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April 26, 1976

Harold S. LEE et al., Plaintiffs,

Tenney, District Judge.

The opinion of the court was delivered by: TENNEY


TENNEY, District Judge.

 After a trial to a jury and a verdict for plaintiffs, defendant has brought on a motion for judgment notwithstanding the verdict pursuant to Rule 50(b) of the Federal Rules of Civil Procedure. For the reasons set forth below, the motion is denied.


 The three plaintiffs in this action, Harold Lee (now deceased) and his sons Eric and Lester Lee, owned a 50% interest in Capitol City Liquor Company, Inc. ("Capitol City"), a wholesale liquor distributorship located in Washington, D.C. Defendant, Joseph E. Seagram & Sons, Inc. ("Seagram"), is a distiller of alcoholic beverages. Capitol City carried numerous Seagram brands and a large portion of its sales were generated by the Seagram lines.

 Plaintiffs and the other owners of Capitol City became desirous of selling their respective interests in the business and, in May of 1970, Harold Lee discussed the possible sale of Capitol City with Jack Yogman ("Yogman"), Executive Vice President of Seagram. While Seagram was not in the habit of purchasing distributorships (these entities normally passed between independent businessmen), Seagram agreed to act as the conduit for the ownership in this instance since the prospective purchaser, qualified in all other respects, was short of capital. On September 30, 1970, the sale to Seagram was consummated.

 Plaintiffs allege that they wanted to continue in the wholesale liquor business in spite of their wish to divest themselves of their ownership interest in Capitol City. In consequence of this desire, Harold Lee allegedly approached Jack Yogman in May of 1970. Plaintiffs contend that Lee offered to sell Capitol City to Seagram, but conditioned the offer on Seagram's promise to relocate plaintiffs in a new distributorship of their own. It is upon the alleged breach of this latter promise that the instant action is premised. Plaintiffs contend that they performed their obligation under the agreement and that the written sales agreement conveying Capitol City to Seagram bears witness to this, but that defendant breached the alleged oral contract to relocate plaintiffs in a new distributorship. This, then, was the posture in which the case was presented to the jury.

 In considering the motion for judgment n. o. v., this Court must apply the same standards as are applicable on a motion for a directed verdict. 5A J. Moore, Federal Practice para. 50.07[2], at 2355-56. See also Hallmark Industry v. Reynolds Metals Co., 489 F.2d 8, 13 (9th Cir. 1973), cert. denied, 417 U.S. 932, 94 S. Ct. 2643, 41 L. Ed. 2d 235, rehearing denied, 419 U.S. 1028, 95 S. Ct. 509, 42 L. Ed. 2d 304 (1974); Hannigan v. Sears, Roebuck and Co., 410 F.2d 285, 287 (7th Cir.), cert. denied, 396 U.S. 902, 90 S. Ct. 214, 24 L. Ed. 2d 178 (1969); O'Neil v. W. R. Grace & Co., 410 F.2d 908, 911 (5th Cir. 1969). The Court may grant the motion "only when, without weighing the credibility of the evidence, there can be but one reasonable conclusion as to the proper judgment." 5A J. Moore, Federal Practice para. 50.07[2], at 2356. See also Jack Cole Company v. Hudson, 409 F.2d 188, 191-92 (5th Cir. 1969); Rice v. Atlantic Gulf & Pacific Co., 59 F.R.D. 280, 282 (S.D.N.Y.), aff'd in part, rev'd in part, 484 F.2d 1318 (2d Cir. 1973). The United States Court of Appeals for the Second Circuit has stated that

"[the] motion will be granted only if (1) there is a complete absence of probative evidence to support a verdict for the nonmovant or (2) the evidence is so strongly and overwhelmingly in favor of the movant that reasonable and fair minded men in the exercise of impartial judgment could not arrive at a verdict against him." Armstrong v. Commerce Tankers Corp., 423 F.2d 957, 959 (2d Cir.), cert. denied, 400 U.S. 833, 91 S. Ct. 67, 27 L. Ed. 2d 65 (1970).

 See also Sotell v. Maritime Overseas Inc., 474 F.2d 794, 796 (2d Cir. 1973), and cases cited therein. Additionally, the Court is "bound to view the evidence in the light most favorable to [the party opposing the motion] and to give it the benefit of all inferences which the evidence fairly supports, even though contrary inferences might reasonably be drawn." Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 696, 82 S. Ct. 1404, 1409, 8 L. Ed. 2d 777, 782 (1962). Finally, since the grant of the motion would deprive a litigant of the opportunity of having the issues determined by a jury, the motion should be "cautiously and sparingly granted." 9 Wright & Miller, Federal Practice and Procedure § 2524, at 542.

 Defendant's motion is predicated upon eight specific points. They are as follows:

1. As a matter of law, the oral agreement alleged by plaintiffs is so vague and indefinite as to be unenforceable;
2. As a matter of law, plaintiffs' proof of the alleged oral agreement is barred by the parol evidence rule;
3. As a matter of law, plaintiffs' proof of the alleged oral agreement is barred by the statute of frauds (N.Y.G.O.L. § 5-701(10) and N.Y.U.C.C. § 1-206);
4. As a matter of law, the offer to sell the plaintiffs' distributorship upon the alleged condition of the oral agreement to provide another distributorship was not a valid offer;
5. As a matter of law, there was no valid acceptance of plaintiffs' alleged conditional offer;
6. As a matter of law, neither plaintiff Harold S. Lee nor his estate has standing to claim or is entitled to damages;
7. As a matter of law, plaintiffs Lester Lee and Eric Lee have no standing to claim and are not entitled to damages; and
8. As a matter of law, plaintiffs' proof of damages is incompetent because speculative and based upon unwarranted assumptions.

 Defendant states that its motion

"is not predicated upon any contention that there was no disputed issue of fact upon which reasonable men could differ. To the contrary, defendant's claim is that, as a matter of law, plaintiffs wholly failed to plead or offer any competent evidence to support material elements of their breach of contract claim, elements which were essential to make a prima facie case permitting submission to the jury. . . . In this context, defendant's motion is in no way dependent upon the credibility of its witnesses or documentary evidence." (Def.'s Memo., at 2) (emphasis in original).

 With the standards previously enunciated and the defendant's above-mentioned claim clearly in mind, the Court will proceed to examine the points raised by defendant seriatim.


 Defendant contends that the oral contract, if in fact one existed, was so vague, indefinite, and lacking in essential terms as to render it unenforceable. It is defendant's position that this situation is one where, even assuming that the parties intended to enter into a binding agreement, there is an absence of material terms such that the parties (and the court in which enforcement is sought) would be unable to determine the rights and obligations of the parties under the agreement.

 Specifically, defendant contends that the alleged oral contract stated only that Seagram would relocate the plaintiffs in a new distributorship with an "exclusive market", if possible. Defendant cites as lacking from the agreement terms making reference to: (1) time of performance, (2) location of the distributorship, (3) brands to be carried, (4) profitability, (5) sales volume, (6) growth trend, and (7) price. Defendant states that there is no basis for implying any terms since it is clear that Harold Lee was never involved in the purchase or sale of distributorships, despite his thirty years of employment by Seagram. Finally, defendant contends that the agreement as plaintiffs envision it would also be unenforceable since it would have given plaintiffs unbridled discretion in deciding whether to accept or reject a particular distributorship.

 Plaintiffs feel that defendant misconstrues the alleged agreement by attributing to it the character of a detailed purchase and sales agreement when in reality it is merely an agreement to provide an opportunity to purchase a liquor distributorship. In plaintiffs' view, the oral contract calls for Seagram to "(1) provide the Lees with the opportunity (2) to purchase one of a finite number of wholesale distributorships (3) approximately half the value and profit potential as the precisely known quantity of Capitol City and to do so (4) within a reasonable time." (Pls.' Memo. at 7).

 According to plaintiffs, the res of the agreement, a Seagram distributorship, was certain and specific. Also, the parties had the benefit of the financial history of Capitol City for use as a reference point in interpreting details of their contractual obligations. Price would approximate the plaintiffs' revenue from the sale of Capitol City and the time for performance would be a reasonable time. Thus, plaintiffs conclude that there was sufficient definiteness for both the Court and the jury to find a valid, enforceable contract.

 This Court cannot enforce the alleged oral contract unless it can fairly stake out the bounds of the agreement and determine what lies within. This is so, notwithstanding the intention of the parties to bind themselves thereby, since their intentions must be expressed in a manner which reasonably delineates their rights and duties so as to make those obligations susceptible of enforcement. See generally 1 Corbin, Contracts § 95, at 394. While it has often been said that courts do not make contracts, Metro-Goldwyn-Mayer, Inc. v. Scheider, 75 Misc.2d 418, 347 N.Y.S.2d 755 (Sup.Ct.1972), the law of New York expresses a clear preference for a construction in favor of validity. [A] meaning that will sustain is preferred over one which will defeat the instrument." Silverman v. Alpart, 282 App.Div. 631, 125 N.Y.S.2d 602, 605 (3d Dep't 1953). These standards have been concisely enunciated in Castelli v. Tolibia, 83 N.Y.S.2d 554 (Sup.Ct.1948), aff'd, 276 App.Div. 1066, 96 N.Y.S.2d 488 (1st Dep't 1950), wherein it was stated:

"It is well settled that, to render a contract enforceable, absolute certainty is not required; it is enough if the promise or agreement is sufficiently definite and explicit so that the intention of the parties may be ascertained 'to a reasonable degree of certainty.' Varney v. Ditmars, 217 N.Y. 223, 228, 111 N.E. 822, 824, Ann.Cas.1916B, 758. A contract cannot be ignored as meaningless, except as a last resort. 'Indefiniteness must reach the point where construction becomes futile.' Cohen & Sons v. M. Lurie Woolen Co., 232 N.Y. 112, 114, 133 N.E. 370, 371. Nor can a contract be rejected as uncertain, if it can be rendered certain by reference to something certain; the maxim being, Id certum est quod certun reddi potest -- That is certain which may be rendered certain. Wells v. Alexandre, 130 N.Y. 642, 645, 29 N.E. 142, 143, 15 L.R.A. 218; Williston on Contracts, Rev.Ed., § 47." Id. 83 N.Y.S.2d at 563-64.

 Certain other concepts play an important role in the Court's determination of enforceability. For example, where a contract is silent regarding the time for performance, the law will imply a duty to perform within a "reasonable time". Oswald v. Oswald, 73 Misc.2d 607, 341 N.Y.S.2d 959, 963 (Fam.Ct.1973); Valley National Bank of Long Island v. Babylon Chrysler-Plymouth, Inc., 53 Misc.2d 1029, 280 N.Y.S.2d 786 (Sup.Ct.), aff'd, 28 A.D.2d 1092, 284 N.Y.S.2d 849 (2d Dep't 1967). Also, an agreement will not fail for lack of definiteness where it can be rendered certain by reference to extrinsic sources. St. Joseph's Immigrant Homes, Inc. v. Seaman, 53 Misc.2d 1095, 281 N.Y.S.2d 143 (Civ.Ct.1967). For example, New York courts have looked to the prior course of dealings between the parties, Borden v. Chesterfield Farms, Inc., 27 A.D.2d 165, 277 N.Y.S.2d 494 (1st Dep't 1967); to the fixing of a price through the estimate of a third party, St. Joseph's Immigrant Homes, Inc. v. Seaman, supra, 53 Misc.2d 1095, 281 N.Y.S.2d 143; to the manner in which work was done in the past, Feldman v. Rockaway News Supply Company, 6 Misc.2d 406, 157 N.Y.S.2d 671 (Sup.Ct.1956); to prior business history, such as would be contained in customer lists or route books, Barnard Bakeshops v. Dirig, 173 Misc. 862, 19 N.Y.S.2d 224 (Sup.Ct.1940); or to custom and practice within an industry, Metro-Goldwyn-Mayer, Inc. v. Scheider, supra, 75 Misc.2d 418, 347 N.Y.S.2d 755. Similarly, the courts of New York State will not shy away from enforcing a contract because there appears to be a lack of mutuality or a broad discretion vested in one of the parties. In these situations the law implies a duty of good faith and fair dealing. Vineyard v. Martin, 29 N.Y.S.2d 935 (Sup.Ct.1941); Barnard Bakeshops v. Dirig, supra, 173 Misc.2d 862, 19 N.Y.S.2d 224; Wood v. Duff-Gordon, 222 N.Y. 88, 118 N.E. 214 (1917).

 The instant contract found by the jury was a simple agreement and was not, as defendant alleges, tantamount to a complex purchase and sales agreement. Liquor distributors are independent business people who hold franchises from the various distillers such as Seagram. The distributorships are generally conveyed from one independent businessman to another without the ownership interest ever touching the distiller. Occasionally, as with the sale of Capitol City, the distiller will hold an ownership interest on a temporary basis. In most cases however, Seagram would have neither occasion nor necessity to enter into a contract which is the functional equivalent ...

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