Edwin K. Williams & Co., Inc. v. Edwin K. Williams & Co.-E.

• Citation: 377 F. Supp. 418
• Decision Date: 18 June 1974
• Docket Number: No. 70-2037-DWW.,70-2037-DWW.
• Court: U.S. District Court — Central District of California
• Parties: EDWIN K. WILLIAMS & CO., INC., a California corporation, Plaintiff, v. EDWIN K. WILLIAMS & CO.—EAST, a Virginia corporation, and Marcoin, Inc., a Virginia corporation, Defendants.

377 F. Supp. 418

EDWIN K. WILLIAMS & CO., INC., a California corporation, Plaintiff, v. EDWIN K. WILLIAMS & CO.—EAST, a Virginia corporation, and Marcoin, Inc., a Virginia corporation, Defendants.

No. 70-2037-DWW.

United States District Court, C. D. California.

June 18, 1974.

COPYRIGHT MATERIAL OMITTED

Grossman, Smaltz, Graven & Perry, Los Angeles, Cal., for plaintiff.

Tuttle & Taylor, Los Angeles, Cal., for defendant.

Huebner & Worrel, Los Angeles, Cal., for defendants on counterclaims, Kemp Printing Co.

MEMORANDUM

DAVID W. WILLIAMS, District Judge.

Beginning about 1935 Edwin K. Williams engaged in the business of designing and providing bookkeeping and business management systems for oil companies and record-keeping books for service station dealers, and of furnishing counseling services to aid them in inventory control, record keeping and the orderly operation of their business. His business was operated under the name of Edwin K. Williams and Co. and he has used various other designations, trademarks and trade names including "Profit Guide," "Quick Sales Recorder," "Profit Analyzer" and "Serv-A-Station Inc."

Fred G. Harris joined plaintiff's staff in 1946 and remained about three years, working generally out of the Los Angeles office. After a stint in the Navy, Harris rejoined Williams in 1952. Just prior to this reunion, Williams had barnstormed the East for business and had received a few accounts, but had made no real progress in developing that territory. In 1952 Williams entered into an agreement which gave Harris the right to "sell, market and promote all bookkeeping systems, forms, books and methods" under the names used by plaintiff, in the states East of the Mississippi River (with stated exceptions). The agreement further gave Harris the right to market under his own name, or under plaintiff's name. Harris had the right to set up sublicensees to distribute the bookkeeping services and he was required to pay plaintiff 30% of the gross revenue he received from this source. Plaintiff turned over to Harris the few accounts he had developed in the Eastern area and from that point henceforth, plaintiff operated West of the Mississippi River (hereinafter called Williams-West) and Harris operated generally East of that line (hereinafter called Williams-East). At first Harris used the name "Fred G. Harris Company, Eastern Representative of Edwin K. Williams and Company" and also used the Serv-A-Station name in his territory; in 1957 he began to phase it out and by 1960 he was using the name Edwin K. Williams and Co., (Va.) (later Edwin K. Williams and Co.—East). Paragraph 7 of the 1952 agreement called for Harris to "use his best efforts to develop said Eastern territory and to maintain the good will of the companies now using Williams' books and systems."

Both Mr. Williams and Mr. Harris were firm, hard-headed businessmen. Williams often scolded Harris for what he considered dereliction of duty in developing the territory and generally tried to maintain the posture of a hard-driving taskmaster over Harris. On the other hand, Harris openly resented the mannerisms of Williams in this regard, but always managed to stay just short of open rebellion against his dominance. The parties to this lawsuit have shared in presenting upwards of 6,000 exhibits consisting of letters between the two men, bulletins and promotional material distributed by Williams to his own branches and licensees and to the branches and sublicensees of Harris, and communications between Harris and his sublicensees. In the latter, Harris attempted to convey the idea that they were all one large national family but that he (Harris) was the "sole proprietor" of the business in the East and that any cooperation between his sublicensees and E. K. Williams and Company in the West was only in the interest of maintaining a national image. A perusal of these many documents provides an interesting saga of the sublimated rivalry between Williams and Harris and the determination of each to maintain a posture of superiority over the other. Needless to say, there were many business disputes that took place concerning the development of the Eastern territory, promotion of the Williams' name and over accountings of funds flowing from one to the other.

Mr. Williams died in 1963 and his widow succeeded him as the head of plaintiff company. No shy violet, the widow quickly stepped into the breach and put together an excellent management team. She showed no intention of letting her husband's project founder or of letting his former associates take over. Her relations with Mr. Harris were no improvement over those that existed between her husband and Mr. Harris and by 1968 their relations were almost at the breaking point. Harris' desire to hold a management seminar outside his territory and within plaintiff's territory caused plaintiff to file a lawsuit against him in the United States District Court in San Francisco in 1968. In an attempt to settle this lawsuit and the many disputes that existed between the parties, Mrs. Williams and her associates and attorneys met with Mr. Harris and his associates and attorneys for four days and hammered out a Settlement Agreement and a Revised Agreement dated July 25, 1968 which purported to resolve all disputes between them and to lead to the dismissal of the San Francisco lawsuit. The Revised Agreement further stated that it was the specific intent of the parties that this agreement shall supercede all other agreements between the parties and that "this Revised Agreement is entire and constitutes all of the promises and representations made by the parties herein to one another."¹ The agreement further states that "all prior agreements between the parties, including all agreements set forth in Article II hereof, are hereby terminated and superceded in their entirety by this Revised Agreement."²

Despite all these efforts at reconciliation, the parties fell to quarreling again and by the middle of 1970 each was refusing to account to the other for commissions due, and plaintiff filed this action. During the pendency of this lawsuit and sometime in February, 1972 Harris and his associates openly repudiated the Revised Agreement, taking the position that it was unenforceable and invalid.

Despite the pronouncements within the Revised Agreement that it is an integrated document which supercedes all earlier agreements of the parties, defendant contends that one must resort to an interpretation of the 1952 agreement in order to determine the true intent of the parties as respects whether the arrangement between the parties was a licensor-licensee situation or an outright sale by plaintiff to Harris of the exclusive right to sell plaintiff's record-books, management services and seminars in the Eastern district. Harris further stoutly contends that both the 1952 and the 1968 agreements amount to an outright sale to him of the right to the use of the name "Edwin K. Williams and Co." in his territory. In support of this he points to the use of the word "grant" in each agreement as opposed to the use of the word "license." I desire to put to rest immediately the contention of Mr. Harris that somehow the words of either agreement amount to a sale to him of the exclusive right to the name "Edwin K. Williams" within his Eastern district. Nowhere in either agreement are there used any words that would reflect this intent. Nowhere in either agreement is there any language that says specifically "Williams sells to Harris the exclusive right to the use of the name `Edwin K. Williams' in the Eastern territory." The plain language of a contract should govern. It should set its limits and fix its boundaries.

The pertinent reference to this in the 1952 agreement is set forth in paragraph 1 thereof as follows:

1. "That Second Party does hereby grant, bargain and sell unto First Party the exclusive right, title and interest to sell, market and promote all bookkeeping systems, forms, books, and methods under said names, which now are used by Second Party, . . ." (emphasis added). (Exh. DX 406).

In the 1968 Revised Agreement the scope of the right is referred to in paragraph III A thereof in these words: ". . . the right to utilize and to license others to utilize the trade names and trademarks used by Williams, . . .." (emphasis added). There is nothing whatsoever in the language of either the 1952 or the 1968 agreement that would support the contention of defendant that there was an outright sale to him of the use of the Edwin K. Williams name in his territory. Paragraph VII D of the Revised Agreement goes so far as to enjoin Harris from using the Edwin K. Williams name or any contraction thereof in connection with any activities not related to the subject of the contract, or the petroleum industry. Only by the boldest assertion of arrogance can Harris breach his contract with plaintiff, openly repudiate it, and then maintain that he has the right to continue the use of the Edwin K. Williams name in or without his territory. His claim that the acknowledged widespread acceptance of this name in the petroleum-oriented industry and the good will it has attained is due to his efforts to promote and publicize the name, was surrendered when he repudiated the Revised Agreement.

I turn to a consideration of whether the two agreements amount to a license to Harris, as contended by plaintiff, or a grant or sale as contended by defendant. In an earlier Order in this case I concluded that the clear language of the contract conflicts with defendant's interpretation and that what was sold involved a marketing right, not a sale. I made reference to Professor Callman's work thusly:

"If the grant of the exclusive use of a trademark is limited as to duration or area (emphasis my own), it will not confer title thereto upon the licensee. A licensee acquires only the right to a limited use of the trademark, for the title to the reversionary

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