Mayflower Air-Conditioners, Inc. v. West Coast Heating Supply, Inc., AIR-CONDITIONER

• Decision Date: 14 May 1959
• Docket Number: No. 34855,AIR-CONDITIONER,INC,34855
• Citation: 339 P.2d 89,54 Wn.2d 211
• Parties: MAYFLOWER, Respondent. v. WEST COAST HEATING SUPPLY, INC., Appellant.
• Court: Washington Supreme Court

Page 211

54 Wn.2d 211

339 P.2d 89

MAYFLOWER AIR-CONDITIONERS, INC., Respondent. v. WEST COAST HEATING SUPPLY, INC., Appellant.

No. 34855.

Supreme Court of Washington, Department 2.

May 14, 1959.

Rehearing Denied July 3, 1959.

Riddell, Riddell & Williams, Seattle, Jacob, Jones & Brown, Portland Or., for appellant.

Wettrick, Flood, O'Brien, Toulouse & Lirhus, Seattle, George J. Toulouse, Jr., and Ralph C. Hove, Seattle, of counsel, for respondent.

HILL, Judge.

This appeal is from a judgment of dismissal of a cross-complaint for damages for breach, by the manufacturer, of an exclusive distributorship contract, and for damages for a refusal to ship articles ordered by the distributor, and for the termination of its distributorship.

The judgemnt was on the theory that the pleadings showed the alleged contract to have been terminable at will.

The cross-complainant, the West Coast Heating Supply, Inc., hereinafter called the distributor, had been the exclusive distributor in Washington and Oregon since April, 1948, for the products of the cross-defendant, Mayflower Air-Conditioners, Inc., hereinafter called the manufacturer.

It had already been determined, on a motion for summary judgment, that the manufacturer was entitled to a judgment on its complaint against the distributor for goods, wares, and merchandise sold and delivered; at the same time a motion for a summary judgment, dismissing the cross-complaint, had been denied.

The issue between the parties is as to whether the distributor has a counterclaim for damages against the manufacturer for a wrongful termination of the exclusive distributorship contract and for a termination of the distributorship, which damages the distributor seeks to set off against the judgment in favor of the manufacturer for goods, wares, and merchandise.

The manufacturer seeks to support this judgment on the basis of matter included in the distributor's bill of particulars, which includes all the writings upon which the claimed exclusive distributorship contract is based. The manufacturer's contention is that the contract, as shown therein, is without mutuality because the distributor was not obligated thereby to purchase or to sell any of the manufacturer's products, and that the contract is, therefore, not binding on either party. It is further contended that even if the writings did constitute a contract, such a contract is terminable at will, since no time limit as to its duration was provided.

In the leading case of Sargent v. Drew-English, Inc., 1942, 12 Wash.2d 320, 121 P.2d 373, and again in Mall Tool Company v. Far West Equipment Company, 1954, 45 Wash.2d 158, 273 P.2d 652, we disposed of the contention, which the manufacturer makes here, i. e., that there was no contract between the parties since the agreement lacked mutuality.

Here, as in the Sargent case, there is a confusion of mutuality and consideration. We have indicated that where, as in the Sargent and Mall Tool Company cases and in the present cases, the parties have operated under an exclusive distributorship agreement, the distributor can prove consideration in various ways, particularly by evidence of promotional work done pursuant to the agreement; and a conceded lack of mutuality does not establish a failure of consideration.

The lack of mutuality does, as pointed out in the Mall Tool Company case, leave the distributor at the mercy of the manufacturer so far as new terms and conditions are concerned, because the manufacturer or producer can terminate the contract at any time on reasonable notice, or on the notice specified in the contract. See also: Swalley v. Addressograph Multigraph Corp., 7 Cir., 1946, 158 F.2d 51; Flint v. Youngstown Sheet & Tube Co., 2 Cir., 1944, 143 F.2d 923.

The trial court here erred in assuming that, under the pleadings, the distributor could not prove a consideration for the contract it had alleged; and in determining, as a matter of law, that the manufacturer had the right to terminate the agreement at any time and for any reason.

The manufacturer asserts that even if the distributor could prove consideration, and even if a reasonable notice had to be given, the pleadings and the files establish that the agreement had been terminated by proper notice; and that, therefore, the distributor could recover no damages, and the dismissal of the cross-complaint was proper.

The showing in the pleadings, relative to the termination of the contract, is an allegation in the distributor's cross-complaint that the manufacturer--in violation of its exclusive distributorship agreement--did grant an exclusive distributorship in Washington and Oregon to Thermal Supply Company, Inc., on or before April 12, 1957; and has since, on or about that date, refused to ship products ordered by the distributor, and has indicated that it will not in the future honor such orders.

The manufacturer, by way of reply and answer to the cross-complaint, denied that there was a violation of an exclusive distributorship agreement with the distributor for the reason that there never was such an agreement, 'and denies the granting of an exclusive franchise to Thermal Supply Co. Inc., on or before April 12th, 1957.'

The pleadings, patently, allege a violation of the exclusive distributorship agreement. The manufacturer's position, in its pleading, is that there was no exclusive distributorship agreement or franchise.

It should be noted that the distributor gave notice of a trial amendment to its cross-complaint, alleging that on or before April 9, 1957, the manufacturer appointed 'Hardesty, Favero & Company, Inc., its exclusive...