Beatty Safway Scaffold, Inc. v. Skrable

• Decision Date: 04 May 1960
• Citation: 4 Cal.Rptr. 543,180 Cal.App.2d 650
• Court: California Court of Appeals
• Parties: BEATTY SAFWAY SCAFFOLD, INC., a corporation, Plaintiff, Cross-Defendant and Appellant, v. B. H. SKRABLE, Defendant, Cross-Complainant and Respondent, and H. M. Skrable and B. H. Skrable, individually and as co-partners doing business under the firm name and style of H. M. Skrable & Son; H. M. Skrable & Son, a co-partnership, et al., Defendants. Civ. 6026.

Page 543

4 Cal.Rptr. 543

180 Cal.App.2d 650

BEATTY SAFWAY SCAFFOLD, INC., a corporation, Plaintiff, Cross-Defendant and Appellant, v.B. H. SKRABLE, Defendant, Cross-Complainant and Respondent andH. M. Skrable and B. H. Skrable, individually and as co-partners doing business under the firm name and style of H. M. Skrable & Son; H. M. Skrable & Son, a co-partnership, et al., Defendants.

Civ. 6026.

District Court of Appeal, Fourth District, California.

May 4, 1960.

Vladimir Vucinich and William Berger, San Francisco, for appellant.

Crossland, Crossland & Richardson and William C. Crossland, Fresno, for respondent.

GRIFFIN, Presiding Justice.

About March 12, 1956plaintiff corporation brought this action for accounting, specific performance, damages and injunction against certain described defendants including B. H. Skrable individually, respondent herein (hereinafter referred to as defendant), alleging that defendants, on September 7, 1948, as distributors, entered into an agreement in writing (exhibit A, dated September 7, 1948, attached to complaint) relating to the exclusive distribution by defendant of scaffolding and grandstand equipment in Kern and San Luis Obispo Counties manufactured by plaintiffs in San Francisco.In addition to many other provisions, exhibit A provided, in paragraph 2:

'The Distributor hereby agrees to purchase or lease from the Company all of the Distributor's requirements of standard scaffolding and grandstand equipment, and the Company agrees to sell or lease, as the case may be, such equipment to the Distributor on the terms and subject to the conditions hereinafter provided.'

Paragraph 4 provides:

'The Distributor shall pay for purchased equipment at the Company's then list prices, which may be changed by the Company from time to time without notice. * * *'

Paragraph 6 reads:

'The term of this agreement shall be for five (5) years from date hereof unless sooner terminated as hereinafter provided.The Distributor shall have the option to renew this contract for an additional period of five (5) years provided the Distributor has complied with all of the terms and conditions of this agreement. * * *'

Paragraph 9 provides:

'The Distributor will not manufacture, sell or lease in said territory any devices, products or equipment competing with the devices, products and equipment mentioned in this agreement, during the continuance of this agreement and for three (3) years thereafter.'

Paragraph 16 recites:

'In the event that either party to this agreement shall fail or neglect to do or perform any of the terms, promises or conditions on its part to be done or performed, the aggrieved party may at its option terminate this agreement upon thirty (30) days' written notice of such default and termination.* * * In the event of termination of this contract, the Distributor agrees to discontinue the use of the trade name 'Safway' and 'Beatty' and to change any corporate name used by it eliminating the name 'Safway' and 'Beatty."

Paragraph 21 reads:

'The Distributor shall have the exclusive selling right of the Company's standard scaffolding and grandstand equipment in said territory for the term of this agreement so long as the Distributor shall secure a minimum of $15,000.00 at Distributor's cost, of sales annually. * * *'

[180 Cal.App.2d 653] Paragraph 21-c provides:

'In the event the Distributor does not secure the minimum annual sales herein provided, the Company at its option shall have the right to terminate this agreement in the manner herein provided or to terminate the said exclusive selling and rental rights.'

Paragraph 22 reads:

'If this agreement shall be terminated, then the Company shall have the option to repurchase all of the Distributor's inventory of Safway equipment and shall pay therefor the Distributor's net cost for such equipment, less 10% annual depreciation if such equipment is in good condition.'

Defendant Skrable, by way of cross-complaint against plaintiff corporation, alleged that $386 was due defendant in connection with the sale of certain bleachers.The trial court denied recovery on this cross-complaint.A dismissal was entered as to defendants H. M. Skrable & Son and H. M. Skrable & Son, a co-partnership.

Facts

Defendant did business under the names of 'Beatty Safway Scaffold Company' from September 7, 1948 to January 1, 1951, and as 'Safway Scaffold Company' from January 1, 1951 to December 1955, and thereafter as 'Tubular Scaffold Company.'

It is conceded that defendant's stipulated sales quota of $15,000 per annum was never met; the required rental inventory of $25,000 was never acquired during the life of the contract.It does appear that after September 7, 1953defendant purchased about three-fourths of his scaffolding from other companies.Apparently it was this action that gave rise to the main dispute between these parties.On April 13, 1951plaintiff wrote defendant cancelling the exclusive sales privilege in his territory for products manufactured by the plaintiff.

The principal claim of defendant on this appeal is that, by the terms of the original written agreement, it was to run only for a term of five years unless sooner terminated, and the distributor had an option to renew it for a like term, provided he had complied with all of its terms; that he never exercised this option by notice in writing or otherwise and never fully complied with its terms, and accordingly it expired of its own force; and since it was not in effect at the time of the claimed breaches, plaintiff had no right of action on it.Plaintiff admits defendant gave no written or oral notice of renewal, but contends that by defendant's action in continuing to purchase merchandise under it and accepting the benefit of it, he did in fact exercise his option to renew, and also argues that defendant would be estopped to deny it.The court specifically found against plaintiffs on these questions.This point will determine many of the other points raised on this appeal.

It is the general rule that when a contract specifies the period of its duration, it terminates on the expiration of such period.12 Am.Jur. 860 sec. 305.No notice of any kind to renew the contract was given by the defendant at any time.No inquiry of any kind concerning the renewal was made by the plaintiff.There was no communication concerning renewal between the parties, oral or written, before or after the expiration of the contract.We are here dealing with a provision for the renewal of a contract, not an extension of one.There is a clear distinction between renewing a contract and extending the terms thereof.As applied to leases, it has been said:

'Extension may be defined as the act of stretching or spreading out of the former term of the lease.A renewal, on the other hand, creates a new estate, and imports the execution of a new lease.'30 Cal.Jur.2d 234 sec. 98.

See alsoBurroughs v. Ben's Auto Park, Inc., 27 Cal.2d 449, 454, 164 P.2d 897;Robertson v. Drew, 34 Cal.App. 143, 144, 166 P. 838;Shamp v. White, 106 Cal. 220, 222, 39 P. 537.In Pyrate Corporation v. Sorensen, 9 Cir., 44 F.2d 323, the court held there was a distinction between leases of real property and renewal of an ordinary contract, because, in dealing in an estate in real property, time and manner of renewal must be determined with relation to that estate.There was evidence in the instant case that almost immediately after the fiveyear period mentioned in the contract, defendant started purchasing tubular products from other sources and plaintiff knew of such reduction in business with its firm.It likewise knew of defendant's failure to report and to maintain an inventory in the amount mentioned in the agreement.Defendant failed to act differently although warned by plaintiff in...