652 F.

2d 340
32 UCC Rep.Serv. 449

PUBLICKER INDUSTRIES, INC. and Continental Distilling

Corporation
v.
ROMAN CERAMICS CORPORATION, Publicker Industries,
Inc., Appellant.
No. 80-2378.

United States Court of Appeals,

Third Circuit.
Argued Feb. 24, 1981.
Decided June 26, 1981.

Harold Cramer, Anthony E. Creato (argued), Jeffrey Cooper, Mesirov,

Gelman, Jaffe, Cramer & Jamieson, Philadelphia, Pa., for appellant.
Thomas P. Preston (argued), Duane Morris & Hecksher, Philadelphia, Pa.,
Meyer J. Myer, Myer, New, Berlin & Braude, Chicago, Ill., for appellee.
Before ADAMS, ROSENN and HUNTER, Circuit Judges.
OPINION OF THE COURT
ROSENN, Circuit Judge.

This contract action presents the question whether the seller, Roman Ceramics
Corporation, must seek breach-of-contract relief from Continental Distilling
Corporation, with whom Roman shares a common state of incorporation, or
whether, on the contrary, Roman is entitled to full relief from Publicker
Industries, Inc., a party whose citizenship is diverse from Roman's. If the
former route is necessary, the case must be dismissed for lack of subject matter
jurisdiction. If, on the other hand, the latter course is permissible, then the case
is properly before the federal courts under 28 U.S.C. 1332 (1976), and we
must address the further question whether the district court awarded Roman the
proper measure of damages. Except for a slight modification in the amount of

damages awarded, we affirm the judgment of the district court.

2

Our inquiry must proceed within the confines of our decision in a prior appeal
of this same case. See Publicker Industries, Inc. v. Roman Ceramics Corp., 603
F.2d 1065 (3d Cir. 1979). Because the factual background of this case is set out
there in some detail, we recount the facts in abbreviated form. In January 1976
Roman, negotiating with individuals who were officials of both Continental and
its parent, Publicker, agreed to sell them 40,000 ceramic "liberty bells."1 In
return Roman was to receive $2.50 per bell. By September, Roman had become
unhappy with the buyers' failure to move ahead with the transaction, and failure
to provide shipping instructions to deliver the bells. 2 Publicker thereupon
entered into settlement negotiations with Roman and paid Roman $40,000 to be
applied on account of settlement of the January deal. Some time afterward,
however, Publicker called the settlement off and, together with Continental,
brought this diversity suit against Roman in federal district court for restitution
of the $40,000. Roman counterclaimed for the unpaid balance of the January
purchase price. Continental was ultimately dismissed from the suit due to its
and Roman's common Delaware citizenship. The district court then entered
judgment against Publicker.

I.
3

We begin with the liability question. The seeds of furor over this issue were
sown by the district court's brief recitation of the theory upon which it
originally held Publicker liable on the contract:

I will note for the record that thus far I have spoken of the plaintiffs (Publicker
and Continental) interchangeably, and I did that deliberately. I rule that on the
present record there is no basis for distinguishing between the two. There is
nothing in the record to show that they are indeed separate entities, that they
are not alter egos for each other. Because of the way they worked
interchangeably throughout this transaction, I treat them as one in the same; and
the finding on the counterclaim is against both plaintiffs.3

On appeal to this court we noted that there was no evidence to support

application of the traditional alter ego theory to pierce the corporate veil. 603
F.2d at 1069-70. However, we went on to acknowledge that a legal framework
for imposition of liability upon Publicker

6
might
be provided by the principles of agency, in that it might be concluded that
Publicker and Continental created mutual agencies in one another with respect to
their dealings with Roman....

Under the agency theory, ... it could be argued that Continental, acting both on
its own behalf and under apparent authority from Publicker, bound Publicker as
well as itself to the January contract with Roman.

Id. at 1070. However, because the district court made no findings under an
agency theory and because we could not discern any other ground upon which
an alter ego theory could be made applicable to this suit, we remanded "to
allow the trial judge to make the necessary findings and to explain the legal
underpinnings of his determination." Id. at 1071.

Upon remand the parties presented additional evidence to support their theories
on the proper scope of Publicker's liability under principles of agency. In light
of the additional evidence, the district court resolved the liability question in
Roman's favor. It found that the principal actors for the buyer in the transaction
were acting as officers, employees, and agents of Publicker rather than
Continental. In support of this conclusion, the district court noted that the
letters from the various buyer representatives comprising exhibit D-8 were
designed to give the reader "the clear impression that Publicker Industries was
the main force in this situation." Secondly, the court noted that when Roman
demanded some sort of action in response to buyer's nonperformance of the
January agreement, it was Publicker that initially shouldered the burden of
setting things straight. "(I)f Publicker didn't have an interest in this transaction
it doesn't make any sense at all in this abortive attempt to settle the
transaction."

10

The court then suggested that Publicker's interest in the transaction

encompassed the entire scope of the relief sought by Roman the expectation
that Roman was seeking to protect in this suit was identical, in economic
impact, to the expectation that Publicker had admittedly created in the aborted
settlement attempt. Finally, Judge Fullam noted that the original complaint filed
by Publicker and Continental for recovery of the $40,000 had expressly alleged
that it was Publicker that had agreed to buy the defective bottles, and that had
paid the $40,000 on account of the settlement. The complaint also, he noted,
had alleged that "Publicker and/or Continental were and are selling Liberty
Bells." The judge further observed that plaintiff's pre-trial memorandum of July
13, 1977 set forth that on two occasions, both plaintiffs agreed to buy the
defective bottles.

11

Based on these facts, the court concluded that "it was Publicker which was the
moving force throughout." It therefore held that Publicker was directly liable
under the contract, rendering it unnecessary "to go into the question of
agency."4 Alternatively, however, the court noted that "at the very least"

Publicker was acting as agent for its subsidiary, Continental, "that it had an
interest in the transaction and that therefore (it) is liable as principal." Publicker
appealed, chiefly on the ground, it seems, that if Continental could have been
held liable under the contract (and we tend to believe that it could have), this
would perforce exclude liability by Publicker.
12

The question to be decided now is not whether Continental could have been
sued on a contract for the purchase of 40,000 liberty bells from Roman. Rather,
the question is whether Publicker is liable under such an agreement, either
solely or jointly. Although the direct method of inquiry would be to ask whether
Publicker was a party to "the contract" (notwithstanding the absence of its name
on some of the documents that passed between the parties), we recognized on
the earlier appeal that Publicker's contract liability could be deduced as a matter
of law from the existence of a putative principal-agent relation between
Publicker and Continental. Under such a theory, the sort of findings ordinarily
bearing directly on the contract question might have been rendered unnecessary
in part. In their stead, the district court could have made findings upon which to
predicate a holding that Continental executed the contract for the bells as agent
for Publicker. From such a holding, Publicker's liability would have followed as
a matter of law.5 In addition, a further finding that Continental was not liable
would not have been inconsistent with such a finding of Publicker's liability.
"Unless otherwise agreed, a person making or purporting to make a contract
with another as agent for a disclosed principal does not become a party to the
contract." Restatement (Second) of Agency (Restatement) 320. See generally
Viso v. Werner, 471 Pa. 42, 369 A.2d 1185 (1977); Vernon D. Cox & Co. v.
Giles, 267 Pa.Super. 411, 406 A.2d 1107 (1979).6 However, the additional
findings of the district court revealed that Publicker's liability was not to be
neatly confined to such a theory.7 Thus, through the findings developed upon
remand, the district court resumed ab initio the liability inquiry, bypassing the
agency theory as an automatic basis for holding Publicker liable.

13

Before us now is solely the question whether the district court's findings
support its conclusion that Publicker bore direct liability on the January
contract.8 Even assuming that for some purposes Publicker is to be
characterized as Continental's agent, the opening proviso to Restatement 320
leads us to reject application of Publicker's "either-or" theory of contract
liability.9 Therefore, we cannot agree with Publicker when it argues that its
exclusion from any direct contractual undertaking is the "law of the case."
Obviously, an explicit written statement signed expressly on behalf of Publicker
would have made the case simple. However, evidence of a more circumstantial
nature is also legally sufficient to establish liability.10

14

Stripped of the contention that Continental's admitted liability negates

Publicker's liability, we believe that Publicker's argument reduces to a mere
disagreement with the district court's factual determinations. Although it is true
that findings of ultimate, rather than evidentiary, facts are reviewable free of the
clearly erroneous rule,11 Publicker has invoked no authority, and we have
discovered none, that would indicate that the district court applied an erroneous
legal analysis in arriving at its ultimate conclusion.12 We find ourselves in
agreement with the district court that Publicker's entire course of conduct
throughout the negotiation, renegotiation, and partial performance of the
aborted transaction manifested Publicker's agreement to bear direct liability in
the anticipated sale. Therefore we affirm the district court's holding that
Publicker is liable upon its own direct commitment under the contract.

II.
15

We turn to the issue of damages.13 At the conclusion of the first trial the district
court awarded Roman $2.50 per bottle, less offsetting sums received by Roman
from Publicker and the outside party purchasers. On the first appeal, we
concluded that the district court had apparently awarded Roman recovery of the
price under U.C.C. 2-709. However, we noted that the district court's failure
to decide whether Roman was unable to resell the bottles at a reasonable price
rendered a damage award under section 2-709 unsupportable. In addition, we
noted that the findings were similarly inadequate to support recovery under
U.C.C. 2-708(1) of the difference between the contract price and the market
price. Therefore, we directed that if on remand the district court were to
determine that Publicker was liable, then it should make findings necessary "to
support the calculation of damages under the appropriate provision of the
Uniform Commercial Code." 603 F.2d at 1073.

16

At the hearing on remand, Harold Roman testified that after offering the bells to
several potential buyers, he received an offer of 40 cents per bell for all 40,000.
Publicker, on the other hand, presented a witness who had conducted inventory
audits of Roman's warehouses in 1979 and 1980, and who testified that at that
time Roman did not, apparently, possess 40,000 bells and tops in finished form.
Publicker also presented witnesses who testified to sales of bells at prices
between $1.00 and $3.50 per bell. Based on this evidence, the district court
chose to award damages under Pa.Stat.Ann. tit. 12A, 2-708.14 It found that the
contract price was $2.50 per bottle, that the market price on the date of the
breach was 40 cents, "and therefore that damages should be calculated on the
basis of $2.10 per bottle." The court then calculated a total award of $84,000 of
which $40,000 had already been paid, leaving a balance of $44,000 plus
interest. Publicker now contends that the damage award (1) is calculated on the

basis of an unduly low market price, (2) is calculated on the basis of an unduly
high number of bells to be purchased under the contract, and (3) fails to account
for expenses saved as a result of the breach.
17

Initially, we must reject Publicker's contention as to market price. The evidence

on this issue was conflicting, but the most probative evidence of "the market
price at the time and place for tender" was clearly Roman's. Publicker's
witnesses produced evidence of transactions only long after the time for tender,
and for quantities vastly smaller than 40,000. Moreover, it was not even clear
whether the buyers in these transactions knew that the bells were defective.

18

Secondly, we must reject Publicker's contention that the contract was limited to
the sale of only those bells for which tops were available at the time of
Publicker's audit of Roman's inventory. The district court found an agreement to
purchase 40,000 bells. Publicker introduced no evidence of a contrary
agreement, but only a lesser number of bell tops in inventory in 1980. We fail to
see the relevance of Roman's apparent short-fall in tops several years after the
transaction was to take place, except as indicating perhaps a saved expense.

19

This brings us to Publicker's most serious contention, namely that the district
court failed to give any credit for expenses saved. The district court heard
conflicting evidence on this issue but concluded only that it was uncertain
"concerning the identification of these bottles with the contract" and uncertain
"as to whether it would have cost more than 40 cents per (bell) to resell them."
It is clear, however, that the 1,200 bells sold earlier by Roman to an outside
party for $3,250 were identified to the contract. Such a finding was made at the
end of the first trial, and was not challenged on remand. Furthermore, Roman's
right to sell any bells outside the sale to Publicker was a matter governed by the
contract between Roman and Publicker. Therefore we have no difficulty
holding, consistently with the opinions rendered in the first round of this
litigation, that the outside sale constituted a gain made possible only by the
buyer's breach,15 rather than a separate, unrelated sale comparable to that of a
"lost volume" seller.16 As a result, we will not uphold that portion of the
damage award that, in effect, compensates Roman doubly for the 1,200 sold
bottles.

20

On the other hand, Publicker would also have us award it credit for the
expenses supposedly saved by Roman's failure to conform all 40,000 bells to
the contract. The district court specifically refused to make findings on this
issue, saying only that it was "uncertain" as to the existence of any expenses
saved. However, it was settled at the end of the first trial that (a) Roman was
ready, willing and able to ship over 50,000 bells upon instructions from

Publicker, and (b) that Publicker gave Roman no clue as to the "finishing
touches" it wished Roman to apply to the bottles. Thus, Publicker's present
argument relating to expenses saved seems to us to be an attempt to exercise an
option that it may once have held, but that it chose to forego. True, the district
court had no doubt that, even in light of Publicker's failure to give additional
instructions, Roman could not now perform its end of the bargain without
incurring additional costs. However, we cannot tell whether the court saw
Roman's problem as one of antiquing the bells, of manufacturing more tops, or
of packing the bells in shipping cases.
21

We must reject the notion that Roman would have been obliged to antique the
bells, because Publicker never made it clear whether such antiquing was
necessary. As to the tops, we see no evidence in the record that sufficient tops
were not in Roman's possession in 1976, or what their cost would have been had
Roman been obliged to make them. In other words, the district court made no
findings as to how much additional expense would have been incurred by
Roman had it completed all work on the bells in 1976. The uncertainty on this
issue was engendered by Publicker's dilatory and erratic course of conduct.
Therefore, we believe that it would be unfair, at this stage, to saddle Roman
with the burden of quantifying the wholly speculative amount of expense saved
in 1976. We conclude that the district court's damage award represents a
considered determination that this element of the expense saved, if indeed it
was saved, was too speculative, and most likely too insignificant, to enter into
the damage award. Given the unusual circumstances presented by this
litigation, we will not disturb that determination.17

22

Finally, there was conflicting evidence on the packing expenses allegedly saved
by Roman. Harold Roman testified that it would have been unreasonable to
accept the outside offer of 40 cents per bell for all 40,000 bells because 40
cents would not even cover his packing costs. Publicker's counsel claimed by
way of rebuttal that at least 23,000 bells had already been packed at the time of
the 1980 inventory audit, thus relieving Roman of such expense upon resale.

23

In reality, it was necessary for Roman to pack the bottles for storage during the
five year period in which this dispute has ground along.18 Viewing the evidence
under the "clearly erroneous" standard, we see no reason to believe that Roman
incurred less cost in packing the bells for storage than in packing the bells for
shipment to Publicker. On the contrary, we are satisfied that the district court's
damage award is supportable (outside of its failure to credit Publicker for the
$3,259 received by Roman in outside sales, plus interest for the appropriate
period) notwithstanding its failure to deduct the wholly speculative elements of
finishing and packing charges now asserted by Publicker.

III.
24

Having decided to affirm the judgment of the district court in substantially all
respects, we must address Roman's request for damages under Fed.R.App.P.
38.19 At the first trial, the district court concluded that Publicker's entire course
of dealing between January 1976 and the time of the first trial evinced

a25carefully conceived but not very subtle plan to stick Roman Ceramics Corporation
with a lot of liberty bell bottles which the plaintiffs agreed to take and later reneged
on.
26

... They wanted to leave the defendant, Roman Ceramics Corporation, stuck
with these bottles until so late in the Bicentennial year that they would not be
able to dispose of them at decent prices elsewhere and then hoped to limit their
exposure to a very modest sum in order to protect their sales of their $20
whiskey bottles.

27

... (E)ven having done that at $2.50 per bottle, they didn't pay hoping that they
would be able to get the defendant in a position where the price would be
worked out still lower.

28

The history of this litigation and this additional appeal also raise serious
questions whether Publicker was motivated by chances of success or by a desire
to draw out the proceedings as long as possible. On the issue of Publicker's
liability, the district court noted after the second trial that

29
reviewing
the record as a whole, one is left with the distinct impression that this is a
case of button-button, who has got the button or which pod has the pea under it
insofar as the corporate set-up as between Publicker and Continental.20
30

Moreover, Publicker provided neither this court nor the district court with any
substantial legal arguments to justify the positions taken on this appeal,21 nor
with any probative factual data upon which to upset the district court's damage
award, perhaps the most vulnerable aspect of the award and the only one as to
which we believed Publicker might have had a colorable claim. We recognize
that in reducing the judgment against Publicker by over $3000, it is apparent
that not all aspects of its appeal were, strictly speaking, without merit.
However, we note that Publicker apparently did not request the modification
that we now make when it submitted its proposed order to the district court;
and we have now entertained Publicker's dilatory claim for relief on this issue
only because the issue was so fully and clearly disposed of in the first round of
litigation.

31

Therefore, it may be fairly argued that the "full record reveals little real excuse
for this second appeal." United States ex rel. Soda v. Montgomery, 269 F.2d
752, 755 (3d Cir. 1959). We are left with the lingering suspicion that Publicker
may have deliberately delayed the payment of the money owed under the
judgment because of the differential between the legal rate of interest and the
interest that may be earned in the money market or elsewhere. However, given
the uncertainties expressed by the district court with respect to credits claimed
by Publicker, and given the divergence between the theories set forth in the
earlier proceedings and the theory ultimately adopted by the district court, we
will deny Roman's claim for damages under Rule 38.

IV.
32

The decision of the district court will be affirmed, except insofar as it fails to
credit Publicker for the $3,259 received by Roman in outside sales of liberty
bells, plus the interest on that sum for the appropriate period. Costs taxed
against appellant.

The 40,000 bells to which we refer were "defective" in the sense that although
they were originally designed to serve as whiskey bottles, they leaked. Roman
had previously shipped Continental 200,000 sound liberty bell-bottles, of the
same design, for which Roman has yet to receive $9,864.30 in payment. See
n.13 infra

Roman had already sold some 1,200 bells to outside parties for $3,259. The
propriety of those sales was adjudicated on the first appeal and is not in issue
here. See 603 F.2d at 1071-72

Perhaps because the case had proceeded to trial and the merits had been
decided before Continental had been dismissed from the case, the parties and
the district court had not paid the same attention to theories of Publicker's
individual liability as they had to Roman's entitlement to recovery against at
least one of the two putative "buyers," Publicker and Continental

The court reached this conclusion notwithstanding its finding that Publicker had
given instructions to prepare "the actual contract documents to the extent that
there were contract documents, namely the invoices and shipping instructions
and so forth," to Continental, and that "Continental issued the checks in the
payment of the good bottles which were delivered."

See, e. g., Restatement (Second) of Agency (1958) (hereinafter cited as

Restatement):

 149. Written Contracts Not Containing Principal's Name

A disclosed or partially disclosed principal is subject to liability upon an
authorized contract in writing, if not negotiable or sealed, although it purports to
be the contract of the agent, unless the principal is excluded as a party by the
terms of the instrument or by the agreement of the parties.
159. Apparent Authority
A disclosed or partially disclosed principal is subject to liability upon contracts
made by an agent acting within his apparent authority if made in proper form
and with the understanding that the apparent principal is a party. The rules as to
the liability of a principal for authorized acts, are applicable to unauthorized
acts which are apparently authorized.
6

Due to the parties' failure to raise any conflict of laws question, we apply the
substantive law of the forum (Pennsylvania) on the liability issue as well as the
damages issue. See, e. g., Montgomery Ward & Co. v. Pacific Indem. Co., 557
F.2d 51, 58 n.11 (3d Cir. 1977)

That is not to say that the evidence adduced on remand was insufficient to
support a finding that Publicker created "apparent authority" in Continental to
act as its agent in purchasing the bells from Roman. Other courts have noted,
when faced with claims that a subsidiary acted as its parent's agent, that
"agency control may be easier to establish when a parent-subsidiary
relationship is involved." Beary v. Norton-Simon, Inc., 479 F.Supp. 812, 815
(W.D.Pa.1979) (citing Wells Fargo & Co. v. Wells Fargo Express Co., 556
F.2d 406, 419 (9th Cir. 1977)). Furthermore, they have apparently applied this
principle independently of the separate inquiry whether to pierce the corporate
veil under the "alter ego" theory of corporate ownership. 556 F.2d at 420 n.13
However, it seems that the district court simply found it unnecessary to make
findings relating to Continental's "apparent authority."

Publicker does not contend that the district court's findings of fact were "clearly
erroneous."

Accord, Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 492 (5th Cir.
1974); B & M Homes, Inc. v. Hogan, 376 So.2d 667, 676 (Ala.1979); Russello
v. Mori, 153 Cal.App.2d 828, 315 P.2d 343, 346 (1957); Thilman & Co. v.
Esposito, 87 Ill.App.3d 289, 42 Ill.Dec. 305, 408 N.E.2d 1014, 1020 (1980);
Clark Advertising Agency, Inc. v. Avco Broadcasting Corp., 383 N.E.2d 353,
355 & n.2 (Ind.App.1978); Looman Realty Corp. v. Broad St. Nat'l Bank, 32
N.J. 461, 161 A.2d 247, 255 (1960); Roberts, Walsh & Co. v. Trugman, 109

N.J.Super. 594, 264 A.2d 237, 239 (App.Div.1970); Simmons v. Cherry, 43

N.C.App. 499, 259 S.E.2d 410 (1979); Kalberg v. Gilpin Co., 279 S.W.2d 177,
181 (Mo.App.1955)
10

For instance, "(t)he inference that the agent is not a party to a contract may be
overcome" on the basis of evidence "that the other party declared that he did
not care who the principal was or that he was satisfied with the credit of the
agent." Restatement 320, Comment c. Accord, Kiska v. Rosen, 181 Pa.Super.
506, 124 A.2d 468, 469-70 (1956) ("A person contracting as an agent will be
liable, whether he is known to be an agent or not, in all cases where he ...
voluntarily incurs a personal responsibility either expressed or implied.");
Western Cas. & Sur. Co. v. Bauman Ins. Agency, Inc., 81 Ill.App.3d 485, 36
Ill.Dec. 773, 401 N.E.2d 614, 615-16 (1980) ("An agent may expressly agree to
be personally bound or it may be inferred by implication reasonably drawn
from all the facts and circumstances in evidence."); Simmons v. Cherry, 259
S.E.2d at 412; Kalberg v. Gilpin Co., 279 S.W.2d at 181 (exception to general
rule "where the contract or circumstances of the transaction discloses a mutual
intention to impose a personal responsibility on the agent")

11

E.g., Joseph Lupowitz Sons, Inc. v. Commissioner, 497 F.2d 862, 865 (3d Cir.
1974)

12

Indeed, Pennsylvania courts have held an agent bound on a contract where

evidence of the agent's personal undertaking was much slimmer than it is here.
See Darlington Brick & Clay Prods. Co. v. Aino, 225 Pa.Super. 186, 310 A.2d
401 (1973); cf. Weimer v. Bockel, 128 Pa.Super. 385, 194 A. 318 (1937)
(holding officer-stockholder liable on a contract for services rendered on behalf
of the corporation)

13

Our discussion will relate solely to the damages for Publicker's repudiation of
its agreement to pay for the 40,000 "defective" bells. See n.1 supra. Publicker
was also held liable, at the end of the original trial, on a claim of $9,864.30 for
the balance due on open account for the "sound" bells. That award was not
challenged by Publicker at any time subsequent to the first trial except on the
(erroneous) theory that Publicker could not be held liable on an agreement to
purchase liberty bells. As we have rejected that theory in Part I supra, and as
Publicker has offered nothing to distinguish its liability to pay for the "sound"
bells from its liability to pay for the "defective" bells (and we can certainly
discern no meaningful distinction on this record), we affirm that part of the
district court order awarding Roman judgment, with interest, on the open book
account

14

This section was repealed effective January 1, 1980, and replaced by a

substantially similar section, 13 Pa.Cons.Stat.Ann. 2708 (Purdon Supp.1980)

15

5 A. Corbin, Contracts 1041 (1964); See Restatement (Second) of Contracts

361, Comment d, at 33 (Tent.Draft No. 14, 1979) ("If the injured party avoids
further loss by making substitute arrangements for the use of his resources that
are no longer needed to perform the contract, the net profit from such
arrangements is also subtracted."); Buono Sales, Inc. v. Chrysler Motors Corp.,
449 F.2d 715, 720 (3d Cir. 1971); Burks v. Sinclair Ref. Co., 183 F.2d 239,
243-44 (3d Cir. 1950)

16

See generally Restatement (Second) of Contracts 361, Comment f, at 38

(Tent.Draft No. 14, 1979); Famous Knitwear Corp. v. Drug Fair, Inc., 493 F.2d
251, 254 n.5 (4th Cir. 1974)

17

Our decision on this issue is not in any way intended to indicate a general rule
for the allocation of the burden of proof on questions of expenses saved under
U.C.C. 2-708(1). Cf. Annot., 17 A.L.R.2d 968, 972 (1951)

18

The district court denied Roman's claim for storage charges, believing that it
would have been "inconsistent with the terms of the remand to permit this new
issue to be raised and litigated at this late date." Arguably, some of the charges
incident to storage were "incidental damages" for which findings could have
been made, pursuant to the terms of our remand, under U.C.C. 2-708(1).
However, we agree with the district court that at this late date we ought not to
begin entertaining arguments on factual questions of damage that were totally
ignored by the parties at the time of the original trial. By the same token, it
would be unfair to Roman to turn around and take the opposite view with
respect to Publicker's new claims on expenses saved

19

Rule 38. Damages for Delay. If a court of appeals shall determine that an
appeal is frivolous, it may award just damages and single or double costs to the
appellee

20

Cf. Fluoro Elec. Corp. v. Branford Assocs., 489 F.2d 320, 326 (2d Cir. 1973)
(awarding Rule 38 damages after three appeals in which there was no pretense
to any ground for appeal other than the claim that the judgment was against the
wrong entity)

21

Cf. Mid-Jersey Nat'l Bank v. Fidelity Mortgage Investors, 518 F.2d 640, 642
n.1 (3d Cir. 1975); Babcock & Wilcox Co. v. Foster Wheeler Corp., 432 F.2d
385, 388 (3d Cir. 1970), cert. denied, 401 U.S. 938, 91 S.Ct. 930, 28 L.Ed.2d
217 (1971). In each of these cases, the court denied Rule 38 damages.
However, in each case, the court was presented with credible legal arguments
for overturning the decision of the district court