the fact that the very question upon which the successor must, under Wiley, submit to arbitration, is the extent to which the other terms of the predecessor’s contract are binding on the successor. See Burns Security

        Services, supra, 406 U.S. at 285, 92 S.Ct. 1571; Slicker, supra, at 1098.

      . See Detroit Local Joint Executive Bd. v. Howard Johnson Co. Inc., 482 F.2d 489 (6th Cir. 1973), cert. granted, - U.S. -, 94 S.Ct. 1481, 39 L.Ed.2d 570 (1973).

      . 406 U.S. at 285, 92 S.Ct. at 1581.

      . Id. It should be noted here that at least one commentator has found the distinction drawn by the Burns Court between unfair labor practice cases and section 301 actions less than persuasive. See The Supreme Court, 1971 Term, 86 Harv.L.Rev. 1, 255 (1972). On the other hand, the same commentator points out that, under Burns and Wiley, “an arbitrator may order enforcement of the predecessor’s agreement against the successor employer but . . . the NLRB may not.” Id. at 256.

      . Id. at 291, 92 S.Ct. at 1584. The continuing vitality of Wiley is evidenced by the recent decision in Golden State Bottling Co. v. NLRB, 414 U.S. 168, 182, 94 S.Ct. 414, 424, 38 L.Ed.2d 388 (1973) : “We held [in Wiley] that the disappearance of the contracting corporation by merger did not necessarily terminate the rights of employees guaranteed by the agreement . . . .” (Emphasis added.)

      . John Wiley & Sons, Inc., supra, 376 U.S. at 551, 84 S.Ct. at 915.

      . Upon remand, the district court might determine that the facts of this case warrant enforcement against BTI of all, some, or none of the ETI-Union contract provisions. For example, if it is found that that contract was entered into by the Union with the specific understanding that its terms would not be deemed to survive a sale of the controlling interest in the corporation, it should not be enforced against BTI. Another issue of fact to be determined, of course is whether there existed a contract between the Union and ETI prior to the sale, and if so, what its terms were.

      . Cf. W. Fletcher, Private Corporations § 7121 (1961 ed).
      As a matter of corporate law, it would seem that a corporation cannot unilaterally terminate a labor agreement simply because a change in the capital ownership of the corporation occurs. In the context of federal labor law, however, “[s]tate law may be utilized so far as it is of aid in the development of correct principles or their application in a particular case, . . . but the law which ultimately results is Federal.” John Wiley & Sons, Inc. supra, 376 U.S. at 548, 84 S.Ct. at 914.

      . Semantically and analytically, the phrase “substantial continuity of identity” may be taken as inclusive of “absolute identity.” Thus, if BTI is found to be the “same” corporation as ETI, there would exist, ipso fac-to a “substantial continuity.”
      Of course, the fact that a transfer of a corporate entity takes the form of a sale of a controlling stock interest might not, in every case, justify the conclusion that there existed either a “substantial continuity” or an absolute identity as between the pre- and post-sale employers. Thus, for example, if a large diversified corporation acquired from a small corporation the latter’s sole asset, for use in a field unrelated to anything the small corporation had engaged in, and the acquisition was effected by a purchase of all the small corporation’s stock, there might be reason to conclude that the large corporation was not bound by labor contracts entered into by the acquiree.

      . 414 U.S. 168, 94 S.Ct. 414, 38 L.Ed.2d 388 (1973).

      . Id. at 183, 94 S.Ct. at 425.

      . The district court characterized the sale of stock from Enick to Eiore as a sale of assets. In light of the allegations of the complaint, we do not share, at least at this stage of the proceedings, the district court’s view of the transaction.

      . Similar to this hypothetical instance are the “alter ego” cases, in which a technical change in employer identity is undertaken in the former employer’s attempt to disguise its continuance and so mask an unlawful motive to avoid the commands of the national labor laws. Courts have not been misled by the disguised continuance, and have imposed labor obligations upon the “alter ego” enterprise. See, e.g., NLRB v. Southport Petroleum Co., 315 U.S. 100, 62 S.Ct. 452, 86 L.Ed. 718 (1942) ; NLRB v. Weirton Steel Co., 135 F.2d 494 (3d Cir. 1943).

      . Another possibility is that two merging companies, each under contract with separate unions, will seek to arrange the merger terms in such a way as to squeeze out the more powerful of the two unions, or to avoid the more disadvantageous contract.

      . 335 F.2d 891 (3d Cir. 1964).

      . Id. at 895.

      . Id. at 893. The non-assumption clause in the Union-ETI contract did not refer specifically to labor obligations.

      . 332 F.2d 954 (9th Cir. 1964).

      . As is alleged in this case, the successor in Wackenhut had declined, in the agreement of sale, to assume the obligations of its predecessor.

      . 402 F.2d 510 (9th Cir. 1968).

      . Some evidentiary factors to be considered in determining whether there exists substantial continuity of business enterprise are: (1) geographic continuity, i.e., whether the predecessor and successor are similar in terms of their geographic base of operations, and thus in terms of their employee “markets(2) similarity of supervisory personnel ; (3) continuity of business operation; (4) similarity of product or service; (5) changes in internal operating methods, i.e., machinery, production methods, inventory, trade name, customers, and methods of financing ; (6) form of succession, i.e., whether by sale of stock, assets, incorporation of a partnership, dissolution of a partnership, or merger. The lens through which these evidentiary factors should be scanned is, of course, the perspective of the employees. The basic inquiry is whether the change in the structure of the employing enterprise should be deemed to have significantly altered the employment relationship as perceived by the employees. See Slicker, supra, at 1054-1063.

      . See 10 Wright and Miller, Federal Practice and Procedure § 2712 (1973); Janek v. Cele-brezze, 336 F.2d 828, 834 (3d Cir. 1964).