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Phillips & Benjamin Co. v. Ratner

decided.: August 7, 1953.


Author: Clark

Before AUGUSTUS N. HAND, CHASE, and CLARK, Circuit Judges.

CLARK, Circuit Judge.

This appeal, in its major aspects, is from a judgment entered upon a jury verdict awarding plaintiff, The Phillips & Benjamin Co., $38,900.35 for commissions claimed to be due it under a sales agency agreement with one of the defendants, Lee Ratner, doing business as Junex Products, together with interest of $1,633.81 and costs of $262.20. Suit was originally commenced in the New York State Supreme Court and was removed to the court below on the basis of the diverse citizenship of plaintiff and the three defendants - all partners in the Junex Products enterprise. The claim in litigation stems from a written contract dated January 21, 1952, by which Ratner engaged plaintiff as exclusive sales representative for his firm's reducing tablet, Junex, in a territory comprising New York State (except the counties of Niagara, Erie, Chautauqua, and Cattaraugus), New Jersey, Maryland, Delaware, the District of Columbia and the adjacent counties of Virginia, and the eastern half of Pennsylvania. In this contract, plaintiff undertook "to actively and aggressively push the sale" of Junex and, somewhat more specifically, "to thoroughly cover his territory with senior salesmen contacting large volume accounts, and detail salesmen contacting independent retail outlets, who in turn will display merchandise, see that Junex Products' advertising materials are used to attract consumers and detail Junex Products through wholesalers in his territory." Compensation for these services was fixed at a commission of 10 per cent on net sales, payable on the 15th day of the month following shipment of the merchandise. The agreement was to expire on December 31, 1952, subject to earlier termination by either party on 30 days' notice or without such notice in case of violation of any part of the agreement.

Defendants availed themselves of this privilege of termination less than three months after the contract was executed; on April 3, they wrote plaintiff cancelling the agreement in so far as it applied to sales through department stores, and a further notice terminating the entire agreement was sent on April 5. Each of these letters gave plaintiff the agreed-upon 30 days' notice and stated that the regular commission would be paid on sales consummated during this period. The total commissions earned by plaintiff from the beginning of its agency for Junex until May 7, 30 days after receipt of the second notice, amounted to $44,534.78. Of this sum, defendants remitted only $375. There thus remained a balance, after deducting certain additional credits which need not now be detailed, of $38,900.35, which plaintiff sought to recover in this suit and which the jury awarded it in the court below.

It is defendants' position on this appeal that their motion to dismiss should have been granted and that plaintiff's claim should thus never have reached the jury because plaintiff failed as a matter of law to establish full performance of its contractual obligations. Those obligations, defendants assert, derive not only from the original contract, but also from "oral conversations and writings" which are claimed to supplement it. The item chiefly relied upon as specifying plaintiff's duties is a long letter written on January 31, 1952, by Frank L. Anderson, plaintiff's president, to Eugene Jeral, vice-president of Junex Products. Discussing various details of the Junex promotion program plaintiff was about to undertake, Anderson wrote, under the heading "Concentration Every Drug Company":

"On Monday morning, February 25th, we want to start a crew in addition to our regular men, to call on every single drug store in Greater New York City at which time, we will put up two streamers and, if possible, two cards in every drug store. We will deliver, to each drug store, one box of Junex Free. * * *

"We want a crew doing this job of not less than 12 men who will make from 20 calls each a day or a total of 240 calls per day, or 1200 calls per week. We will have finished New York on this basis by March 29th. This means that every drug store in Greater New York will have Junex in stock in quantities from 1/6 dozen up to 3 dozen. Every drug store in New York will have signs up, tying in to your television show and the newspaper advertising."

If, as defendants assert, this letter "clearly expressed what was expected and what was required of" plaintiff under the contract, there was indeed no full performance, since plaintiff admittedly did not "finish" New York's 5,500 retail drugstores by March 29. But plaintiff counters that the quoted statements were only an approximation of what it hoped to accomplish and in no way an expression or admission of its contractual commitment. To establish its performance of the original agreement, it presented evidence at the trial showing that its selling staff had been increased from 12 to 26 to handle this "stupendous job," and that this staff had contacted a large number of New York's retail druggists in addition to numerous wholesale druggists, drug chains, and department stores in that city and other parts of its territory.

Whether the January 31 letter formed part of the contract was clearly a question for the jury to decide. Union Trust Co. of N.Y. v. Whiton, 97 N.Y. 172, 178; see also Shoenthal v. Bernstein, 276 App.Div. 200, 204, 93 N.Y.S.2d 187, 191. Hence there was no error in the district court's denial of defendants' motion to dismiss. And, assuming that the jury rejected defendants' contention and held plaintiff simply to its promise "to actively and aggressively push the sale" of Junex, the evidence of plaintiff's activities was sufficient to establish full performance.

Defendants' claim that plaintiff forfeited its right to recovery because of various acts of disloyalty was also properly submitted to the jury. We find it unnecessary to detail these charges here. Suffice it to say that plaintiff offered plausible explanations for each of the purported "instances of bad faith," showing that in each case it acted with the approval of one of defendants' agents and not for its own gain. The evidence certainly would not have justified dismissal of plaintiff's claim as a matter of law, and the loyalty issue was submitted to the jury on the basis of a complete and accurate charge as to the applicable law.

While defendants do not challenge this portion of the charge, they do claim to find reversible error in the district court's instructions on the issue of plaintiff's performance. Specifically, they contend that the court improperly charged the jury that plaintiff could recover in full even if it only substantially performed its contract obligations. The alleged error appears in the following section of the charge:

"If you find the plaintiff, within the contemplation of the parties, fully performed its commitments under the contract, then it may recover, even though its representatives did not visit all the 5,500 stores, unless you find that the understanding of the parties was that the plaintiff was under a duty to have its men visit and make delivery of a free box of Junex to every druggist in the greater New York area by March 29, 1952, and to procure the placement of streamers and other advertising paraphernalia, as the defendants contend.

"If you do find that it was part of plaintiff's obligation to so visit all the drugstores, of course, it has the burden of proving that it duly performed this undertaking.

"If you find that the plaintiff substantially performed its commitments under the agreement of the parties and within their contemplation, then its right to recover is not forfeited or lost ...

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