Summary
In Hoffmann v. Pfingsten (1951), 260 Wis. 160, 50 N.W.2d 369, our court held that a contract was amended so that the quantity of material to be covered by the contract was made so uncertain as to bring about no enforceable obligation.
Summary of this case from Witt v. Realist, Inc.Opinion
November 6, 1951 —
December 4, 1951.
APPEAL from a judgment of the circuit court for Milwaukee county: GUSTAVE G. GEHRZ, Circuit Judge. Affirmed.
For the appellants there were briefs by Posner Perkins and Lines, Spooner Quarles, attorneys, and Louis Quarles, Maxwell H. Herriott, Herman J. Posner, and David A. Fox of counsel, all of Milwaukee, and oral argument by Mr. Herriott and Mr. Herman J. Posner.
William J. Calvano, attorney, and A. L. Skolnik of counsel, both of Milwaukee, for the respondents.
For the purposes of this opinion, Mr. and Mrs. Hoffmann are treated as one person and Mr. and Mrs. Pfingsten as one.
The defendant, a tanner by trade, concocted a shoe dressing and made small quantities of it in his home. He distributed this to various acquaintances and among them was the plaintiff, who was employed at the tannery with the defendant. The plaintiff, Hoffmann, thought the dressing had merit and that he could do a profitable business in selling it. He persuaded Pfingsten to buy a factory and to go into the business of producing dressing which Hoffmann would then distribute. Hoffmann did not want to operate as an agent but preferred to buy his supplies from Pfingsten and dispose them for his own account. In October, 1945, a written contract was drawn by Pfingsten's attorney and was executed as follows: (Material parts, only.)
"Whereas said parties of the first part have lately discovered and perfected a shoe dressing in various colors and shades and are desirous of introducing the same to the public and have the same marketed, and have agreed to appoint and do hereby designate and appoint said party of the second part to be their sole distributor in the territorial United States for that purpose, and upon the terms hereinafter expressed herein;
"Now, therefore, in consideration of the premises, parties of the first part agree to manufacture, and said party of the second part agrees that he will purchase from the parties of the first part, said shoe dressing at fifteen cents (15¢) per bottle of four (4) ounce bottles, to be packed in cases containing one-quarter (1/4) gross and delivered at first parties' place of manufacture in the city of Milwaukee. . . .
"It is further agreed that parties of the first part shall cause to be registered in the United States patent office the name of `Perfection' for said shoe dressing, or if such name cannot be used, another desirable name therefor, and parties of the first part agree to put the name of the distributor on said label.
"It is understood and agreed that it is the intention of the parties that this contract shall be permanent, provided that party of the second part shall immediately commence the exclusive sale of parties of the first part's products, and shall, by the end of two years from the date hereof, order and pay for 25,000 bottles per month of the product of the parties of the first part. Parties of the first part agree to manufacture at least 25,000 bottles per month of said product, provided parties of the first part can get the bottles, as well as the materials, to manufacture said amount of product, and provided further that their business is not interrupted by strikes, war, or other conditions over which parties of the first part have no control; and in the event that party of the second part is not able to sell at least 25,000 bottles per month at the end of two years, then this contract shall become null and void, and parties of the first part shall have the right to engage another distributor.
"It is further agreed by and between the parties hereto that in case parties of the first part shall desire to sell their formula, including the name, of the product and their interest in said shoe dressing, party of the second part shall have the first chance to purchase in case of sale. In case sale is made, the sale shall be subject to the distribution rights of the second party as provided herein. . . .
"It is further agreed that upon the signing of this contract, the parties of the first part will deposit the formula, together with any improvements that they may hereafter make thereon, for making said shoe dressing or other products, in a safety deposit box, with access thereto in their attorney, Charles E. Hammersley, so that in case anything shall happen to parties of the first part, the production of the product of the parties of the first part may be continued uninterruptedly. . . .
"It is further agreed by and between the parties that in case the party of the second part terminates this contract and quits, he will turn over all lists of customers and dealers and names of his agents and employees that he has secured during the time that he shall operate under this contract. . . .
"Party of the second part further agrees not to handle or sell, during the continuance of this contract, any similar product excepting only those manufactured by parties of the first part. . . .
"It is further agreed that this contract shall bind the respective parties, their administrators, successors, heirs, and assigns."
Hoffmann gave all his time to establishing a market for the dressing, which was put out under the name of "Perfection." He succeeded in selling 8,844 bottles in 1945, and 106,742 in 1946. Although the business was showing a steady increase, it became evident that Hoffmann would not reach sales of 25,000 bottles per month (300,000 bottles per year) at the end of two years from the date of the contract and the parties modified the contract on December 14, 1946, by an instrument in writing of which the material part is:
"Now, therefore, it is agreed that said contract is modified as follows:
"Paragraph 1 on page 2 requiring the party of the second part to order and pay for 25,000 bottles per month of the product of said parties of the first part, is hereby eliminated.
"Paragraph 3 on page 1 fixing the price of fifteen cents (15¢) per bottle is hereby raised to sixteen cents (16¢) per bottle.
"That said contract in all other respects shall remain in full force and effect."
During 1947 the parties discovered that the name "Perfection" infringed on the rights of third parties and Pfingsten renamed his product "Old Tanner" and thereafter Hoffmann distributed it under the new name. Pfingsten registered this as a trade-mark nationally, as the contract provided, and in several states. Various labels were used, some containing Pfingsten's name and others without it, and all of them featuring Hoffmann as sole distributor. Business continued to expand because of the quality of the dressing and Hoffmann's efforts in selling it. In 1947, 187,544 bottles were sold; in 1948, 331,173; in 1949, 502,752; and in 1950, 701,096. Toward the end of this period friction developed between the parties. Pfingsten wanted a higher price per bottle and he also wanted more prominence on the label for his name and function. At least one price adjustment was made but the dispute continued and on December 26, 1950, Pfingsten notified Hoffmann that he was terminating the agreement at the end of the year for lack of mutuality and had appointed the defendant Martin exclusive distributor for "Old Tanner" and would supply no more of the dressing to Hoffmann. Hoffmann then sued for damages by reason of defendant's alleged breach of contract and his complaint also demanded that the defendant be enjoined from selling the shoe dressing and from using the name "Old Tanner" except in accordance with the terms of the contract. The complaint also demanded that the trade-marked name "Old Tanner" be declared the property of Hoffmann and demanded that Pfingsten be ordered to deposit the formula for the dressing with such person as the court might direct in accordance with the contract's provision for such deposit.
Defendant's answer admitted the execution of the contract and its modification and denied the other material allegations of the complaint. The action was tried to the court which made findings of fact and conclusions of law to the effect that the agreement as modified is void for want of mutuality and for uncertainty as to the period for which it was to run; that it constituted no more than a continuing offer by Pfingsten to sell "Old Tanner" to Hoffmann and such offer could be withdrawn at will and was lawfully withdrawn on December 26, 1950, effective January 1, 1951. The court also found Pfingsten to be the owner of the formula and the sole owner of the name "Old Tanner." It found and concluded that there was no conspiracy between Martin and Pfingsten to terminate the agreement between Hoffmann and Pfingsten and it refused to grant an injunction restraining them in the distribution and sale of the dressing. On the other hand, the court restrained Hoffmann from marketing "Old Tanner" except for the distribution of such bottles as Hoffmann had already ordered and paid for. The judgment, entered February 23, 1951, dismissed the complaint. Hoffmann has appealed.
Hoffmann's first contention on the appeal is that the learned trial court erred in holding that the contract as modified December 14, 1946, was void for want of mutuality and on this issue we have concluded that the judgment must be affirmed. The original contract contained an obligation on the part of Hoffmann to order 25,000 bottles of dressing per month and clearly there was mutuality of obligation while that provision remained but this requirement was struck out December 14, 1946. There may be some doubt as to whether or not the words of the amendment were designed to eliminate Pfingsten's obligation to manufacture and supply any dressing thereafter as well as to relieve Hoffmann of the obligation of ordering it. We conclude that the intent was only to affect the minimum orders required of Hoffmann, reaching this result the more easily because the amendment was prepared by Pfingsten's lawyer and included a provision respecting price which was clearly for Pfingsten's benefit. Where different interpretations are possible that must be preferred which is against the party who prepares the instrument. Deree v. Reliable Tool Machine, Inc. (1947), 250 Wis. 224, 26 N.W.2d 673.
The resulting contract, then, purports to require Pfingsten to fill Hoffmann's orders, whatever they may be, in consideration of Hoffmann's acts or forbearances which remain in the instrument after the modification. We find two: That upon termination of the agreement by Hoffmann, which may never take place, he will give Pfingsten his lists of customers and employees; and, that until he terminates he will distribute no competitor's shoe dressing. We are not concerned now with what the parties must do if the contract is ended. The question is whether there is mutuality while it is in force. Hoffmann's only agreement, effective during that period, is that he will refrain from handling competitive products. Such a forbearance appeared in the contract of Pessin v. Fox Head Waukesha Corp. (1939), 230 Wis. 277, 278, 282 N.W. 582, but we held that mutuality was lacking, nevertheless, there being no undertaking to order the manufacturer's product at all. That case was reviewed and approved in Strauss v. Eulberg Brewing Co. (1947), 250 Wis. 579, 27 N.W.2d 723.
On Hoffmann's behalf it is submitted that the facts bring this action within the rule of Excelsior Wrapper Co. v. Messinger (1903), 116 Wis. 549, 93 N.W. 459, and Eastern R. Co. v. Tuteur (1906), 127 Wis. 382, 105 N.W. 1067. It is argued that when the contract was modified in 1946 Hoffmann had an established business and the cases just cited hold that agreements to supply a buyer according to the requirements of his business are sufficiently definite as to the quantity which he must purchase to be enforceable. The Excelsior Wrapper Co. and the Eastern R. Co. Cases differ from the present one in that their contracts specified that the buyer would take and the seller would supply such goods or services as the buyer required for a definite time in carrying on the buyer's business, to which such goods or services were necessary and incidental. In Hoffmann's case there is no reference in the contract to any business whatever or to filling the requirements thereof and actually he has no business (other than trade in Pfingsten's dressing), the requirements of which will determine the quantity of dressing which he will be bound to take and pay Pfingsten for. If Pfingsten should be dissatisfied. with Hoffmann's orders, considering them either too large or too small, we can find no relief in the contract for him. The original obligation for Hoffmann to take 25,000 bottles monthly was struck out and nothing was put in its place. The named standard being gone we do not see how Pfingsten could have appealed to another which the parties had never referred to, either in the original or in the modified agreement, and this is particularly so where Hoffmann had no obligation to give all his time to "Old Tanner" nor to prosecute its development vigorously but was permitted by the contract to engage in other business which did not deal in products similar to "Old Tanner." We conclude, therefore, that the cases where the requirements of established businesses measured the obligations of both parties do not apply to the present situation and those cases do, of which Teipel v. Meyer (1900), 106 Wis. 41, 81 N.W. 982, and Pessin v. Fox Head Waukesha Corp., supra, and Strauss v. Eulberg Brewing Co., supra, are examples, in which it was held that the contract to supply is void want of mutuality because there is no corresponding duty to order.
Our conclusion that the contract as modified lacks mutuality and is therefore void makes it unnecessary to consider propositions that Pfingsten may end it at will because its duration is indefinite. The argument has much force and was resolved in Pfingsten's favor by the trial court but the solution is not necessary to our determination.
We agree with the learned trial court that there is no evidence that defendant Martin conspired to interfere with Hoffmann's contractual rights.
There remains Hoffmann's contention that the trade-mark with the name "Old Tanner" is his property because it was his effort as a distributor which gave it publicity and value. Counsel cites numerous decisions to the effect that the trademark was part of the good will created by the promotional activity of Hoffmann and is inseparable from it. However, we consider that Hoffmann, himself, recognized that the name belonged to Pfingsten. The contract provided: ". . . in case parties of the first part [Pfingstens] shall desire to sell their formula, including the name, of the product . . . party of the second part [Hoffmann] shall have the first chance to purchase. . . . "There was no revision of this portion of the agreement and we can see no ground for holding that anything in the conduct of the parties deprived Pfingsten of the property right thus recognized.
By the Court. — Judgment affirmed.