House of Crane Inc. v. H. Fendrich, Inc.

• Decision Date: 01 April 1970
• Docket Number: No. 1,No. 468,468,1
• Citation: 146 Ind.App. 478,256 N.E.2d 578
• Parties: The HOUSE OF CRANE INCORPORATED, Appellant, v. H. FENDRICH, INC., Appellee. A 69
• Court: Indiana Appellate Court

Page 578

256 N.E.2d 578

146 Ind.App. 478

The HOUSE OF CRANE INCORPORATED, Appellant, v. H. FENDRICH, INC., Appellee.

No. 468 A 69.

Appellate Court of Indiana, Division No. 1.

April 1, 1970.

Rehearing Denied April 20, 1970.

C. Severin Buschmann and Donald A. Schabel, Indianapolis, for appellant; Buschmann, Carr & Schabel, Indianapolis, of counsel.

Fred P. Bamberger, Evansville, R. Stanley Lawton and Jim A. O'Neal, Indianapolis, for appellee; Bamberger, Foreman, Oswald & Hahn, Evansville, Ice, Miller, Donadio & Ryan, Indianapolis, of counsel.

SULLIVAN, Judge.

Appellant, House of Crane, Inc., defendant below (hereinafter referred to as Crane) filed a counterclaim to which appellee H. Fendrich, Inc. (hereinafter referred to as Fendrich) filed a demurrer. The demurrer was sustained to the counterclaim and Crane refused to plead further. Judgment was thereupon entered for plaintiff-appellee upon appellant's counterclaim. The issues framed by Fendrich's complaint against Crane and the answer thereto are not before this Court upon appeal.

Crane's counterclaim against Fendrich in essence alleged that Crane, as well as its predecessor in interest, since 1894, was engaged in the business of wholesale distribution of cigars. Crane distributed a brand of cigar manufactured by Fendrich in 1905 and thereafter, both in the Indianapolis and Evansville areas. Crane, it was alleged, undertook to distribute a second brand manufactured by Fendrich and after many years of concentrated effort in promotion Crane succeeded in establishing that particular brand as a sales leader. Over a period of many years Fendrich would assign territory to Crane in which Crane was to have the exclusive sales privilege for Fendrich brand cigars and as of January, 1960, had such exclusive privilege in 74 Indiana counties, 24 Illinois counties and 18 Kentucky counties. The counterclaim further alleged that in consideration of the exclusive sales privilege Crane undertook to: Use its best efforts to achieve the maximum sales of Fendrich's products in said territory; establish and maintain a system of distribution in said territory for Fendrich's products; maintain a sufficient inventory of Fendrich's products to service the trade satisfactorily; assume all credit risks on the accounts to which it sold the Fendrich's products; and, in addition thereto performed many acts of additional consideration over a period of years, e.g., conducting sales promotion contests, consumer sampling, display promotion and advertising consultation. Because Fendrich sold to Crane at a greater discount than to other jobbers, Crane made Fendrich cigars its only major product for distribution.

Crane alleged further that starting in 1960, Fendrich commenced a course of conduct to impair and undermine Crane's effort to promote and sell Fendrich's cigars and permitted and encouraged other distributors within Crane's theretofore exclusive territory. In some instances, it was claimed, Fendrich sold cigars directly to large drugstore chains and other retail outlets. Crane asserted that Fendrich's 'unwarranted' actions so damaged the profitability of Crane's business that Crane was forced to notify Fendrich in 1964 that it was discontinuing its wholesale cigar jobbing operation. Crane sought damages against Fendrich for the alleged contract breach in the sum of $750,000.00.

It is to be noted that the counterclaim does not allege that said 'contract' was reduced to writing at any time during the continuance of Crane's business relationship with Fendrich. To the contrary, it would appear from the totality of the counterclaim allegations that the relationship between the parties grew gradually, somewhat like Topsy, and that the privilege and responsibilities of the respective parties existed only insofar as the custom and the course of business conduct over the years permitted.

Fendrich demurred to the counterclaim on the ground that it did not state facts sufficient to constitute a cause of action or a setoff against Fendrich. By reason of our opinion here we need consider only one basis upon which the demurrer was predicated as set forth in its memorandum attached thereto. Fendrich asserts that the alleged exclusive franchise agreement was invalid and unenforcible for the reason that there was no time fixed during which such agreement was to operate nor were there any provisions for termination of such an agreement.

Appellant Crane readily admits that the agreement did not specify a definite time or prescribe conditions which would determine the duration of the contract but argues that the absence of such specification does not render the agreement terminable by either party at will. In support thereof, appellant cites Federal cases from the Northern District of California...