Pace Corp. v. Jackson

• Decision Date: 02 November 1955
• Docket Number: No. 5210,5210
• Citation: 155 Tex. 179,284 S.W.2d 340
• Parties: PACE CORPORATION et al., Petitioners, v. Allan JACKSON, Respondent.
• Court: Texas Supreme Court

Page 340

284 S.W.2d 340

155 Tex. 179

PACE CORPORATION et al., Petitioners, v. Allan JACKSON, Respondent.

No. 5210.

Supreme Court of Texas.

Nov. 2, 1955.

Rehearing Denied Dec. 21, 1955.

Brewer, Matthews, Nowlin & Macfarlane, W. F. Nowlin and James V. Graves, San Antonio, for petitioners.

Spears & LeLaurin and G. Bert Smith, Jr., San Antonio, for respondent.

CALVERT, Justice.

Suit for a declaratory judgment was instituted by Pace Corporation, Allan DuBose and Lee Moffett against Allan Jackson for the purpose of declaring the meaning of certain provisions of a written contract between the parties and of defining the rights and obligations of the parties thereunder. By way of cross action Jackson alleged a breach of the contract by the plaintiffs and sought a recovery of damages. The case was tried to a jury and its answers to certain special issues were made the basis of a trial court judgment for Jackson in the sum of.$19,000. The Court of Civil Appeals has affirmed. 275 S.W.2d 849.

Prior to January 19, 1953, DuBose, Moffett and Jackson were each stockholders, directors and officers in Pace Corporation, a corporation engaged in the cigarette vending machine business in Bexar County. The corporation had a 'direct line of credit' with the major cigarette manufacturers which enabled it to purchase cigarettes at a lower price than they could have been obtained from wholesale dealers. The evidence reflects that such a purchasing arrangement is difficult to obtain and, once obtained, is a very valuable business relationship since it affords those dealers who have it a substantial advantage in a business where the per unit profit is small.

A controversy between the parties over company policy was settled by Jackson's 'getting out' of the corporation on January 19, 1953, under an agreement, reduced to writing, containing the following provisions: 1. Jackson's stock was sold to the corporation, payment therefor to be made in monthly installments over a period of five years. 2. Jackson was not to engage in the cigarette vending machine business, directly or indirectly, in Bexar County during the period of indebtedness and for two years thereafter. 3. Neither Pace Corporation nor Moffett or DuBose individually was to engage 'in the handling of the sale of cigarettes * * * in any manner whatsoever' in Kerr and Bandera Counties during the period of indebtedness. 4. Paragraph E, the heart of the controversy, reads as follows: 'As a part of the consideration for this transaction, Pace Corporation agrees to supply Allan Jackson for any business he may become interested in outside of Bexar County, with cigarettes on a cash basis, at cost, for a period not to exceed two years after Pace Corporation has paid its indebtedness to Allan Jackson, such cost being defined as invoice price less normal trade and cash discount, if any.'

Shortly after the execution of the foregoing contract and the transfer of Jackson's stock in Pace Corporation as provided for therein he opened a cigarette business in Kerrville, Kerr County, for the sale of cigarettes at retail through vending machines and at wholesale to other retailers for over-the-counter sales. The vending machine business was established on March 13, 1953, and the wholesale business on May 1, 1953. He purchased his first cigarettes from a wholesale dealer and on May 10th placed an order with Pace Corporation which was filled. He placed his second order with Pace Corporation on May 20th but was notified that the order would not be filled. Should the contract be construed so that Pace Corporation was obligated to supply Jackson with cigarettes for the type of business in which he was then engaged there is no doubt but that the refusal was firm, unequivocal and sufficient to constitute an anticipatory breach of Pace Corporation's obligation under paragraph E of the contract.

Petitioners' declaratory judgment suit sought, principally, to establish that it was not obligated by paragraph E to supply respondent with cigarettes for a wholesale business but only for such cigarette vending machines as respondent might operate in Kerr and Bandera Counties. They sought also a declaration that the provisions of said paragraph were lacking in mutuality and were so vague, indefinite and uncertain as to be unenforceable as a contract. These allegations were duly controverted by respondent.

The case was submitted to the jury on six special issues in response to which the jury found: 1. The parties mutually intended that Pace Corporation would supply Jackson with cigarettes for a wholesale cigarette business to be carried on in Kerr and Bandera Counties. 2. Jackson was caused to lose profits in his wholesale business by reason of the failure of Pace Corporation to supply cigarettes at the contract price. 3. The amount of profits lost by Jackson in the wholesale business was $16,000. 4. Pace Corporation failed and refused to supply Jackson with cigarettes for his vending machine business. 5. Jackson was caused to lose profits in his vending machine business by reason of the failure of Pace Corporation to supply cigarettes at the contract price. 6. The amount of profits lost in the vending machine business was $3,000.

We are not impressed with petitioners' contention that when the contract is viewed from its four corners the words 'any business' as used in paragraph E means, as a matter of law, 'any vending machine business.' That limitation of the meaning of the words 'any business' is wholly at odds with their ordinary signification, and any indefiniteness in their meaning arising out of the wording of other paragraphs has been resolved by the jury, upon conflicting evidence, in its finding that the parties intended them to include a contemplated wholesale business.

Our construction of the contract is that for a valuable consideration Pace Corporation obligated itself by paragraph E to supply Jackson, at cost, with all the cigarettes he chose to order at any time on reasonable notice, and from time to time, for his cigarette business in Kerr and Bandera Counties for a period of seven years.

In asserting that the contract is lacking in mutuality petitioners have reference to mutuality of obligation, and assume that paragraph E is a separate and divisible contract. Paragraph E is not a separate and divisible contract. It is a part of the entire integrated contract between the parties, and the consideration for Pace Corporation's promise to supply Jackson with cigarettes was the sale and transfer of Jackson's stock in the corporation at the price stipulated and the relinquishment of his rights incident to the ownership thereof. Blaffer & Farish v. Gulf Pipe Line Co., Tex.Civ.App., 218 S.W. 89, no writ history. Consideration for the promise having been oterwise paid or furnished, the contract is unilateral and mutuality of obligation is unnecessary to its validity. Corbin on Contracts, Vol. 1, secs. 21 and 152; 12 Am.Jur. 509-513, Contracts, secs. 13 and 14; 46 Am.Jur. 254, Sales, sec. 63. This elementary rule is recognized in Corsicana Petroleum Co. v. Owens, 110 Tex. 568, 222 S.W. 154, and in Johnson v. Breckenridge-Stephens Title Co., Tex.Com.App., 257 S.W. 223, 225. In so far as the provisions of paragraph E are concerned the contract is not a bilateral executory contract for the sale of cigarettes for future delivery but is an option contract, supported by a valuable consideration. As was said by the Illinois court in Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, 133 N.E. 711, 714: '* * * where there is any other consideration for the contract, mutuality of obligation is not essential. If mutuality, in a broad sense, were held to be an essential element in every valid contract to the extent that both contracting parties could sue on it, there could be no such thing as a valid unilateral or option contract.' See also Mayhew & Isbell Lbr. Co. v. Valley Wells Truck Growers' Ass'n, Tex.Civ.App., 216 S.W. 225, 231-232, no writ history. The unilateral obligation of Pace Corporation was to be merged into such number of bilateral contracts for the sale of cigarettes as were necessary to supply Jackson's business. Bilateral contracts between the parties for the sale of cigarettes could only come into existence through the placing by Jackson of definite orders. Corbin on Contracts, Vol. 1, secs. 100, 262, 263 and 264.

In the light of this interpretation of the contract we are asked to hold that it was too vague, indefinite and uncertain to be enforceable. To so hold would require that the judgments of the trial court and Court of Civil Appeals be reversed and that judgment be here rendered that plaintiff take nothing.

The law requires a reasonable degree of certainty and definteness in the subject matter of contracts, but the courts are not always in agreement as to just what particularity or refinement of terms is essential to meet the requirement of 'reasonsable degree of certainty.' It is often said that less certainty is required in a suit for damages than in a suit for specific performance. Grimsley v. Life. Ins. Co. of Virginia, Tex.Civ.App., 154 S.W.2d 196, 199, writ refused, W.O.M.; 12 Am.Jur. 556, Contracts, sec. 64.

Before considering the legal effect of the uncertain elements in the contract it will be well to note those elements which were certain and definite. The merchandise to be sold was cigarettes. The term during which they were be sold was seven years. The price to be paid was 'invoice price less normal trade and cash discount, if any,' a price well understood by both parties. All of those elements were made certain in the contract. The first uncertain element was the quantity of cigarettes to be sold. The second uncertain element lay in the fact that there were more than a dozen different brands of cigarettes available, many manufactured in different styles (regular or king-size) and commanding differing prices, and the brands and styles to...