Refrigeration Division
The Refrigeration Division based its case on the fact that the division not only could, but did, buy the
thermostatic control unit from a reliable outside supplier for $2.15. The division was sure that the Monson
Controls Corporation had capacity to produce all its requirements and would be happy to do so for $2.15 a
unit. Since patronage had been transferred to the Electric Motor Division only as a favor and to benefit the
company as a whole, the Refrigeration Division believed it was unjust to make it pay a higher price than it
would have paid if the division had not allowed the business to be taken inside the company.
As further evidence to support its case, the Refrigeration Division pointed to an agreement made
with the Electric Motor Division at the time it had agreed to purchase all its requirements of the thermostatic
control unit from that division. This agreement read, in part: “In the vent of a major pricing disparity, it is
agreed that further model requirements will be competitively sourced (i.e., sourced to the lowest bidder)”.
The Refrigeration Division stated that in light of the major pricing disparity it should be allowed to
request quotations from outside suppliers and place the business outside should such a supplier bid lower
than the Electric Motor Division.