Mantell v. Int'l Plastic Harmonica Corp..

• Decision Date: 21 October 1947
• Docket Number: No. 218.,218.
• Citation: 55 A.2d 250
• Parties: MANTELL et al. v. INTERNATIONAL PLASTIC HARMONICA CORPORATION et al.
• Court: New Jersey Supreme Court

55 A.2d 250

MANTELL et al.

v.INTERNATIONAL PLASTIC HARMONICA CORPORATION et al.

No. 218.

Court of Errors and Appeals of New Jersey.

Oct. 21, 1947.

COPYRIGHT MATERIAL OMITTED.

Appeal from Court of Chancery.

Suit by S. Carl Mantell and Milton Adler, jointly and severally trading as Liberty National Distributors, against International Plastic Harmonica Corporation to enjoin defendant from selling plastic harmonicas to other purchasers until defendant fulfilled an obligation to complainant and for other relief. From an adjudication of civil contempt against defendant corporation and Peter Christian Christensen, its president, and Finn H. Magnus, its vice-president, and from a decree enjoining the corporation from selling harmonicas to persons other than complainants until specified minimum quantities were supplied complainants and from competing with complainants in specified area, and directing a reference to master to ascertain extent of injury and damages suffered by complainants, 138 N.J.Eq. 562, 49 A.2d 290, Peter Christian Christensen and Finn H. Magnus, appeal.

Affirmed as modified and cause remanded.

McGEEHAN, J., dissenting.

John E. Toolan, of Perth Amboy (Thomas J. Brogan, of Jersey City, and Meyer E. Ruback, of Newark, of counsel), for appellants.

Arthur T. Vanderbilt, of Newark, for the respondents.

HEHER, Justice.

There are two appeals here. One is directed to an adjudication of civil contempt against the defendant corporation and Christensen, its president, and Magnus, its vice-president, made on September 5, 1946, for having sold patented plastic harmonicas manufactured by the corporation to persons other than complainants, and also engaging in competition with complainants in certain areas, all in violation of a preliminary injunction granted the prior December 7th; the other challenges a decree made on the same day, after final hearing, enjoining the corporation, inter alia, (1) from selling such harmonicas to persons other than complainants until it had supplied complainants with specified minimal quantities ‘from the harmonicas' produced ‘up to July 3, 1947,’ in accordance with what was found to be the corporation's contractual obligation, and (2) from engaging in competition with complainants in the regional area allotted to them by the contract, and directing a reference to a master to ascertain ‘the extent of the injury and damage’ suffered by complainants and ‘of the profits' made by the corporation ‘by reason of said acts in violation of the contract, * * * for the period from July 1, 1945, through December 6, 1945,’ only, since the original restraint was imposed on December 7, 1945, and the corporation had been adjudged in contempt for disobedience of the order, and there had been a reference to a master to fix the amount of a fine to be paid to complainants, ‘measured by this injury suffered’ by them. The decree further directed that in determining complainants' damage and the corporation's profit, the master ‘be guided by the findings of fact’ set forth therein; and that he report (a) the profits which complainants have lost because of the breach of the contract found by the Vice-Chancellor, and (b) the profits made by the corporation as a result of its breach of the contract, to the end that a ‘fine’ may be imposed ‘for the use’ of complainants, ‘measured’ by either computation ‘as the court may by order direct.’ In making computation (a), the master was instructed that ‘the sale of 83,678 harmonicas made by defendant to complainants on January 23, 1946, after a period of approximately five months without any deliveries, was not a sale in the usual course of business but was made in bad faith in an attempt to embarrass complainants, and to induce a breach of contract to facilitate the lifting of the restraining order, and the immediate resale of said harmonicas by complainants was in the nature of a forced sale not reflecting normal profits.’ Thus, the decree is in substance a final disposition of the basic issues.

The adjudication in contempt also directs a reference to the same master to compute the ‘profits' lost by complainants and the ‘profits' made by defendant by reason of the violation of the preliminary injunction, subject to specific findings and instructions embodied therein, and levies upon the corporate defendant and its named officers, for the use of complainants, a ‘fine’ equal to the ‘injury and damage’ sustained by complainants or the ‘profits' made by the corporation by reason of the disobedience of the injunction, ‘as the court may by order direct.’ A jail commitment is the alternative to noncompliance. And there is also a provision for sequestration in such event.

On October 10, 1946, an order was entered at the instance of the defendant corporation, with complainants' consent, terminating ‘all restraints' imposed by the decree under appeal, ‘from this day forward but not heretofore,’ and providing that the decree ‘shall in all other respects continue in full force and effect.’ The order recites that on September 19, 1946, defendant tendered to complainants delivery of 210,000 harmonicas for the then current month; that the tender was refused; and that complainants had ‘declared it to be their purpose and intention to accept * * * no further deliveries of harmonicas at any time in the future,’ on the ground that defendant, in their view, had ‘completely and irrevocably broken’ the contract.

I.

The first insistence is that, for want of a stipulation fixing the sale price of the goods constituting the subject matter of the bargain, no contract enforceable either at law or in equity came into being.

The agreement was made in writing on July 3, 1945, for a term of two years from that date, automatically renewable for like periods until terminated by notice given by either party to the other. Thereby, the defendant corporation ‘appointed’ complainants as its ‘general distributors' of plastic harmonicas to be manufactured by it under letters patent ‘throughout the State of New York, excepting therefrom the City of New York and all its Boroughs, the states of Pennsylvania, Delaware, Maryland, Virginia, West Virginia and the District of Columbia,’ save ‘all sales' in that regional area ‘to chain department stores, mail order houses, sales to the export trade, to the American Red Cross, and P.X. stores in the United States Army and Navy camps.’ And it was provided that the corporation ‘shall deliver to the distributors, and the later shall take, during every month, beginning with July, 1945, all of the harmonicas produced’ by it, but not exceeding 30,000 per month, ‘at the lowest prices and with the highest discount which’ it ‘shall give to any other distributor in the United States of America;’ and that ‘The initial retail list prices for said harmonicas shall be $1.00 for each balck harmonica, $1.15 for each harmonica in solid colors, and $1.25 for each harmonica in mottled colors.’ It was also agreed that when the corporation ‘obtains another injection moulding machine and other necessary equipment,’ it ‘shall deliver to the distributor and the distributors shall take * * *, an additional 45,000 harmonicas per month, and an additional 45,000 harmonicas per month for each additional machine not exceeding four machines.’ The agreement recites a representation by complainants to ‘use their best efforts, skill and facilities to introduce, advertise and promote the sale’ of the harmonicas, and their ‘desire to act as general distributors' thereof; and it was stipulated that complainants, as such distributors, ‘shall cover their assigned territory with proper representatives, traveling agents, correspondents and other sales methods to increase the sales' of the product, and to ‘cooperate with the producer in formulating sales promotion plans and in supplying statistical information from time to time whenever so requested.’ It was also provided that the ‘contract shall bind and enure to the benefit of the parties' and ‘their respective heirs, executors, successors and assigns.’

Complainants were the only ‘distributors' appointed by the defendant corporation; and the contention is that the ‘price element’ was, by common consent, ‘committed to the future event of the appointment of other distributors and the giving by the manufacturer of prices to such other distributors,’ and, failing such appointment, the standard thus prescribed would not ‘spring into existence’ and the ‘price would remain unfixed,’ and so the agreement would be unenforceable for indefiniteness and want of mutuality. Appellants seemingly concede that if the agreement were utterly silent on the subject of price, the standard of ‘reasonable or market value’ would prevail, and reference could then be hald to the differentials commonly obtaining in the open market as between distributors and jobbers and subordinate dealers.

But the agreement did not fix either the price of the goods or a standard for the admeasurement of the price. Indeed, appellants frankly concede that when the agreement was made, ‘it was not practical to fix a free price,’ since the plastic harmonica ‘had not yet been perfected’ and the ‘manufacturer's production capacity was altogether speculative and unknown.’ This type of harmonica was a radical innovation and its potentialities were uncertain; and production and sales experience necessarily entered into the setting of prices. The stipulation that the sale prices should not exceed those given to ‘any other distributor’ obviously was designed to safeguard complainants against price discrimination and inequality that would materially impair or, perhaps, destroy the value of the contract. It was not in contemplation that the very existence of the contract would depend upon the appointment of another distributor and a price agreement with the appointee. Appellants acknowledge that complainants ‘wanted to be certain that their price would be no higher than that given to ...