Grombach v. Oerlikon Tool and Arms Corp. of America

• Decision Date: 14 March 1960
• Docket Number: No. 8000.,8000.
• Citation: 276 F.2d 155
• Parties: John V. GROMBACH, Appellant, v. OERLIKON TOOL AND ARMS CORPORATION OF AMERICA, a corporation, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

276 F.2d 155 (1960)

John V. GROMBACH, Appellant, v. OERLIKON TOOL AND ARMS CORPORATION OF AMERICA, a corporation, Appellee.

No. 8000.

United States Court of Appeals Fourth Circuit.

Argued January 21, 1960.

Decided March 14, 1960.

COPYRIGHT MATERIAL OMITTED

Richard L. Merrick, Washington, D. C., and Stanley M. Lazarus, New York City (Thomas H. King, Washington, D. C., on the brief), for appellant.

Frank M. Parker and George H. Ward, Asheville, N. C. (Harold K. Bennett, Asheville, N. C. on the brief), for appellee.

Before SOPER and BOREMAN, Circuit Judges, and BARKSDALE, District Judge.

BARKSDALE, District Judge.

This diversity action was instituted on May 27, 1958, by John V. Grombach, formerly an officer of the United States Army, a citizen and resident of New York, against Oerlikon Tool and Arms Corporation of America, a Delaware Corporation doing business in North Carolina, seeking damages for the alleged breach by the defendant of a written contract entered into on February 10, 1953. Defendant's motion for a summary judgment having been previously overruled, the case came on for trial by a jury on August 5, 1959. At the conclusion of all the evidence the district court granted defendant's motion for a directed verdict, judgment was entered dismissing the plaintiff's action, and from this judgment plaintiff has prosecuted this appeal. Since there was a directed verdict against him, the evidence must be viewed in the light most favorable to the plaintiff.

Early in February 1953, Grombach, who described himself as "a specialist in the harnessing of foreign basic research to United States National Defense, particularly with regard to security angles and the production and research angles", at the invitation of one Emil Buehrle, went to Zurich, Switzerland, "to have a conference with him with regard to solving his problems and becoming his consultant." Buehrle, a Swiss citizen, had varied business interests, but he was primarily a munitions maker. After several conferences, Grombach and Buehrle, on February 10, 1953, entered into a written contract in the form of a letter confirmed by the signatures of both parties, which is the basis of this action. So far as pertinent, the contract is as follows:

"I. This is to confirm our understanding that you will serve in the United States as general and public relations consultant for the Oerlikon Machine Tool Works Buhrle & Co. (Werkzeugmaschinenfabrik Oerlikon Buhrle & Co.) Zurich, Contraves Ltd., Zurich, the Oerlikon Tool & Arms Corporation of America of Delaware and North Carolina, Olkon Research Corporation in Washington, D. C. and for me personally and for any subsidiary or affiliated company or companies owned directly or indirectly by me.

"II. It is agreed that your consultant status shall begin as of this date and shall be for a period of five years unless sooner terminated as specially and specifically provided for in this letter.

"III. You shall receive a salary or fee of U.S.A. $25,000. — (twenty five thousand dollars) per year or a total of U.S.A. $125,000. — (one hundred and twenty five thousand) in five years, payable quarterly which shall be full compensation for your part-time services as a consultant and make you reasonably available to the companies and their management for consultation and or services and also to me personally.

* * * * * *

"VI. It is agreed that I shall have the right to cancel this five-year agreement under the following conditions:

"a) If the President of the Oerlikon Tool and Arms Corporation of America objects to your being retained as consultant to his company, I shall have the right to cancel this agreement at the end of one year or on February 9, 1954, by giving you written notice by registered mail before May 1st, 1953. In that case you will serve only the other above mentioned companies to February 9, 1954. * * *"

The nature and functions of all the companies mentioned are not clear, but it seems that Buehrle owned or controlled all of them. It further appears that one or more of the Swiss companies were engaged in the manufacture of munitions for export, and that the defendant Oerlikon Tool and Arms Corporation of America (hereinafter referred to as "O.T.A.") entirely owned by Buehrle, personally, or through stock ownership in a holding company, had been organized for the ultimate purpose of manufacturing munitions under Swiss patents in the United States when, as and if security clearance could be obtained, one of the prerequisites of which being at least seventy-five percent ownership by American citizens. It is to be noted that neither Buehrle nor any of the other companies are named as defendants in this action; O.T.A. is the sole defendant.

Following the execution of the contract, Grombach undertook to assist in the procurement of an export license from the Swiss government for munitions manufactured by one of the Swiss companies for sale to the United States Government, and to make contacts with his friends in the Department of Defense and in the armed services.

On April 22, 1953, within the time when cancellation of the written contract was permitted by paragraph VI (a) of the written contract, Buehrle, by cable, requested of Grombach that the cancellation period be extended until June 30, 1953. Grombach first suggested by cable a shorter extension, but on April 27, 1953, cabled to Buehrle an agreement to extend the cancellation period until June 30, 1953.

By registered letter of June 24, 1953, Buehrle gave Grombach notice of termination of the contract, the letter, so far as pertinent, reading as follows:

"With reference to the conversation I had with you during my last stay in the States respecting retaining you as a general and public relations consultant for Oerlikon, I hereby give you — as agreed with you — according to the provisions of Article VI(a) notice of the termination of the Agreement between you and all my firms, such termination to be effective as of February 9th, 1954. The notice term of May 1st, 1953, has been prolonged by mutual agreement (see your cable of April 27th, 1954).

"The President of Oerlikon Tool and Arms Corporation of America having objected to your being retained as a consultant to his company, your activity until February 9th, 1954, i. e. until the termination of our Agreement, is limited to my companies here in Zurich, viz. the

Oerlikon Machine Tool Works, Buhrle & Co.,

(Serkzeugmaschinenfabrik Oerlikon, Buhrle & Co.)

Zurich, and the

Contraves Ltd., Zurich.

"I ask you to be good enough to return to me the original authorization dated February 10th, 1953, which includes the Oerlikon Tool and Arms Corporation of America, Washington, D. C., as well as the Olkon Research Corporation, Washington. Consequently, I am sending you, herewith enclosed, the new Authorization.

"According to Article III of our Agreement, you will receive for the whole year a retaining fee of U.S.A. $25,000. —, payable quarterly. The first quarterly payment was due on May 10th, 1953. Inasmuch as I am in arrears with the first payment, I am sending you through my bankers simultaneously the second quarterly payment. You will consequently receive within the next few days a cheque for $12,500. — (twelve thousand five hundred Dollars). I would appreciate it if you would kindly let my company here have a fee note in two copies for this amount, mentioning that you already received payment for same. We need this bill for tax purposes.

"As to the third and fourth quarterly payments due November 10th, 1953, and February 10th, 1954, i. e. on the termination of the Agreement, I ask you to send the bills in two copies about ten days in advance to my Secretary, Dr. O. Maurer, here in Zurich. As expressed in your letter of June 2nd, he will arrange for the payments in good time.

"I have already expressed my regret for my inability to change the situation. Yet, I venture to hope that, nevertheless, you will — as you assured me already orally — maintain a loyal attitude towards me and the companies I control.

"You would oblige, for the sake of regularity, by confirming the contents of this letter."

To this notice of termination of contract, by letter dated June 30, 1953, Grombach replied to Buehrle as follows:

"This will acknowledge receipt of your cancellation and of the $12,500 for the first and second quarterly payments.

"I desire to assure you of my personal loyalty to you and your companies and shall do nothing except try to help you and your companies, at least until February 10, 1954. From now until then as you know, and pursuant to the contract, I am available to advise or to help you in any way.

"I only hope that you will give me a further opportunity to prove myself as I feel that I have on the matter of the licenses, the postponement of the Lethal Munitions Act, and other matters involving the status and reputation of your interests in the U.S.

"With kindest personal regards, I am

"Sincerely "/s/ John V. Grombach"

Besides this letter of June 30, 1953, acknowledging receipt of Buehrle's cancellation of the contract and raising no question as to its propriety, by letter of June 24, 1953, written before the receipt of the cancellation notice, Grombach wrote Buehrle as follows:

"As explained in my cable of June 22nd, I have not yet received payment due me since May 10, nor the written cancellation notice. Naturally, the last is not welcome, but in the fact that I like to make detailed plans for the future and have a personal service business, you can well understand that I want to know exactly where I stand as soon as possible.

Fortunately, I have just about reached the limit of the amount of business which I desire to handle for the present, and if and when given notice, I am certain I can replace your account before February of 1954."

Again, Grombach wrote Buehrle a long letter dated July 14, 1953, in which, amongst other things, he said:

"This is not in any way to try to get you to withdraw your

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