W. & J. SLOANE, INC. v. KAPLAN FURNITURE COMPANY
| Decision Date | 24 June 1964 |
| Citation | 232 F. Supp. 791 |
| Parties | W. & J. SLOANE, INC., Plaintiff, v. KAPLAN FURNITURE COMPANY and Knapp & Tubbs, Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Weil, Gotshal & Manges, New York City, for W. & J. Sloane, Inc.
Wolf, Haldenstein, Adler, Freeman & Herz, New York City, for Kaplan Furniture Co. and Knapp & Tubbs, Inc.
Plaintiff seeks to enjoin defendants from marketing and displaying furniture manufactured by Kaplan under the name "Beacon Hill Collection." Plaintiff claims the exclusive right to sell this concededly outstanding quality furniture by virtue of a 1959 oral agreement with defendant Kaplan, by the terms of which, it is asserted, plaintiff was given exclusive rights in plaintiff's "trade areas" — specifically, New York, Washington, D. C. and San Francisco.
The gravamen of plaintiff's action is the granting by Kaplan, of the exclusive use to plaintiff of the name "Beacon Hill" in these trade areas. Kaplan concedes the making of the oral agreement, but avows it was terminable at will by either side. After five years of operation under the agreement, Kaplan suddenly purported to exercise this right in April of this year by informing plaintiff that it intended to allow defendant Knapp & Tubbs, Inc. to display Beacon Hill furniture in the latter's recently acquired New York showroom. It is quite apparent that, among other detriments to plaintiff, this will result in price-cutting.
Plaintiff brings this action to permanently enjoin defendants from executing this plan, and, pending such determination, that they be temporarily enjoined.
Kaplan markets its Beacon Hill collection through various stores around the country, each having the exclusive right to display and sell the line. In exchange for this privilege, the retailer undertakes to advertise, exploit and display the furniture, and to sell it under the Beacon Hill trademark. In return, Kaplan agreed to supply each retailer with the furniture required.
Plaintiff, it is conceded, since 1959 spent substantial sums and devoted considerable effort to exploit the Beacon Hill name, at all times holding it out as exclusively its own. For all intents and purposes, Beacon Hill furniture is a Sloane product, so intensive has been its campaign. The name Kaplan has been associated with the line in a few unimportant instances in the 27 years that Beacon Hill has been marketed in the New York area (for 22 years a similar arrangement existed with B. Altman & Co.).
It is estimated that plaintiff spent $100,000 in extensive advertising of the line since 1959. This is nowhere controverted by defendant. Uncontroverted also is the fact that plaintiff is presently in possession of a Beacon Hill inventory valued at $500,000 retail. This will be seriously de-valued, it is urged, if the relief sought here is not granted. Indeed, already there is evidence to such effect. For instance, relying on announcements by defendants that Beacon Hill furniture will be available in decorator showrooms, an order taken by plaintiff has been cancelled, the purchaser desiring to take advantage of a substantially lower purchase price. That the future sales of its Beacon Hill furniture are likely to suffer seems not a specious argument.
It is conceded that an agreement was reached in 1959. Both parties, however, ask this Court to determine the intent of the agreement by applying the test of "reasonableness" to its terms.
Kaplan asks: "Would I bind myself to plaintiff for the marketing of my furniture, without retaining for myself the unilateral right to terminate the agreement at will?" To answer this, one must keep in mind the factors which prompted Kaplan to use this method of marketing in 1937. In order to be able to market this high priced line of furniture without substantial expense to him, Kaplan gave the name Beacon Hill to established stores throughout the country, relying on the fact that in exchange for a secure and exclusive use of the name, the retailer would expend substantial effort and considerable expense promoting it. It is, therefore, entirely plausible to suppose that plaintiff would not allow Kaplan the right to unilaterally abrogate the agreement.
It is difficult to entertain the thought that plaintiff-retailer would extend itself in this fashion, knowing that the primary asset, the product's exclusivity, could be taken away at the whim of the supplier.
We do not here say that the agreement was terminable on mutual consent. That is for the trier of the facts to determine upon the ultimate resolution of the issues. Wha...
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