Coleman v. Ford Motor Co.
| Decision Date | 29 January 1917 |
| Citation | 193 S.W. 866,195 Mo.App. 554 |
| Parties | M. B. COLEMAN et al., Respondents, v. FORD MOTOR CO., Appellant |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. O. A. Lucas, Judge.
REVERSED AND REMANDED (with directions).
Judgment reversed and cause remanded.
Scarritt Scarritt, Jones & Miller and L. B. Robertson for appellant.
Frank M. Lowe for respondents.
Coleman Brothers, the plaintiffs, were engaged in business at Sedalia and dealt in automobiles. On March 12, 1913, they entered into a written contract with the defendant, the Ford Motor Company, whereby they obtained the restricted right to sell, within a certain designated territory surrounding Sedalia, automobiles manufactured by defendant. The defendant agreed, subject to the terms and conditions of the contract to sell its said machines to plaintiffs in said territory, to be sold and delivered by them therein only.
As a guarantee of the full and faithful performance of all the terms and conditions of the contract, the plaintiffs deposited with the defendant the sum of $ 250. In said contract the plaintiffs were called "The Dealer-Licensee" and the defendant was termed "The Manufacturer-Licensor." And said contract contained a provision that
The contract was to expire by limitation on September 30, 1913, but a provision therein authorized its termination at the will of either party at any time upon giving notice to the other party. It was further provided that:
"All sales made by the Dealer-Licensee after such termination of this license-agreement shall be governed by the terms and conditions thereof," and that "in case the Dealer-Licensee has any Ford cars still on hand the sale thereof shall be subject to the terms of this license-agreement and any violation of the terms of sale shall constitute a violation of this license-agreement under said patents."
On April 30, 1913, the defendant exercised the right of termination existing in either party, and terminated the contract by giving the required notice.
The contract also provided that at the end of each week plaintiffs should make a report of all Ford automobiles sold by them under the agreement, giving car and motor numbers, date of sale, and name and address of each purchaser. And on May 14, 1913, defendant requested of plaintiffs a report of certain cars sold and delivered to plaintiffs. In due time said report was received from them in which they stated that car No. 195,292 had been sold to A. M. Parks of Sedalia, Mo. Defendant refusing to surrender the $ 250 deposit, plaintiffs brought this suit to recover said deposit.
A jury was waived and the cause was tried by the court. It was proved, and the court so found, that said car No. 195,292 was sold on May 2, 1913, to C. L. Parks outside of plaintiffs' allotted territory and not, as stated by said report, to A. M. Parks in said territory.
By the giving of declaration No. 5 and the refusal of declaration No. 6, the court declared the law to be that if the sale of said automobile outside of the specified territory had been made before April 30, 1913, the date the contract was terminated, then plaintiffs would have forfeited the $ 250 deposit, but that as the sale was made after the termination of the contract, it was not forfeited; and, therefore, judgment was rendered for plaintiffs for the amount of the deposit together with costs. The defendant has appealed.
Under the contract, either party had a perfect right to terminate it at will at any time, and consequently the defendant's termination thereof on April 30, 1913, was not wrongful but in strict accord with the contract. Now, said contract not only contained terms and conditions regulating the sale of Ford automobiles during the continuation of the contract, but said contract also provided that after its termination, whether at the will of either party or for cause, the sale of such automobiles as plaintiffs had obtained under the contract and which were yet on hand, should be "governed by the terms and conditions thereof" and should be "subject to the terms of this license-agreement and any violation of the terms of sale shall constitute a violation of this license-agreement under said patents." One of the conditions under which plaintiffs bought defendant's patented machines was that they would not sell them outside of a specified territory, and plaintiffs agreed that if they did sell them outside of that territory they would forfeit the deposit. They further agreed that if the contract should be terminated in any of the ways specified therein, the sale of such automobiles as were then on hand, and not yet sold, should continue to be governed by the same terms and conditions as before. In other words, as the contract was at any time terminable by either party at will, the agreement provided for the restricted sale of such cars as plaintiffs had on hand after such termination; that is, the parties agreed that although the contract be terminated, so that plaintiffs would not have the right thereafter to get defendant's machines, yet, as to machines theretofore obtained and not yet sold, the contract would continue in force. And plaintiffs would have no more right to sell a car outside the specified territory, after the termination of the contract, than they did before. We see no reason why a contract may not thus provide for the termination of the general relations existing between the parties by reason of it, and at the same time provide for the continuation of certain rights as to things obtained under but not as yet disposed of according to the contract. In other cases the principle seems to be well established that parties to a contract may provide therein for their respective rights and liabilities in the event of the termination thereof. [Hayes v. City of Nashville, 80 F. 641; McCreery v. Day, 119 N.Y. 1, 23 N.E. 198; Schwab v. Baremore, 95 Minn. 295, 104 N.W. 10; Alabama Oil Co. v. Sun Company, 99 Tex. 606, 92 S.W. 253; Mayor etc. of New York v. New York Refrigerating etc. Co., 146 N.Y. 210, 40 N.E. 771.] The fact that the defendant terminated the contract makes no difference, since it had a right to terminate and plaintiffs agreed to the contract with that right in it, and also agreed that if that right were exercised they would sell the cars still on hand subject to the terms and conditions of the contract.
There is nothing unreasonable or objectionable in such a contract. The defendant is the holder of patents from the government granting it the exclusive right to make and sell its machines. The contract in this case is one that affects its right to sell its manufactured patented product. It is true, it agreed to sell, and did sell, the machines to plaintiffs but the price plaintiffs paid was not all the consideration defendant received. A part of that consideration was that plaintiffs would not sell outside their territory and thus encroach upon the territory of other dealers to whom defendant had granted a similar restricted right to sell. This stipulation confining each dealer to his allotted territory is not a jug-handled affair--all on one side. It is to the benefit of both the manufacturer-patentee and the dealer. By the contracts made with the dealers in the territory adjoining plaintiffs' territory, defendant could and did prevent those dealers from encroaching on plaintiffs' territory, and thus it was to the advantage of each dealer that he agreed to be confined to his allotted territory. By these contracts the defendant had...
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