Cross-Abbott Co. v. Howard's, Inc.

Decision Date02 February 1965
Docket NumberCROSS-ABBOTT,No. 1234,1234
Citation207 A.2d 134,124 Vt. 439
CourtVermont Supreme Court

Black & Plante and Frank G. Mahady, White River Junction, on the brief, for plaintiff.

Davis, Martin & Free, Barre, for defendant.


KEYSER, Justice.

The plaintiff seeks by its bill in chancery to permanently restrain the defendant from using or maintaining any trading stamp plan in its retail store other than the stamp plan of Top Value Enterprises, Inc. or other plan approved by plaintiff. After hearing, the chancellor made findings of fact and entered a decree dismissing plaintiff's bill of complaint. From this action plaintiff has appealed.

The findings show these parties entered into a written contract, called an operating agreement, on July 27, 1960. The plaintiff is a wholesaler of foods and non-food commodities. The defendant owns and operates a retail store and market in Barre Town, selling foods and non-food commodities of the type dealt in by the plaintiff. This operating agreement obligated the defendant to buy from the plaintiff, all food and non-food commodities, with certain exceptions, which it required for reslae in the ordinary course of its store business. The plaintiff agreed thereby to sell the same to the defendant and in addition agreed to provide promotional, supervisory, accounting and other services to the defendant. Previously, on March 10, 1960, the plaintiff had entered into a contract with Top Value Enterprises, Inc., the purpose of which was to promote and increase its business by the use of trading stamps known as 'Top Value Stamps'. The plaintiff supplies these stamps it thus acquired under said contract to the defendant and its other retail establishments making a profit thereon. These trading stamps are given by the retail store as a bonus to its customers for their business, the number being based upon the dollar value of the goods purchased. The defendant at first obtained from the plaintiff, and used in its store, the Top Value stamps. In June 1963, defendant began to use an additional and different kind of trading stamps called 'S & H Green Stamps'. Defendant gave these green trading stamps to its customers if they preferred them to the 'TV stamps,' but has continued to use and issue to its customers both kinds of stamps.

The appeal presents one basic question, the determination of which will control the disposition of the case. It is--Does the operating agreement entered into by these parties prohibit the defendant from the use of a trading stamp plan other than the Top Value Enterprises, Inc. stamp plan not approved by the plaintiff? The plaintiff urges that clauses 2, 3, 7, 9, 15 and 16 of the operating agreement establish its position that the agreement prohibits the defendant from using trading stamps other than 'Top Value' supplied by the plaintiff.

It is well established in construing written instruments to ascertain the intention of the parties that courts must give effect to every part and from the parts form a harmonious contract. Jackson v. Rogers, 120 Vt. 138, 141, 134 A.2d 620; Abraham v. Dougherty, 115 Vt. 71, 51 A.2d 133. Words employed in a contract will be assigned their common meaning and usage where they can be sensibly applied to the subject matter. Texaco, Inc. v. Rognow, 150 Conn. 401, 190 A.2d 48. However, if the language of the instrument is clear and unambiguous its intent cannot be altered by evidence of extraneous circumstances; and in such situation the instrument is to be interpreted by its own language, and the understanding of the parties must be deemed to be that which their own written instrument declares. Stratton v. Cartmell. 114 Vt. 191, 194, 42 A.2d 419. See, also, Haklits v. Oldenburg, 124 Vt. 199, 202, 201 A.2d 690; Feinstein Bros. v. Hotte Granite Co., 123 Vt. 167, 170, 184 A.2d 540.

The plaintiff claims trading stamps are a non-food commodity and thus embraced within the provisions of clause 2 of the agreement. We do not agree with this contention of plaintiff. The word 'commodity' is defined as everything movable that is bought and sold, Peterson v. Currier, 62 Ill.App. 163; any article that is bought and sold, Webster's Unabridged Dictionary, 2d Ed. In Sperry & Hutchinson Co. v. Mechanics' Clothing Co., C.C., 135 F. 833, 834, the court said, 'A trading stamp is not ordinary property. It is suigeneris. * * * In the transaction between the company and the merchant, the stamp, once issued, represents so much advertising furnished and paid for. Once issued by the merchant, it is functus officio as a token of the sale and use of so much advertising. The trading stamp, when issued, represents a closed transaction between the merchant and the company, as well as an outstanding obligation to redeem the stamp.' Stamps given a customer with cash purchases of merchandise are his reward for paying cash and constitute a 'discount for cash'. Sperry & Hutchinson Co. v. Margetts, 25 N.J.Super. 568, 96 A.2d 706, 712. A trading stamp is a stamp which entitles a buyer of goods to obtain from some person other than the seller some article of merchandise in addition to that sold. State v. Dalton, 22 R.I. 77, 46 A. 234, 48 L.R.A. 775. The stamp represents the right to redeem for articles which the stamp company sells at a stipulated number of stamps and is a chose in action. Sperry & Hutchinson Co. v. Hertzberg, 69 N.J.Eq. 264, 60 A. 368. It is well known that the trading stamp is a device to attract customers or to induce those who have bought once to buy again and is a promotional scheme. These stamps are not an item sold by the merchant as a part of his stock in trade. Rather, they are issued as a premium to the customer by the merchant without charge, the number of stamps issued being based upon the percentage of the cash purchases. Patently, trading stamps are not something that the defendant 'required for resale' in the ordinary course of its retail business.

The plaintiff takes the position that it sells the trading stamps to its retail grocer customers. This, however, is not the fact. A sale is a contract whereby the ownership of property is transferred from one person to another for a consideration. State v. Weissman, 73 N.J.Super. 274, 179 A.2d 748. A sale is defined in the Uniform Sales Act, 9 V.S.A. § 1501(b), to be--'A sale of goods is an agreement whereby the seller transfers the property in goods to the buyer for a consideration called the price.' By the agreement between Top Value Enterprises, Inc. and the plaintiff, the latter is only licensed and authorized to use with its retail grocer customers, the licensor's Top Value Stamps as symbols or tokens in connection with such retail businesses. This agreement further provides in part that 'the property in and title to said Top Value Stamps * * * shall remain in Licensor, and shall, in no event pass to Licensee, or any other person, firm or corporation.' These provisions can leave no doubt that the trading stamps are not something which is subject to being bought and sold. Rather it is the advertising and the inducement to purchase merchandise at retail, which is bought. The plaintiff by its very agreement with Top Value Enterprises, Inc. neither buys the trading stamps nor does it ever acquire title to them. Under these circumstances, there can be no sale of the stamps by the plaintiff to the defendant as it claims. Clearly, the stamps are not the subject of resale by the defendant's store or a non-food commodity, under clause 2 of the operating...

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25 cases
  • Pond v. Carter
    • United States
    • Vermont Supreme Court
    • April 4, 1967
    ...and the understanding of the parties must be deemed to be that which their own written instrument declares. Cross-Abbott v. Howards, Inc., 124 Vt. 439, 441, 207 A.2d 134. The defendant argues that there was no provision which deals with the situation where the seller accepts the buyer but i......
  • Estate of Smith v. U.S.
    • United States
    • U.S. District Court — District of Vermont
    • September 19, 1997
    ...parties, a court must give effect to every part, and from the parts form a harmonious whole, if possible. Cross-Abbott Co. v. Howard's, Inc., 124 Vt. 439, 441, 207 A.2d 134, 137 (1965). When an agreement is clear and unambiguous, its plain meaning governs its interpretation. Workman v. Agen......
  • Suburban Propane, a Div. of Nat. Distillers and Chemical Corp. v. Proctor Gas, Inc.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • January 9, 1992
    ...the question of Proctor's breach of the putative exclusivity provision to the jury. Proctor relies on Cross-Abbott Co. v. Howard's, Inc., 124 Vt. 439, 443, 207 A.2d 134 (1965), for the proposition that all valid covenants in restraint of trade must be explicitly stated. In Cross-Abbott the ......
  • Page v. Lyle H. Hall, Inc.
    • United States
    • Vermont Supreme Court
    • November 8, 1965
    ...the proceeds to the indebtedness. With supporting evidence present, this Court will affirm his finding of fact. Cross-Abbott v. Howard's Inc., 124 Vt. 439, 445, 207 A.2d 134. This result is strengthened by the rule construing a doubtful provision against the party responsible for drafting i......
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