Hoston v. JR Watkins Company, 17424.

• Decision Date: 28 March 1962
• Docket Number: No. 17424.,17424.
• Parties: William James HOSTON, Appellant, v. The J. R. WATKINS COMPANY, a corporation, aka Watkins Products, Inc., a corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

300 F.2d 869 (1962)

William James HOSTON, Appellant, v. The J. R. WATKINS COMPANY, a corporation, aka Watkins Products, Inc., a corporation, Appellee.

No. 17424.

United States Court of Appeals Ninth Circuit.

March 28, 1962.

Vaughn & Morrow, by George L. Vaughn, Jr., Los Angeles, Cal., for appellant.

David C. Levenson and Alfred J. Smallberg, Los Angeles, Cal., for appellee; Alfred J. Smallberg, Los Angeles, Cal., of counsel.

Before JERTBERG, DUNIWAY, Circuit Judges, and DAVIS, District Judge.

DUNIWAY, Circuit Judge.

Plaintiff, Hoston, appeals from a summary judgment entered in a diversity case. The judgment orders that he take nothing by his complaint and that the defendant J. R. Watkins Company (Watkins) have judgment against him in the sum of $2,151.27. The latter judgment is based upon a counterclaim for the net balance of an account between the parties for goods sold by Watkins to plaintiff. The counterclaim was denominated as such, but plaintiff did not file a reply (see Rule 7(a), F.R.Civ.P., 28 U.S.C.A.) either within the time prescribed by Rule 12(a) or at all, and his default was duly entered (Rule 55). In his deposition, plaintiff admitted that the account, a copy of which is attached to the answer, was correct. We therefore need not consider this phase of the matter further.

Attorneys undertaking to try cases in the Federal Courts should familiarize themselves with the applicable Federal statutes and with the Federal Rules of Civil Procedure. In this case, the complaint was obviously drawn to conform to the California practice. (Cal.Code Civ. Proc. Section 426), rather than to Rule 8 (a) F.R.Civ.P. Watkins served a "Notice to Produce" (Cal.Code Civ.Proc. Section 1938), a procedure not provided for in the Federal Rules of Civil Procedure. Several affidavits of mailing, both in the court below and in this court, are made "under the penalties of perjury", which is provided for in Section 2015.5 of the California Code of Civil Procedure, but not in the Federal statutes or Rules.

Both parties have misconceived the proper procedure on a motion for summary judgment. Plaintiff filed no affidavit; he apparently assumed that his complaint was verified and that a verified complaint is equivalent to an affidavit under Rule 56(a), (b) and (e), F.R.Civ. P. The complaint, however, was not verified. We thus need not, and do not consider whether, if ever, a verified pleading can serve as an affidavit under Rule 56. (See Lindsey v. Leavy, 9 Cir., 1945, 149 F.2d 899). Watkins' affidavit in support of the motion does not comply with Rule 56(e), F.R.Civ.P. It was made by Watkins' counsel, who obviously did not have personal knowledge of most of the things that he referred to, and whose testimony would not have been admissible in evidence at the trial. However, Rule 56(b) permits a motion to be made without supporting affidavits and Rule 56(c) contemplates that the court shall consider "the pleadings, depositions, and admissions on file, together with the affidavits, if any". There were before the court, by stipulation, three depositions taken in a prior action, that of the plaintiff and those of two of the representatives of the defendant with whom he dealt. On the basis of these depositions, we conclude that the motion for summary judgment was properly granted.

The complaint is based upon an alleged oral contract between the parties. The Watkins Company manufactures various cosmetic and food preparations and sells them to "distributors". The products are sold by door to door salesmen working under the distributors. It is alleged that plaintiff became a distributor under an oral contract requiring him to devote his full time and best efforts to the promotion of Watkins' products in a prescribed territory situated in the San Fernando Valley in Los Angeles County; that for so long as plaintiff was the distributor, defendant would not create a new, or permit any other distributor in that territory; that plaintiff, at his own expense, was to provide an office and recruit and train a sales staff; that plaintiff was to refrain from handling any other products, and was to meet certain sales quotas; that he was to obtain his products from Watkins at its distributor wholesale prices less 27½% and was to furnish a surety bond of $5,000 to guarantee payments; that the agreement was to exist for one year, with an option on plaintiff's part to renew it on a year to year basis, provided that he performed satisfactorily, but the option could be terminated upon reasonable notice in writing considering all the circumstances of either party. It is then alleged that part of the agreement was reduced to writing for the purpose of protecting Watkins in the case of a claim against it by a third party, the objective being to make it appear to such third party that the relationship of Watkins to plaintiff was that of vendor to purchaser. Plaintiff was to invest between $3500 and $5,000 in the course of a year and maintain a stock of merchandise having a value at Watkins' wholesale prices "not in excess (sic) of $5,000." Plaintiff claims that he performed, invested $4380 between August 29, 1957 and December 27, 1958 in establishing and maintaining his office, recruiting and training a sales personnel of 200 persons and promoting Watkins' products, and exceeded the quotas set by Watkins. He further claims that he renewed his option on August 29, 1958, but that on December 27, 1958, Watkins unreasonably and without cause terminated his distributorship and by misrepresenting that plaintiff had resigned, recruited his sales personnel for another distributor. Since that time, plaintiff has not been able to obtain Watkins' products and Watkins has appropriated his business to its own use. Damages of $25,000 are claimed.

The answer denies the material allegations of the complaint and sets up a written agreement between the parties dated August 29, 1957. It admits that before that date there were informal talks between plaintiff and representatives of Watkins relative to Watkins' products, the locality available for the plaintiff, the manner in which plaintiff contemplated operating, his financial responsibility, and Watkins' requirement that he provide a surety bond. It is also admitted that Watkins terminated its relationship with plaintiff on January 6, 1959.

Thus, under the pleadings, the principal issue is whether there was an oral contract between the parties having the terms set forth in the complaint. The testimony of plaintiff in his deposition and certain stipulations entered into at that time show that Watkins would not make a contract with him...