Zelinger v. Uvalde Rock Asphalt Company

• Decision Date: 18 April 1963
• Docket Number: No. 7003.,7003.
• Citation: 316 F.2d 47
• Parties: Melvin M. ZELINGER, doing business as Public Distributing Company, Appellant, v. UVALDE ROCK ASPHALT COMPANY, Larson Distributing Company, a Colorado corporation, John L. Larson, individually and as Executor of the Estate of Otis L. Larson, and Ray L. Dergance, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

316 F.2d 47 (1963)

Melvin M. ZELINGER, doing business as Public Distributing Company, Appellant, v. UVALDE ROCK ASPHALT COMPANY, Larson Distributing Company, a Colorado corporation, John L. Larson, individually and as Executor of the Estate of Otis L. Larson, and Ray L. Dergance, Appellees.

No. 7003.

United States Court of Appeals Tenth Circuit.

April 18, 1963.

COPYRIGHT MATERIAL OMITTED

Abe L. Hoffman, of Donaldson, Hoffman & Goldstein, Denver, Colo., for appellant.

John R. Evans, of Haskell, Helmick, Carpenter & Evans, Denver, Colo., for appellees.

Before MURRAH, Chief Judge, and PICKETT and LEWIS, Circuit Judges.

PICKETT, Circuit Judge.

In January, 1955, Uvalde Rock Asphalt Company, a Texas manufacturer of various lines of asphalt and vinyl floor tile, entered into an oral arrangement with Melvin M. Zelinger, d/b/a Public Distributing Company, establishing him as the distributor for its products in the Denver sales area. In June, 1955, this arrangement was formalized by a document entitled "General Provision for Sales of Azrock Floor Products to Authorized Wholesalers." This document set forth the rights and duties of the parties and adopted, by reference, price lists which were to be published by Uvalde from time to time. The business relationship between Uvalde and Zelinger continued until July, 1958, at which time Uvalde terminated Zelinger's distributorship and designated Larson Distributing Company as the exclusive distributor of its products in the area. When Zelinger objected Uvalde sent him a formal notification of termination for cause pursuant to the written agreement.

Uvalde brought this suit to recover the amount owed by Zelinger on his account. In his answer Zelinger denied the debt, and asserted as an affirmative defense the breach of the written agreement by Uvalde. Zelinger also filed counterclaims in which he alleged the breach of the written agreement by Uvalde, a tortious interference with his distributorship contract by Larson Distributing Company, John L. Larson and Otis L. Larson, the owners and managing officers of Larson Distributing Company, and Ray L. Dergance, Uvalde's sales representative for the Denver area, and a conspiracy among all of the counterclaim defendants to wrongfully interfere with and bring about the breach of his contract. At the conclusion of the trial, the District Court directed a verdict for Uvalde on its claim based upon Zelinger's account, and also directed a verdict for Larson Distributing Company and John L. Larson, both individually and as Executor of the Estate of Otis L. Larson, on Zelinger's counterclaim against them for tortious interference with his contract. Zelinger's causes of action against Uvalde, for breach of the distributorship agreement, and against Dergance, for tortious interference with his distributorship, were submitted to the jury which returned verdicts in favor of Uvalde and Dergance.

Zelinger primarily attacks the several rulings of the trial court with respect to the motions for directed verdicts and the failure of the trial court to grant his motions for directed verdicts on his counterclaims for interference with his distributorship.

In granting a motion for a directed verdict the court must consider the evidence in the light most favorable to the party against whom the motion is directed, and if, on the basis of the evidence and inferences to be drawn therefrom, reasonable and fair-minded persons might form different conclusions as to the facts in issue the motion should not be granted. E. g., Miller v. Brazel, 10 Cir., 300 F.2d 283; Anderson v. Hudspeth Pine, Inc., 10 Cir., 299 F.2d 874; Brown v. Alkire, 10 Cir., 295 F.2d 411; Lohr v. Tittle, 10 Cir., 275 F.2d 662; Farris v. Sturner, 10 Cir., 264 F.2d 537; Brodrick v. Derby, 10 Cir., 236 F.2d 35. Applying this standard, we are satisfied that the trial court's rulings on the motions were not erroneous.

Uvalde's books showed that there was due to it $29,281.34 for goods delivered to Zelinger, whose books also disclosed that this identical amount was due. Zelinger's defense was premised upon the proposition that neither he nor any of his employees had signed one of the purchase orders, and that he did not know whether the tile reflected on that purchase order had been sold to him or had been delivered to him. It is clear from the record that the purchase order in question was a master purchase order for tile which was used in the construction of the U. S. Air Force Academy at Colorado Springs, Colorado, and that it represented a sale with which Zelinger had little or nothing to do. In effect, the sale was made directly by Uvalde to the contractor, but it was channeled through Zelinger as the area distributor for the purpose of allowing him the distributor's profit on the transaction. The evidence showing that the material was delivered and used on the job, and that Zelinger received his profit therefrom, is not contraverted. It is inconceivable that any two minds would differ on the proposition that the tile was delivered to the job by Uvalde and that Zelinger owed the amount demanded in the complaint. Any breach by Uvalde of the distributorship agreement was unrelated to Zelinger's obligation to pay for the materials received and, although he may have a remedy by way of counterclaim, such breach is not available to Zelinger as a defense to the action on the account. Williams Mfg. Co. v. Strasberg, 229 Ark. 321, 314 S.W.2d 500; Mark v. Stuart-Howland Co., 226 Mass. 35, 115 N.E. 42, 2 A.L.R. 678; Springfield Seed Co. v. Walt, 94 Mo.App. 76, 67 S.W. 938; 6 Williston on Contracts § 872 (3d Ed., 1962). See Brown v. Fraley, 222 Md. 480, 161 A.2d 128; Tichnor Bros. v. Evans, 92 Vt. 278, 102 A. 1031, L.R.A. 1918C, 1025.

Zelinger's counterclaims against the Larson defendants were based upon a theory that Larson Distributing Company, acting through its officers, had tortiously interfered with Zelinger's distributorship agreement with Uvalde. We have heretofore said, "The rule that one may not knowingly and intentionally induce another to breach his contract with a third person is too well established to merit extended discussion or the citation of cases." Paramount Pictures, Inc. v. Leader Press, Inc., 10 Cir., 106 F.2d 229, 232. See Employers' Liability Assur. Corp. v. Freeman, 10 Cir., 229 F.2d 547; Baruch v. Beech Aircraft Corp., 10 Cir., 175 F.2d 1, cert. denied 338 U.S. 900, 70 S.Ct. 251, 94 L.Ed. 554. The Colorado rule is that an action for damages will lie against one who intentionally and without justification interferes with or induces a breach of a contractual arrangement between others, even though the contract is terminable at the will of either party. Watson v. Settlemeyer, Colo., 372 P.2d 453; Credit Inv. and Loan Co. v. Guaranty Bank and Trust Co., 143 Colo. 393, 353 P.2d 1098; Order of Ry. Conductors v. Jones, 78 Colo. 80, 239 P. 882. The right to recover for such wrongful interference is recognized in most states. E. g., Hendler v. Cuneo Eastern Press, Inc., 2 Cir., 279 F.2d 181; American Sur. Co. v. Schottenbauer, 8 Cir., 257 F.2d 6; Baruch v. Beech Aircraft Corp., supra; Anno. 26 A.L.R.2d 1227 (1952); Anno. 9 A.L.R.2d 228 (1950); Anno. 84 A.L.R. 43 (1933).

Manifestly, however, a cause of action for tortious interference with a contract does not arise every time a third party negotiates with one of the contracting parties on the subject matter of the contract, or a seller deals with one buyer instead of another in a manner which may affect an existing contract.¹ A frequently cited statement of the general rule is found in Restatement, Torts § 766 (1939), where it is said:

"Except as stated in Section 698, one who, without a privilege to do so, induces or otherwise purposely causes a third person not to

(a) perform a contract with another, or

(b) enter into or continue a business relation with another

is liable to the other for the harm caused thereby."

While the Colorado Supreme Court has not specifically adopted the quoted rule its decisions are in accord with the Restatement, and the United States District Court for the District of Colorado has cited this section of the Restatement with approval. Morrison v. International Harvester Co. of America, D. Colo. 204 F.Supp. 6. Comment i following Section 766 of the Restatement states in part:

"One does not induce another to commit a breach of contract with a third person under the rule stated in this Section when he merely enters into an agreement with the other with knowledge that the other cannot perform both it and his contract with the third person * * *."

Although Larson Distributing Company, through its agents, made inquiry of Uvalde and displayed an interest in becoming its distributor in the Denver area there is no evidence that it intentionally interfered with Zelinger's contract or did anything to induce its termination. Its activities were limited to contracting with Uvalde with knowledge that the contract could not be performed if the Zelinger contract continued in existence, and a jury question was not presented on this issue of its unwarranted and intentional interference with that contract. See Wolf v. Perry, 65 N.M. 457, 339 P.2d 679.

Zelinger urges that the undisputed evidence is such that he should have been granted directed verdicts against all of the counterclaim defendants on his counterclaims charging them with collectively interfering with and bringing about the breach of his distributorship agreement. In essence, Zelinger relies upon a conspiracy theory for these charges. In Lockwood Grader Corp. v. Bockhaus, 129 Colo. 339, 270 P.2d 193, 196, the Colorado Supreme Court listed the elements of a civil conspiracy as follows:

"To constitute a civil conspiracy there must be: (1) two or more persons, and for this purpose a corporation is a person; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful overt acts; and (5)

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