discussing retainage. The Hirsch executives described the meeting as a "missionary type" meeting through which Enright hoped to regain an old customer.
In September of 1980 Enright sent a typed price list to Hirsch which listed its refining charges as (1) refining charge; (2) cents-off charge; and (3) a returnable charge. The price list did not list a retainage charge nor did it state anywhere that such a charge would be made. In light of this price list and the above discussed testimony, I find that Enright did not disclose, and Hirsch was not aware of, any retainage fees charged by Enright for refining services.
Hirsch sent a shipment of ten and fourteen-karat gold scrap to Enright on September 18, 1980. In addition to other charges, Enright retained 2% of the fine gold and 5% of the fine silver in that shipment. A report letter was sent to Hirsch on October 17, 1980, but due to the mixture of ten and fourteen-karat scrap in the shipment no calculation could be made to confirm the report. A second shipment was sent to defendant on October 27, 1980. This shipment contained only fourteen-karat-gold scrap and was also charged a retainage fee. It is noted that the report letters listed contents after retainage was deducted but did not indicate that the deduction had been made. After receiving a report letter dated November 24, 1980, Hirsch compared its expected return to what it actually received and confronted Enright with its questions. At that point Enright explained that the discrepancy was due to its retainage fee. Thereafter, Hirsch brought this suit seeking to recover the amounts retained by defendant. The parties have stipulated that the amount of $98,979.65 represents the retainage charged by Enright for the 1980 shipments.
Examining first the 21 transactions which occurred between September 1976 and December 1977, this court finds that the assessment of a retainage fee constituted a breach of the oral contract between the parties. Hirsch had dealt with Enright for a number of years and had never been charged a retainage fee. This fee was imposed without notification and without the knowledge of Hirsch. Hirsch had not agreed to the imposition of this charge and, indeed, it had never been discussed as a potential part of the agreement between the parties. Therefore, I find that defendant breached its contract with Hirsch by assessing the retainage fee.
Under New Jersey law, the following elements must be proven to establish a prima facie case of fraudulent misrepresentation (1) a material misrepresentation of a presently existing or past fact; (2) knowledge of the falsity by the person making the misrepresentation; (3) intent that the misrepresentation be relied on; (4) reliance on the misrepresentation; and (5) damage to the party who relied on the misrepresentation. Jewish Center of Sussex County v. Whale, 86 N.J. 619, 624, 432 A.2d 521 (1981). Using these elements as the relevant criteria, I find that defendant fraudulently misrepresented its charges to Hirsch during the 1976 through 1977 period. During that period Hirsch acted on the presumption that Enright's charges had not changed since it had not been notified of any change. Enright's failure to disclose the retainage fee is a misrepresentation by omission. See -- Weintraub v. Krobatsch, 64 N.J. 445, 455, 317 A.2d 68 (1974). In addition, Enright acted affirmatively to conceal the assessment of the fee by listing the contents of the shipments in the report letters as the amount after deduction of retainage. By these acts Enright intended that Hirsch be deceived into sending gold scrap to defendant for refining and that Hirsch be deceived into accepting in payment an amount less than that contracted for. Hirsch did rely on Enright's representations and omissions and was thereby harmed. Therefore, I find that Enright is liable to Hirsch for fraudulent misrepresentation as to the transactions occurring between September 1976 and December 1977.
Turning to the 1980 transactions, the contract analysis is basically the same as for the earlier contracts. Hirsch entered into oral contracts with Enright in 1980 based substantially on the typed price sheet supplied by Enright. These agreements did not contemplate the assessment of a retainage fee by defendant and, therefore, any such assessment constituted a breach of the contracts.
This court also finds that Enright is liable for fraudulent misrepresentation as to the 1980 transactions. Enright's misrepresentation was one of omission rather than of commission. By failing to disclose its retainage fee to Hirsch either at the 1978 meeting or through its price sheet, Enright intended to and did induce Hirsch into entering into the contracts for refining. Hirsch relied on these representations and has been damaged by that reliance. It is further noted that Enright continued its misrepresentation by not disclosing the true "contents" of the gold shipments in its report letter. Accordingly, I find Enright liable for fraudulent misrepresentation as to the 1980 transactions.
Defendant claims that plaintiff's recovery must be barred or limited by the statute of limitations as well as the statute of frauds. In a number of the transactions between the parties Hirsch elected to receive cash for the gold sent to Enright rather than have the gold returned. The parties agree that these transactions are covered by article 2 of the Uniform Commercial Code and defendant argues that U.C.C. provisions bar recovery for these transactions. N.J.S.A. 12A:2-725 provides in part
(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.
(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach.