Automatic Vending Co. v. Wisdom

• Decision Date: 30 June 1960
• Citation: 182 Cal.App.2d 354,6 Cal.Rptr. 31
• Court: California Court of Appeals Court of Appeals
• Parties: AUTOMATIC VENDING COMPANY, a corporation, Plaintiff and Respondent, v. Bessie Jane WISDOM, individually and doing business as Last Chance Cafe, Defendant and Appellant. Civ. 9913.

Page 31

6 Cal.Rptr. 31

182 Cal.App.2d 354

AUTOMATIC VENDING COMPANY, a corporation, Plaintiff and Respondent, v. Bessie Jane WISDOM, individually and doing business as Last Chance Cafe, Defendant and Appellant.

Civ. 9913.

District Court of Appeal, Third District, California.

June 30, 1960.

Clifford R. Lewis, Sacramento, for appellant.

Devlin, Diepenbrock & Wulff, Sacramento, for respondent.

WARNE, Justice pro tem.

Defendant appeals from a judgment for plaintiff in an action for damages for breach of contract.

Respondent is engaged in the business of selling and dispensing cigarettes by means of automatic vending machines. Defendant leases and operates a cafe. On February 27, 1958, respondent and appellant entered into a written contract whereby appellant granted to respondent a three-year concession for the sale of cigarettes on her premises by means of cigarette vending machines. The provisions of the contract insofar as they are pertinent to the issues presented on this appeal are as follows:

'1) In consideration of the payment of any advance commission hereunder, or the payment of the commissions hereinafter set forth, I/we hereby grant to you, Automatic Vending Company, a corporation, for a period of three (3) years from the date shown hereon, an exclusive concession for the sale of cigarettes in and about my/our place of business located at 2816 W. Capitol Av. West Sacramento, California, known as Bessie Jane Wisdom, DBA Last Chance Cafe.

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'6) You are to pay me/us the following rates of commission for the said exclusive concessions:

On Monthly sales 1000 packages or over .. 8% - on all sales

On Monthly sales 700 to 1000 packages .. 7%

On Monthly sales 400 to 700 packages ... 5%

On Monthly sales 100 to 400 packages ... 4%

'7) I/we agree that you may change the above cigarette commission rates upon written notice to me/us and I/we further agree to accept your count as to the amount of cigarettes sold on my/our premises.

'8) No commissions shall be paid hereunder by you to me/us until all of the advance commissions, if any, heretofore paid by you have been repaid to you in full, and thereafter said commission shall be paid to me/us monthly. I/we shall not assign this contract or any part thereof, without your written consent, during the term hereof.'

Concurrently with the execution of this agreement respondent paid appellant $200 as an advance commission. In January of 1959, appellant demanded that respondent pay to her larger commissions than those provided for in the contract, which respondent refused to do. On January 28, 1959, appellant repudiated the contract and demanded that respondent remove its cigarette vending machine from her premises. Respondent did so and on March 8, 1959, filed this suit to recover damages for loss of profits which it would have earned during the remaining 25 months' life of the contract.

The undisputed testimony of one John Wojcik, vice president of the respondent corporation, shows that the total sales from the cigarette vending machine on appellant's premises during the 12 months immediately prior to appellant's breach of the contract averaged 1,389 packs monthly; that its average gross profit per package of cigarettes was $.076567; that its net profit is determined by deducting from its gross profit a commission paid to appellant of $.02 per package of cigarettes sold and sales tax paid in the amount of $.01 per package sold which resulted in a net profit to appellant of $.04657 per package of cigarettes sold. In arriving at his estimate of respondent's loss by reason of appellant's breach, the witness multiplied the number of packages sold each month by the average profit per pack, and then multiplied this figure by the number of months (25) which the contract had to run at the time of breach, which totaled $1,617 (the amount of damages found by the trial court). The witness testified, however, that he had not subtracted from the computed profits any amount representing the respondent's cost of doing business, because respondent's costs were fixed and would not be diminished by reason of the loss of appellant's account; that even if as many as 20 accounts were lost respondent's cost of doing business would not be affected; and that no special trip had to be made to service appellant's account because it is located on a route taken by one of respondent's men every day.

Appellant first contends that the contract is illusory, lacks mutuality of obligation, and is void since in effect it gave respondent the discretionary power to vary the commissions which defendant would receive. We feel that this contention is without merit.

The general rule is that: 'An agreement that provides that the price to be paid, or other performance to be rendered, shall be left to the will and discretion of one of the parties is not enforceable. This is because the party having such discretion makes no real promise to pay or to perform. An illusory promise is no promise at all and is not a sufficient consideration for a return promise. But the fact that one of the parties reserves the power of varying the price or other performance is not fatal if the exercise of this power is subject to prescribed or implied limitations, as that the variation must be in proportion to some objectively determined base or must be reasonable.' (1 Corbin on Contracts, sec. 98, p. 311....