Goodman v. Motor Products Corp.

• Decision Date: 06 February 1956
• Docket Number: Gen. No. 10832
• Citation: 132 N.E.2d 356,9 Ill.App.2d 57
• Court: United States Appellate Court of Illinois
• Parties: Manuel GOODMAN, Individually; Manuel Goodman & Company, Inc.; and Deepfreeze International Corporation, Plaintiffs-appellants, v. MOTOR PRODUCTS CORPORATION, a New York corporation, Defendant-appellee.

Page 356

132 N.E.2d 356

9 Ill.App.2d 57

Manuel GOODMAN, Individually; Manuel Goodman & Company, Inc.; and Deepfreeze International Corporation, Plaintiffs-appellants, v. MOTOR PRODUCTS CORPORATION, a New York corporation,

Defendant-appellee.

Gen. No. 10832.

Appellate Court of Illinois, Second District.

Feb. 6, 1956.

Rehearing Denied March 8, 1956.

Baker, McKenzie, Hightower & Brainerd, Chicago, for appellants.

Floyd E. Thompson, Johnston, Thompson, Raymond & Mayer, Chicago, for appellee.

EOVALDI, Justice.

Manuel Goodman, individually; Manuel Goodman & Company, Inc., and Deepfreeze International Corporation filed a complaint in the Circuit Court of Lake County against Motor Products Corporation, a New York corporation, L. J. Sorensen and B. G. Sanderson, charging that in October, 1940, the plaintiff, Manuel Goodman, entered into a contract with the defendant corporation, acting through Willard L. Morrison, its agent, giving the said Manuel Goodman an exclusive sales and distribution contract to sell food freezers manufactured by the defendant corporation under the trade-name of 'Deepfreeze' in the territory 'outside the continental United States.' The terms of the agreement, according to the plaintiffs' complaint, required Goodman to give up his other business ventures, competitive or otherwise, and devote his full time and attention to the sale and distribution of Deepfreeze appliances in territories outside the continental United States, to finance his own promotional activities and to render assistance in the formulation of domestic policy without further compensation other than the fruits of the contract. In return therefor, Goodman was granted the exclusive foreign distributorship and the right to set up corporations containing the word 'Deepfreeze' in their name so long as they did not handle a competing product. The distributorship was to continue so long as Goodman devoted his full time and attention to the sale and distribution of Deepfreeze appliances, did not handle a competing line, gave adequate representation and so long as Motor Products Corporation was in the appliance business. The complaint further alleged that the plaintiff, Manuel Goodman, did organize and was the sole owner of the plaintiff corporation, Manuel Goodman & Company, Inc., which was organized for the purpose of buying appliances from the defendant corporation, and of the plaintiff corporation, Deepfreeze International Corporation, which was organized for the purpose of acting as a foreign sales agent for the food freezers manufactured by the defendant corporation; and that the defendant corporation and its sales manager, L. J. Sorensen, and the general manager of Deepfreeze Division of Motor Products Corporation, Ben G. Sanderson, invaded the plaintiff's territory through direct sales to a distributor appointed by it in Mexico and thereafter sent the plaintiff a notice purporting to terminate the agreement as of November 28, 1953, in derogation of its contract and to the damage of all three plaintiffs. The original complaint was in four counts: Counts I, II and III being claims for damages, and Count IV being in equity by Manuel Goodman, individually, and by the Deepfreeze International Corporation, praying that the defendant Motor Products Corporation be restrained and enjoined from using the name 'Deepfreeze International Corporation', 'Deepfreeze International' and/or 'Deepfreeze' in connection with the advertising, distribution or sale of products manufactured and/or sold by the Deepfreeze Division of the defendant Motor Products Corporation, in any country of the word other than the United States of America; and from using any advertising material or conducting any activity whatsoever which tended to deceive the public and to trade upon and damage the reputation and good will of the plaintiff, Deepfreeze International Corporation. The defendants filed their answers, which included several Special Defenses to Counts I, II, and III and a counterclaim to Count IV, the prayer of which asked the court to enjoin and restrain the plaintiff Manuel goodman from using the word 'Deepfreeze' in the corporate name of any corporation controlled by him, or employing the term in any business activity, and directing him to dissolve the Deepfreeze International Corporation. The only claim submitted to the jury was the one contained in Count I of the complaint, and when the case was submitted the only plaintiff was Manuel Goodman, individually, and the only defendant was Motor Products Corporation. The demands for judgment by Manuel Goodman & Company, Inc., and by Deepfreeze International Corporation were dismissed and the defendants L. J. Sorensen and Ben G. Sanderson were dismissed from the case. The jury returned a verdict awarding damages in the sum of $130,000 to Manuel Goodman, individually. Count IV, which purported to state a claim for accounting and injunction in equity, was submitted to the court on the record made on the trial of the issues of Count I. Thereafter the court sustained the defendant's motion for judgment notwithstanding the verdict, or, in the alternative, granted a new trial. Judgment was thereupon rendered in favor of the defendant. A decree was also entered dismissing Count IV of the complaint, and enjoining the plaintiff and others from continuing the use of the word 'Deepfreeze' in their corporate name, or employing the term in any business activity, and directing Manuel Goodman to dissolve the Deepfreeze International Corporation. The plaintiffs have appealed from the decree and judgment of the Trial Court.

The ultimate facts requiring consideration are substantially as follows: Plaintiff, Manuel Goodman, is an exporter who for most of his life has been engaged in the business of foreign trade. The defendant Motor Products Corporation is a New York corporation licensed to do business in Illinois. It carries on divers lines of manufacturing through numerous divisions and in particular operates a branch in North Chicago, Illinois, known as Deepfreeze Appliances Division devoted to the manufacture and sale of Deepfreeze appliances. In 1940, defendant Motor Products Corporation entered the freezer and refrigerator market and Willard L. Morrison, who had invented the low tempeature machine known as the Deepfreeze and had developed the same in the plant located in North Chicago, Illinois, which is now the Deepfreeze Appliances Division of the defendant corporation, was placed in charge of this department of the corporation. There is considerable dispute as to Morrison's relationship with the defendant, the defendant referring to him as a development and experimental engineer, and the plaintiff referring to him as the general manager of the Deepfreeze Appliances Division of the defendant Motor Products Corporation. From the evidence it is clear that Morrison was in charge of the manufacturing activities of the plant and that he appointed distributors of the products being manufactured, both orally and in writing. The plaintiff, Goodman, introduced himself to Morrison after reading an article which depicted Morrison as the inventor of a new successful food freezer and the head of the organization manufacturing them. In October of 1940 Goodman called on Morrison to inquire about selling the machines in the foreign market. Morrison at first told Goodman that the company was not interested in spending any money or in undertaking advertising to promote Deepfreezes outside of the country. Goodman insisted that if he were given exclusive export rights he would finance his own enterprise, service his own goods, handle all his promotional activities and would at the same time pay the manufacturer the same price for the machines that domestic distributors were paying. After several days of discussion an agreement was reached which, when interpreted in a light most favorable to plaintiff, was substantially as follows: Goodman was to have the exclusive rights to sell Deepfreeze products in all countries in the world outside of the continental United States so long as he devoted his full time and attention thereto and gave adequate representation. Goodman was to refrain from the distribution and sale of any competing products so long as the agreement was in effect. Goodman was to devote his time and best efforts exclusively to the distribution and sale of Deepfreeze products in countries of the world outside the continental United States to the exclusion of any other business interest which he might theretofore have had. In the event Goodman failed to devote his time and best efforts exclusively to the distribution and sale of products manufactured and/or sold by the Deepfreeze Division of Motor Products Corporation the agreement would terminate and Goodman would get out of the appliance business. Goodman was to have the right of the use of the word 'Deepfreeze' in his corporate name for so long as he did not sell a competing product. In the event Motor Products Corporation discontinued the manufacture and sale of products through its Deepfreeze Division, although continuing manufacture of other products, the agreement would thereupon terminate.

Goodman commenced selling and distributing appliances immediately after he and Morrison had settled the terms governing the conduct of the parties, and was given a desk in the North Chicago factory. He continued to distribute the products of the defendant corporation when they were available from 1940 to 1953. Goodman's allocation of the appliances during the war years, 1940 to 1945, was minute, and his orders far exceeded his supply. During the years 1945 to 1950 Goodman continued to distribute the appliances and was the only distributor of the company's products in the foreign market. About the middle of November, 1951, Ben G. Sanderson, sales manager of the defendant corporation, phoned Goodman to say that he wanted to withdraw Canada from the plaintiff's territory....