Jack's Cookie Company v. Brooks
| Decision Date | 08 December 1955 |
| Docket Number | No. 7060.,7060. |
| Citation | 227 F.2d 935 |
| Parties | JACK'S COOKIE COMPANY, Appellant and Cross-Appellee, v. A. A. BROOKS, Appellee and Cross-Appellant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
W. Pinkney Herbert, Jr., Charlotte, N. C., R. B. Herbert, Jr., Columbia, S. C., and James O. Moore, Charlotte, N. C. (Herbert & Dial, Columbia, S. C., and Lassiter, Moore & Van Allen, Charlotte, N. C., on the brief), for Jack's Cookie Co.
Fred F. Cunningham and Edward M. Woodward, Columbia, S. C. (Edens & Woodward and Cunningham & Brandon, Columbia, S. C., on the brief), for A. A. Brooks.
Before SOPER and DOBIE, Circuit Judges, and BRYAN, District Judge.
This suit grows out of the termination of an agency contract between Jack's Cookie Company, a North Carolina corporation, and A. A. Brooks, a citizen of South Carolina who was engaged in the business of selling and distributing the products of divers manufacturers in South Carolina and neighboring states. Jack's terminated the contract after it had been in operation for about nineteen months and notified the trade by circular letter that Brooks was no longer its sales representative. Thereupon Brooks sued Jack's claiming damages for breach of contract and unjust enrichment, and also claiming actual and punitive damages for libel on the ground that certain statements in the circular letter imputed to him a lack of business capacity and insinuated that he had been discharged for dishonesty or misconduct. At the conclusion of the plaintiff's case the District Judge, on motion of the defendant, dismissed the claims of breach of contract and unjust enrichment on the grounds that the arrangement between the parties lacked mutuality and was indefinite in duration and terminable at the will of either party.
The case proceeded on the claim of libel and was submitted to the jury at the close of all the evidence on the issue of actual damages, the right to punitive damages being refused. The jury found for the plaintiff on this cause of action in the sum of $17,500, and both parties have appealed.
Jack's had been in the business of manufacturing cookies in Charlotte, North Carolina, since 1947, but had not been very successful and in consequence it was reorganized in 1950 and a new management was installed under a new president, John Barton, who set about changing the methods of operation. The company had previously distributed its product in its own trucks on certain routes in and around Charlotte, and Barton decided to sell to independent distributors rather than from his own trucks in introducing the product in new territory. Brooks had had experience as a manufacturer's representative in handling diversified lines of goods which he sold to wholesalers and distributors. He was on the lookout for new accounts and one of his circulars fell into Barton's hands and led to a meeting between the men and the formation of an oral contract.
It was agreed that Brooks was to set up a sales organization for the sale of Jack's product by wholesale distributors in Virginia and West Virginia, and also in the Carolinas, with the exception of certain cities in the latter states. He agreed to produce a reasonable amount of business and to pay his own expenses and he was to receive as compensation a commission of five per cent on gross sales after a deduction of five per cent for freight charges. He was to have the position so long as he did a good job, but he was free to stop work for Jack's at any time. There is no dispute that these terms formed part of the contract, but as to another element the testimony was in conflict. On behalf of Jack's it was testified that Brooks was not to take on any additional lines of merchandise; but Brooks denied that he made any such agreement.
Entering upon his duties on or about January 1, 1952, Brooks visited jobbers to whom he was already selling other merchandise and divided the territory amongst them giving them exclusive areas for the sale of Jack's cookies upon their agreement that they would not handle competing goods. He had one salesman working for him at the time, but employed additional men to assist him in the work, and paid them four-fifths of his commissions. His efforts were successful and sales were greatly increased in the territory assigned him, so that by September, 1953 the gross sales had risen from approximately $1500 to approximately $50,000 per month, and his net return amounted to $1,000 per month for a number of months in 1953. Upon his advice Jack's increased the minimum purchase by the distributors from $50 to $200, and he selected new distributors in certain localities in place of old ones appointed by Jack's who had proved unsatisfactory. In April, 1953, after he found the line profitable, he asked for a written contract which he had previously refused to sign, but the company declined.
Dissatisfaction arose in certain particulars. Brooks did not keep any record of his sales or of his employees, and he did not make it clear to them that they were his employees and not Jack's, and in some instances the salesmen called on Jack's for services which Brooks should have given. Barton was obliged to call a meeting of salesmen in Charlotte in order to instruct the salesmen on this point. Barton instructed Brooks to open an office in Columbia as headquarters for Brooks' operations and in January Brooks rented an office and engaged a secretary, but it was not opened until July and then it proved to be the headquarters of an employment agency operated by his wife and his secretary. Brooks hired and fired a large number of salesmen during the period and he had only two salesmen at work in September, 1953.
In April, 1953, in order to increase sales and instruct the retailers as to the distribution of the product, it was agreed that one Henry Hall, an experienced man, should be employed to go out with the salesmen on their routes in order to demonstrate how to display the goods, and he was paid for these services by Jack's for seventy-five days, and thereafter one-half of his salary was paid by each of the parties.
While working for Jack's Brooks took on several new lines for distribution, contrary to his agreement with Jack's, if the testimony of Barton is accepted.
On September 1, 1953 Brooks was called into Jack's office and discharged. He was paid in full for goods sold up to that date. Henry Hall, as an employee of Jack's, was put in charge of the distribution of the merchandise on a salary basis.
On or about September 3, 1953 Barton sent out to the trade a letter announcing that Brooks had ceased to be Jack's representative in the following terms:
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