Des Moines Blue Ribbon Distributors, Inc. v. Drewrys Limited, U.S.A., Inc.

Citation256 Iowa 899,129 N.W.2d 731
Decision Date16 July 1964
Docket NumberNo. 51321,51321
CourtIowa Supreme Court

Dickinson, Throckmorton, Parker, Mannheimer & Raife, Des Moines, and Oare, Thornburg, McGill & Deahl, South Bend, Ind., for appellant.

Abramson, Myers & Hockenberg, Des Moines, for appellee.

GARFIELD, Chief Justice.

This is a law action by Des Moines Blue Ribbon Distributors, Inc., against Drewry's Ltd. U. S. A., Inc., for damages from cancellation by defendant of an agreement, alleged to be partly written and partly oral, under which plaintiff says it was a distributor of defendant's beer. Trial resulted in jury verdict and judgment for plaintiff for $6429.17 from which defendant has appealed.

Plaintiff's petition alleges that about February 18, 1955, plaintiff's assignor, Des Moines Blue Ribbon Distributor, a copartnership, and defendant entered into the agreement whereby in consideration of establishing and maintaining a wholesale distributorship for the sale of defendant's beer, it granted Blue Ribbon exclusive right to sell its products in all of Polk county (including Des Moines), two adjoining counties and parts of two others and agreed said arrangement was to continue so long as there would be a demand for the product and Blue Ribbon desired to continue with the sale of the same. The written portion of the contract was attached to, and made part of, the petition.

The petition further alleges future profits from said business were contemplated by the parties at the time the agreement was made and induced Blue Ribbon to enter into it; pursuant to the agreement Blue Ribbon spent great sums and efforts to establish and maintain a distributorship in the designated territory and continued to act as such distributor until July 1, 1960, when it assigned to plaintiff corporation all rights under the agreement; plaintiff continued to perform the agreement until June 14, 1961, when, without reasonable notice or cause, defendant forthwith terminated the distributorship and engaged a new distributor in violation of its agreement with Blue Ribbon; because of defendant's breach of the agreement plaintiff has been damaged $9950.

Defendant's answer was a denial of the petition.

I. The written portion of the agreement in question is a typewritten letter (exhibit A), dated February 18, 1955, from defendant, signed by its president, to Bennett Gordon, Des Moines Blue Ribbon Distributors. It consists of two sheets of stationery, the first of which is defendant's printed letterhead, bearing defendant's name and address at the top and the words 'Brewers of World's finest ale and beer' in red print. At the bottom of this sheet, also in red, and in small type, is the printed statement, 'Every shipment of beer or ale is an individual transaction. No contracts, agencies or franchises awarded.' The second sheet of the exhibit is entirely plain except for the typewriting and the president's signature with pen and ink.

Bennett Gordon was the principal active partner of Blue Ribbon, plaintiff's assignor, and is the managing officer of plaintiff corporation. All defendant's dealings were with him.

Basis of the first group of assigned errors is the printed statement at the bottom of the letterhead. Defendant argues it is unmistakably part of the written portion of the agreement declared upon; defendant was therefore entitled to a directed verdict; the court should have instructed the jury to disregard and evidence of oral statements in conflict with the printed statement, and receipt of evidence of the alleged oral portion of the agreement with Blue Ribbon violated the parol evidence rule.

Exhibit A is too long to set out in full. It first confirms stated prices quoted Blue Ribbon by Mr. O'Brien, then defendant's general sales manager, who with Edwards, defendant's Iowa-Illinois sales manager, arranged with Bennett Gordon for Blue Ribbon to become defendant's distributor. The exhibit clearly refers to Blue Ribbon as defendant's distributor in the designated territory, stresses the importance of Blue Ribbon's use of advertising material supplied by defendant, states it is sending 'the outlets in your territory * * * an announcement of your appointment as the DREWRY'S distributor. * * * Also--we have an attractive drivers' uniform offer * * * explained in the enclosed brochure. * * * We are confident you will do an outstanding job with DREWRYS--both for yourself and for us.'

The typewritten portion of the exhibit makes no reference to the printed statement at the bottom of the letterhead. There is no evidence Bennett Gordon's attention was called to it. O'Brien and Edwards were two of the three witnesses for defendant. The former frankly testified, 'I had authority to establish this distributorship with Des Moines Blue Ribbon and did so.' Edwards said, 'On February 18, 1955, Des Moines Blue Ribbon Distributors did take on the distributorship of Drewry's beer.'

We are not persuaded any of the first group of errors should be sustained. The printed statement at the bottom of the letterhead was not unmistakably part of the written portion of the agreement, did not entitle defendant to a directed verdict, nor was the parol evidence rule violated by receipt of evidence of the alleged oral part of the agreement. The court's instructions left to the jury the question whether the printed statement was part of the agreement. Although the instructions might well have been more explicit on this point we do not find they were erroneous on the ground objected to and argued by defendant.

We are not aware of an Iowa decision on the question whether a printed statement on a letterhead, not referred to in the written portion of the letter or brought to the other party's attention, is part of the contract embodied therein. The result reached in a particular case depends largely upon the facts.

1 Williston on Contracts, Third Ed. (1957), section 90D, cites preceents in which such a printed statement is held to be part, or not part, of the agreement and then states: 'The principal question in deciding cases of this kind is whether the facts present a case where the person receiving the paper should as a reasonable man understand that it contained terms of the contract which he must read at his peril, and regard as part of the proposed agreement. The precise facts of each case are important in reaching a conclusion.'

We think these decisions support the conclusion reached here: Sturm v. Boker, 150 U.S. 312, 326-327, 14 S.Ct. 99, 103, 37 L.Ed. 1093, 1099; Maynard v. James, 109 Conn. 365, 146 A. 614, 65 A.L.R. 427, 429-430; Summers v. Hibbard, Spencer, Bartlett & Co., 153 Ill. 102, 38 N.E. 899, 901; B.F. Sturtevant Co. v. Fireproof Film Co., 216 N.Y. 199, 110 N.E. 440, 442, L.R.A.1916D, 1069; Clem Lbr. Co. v. Marty, Tex.Civ.App., 26 S.W.2d 319, 320; R. J. Menz Lbr. Co. v. E. J. McNeeley & Co., 58 Wash. 223, 108 P. 621, 28 L.R.A.,N.S., 1007, 1011; Weeks v. Robert A. Johnston Co., 116 Wis. 105, 92 N.W. 794, 796. See also 17A. C.J.S. Contracts § 310, page 171; 12 Am.Jur., Contracts, section 245.

The Clem Lumber Co. case, supra, holds that where the party who prepared the writing did not intend printed words at the top of the pages to be part of the writing they will not be so considered.

There can be no question defendant made Blue Ribbon its distributor in the designated territory. As stated, the typewritten portion of exhibit A clearly so indicates and the principal witnesses for defendant testified to such an arrangement. The parties so treated it in letters and otherwise for several years. If the printed statement at the bottom of the letterhead were regarded as part of the written portion of the distributorship agreement and given controlling effect it would mean no such contract was entered into--all that occurred was a transaction for a single shipment of beer. It is extremely unreasonable that the parties intended their distributorship agreement to be nullified by printed words at the bottom of the letterhead.

In any event we feel that if the printed statement were regarded as part of the agreement it is inconsistent with the typewritten portion and the latter would therefore control the former. Section 622.21, Code 1962, I.C.A.

II. Defendant's second group of assigned errors are based on the contention the agreement alleged by plaintiff so lacks mutuality of obligation it is unenforceable. The argument is that Blue Ribbon and plaintiff as its assignee were not obligated to act as distributor for defendant for any definite time, could terminate the arrangement at will and therefore defendant might do likewise without incurring liability to plaintiff.

We think the validity of the claimed agreement depends on whether there was consideration for it. We have held 'If the lack of mutuality amounts to a lack of consideration, then the contract is invalid. But mere lack of mutuality in and of itself does not render a contract invalid. If mutual promises be the mutual consideration of a contract, then each promise must be enforceable in order to render the other enforceable. Though consideration is essential to the validity of a contract, it is not essential that such consideration consist of a mutual promise.' Standard Oil Co. v. Veland, 207 Iowa 1340, 1343, 224 N.W. 467, 469; Lewis v. Minnesota Mutual Life Ins. Co., 240 Iowa 1249, 1265, 37 N.W.2d 316, 325. See Anno. 83 A.L.R. 1416, 1421. See also Hardin v. Eska Co., Iowa, 127 N.W.2d 595, 596-597; J. C. Millett Co. v. Park & Tilford D. Corp., D.C.Cal., 123 F.Supp. 484, 493.

Numerous authorities are to the effect that where a contract granting a sole distributorship for an indefinite time is supported by some consideration other than the services to be rendered thereunder as an agent, the contract will continue for a reasonable time and may be terminated without cause only upon reasonable...

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