Senor v. Bangor Mills, Inc.

William Shetzline bought nylon from various suppliers to meet the needs of his hosiery mills. Bangor Mills, Inc. (Bangor) (defendant), a large hosiery producer in frequent need of additional nylon, occasionally requested Shetzline’s help in finding additional nylon for Bangor’s use. Under the arrangement between Shetzline and Bangor, Shetzline would buy no more nylon than Bangor needed, pay no more than $10 per pound, pay for the nylon using his own cash, deliver the nylon to Bangor, and then reimburse himself from a Peoples Bank account that Bangor set up and funded for that purpose. Aside from fulfilling these occasional requests on Bangor’s behalf, there was no ongoing principal-agent relationship between Bangor and Shetzline. On his own and without Bangor’s request or authorization, Shetzline contracted to buy a batch of nylon for $11.35 per pound from a supplier named Senor (plaintiff). As the contract directed, Senor delivered the nylon to one of Shetzline’s mills, whereupon Shetzline paid Senor with a check drawn on the Peoples Bank account. Without Senor’s knowledge, and for an invoice price of only $10 per pound, Shetzline sent the nylon on to Bangor for Bangor’s use. After Shetzline’s check bounced, Senor learned for the first time of Shetzline’s occasional agency relationship with Bangor. Senor filed a federal diversity action to collect payment from Bangor. The district court entered judgment for Bangor. Senor appealed to the Third Circuit.