Florsheim Shoe Co. v. Leader Department Store, Inc.

• Decision Date: 22 September 1937
• Docket Number: 104.
• Citation: 193 S.E. 9,212 N.C. 75
• Parties: FLORSHEIM SHOE CO. v. LEADER DEPARTMENT STORE, Inc.
• Court: North Carolina Supreme Court

193 S.E. 9

212 N.C. 75

FLORSHEIM SHOE CO. v. LEADER DEPARTMENT STORE, Inc.

No. 104.

Supreme Court of North Carolina

September 22, 1937

Appeal from Superior Court, Buncombe County; J. H. Clement, Judge.

Action by the Florsheim Shoe Company against the Leader Department Store, Inc., wherein defendant set up a cross-action and counterclaim. Judgment for defendant, and plaintiff appeals.

Reversed.

The plaintiff instituted the action in the general county court of Buncombe county to recover upon an open account for merchandise and for the value of an electric sign. The defendant admits the plaintiff's account and the value of the electric sign was agreed upon. In its answer the defendant set up a cross-action and counterclaim, alleging damages arising from the breach of a contract, under the terms of which the plaintiff granted the defendant an exclusive agency in Asheville to sell plaintiff's nationally known and advertised "Florsheim Shoes."

Verdict and judgment in favor of the defendant, and the plaintiff assigning errors, appealed to the Superior Court.

The court below, overruling the plaintiff's exceptive assignments of error, affirmed the judgment of the general county court, and the plaintiff appealed.

Hedrick & Hall, of Durham, and J. G. Merrimon and Chas. G. Lee, Jr. both of Asheville, for appellant.

Williams & Cocke, of Asheville, for appellee.

BARNHILL Justice.

The evidence discloses that from 1921 until the spring of 1935 plaintiff sold its shoes in Asheville exclusively to S. I Blomberg and his successor, the Leader Department Store, Inc. In the spring of 1935 plaintiff procured another dealer in the town of Asheville and discontinued sales to the defendant. The defendant contends, and the jury found, that the sales of the Leader Department Store, Inc., and its predecessor were made under a contract of exclusive agency. The plaintiff denied the contract and contended that it discontinued sales to the defendant for the reason that the defendant did not pay its bills promptly and at times became heavily indebted to the plaintiff.

The contract relied upon by the defendant was testified to by S I. Blomberg as follows: "We gave you exclusive sole agency for those shoes when Mr. Harper was here, and he gave it to you because I told him to do so, and as long as you will pay your bills and advertise those shoes and not carry a competitive line, that is, a line that don't conflict in price with the Florsheim Shoe, which were retailing at that time for $10.00, $12.00 and $14.00, he says you can have the shoes. You don't have to worry about how many shoes you are going to carry, because we are going to carry your account the same as we do hundreds of others, you can take your time and you can pay when convenient; don't pay any attention about paying the bills exactly on time, but you must advertise them and you must not carry any other line of shoes except Florsheim shoes. Mr. Harper told me he would give me exclusive sole agency for the Florsheim shoes, providing as long as I pay my bills, with the provision that I don't handle any other kind of shoes, that is, competitive, that is a competitive price, to the Florsheim shoe, and that I could pay my bills when convenient. I agreed to take on the shoes and advertise them, not handle any other line, and he agreed to furnish me with shoes from time to time just when we needed them and that I would pay my bills. My best recollection is that Mr. Schaaf came down either 1922 or 1923. He certainly did tell me that I had the exclusive agency to sell these shoes. He said one of the conditions was that I had to advertise them. He said one of the conditions to allow me to sell these shoes under this agreement was I should not carry or sell any other shoes of competitive price range. The agreement was that I was not allowed to sell any shoes at prices reasonably competitive with the Florsheim shoe. I wasn't under any obligation to buy a certain number, but to handle their line and nobody's else. According to our agreement I was supposed to buy their shoes and nobody's else. We stuck to it and didn't buy anybody's else shoes. At no time during the whole period did I carry or buy any other shoes within the price range of Florsheim shoes. That is the only shoe we carried and advertised, because we had an agreement with Mr. Schaaf and the Florsheim people that we did not put in any other line except the $5.00 shoes 'that Friendly Five.' I was supposed to buy from him all of the Florsheim shoes the trade demanded. Whatever our trade demanded, needed, I was supposed to buy Florsheim shoes and no other kind of shoes."

Is the contract, which the evidence of the defendant tends to establish, void for that it violates subsection 2 of C.S. § 2563, or does subsection 6 thereof apply? If it is a contract prohibited by subsection 2, it is unlawful and unenforceable. If subsection 6 is the pertinent provision of the statute, an intent to stifle competition must appear in order to defeat a recovery by defendant. Upon the question as to whether the defendant's counterclaim should have been dismissed as of nonsuit, these subsections constitute the battleground between the parties. The rights of the parties in this particluar are to be determined by an interpretation and application of the evidence in relation to these two subsections in the light of the decisions of this court in Standard Fashion Company v. Grant, 165 N.C. 453, 81 S.E. 606, and in Mar-Hof Company v. Rosenbacker, 176 N.C. 330, 97 S.E. 169, 170.

C.S. § 2563, is the codification of chapter 41, section 5, Public Laws 1913, and provides: "In addition to the matters and things hereinbefore declared to be illegal, the following acts are declared to be unlawful, that is, for any person firm, corporation, or association directly or indirectly to do or to have any contract, express, or knowingly implied, to do any of the acts or...