Harris Calorific Sales Co. v. Manifold Systems, Inc.

• Decision Date: 06 June 1989
• Docket Number: No. 6921,6921
• Citation: 559 A.2d 241,18 Conn.App. 559
• Court: Connecticut Court of Appeals
• Parties: HARRIS CALORIFIC SALES COMPANY v. MANIFOLD SYSTEMS, INC.

Page 241

559 A.2d 241

18 Conn.App. 559

HARRIS CALORIFIC SALES COMPANY v. MANIFOLD SYSTEMS, INC.

No. 6921.

Appellate Court of Connecticut.

Argued Feb. 16, 1989.

Decided June 6, 1989.

Mark E. Lowell, Canton, for appellant (defendant).

Debra J. Zappone, with whom, on the brief, was Joseph F. Keefe, Torrington, for appellee (plaintiff).

Before DUPONT, C.J., and STOUGHTON and JACOBSON, JJ.

JACOBSON, Judge.

The defendant appeals from the judgment of the trial court ordering it to pay the plaintiff a specified amount under a contract between the parties. The defendant claims that the trial court erred (1) in concluding that an agreement made by the parties on September 11, 1984, had modified an earlier contract executed by them on December 10, 1982, (2) in finding that the plaintiff had received the defendant's consent, as required in the earlier agreement, to transact business with a customer with whom the plaintiff was prohibited to deal under the terms of a noncompetition clause in the earlier agreement, (3) in awarding interest to the plaintiff after finding that the defendant had wrongfully withheld payment due the plaintiff under the contract, and (4) in denying the defendant's two postjudgment motions for special findings. We find no error.

The plaintiff is in the business of selling welding supplies, and the defendant manufactures manifolds intended for the distribution of gas. About 1980, two individuals, David McQuay and Leonard Johnson, formed Manifold Systems, Inc., each retaining one-half interest in the corporation. On December 10, 1982, they signed an agreement whereby McQuay, doing business as the plaintiff, Harris Calorific Sales Co., Inc., sold his interest in the corporation to the defendant. The agreement contained a clause prohibiting the plaintiff from competing with the defendant for three years without its written consent. ¹ The purchase price of the buyout was $38,400; the defendant was to pay the plaintiff a set amount upon signing the agreement and the remainder was to be paid in quarterly installments. Additionally, after each of three years following the date of the agreement, the plaintiff was to receive 25 percent of the annual gross sales by Manifold Systems, Inc., "to the General Electric facility presently located in Lynn, Massachusetts," less the set figure of $8300.

McQuay asserted that, in 1984, he was contacted by a purchasing agent from General Electric who inquired about purchasing certain equipment. The defendant had had no prior dealings with this purchasing agent. Because the defendant manufactured the equipment that General Electric sought, McQuay contacted Johnson about a potential sale. Following a series of negotiations, the parties signed an agreement on September 11, 1984. The plaintiff was to receive $7641, 25 percent of the total invoiced to the General Electric Company by the defendant, in exchange for turning over to the defendant the purchase orders it had received from General Electric.

The defendant filled the orders and received full payment from General Electric. Despite demands from the plaintiff, the defendant refused to pay, and the plaintiff instituted this action.

The defendant, in its answer, alleged four special defenses. It maintained (1) that the plaintiff already had been paid for the purchase orders under the terms of the buyout agreement, (2) that the later written agreement was void because the defendant signed it under extreme duress, concerned that General Electric would cease doing business with it if the plaintiff and defendant "were to come into conflict over the order," (3) that the plaintiff's procurement of the purchase orders violated the noncompetition clause in the earlier agreement, and (4) that the later agreement lacked consideration because the defendant already was entitled to the orders under the terms of the earlier agreement. The defendant also counterclaimed, claiming damages for the plaintiff's breach of the noncompetition clause in the earlier agreement, and for damages resulting from the parties' duress-induced agreement.

The trial court found that the later agreement was valid and that the defendant had signed it without duress. It further found that the parties intended the later agreement to modify the earlier agreement; alternatively, it found that the later agreement constituted a sufficient written consent by the defendant, as required in the earlier agreement, for the plaintiff to have transacted business with the customer. After finding the defendant's withholding of the amount due to the plaintiff wrongful, it awarded the plaintiff interest, as well as damages. This appeal followed.

The defendant's first claim of error challenges the trial court's finding that the later agreement modified the earlier one. As an appellate court, our review of trial court decisions is limited to determining whether their legal conclusions are legally and logically correct, supported by facts set out in the memorandum of decision. Pandolphe's Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221-22, 435 A.2d 24 (1980). If the factual basis of the court's decision is challenged, our review includes determining "whether the facts set out in the memorandum of decision are supported by the evidence or whether, in light of the evidence and the pleadings in the whole record, those facts are clearly erroneous." Id. Reviewed within these well established bounds, we find the trial court's decision that the later agreement modified the earlier one was not erroneous.

" 'Whether a contract exists is a question of fact for the court to determine.' Randolph Construction Co. v. Kings East Corporation, 165 Conn. 269, 277, 334 A.2d 464 (1973); Finley v. Aetna Life & Casualty Co., 5 Conn.App. 394, 408, 499 A.2d 64 (1985) [rev'd on other grounds, 202 Conn. 190, 520 A.2d 208 (1987) ]. Parties may alter any term of an existing contract by entering into a subsequent contract. Mutual promises qualify as sufficient consideration for a binding contract. Gordon v. Indusco Management Corporation, 164 Conn. 262, 267-68, 320 A.2d 811 (1973); Taft Realty Corporation v. Yorkhaven Enterprises, Inc., 146 Conn. 338, 342, 150 A.2d 597 (1959). 'For a valid modification, there must be mutual assent to the meaning and conditions of the modification and the parties "must assent to the same thing in the same sense ... if they are to vary the contract in any way." ' Lar-Rob Bus Corporation v. Fairfield, 170 Conn. 397, 402, 365 A.2d 1086 (1976). 'The meaning to be given subsequent agreements, therefore, depends on the intention of the parties. As intention is an inference of fact, "the conclusion is not reviewable unless it was one which the trier could not reasonably make." ' (Citations omitted.) Id., 402-403 ." Manzin v. United Bank & Trust Co., 6 Conn.App. 513, 516, 506 A.2d 169 (1986).

Given these principles, our question becomes, on appeal, whether the evidence presented to the trial court supported that court's conclusion that the newer agreement modified the earlier one. The evidence presented to the court primarily consisted of testimony of the two individuals mainly responsible for executing the two agreements, McQuay and Johnson. The court chose as more credible the testimony of McQuay, and accepted McQuay's reconstruction of the facts to find that the agreement was valid and not signed under duress. Nothing advanced by the defendant compels us to conclude that the trial court's assessment of the law regarding the modification of contracts, or the facts upon which its conclusions rest, was erroneous.

The defendant asserts that the second agreement failed for lack of consideration. It argues that the plaintiff received a benefit from the 1984 agreement that it was, under the 1982 contract, either obligated to convey to the defendant or to decline to accept in the first instance. We disagree. Although contracts modifying earlier ones must be supported by new consideration; State National Bank v. Dick, 164 Conn. 523, 529, 325 A.2d 235 (1973); Gordon v. Indusco Management Corporation, 164 Conn. 262, 267, 320 A.2d 811 (1973); mutual promises are sufficient consideration to bindparties to a modification. Gordon v. Indusco Management Corporation supra, 267-68, 320 A.2d 811. We find no evidence that would lead us to conclude that the trial court's assessment of the parties' agreements could not have supported its conclusion. The plaintiff promised to negotiate and secure orders on behalf of the defendant in return for a percentage of the total amount invoiced to the customer. These promises constituted sufficient consideration for the 1984 agreement.

The trial court's decision finding that the initial contract was modified by a subsequent agreement is not erroneous. The defendant, therefore, is liable under the valid, later agreement, and it is unnecessary for us to review the defendant's second claim of error, namely, that the trial court erred in finding that the defendant consented to the plaintiff's actions in conducting business with the customer.

The third claim of error advanced by the defendant concerns the court's award of interest to the plaintiff. The essence of the defendant's argument is that awards of interest under General Statutes § 37-3a ² are permitted only when there is no legitimate dispute and payment is wrongfully withheld. The defendant asserts that, in this case, the defendant's reliance on the noncompetition term in the earlier agreement was reasonable and provided a sufficient basis for a court to decide that an award of interest was not warranted. We disagree.

" ' "Whether interest is a proper element of damages is primarily an equitable determination and is a matter which lies within the discretion of the trial court." State v. Stengel, 192 Conn. 484, 487, 472 A.2d 350 (1984); Perl v. Case, 3 Conn.App. 111, 116, 485 A.2d 1331 (1985).' Guaranty Bank & Trust Co. v. Dowling, 4 Conn.App. 376, 386, 494 A.2d 1216 (1985). ...