Schnerb v. Caterpillar Tractor Co., 394.

• Decision Date: 28 July 1930
• Docket Number: No. 394.,394.
• Citation: 43 F.2d 920
• Parties: SCHNERB et al. v. CATERPILLAR TRACTOR CO.
• Court: U.S. Court of Appeals — Second Circuit

43 F.2d 920 (1930)

SCHNERB et al. v. CATERPILLAR TRACTOR CO.

No. 394.

Circuit Court of Appeals, Second Circuit.

July 28, 1930.

Wm. H. Page, of New York City (H. H. Nordlinger, Wm. Harvey Smith, and Samuel H. Hofstadter all of New York City, of counsel), for appellants.

John Thomas Smith, of New York City (Anthony J. Russo and Albert M. Levert, both of New York City, of counsel), for appellee.

Before L. HAND, SWAN, and MACK, Circuit Judges.

SWAN, Circuit Judge.

This is the third time this litigation has been before this court. In the first appeal a judgment of nonsuit in a prior action was affirmed. 289 F. 1001. Within a year thereafter the present action was begun in the Supreme Court of New York, and removed on diverse citizenship into the District Court. After a trial, judgment was entered dismissing the complaint on the ground that the judgment in the prior action was a bar. This was reversed in 24 F.(2d) 377. A second trial of the present action was then had, resulting in the judgment above described and the present appeal.

The complaint alleges two independent causes of action; the first being referred to as the French cause of action, the second as the English cause of action. Both in the trial court and on this appeal the questions presented as to each cause of action are separate and unrelated. Consequently they require independent treatment.

The French Cause of Action.

This is based upon a written agreement in the form of a letter, dated August 14, 1912, signed by the vice president of the defendant, whose corporate name was then Holt Caterpillar Company, and accepted by the plaintiffs. The defendant manufactured caterpillar tractors under patents owned by it, and desired to extend its foreign sales. Schnerb and Wegimont were business men of substance in Antwerp, Belgium, with commercial affiliations in many countries. By the contract they were given "exclusive representation" in the sale of defendant's tractors in defined territory, including France. Defendant was to refer all inquiries from propective customers within this territory to plaintiffs; they were to refer all inquiries from other territory to defendant. Implicitly each party agreed not to sell in the other's territory. While there was no promise to buy or sell a definite number of tractors, we think defendant impliedly agreed to fill plaintiffs' orders if it could. A price "for the present" of the 60 horse power type of tractor was specified, and defendant promised that the prices charged plaintiffs should be in keeping with the prices being charged other agents. Plaintiffs agreed that the prices at which they resold should be those charged by other agents or "as may be mutually agreed" between plaintiffs and defendant. Plaintiffs were also to act for defendant as it might direct in protecting its patents and apparently its other rights. As indicated by subsequent correspondence, it was expected that the plaintiffs would spend money and effort to develop business in tractors within their territory, and in fact they did so, but, prior to the outbreak of the European War in August, 1914, the plaintiffs had purchased only twelve tractors.

The defendant's contention that this was not a valid contract cannot prevail. While the letter is vague in many respects, it constitutes, as the court has previously intimated, a contract. 289 F. 1001, 1004. There are mutual considerations, and the terms are definite enough to use as standards in determining performance. Defendant must fill plaintiffs' orders, if the capacity of its plant permits, and prices are not left wholly to the will of either party; defendant's price to plaintiffs must be the same as it charges other "agents", i. e., dealers having exclusive territory, and plaintiffs' resale prices must follow those of other "agents." Each party implicitly promises not to invade the territory of the other while the contract continues. We start, therefore, with the premise that the letter of August 14, 1912, evidences a valid contract.

The complaint sets out this contract and charges that defendant violated it by selling in 1915 seventeen tractors and one trailer to Schneider & Co. for use in France, and by selling from 1916 to the termination of the war a very large number of tractors to the French government. For these violations of their "exclusive territory," plaintiffs ask damages of nearly $350,000, which they assert to be the profits to which they were entitled under the contract; that is, the difference between the price at which defendant would have sold to them and the prices paid by Schneider & Co. and the French government. The defendant pleaded, among other defenses, that the contract had been terminated before the sales in question. If this defense was established, a verdict should have been directed for the defendant, and all other questions become immaterial.

The 1912 letter recites that it is "to be effective until more definite conclusions are reached," and that the plaintiffs "are to have the exclusive representation pending the conclusion of a regular agency agreement." It fixes no definite term, and says nothing as to termination. Both counsel, however, assume that it could be terminated at will by either party by giving notice, and we have no doubt that defendant was privileged to terminate its obligations at any time by notice, except as to business already in negotiation by the plaintiffs. See Rees v. Pellow, 97 F. 167 (C. C. A. 6); Bronn v. Northampton-E. & W. Traction Co., 200 F. 897 (C. C. A. 3); Crowe v. Trickey, 204 U. S. 228, 27 S. Ct. 275, 51 L. Ed. 454.

On October 12, 1914, defendant addressed a letter of revocation to Mr. Schnerb at his Antwerp office. He had already removed to London, and testified that he did not receive the letter until January 17, 1919. On October 14, 1914, defendant learned by a cable from Schnerb that he was in London. Instead of mailing him a copy of its letter of revocation, defendant instructed its representative in England, Mr. Gotshall, to advise Mr. Schnerb of the revocation. Mr. Gotshall testified that he delivered personally to Mr. Schnerb a copy of the letter of October 12th; this Schnerb flatly denied. However unlikely it may seem that Mr. Gotshall failed to carry out the instructions given him, which his testimony asserts he did carry out, the jury's verdict compels us to accept Schnerb's denial. Schnerb, however, admits that by March 9, 1915, he knew of the Baumgartner letter which stated that his contract was "suspended by mutual agreement." He thereupon wrote to defendant, protesting vigorously that he had never so agreed. In reply he received an apologetic letter, in which defendant did not clearly take...