Atlas Brewing Co. v. Huffman

• Decision Date: 16 January 1934
• Docket Number: No. 41983.,41983.
• Citation: 217 Iowa 1217,252 N.W. 133
• Parties: ATLAS BREWING CO. v. HUFFMAN.
• Court: Iowa Supreme Court

217 Iowa 1217

252 N.W. 133

ATLAS BREWING CO.

v.HUFFMAN.

No. 41983.

Supreme Court of Iowa.

Jan. 16, 1934.

Appeal from District Court, Cerro Gordo County; Jos. J. Clark, Judge.

An action upon an account which defendant admitted and filed counterclaim for damages by reason of the breach of an oral contract creating an agency for the sale of plaintiff's product. The facts appear in the opinion. There was a verdict and judgment for defendant, from which plaintiff appeals.

Affirmed.John C. Shipley and Senneff, Bliss & Senneff, all of Mason City, for appellant.

L. R. Boomhower and N. Levinson, both of Mason City, for appellee.

ANDERSON, Justice.

The plaintiff-appellant is a corporation with its principal place of business in Chicago, Ill., and its business is that of conducting a brewery and merchandising its products. The defendant-appellee is a resident of Mason City, Cerro Gordo county, Iowa. In October, 1929, and for a considerable time prior thereto, the defendant was engaged in the sale and distribution of Falstaff brew in the territory surrounding Mason City, Iowa. The latter part of October, 1929, he was solicited by a Mr. S. J. Warring, who was district manager of the Atlas Brewing Company in the state of Iowa, to accept an agency contract with the plaintiff-appellant. The first negotiations along this line occurred in the defendant's office in Mason City. Later in the same month, and at the solicitation of the agent, Warring, the defendant went to Chicago and called at the general offices of the plaintiff company, where he met the president and the general sales manager, a Mr. Richard Dieck. An oral agreement was there entered into by Mr. Warring, the Iowa district manager, in behalf of the company, and the defendant, W. F. Huffman. There is some controversy as to the terms of this contract, but the defendant testifies, and his testimony is supported by other testimony in the record, that he was to have an exclusive agency for the sale and distribution of the plaintiff's products in fifteen counties in Iowa, in the territory including Cerro Gordo county. The plaintiff's testimony limits the exclusive territory to eight counties. There is no dispute in the record as to the consideration for the contract. The defendant was given the right to purchase plaintiff's product at $2.05 per case with a rebate of $1 for each empty case returned. He was to sell the product at $1.95 per case. He was also to receive $.05 per case commission on each case of appellant's product sold in the territory covered by his agency, and outside his exclusive territory by any subagent. At the time this contract was entered into appellant did not have any agents or distributors of its products in the territory involved. The plaintiff claims that it was a part of the agreement that the defendant was to appoint subagents in all counties outside of those in which he had the exclusive agency. The defendant purchased a carload of beer of the plaintiff, one-half of which was delivered to him at Mason City and the other one-half to a subagent appointed by him at Fort Dodge, Iowa. The appellee's testimony tends to prove that he immediately commenced work on the introduction and sale of appellant's product in the territory included in his contract; that he made trips to most of the larger towns in the territory, calling upon many people for the purpose of inducing them to become subagents for the sale of plaintiff's product in different places; that he advertised the product on menu cards in restaurants, and distributed much of the product free in order to create a demand and promote the sale of the product; that he purchased a special truck and employed two special men to assist him in this work. On January 6, 1930, the appellee bought a second carload of beer from the appellant. The agent, Warring, called upon the appellee at his place of business early in January, 1930, and he (Warring) testified that, on this occasion, he gave the appellee until April 1, 1930, in which to perform his contract. The appellee testifies that there was nothing said at that time, or at any other, as to the date he was to perform his contract, and that nothing was said at that time, or at any other, about revoking the contract, or taking the territory or any part of it away from him. Warring also testified that the appellee had not paid for the first carload of beer in full; and that he had not used his best efforts in promoting the interests of the company in the territory. Mr. Dieck, who was the general sales manager of the appellant, testified that the second carload of beer was shipped to Mr. Huffman about January 7, 1930, on open account, and that the first carload had been paid for in full at that time. The testimony further shows without dispute that during the month of February, 1930, Mr. Warring, the Iowa agent of the appellant, called on the Melman Fruit Company at Marshalltown, Iowa, and gave them the right to sell appellant's product in three of the counties which were included in the appellee's exclusive territory; and that the said fruit company immediately commenced to sell the product of the appellant in those counties. The defendant discovered this situation in March, through his men, who were soliciting in the territory, and immediately protested by letter, to the appellant, on account of this violation of the terms of his contract, and when he protested orally to Mr. Warring, the Iowa agent, Warring informed him that the Melman Fruit Company was a big concern; that they could produce more than Huffman; and that they were going to take the agency away from him whether he liked it or not. At this time the appellee claims that he had received no complaint from appellant, or any notice of cancellation of his contract. There is no showing in the record that any notice of cancellation of the contract was ever given to the appellee other than the statement claimed to have been made by Mr. Warring on January 7, that he would give him (Huffman) until April 1, to perform. Appellee had appointed subagents in Humboldt and Webster counties, but did not receive any commission on the sales made by such subagents until March 24, 1930, and none thereafter. The appellee testifies that the cost to him in the sale and distribution of the Atlas products in his territory was $.40 per case, and that this would leave him a net profit of $.50 on each case sold by him direct, in addition to the $.05 per case commission of the product sold by subagents in the territory. About April 1, 1931, the defendant had sold and distributed all of the appellant's product that he had received, and asked them to ship another carload, which they refused to do, and about that time also gave to the Melman Fruit Company the Mason City territory; and that the fruit company sold between six and seven thousand cases of the appellant's product in the Mason City territory alone; that between November, 1929, and December 1, 1930, about three thousand cases of the appellant's product was sold by appellee's subagents, and plaintiff claims that he is entitled to a commission of $.05 per case upon the amount so sold by subagents, and also that he is entitled to $.05 per case upon the amount sold in the Mason City territory by the Melman Fruit Company.

The case was submitted to the jury upon the foregoing facts, and a verdict was returned for the appellee in the sum of $2,091.25. A motion for a new trial was overruled, and the brewing company appeals.

The action was commenced by the brewing company, as plaintiff, to recover on an account for a balance on the second carload of beer shipped to the defendant. The defendant admitted the correctness of the account, but alleged there was nothing due the plaintiff because of its violation and breach of his contract of agency, and filed a counterclaim to recover the amount claimed to be due him as damages for such breach and violation.

[1][2][3] The existence of an agency contract between the parties is not in dispute. The appellant contends that, the contract not being for a definite period, they could cancel it at any time upon reasonable notice. It does not claim that any notice of cancellation was ever served upon the appellee other than the statement of Mr. Warring, its agent, on January 7, 1930, to the effect that appellee would be given until April 1 to perform. What would be a reasonable notice of cancellation of the contract in the instant case would depend upon the circumstances as well as the intention and contemplation of the parties at the time the contract was entered into. Hess v. Iowa Light, Heat & Power Co., 207 Iowa, 820, 221 N. W. 194;Smith v. Cedar Falls & M. R. Co., 30 Iowa, 244. But we do not think it is necessary for us to enter into a discussion as to the length of time that would be necessary to cancel the contract in question, as there is no evidence in the record that the contract was ever cancelled. The contract provided, as claimed by appellee, that it was to continue as long as there would be a demand for the product, and as long as appellee desired to continue with the sale of the same. And such contracts have been held valid in practically all jurisdictions, until, at least, a reasonable notice of cancellation is given. Hichhorn, Mack & Company v. Bradley, 117 Iowa, 130, 90 N. W. 592;Kaufman Bros. & Company v. Farley Manufacturing Company, 78 Iowa, 679, 43 N. W. 612, 16 Am. St. Rep. 462;Huntington v. Jacob Haish Company, 190 Iowa, 1197, 181 N. W. 480. The appellant urges, as one of the errors entitling it to reversal, that there was no competent evidence upon which the jury could compute damages, and that the evidence tending to prove damages was too remote and speculative to form a basis for liability or to warrant a recovery. The appellee contends that he was entitled to recover such profits or commissions as he would have earned had the contract been carried out, less the expenses incident to the...