Charles v. Judge & Dolph, Ltd.

• Citation: 263 F.2d 864
• Decision Date: 25 February 1959
• Docket Number: No. 12418.,12418.
• Parties: Pierre CHARLES, Le Liquidateur Amiable, Societe Anonyme Du Vermouth Export Pissis-Noilly, Plaintiff-Appellant, v. JUDGE & DOLPH, LTD., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

263 F.2d 864 (1959)

Pierre CHARLES, Le Liquidateur Amiable, Societe Anonyme Du Vermouth Export Pissis-Noilly, Plaintiff-Appellant, v. JUDGE & DOLPH, LTD., Defendant-Appellee.

No. 12418.

United States Court of Appeals Seventh Circuit.

February 25, 1959.

Howard T. Markey, Norman S. Parker, James G. Staples, Chicago, Ill., for plaintiff-appellant.

Emil N. Levin, Elmer M. Leesman, Friedlund, Levin & Friedlund, Chicago, Ill., for appellee-defendant.

Before DUFFY, Chief Judge, and SCHNACKENBERG and HASTINGS, Circuit Judges.

DUFFY, Chief Judge.

This is a suit for damages for breach of contract. The trial was to the court. No oral testimony was heard. At the conclusion of plaintiff's case, plaintiff moved for a finding and judgment in its favor pursuant to Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. The trial court granted judgment for the defendant. The counter-claim which had theretofore been interposed by defendant was withdrawn.

Defendant is a distributor of wines and liquors with principal place of business at Chicago, Illinois. It has imported vermouth into this country since 1933. Plaintiff company, a French corporation, was a manufacturer of French vermouth, and was located in or near Paris, France.

On December 20, 1946, the plaintiff and defendant entered into a written contract. The parties to that contract and to this suit are in dispute as to whether the contract was one of purchase and sale or a contract establishing a principal and agent relationship. Without attributing any particular significance to the phraseology of the agreement at this point, we shall sometimes use the language of the contract and refer herein to plaintiff as principal and the defendant as agent.

Prior to this suit, plaintiff company became bankrupt, and Pierre Charles as "Le Liquidateur Amiable" is carrying on this suit in behalf of the company. Any reference herein to plaintiff or plaintiff company refers to Societe Anonyme Du Vermouth Export Pissis-Noilly with whom defendant signed the agreement.

Under the contract, the defendant was given the exclusive right to sell and distribute plaintiff's vermouth in this country for a period of five years. Plaintiff agreed to sell its product to defendant at $9.50 per case of twelve bottles during the first four months of the agreement, and further provided the price could be revised from time to time by the principal to meet any change in the cost of raw materials or other production costs. Adjustment in prices was also authorized on the basis of changes in the rate of exchange of the currency of the two countries. The contract stated: "In both cases, the express intention of the parties is that the product of the Principal be sold at a price which will not be higher than the price of the best competing product of the same type." Defendant agreed to pay "for all goods sold under this agreement by documentary bank credits at the time of shipment from the Principal's factory." The contract also provided that if the Agent failed to order the number of cases each month as specified, the principal could elect to terminate the agreement on thirty days' notice. There was also a provision that if there was any other breach of the provisions of the contract by either Principal or Agent, either party could terminate same upon giving sixty days' notice in writing.

Under the contract, plaintiff undertook to furnish a minimum of 1,500 cases per month over a five year period, shipments to start on January 15, 1947. Defendant agreed to order not less than 1,500 cases per month during the first year, 2,000 cases per month during the second year; 3,000 cases per month during the third year; and 4,000 cases per month during the fourth and fifth years. Defendant agreed not to sell any other imported French vermouth during the continuance of "this agency," and to sell it under no other name than "Vermouth Export Pissis-Noilly."

The agreement provided that defendant should bear all expense for advertising the product, and with reference to a sample which plaintiff had furnished, provided "The Principal undertakes to furnish the product lighter in color and drier in taste than the sample submitted to the Agent, but the product shall be of the same character and quality as the sample submitted to the Agent."

The first shipment of vermouth consisting of 1,500 cases was shipped from France on April 3, 1947. This shipment was paid for by defendant in France. Defendant obtained a sample on May 20, 1947. Promptly thereafter defendant wrote to plaintiff company complaining of the packaging and the branding on the cases. Complaint was also made that the product contained large crystals of tartaric acid, and also that there was an "eye appeal" of dirty vermouth. A laboratory to which a bottle from the first shipment had been submitted, reported to defendant that the tartaric acid crystals could easily be filtered out, and, as this vermouth was made with a certain amount of light-bodied white wine, some sediment was likely to show up. Plaintiff company wrote to defendant on June 12, 1947, agreeing to remedy the defects in marking the cases and also explaining the presence of tartaric acid in any vermouth which has a white wine base. However, plaintiff company assured defendant that in the next shipment, the tartaric acid in the product would be reduced to 1/6th of the amount in the first shipment.

On June 17, 1947, and apparently before receipt of plaintiff's letter of June 12, 1947, defendant wrote plaintiff company asking for credit for certain breakages and related the advice of its chemist that the vermouth be filtered. Defendant again asked for plaintiff's "decision or suggestions" and also observed that filtering the entire shipment would be very expensive. Plaintiff replied on June 26, 1947, after the second shipment of 1,500 cases had been made, and predicted that defendant would be satisfied with such shipment.

On July 4, 1947, plaintiff wrote that credit for $13,500 for the second shipment had not been made as required by the contract, and informed defendant that another shipment of 1,500 cases would be made on July 24th. Defendant cabled on July 15, 1947 asking plaintiff to delay the July shipment until the June shipment had arrived and been inspected. Defendant stated the first shipment was not saleable due to excess tartaric acid crystals.

On July 24, 1947, plaintiff company wrote to defendant stating that the vermouth could be treated on the spot, and offering to reimburse the cost that this extra work would entail, and later did send $1,500 to defendant for that purpose. On August 6, 1947, defendant wrote plaintiff that it would be necessary to filter the entire 1,500 cases of the first shipment as all of the merchandise from this lot had been returned to them. The letter concluded: "Please do not make any shipments until you are notified by us by cable." On August 22, 1947, defendant wrote that the bottles used were of improper size and that the labels did not indicate the correct amount of contents of the bottles. Defendant paid $294.45 extra taxes on the second shipment due to the extra quantity of vermouth in the bottles.

On November 24, 1947, one Claude R. Myers wrote to the president of defendant upon behalf of the president of plaintiff. Defendant answered under date of December 3, 1947 stating it had...