Phoenix Spring Beverage Co. v. Harvard Brewing Co.

• Decision Date: 02 December 1942
• Citation: 45 N.E.2d 473,312 Mass. 501
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: PHOENIX SPRING BEVERAGE COMPANY v. HARVARD BREWING COMPANY & others.

312 Mass. 501

45 N.E.2d 473

PHOENIX SPRING BEVERAGE COMPANY v. HARVARD BREWING COMPANY & others.

Supreme Judicial Court of Massachusetts, Worcester.

December 2, 1942

September 21, 1942.

Present: FIELD, C.

J., DONAHUE, DOLAN COX, & RONAN, JJ.

Contract, What constitutes, Construction, Termination. Agency, Termination of agency. Evidence, Extrinsic affecting writings. Equity Pleading and Practice, Master: exceptions to report.

Of two letters written by a manufacturer to one of his distributors, the first in effect stating that the manufacturer intended "at no time" to withdraw the agency from the distributor so long as he performed satisfactorily but also stating that the manufacturer would be "glad to offer" the distributor "a contract" and that his representative would discuss with the distributor "our future mutual relations, in detail," and the second, specifically assented to by the distributor in writing,

"confirming" his appointment as distributor for a specified territory and stating certain terms of the relationship, the second letter and the assent thereto alone constituted the contract between the parties.

An unequivocal written contract, whereby a manufacturer appointed an exclusive distributor for his product in a certain territory without specifying the term of the relationship, was terminable by either party at will upon reasonable notice.

A master's admission of evidence of a custom as bearing on an interpretation that a contract in writing, which was the basis of the suit, was terminable at will, and his finding that both parties believed and knew it to be so, were not harmful where the contract was unequivocal and the proper interpretation of its provisions was that it was terminable at will.

BILL IN EQUITY filed in the Superior Court on November 25, 1941. Following confirmation of a master's report, the plaintiff appealed from a final decree dismissing the bill, entered by order of Dillon, J.

The evidence of a custom referred to in the opinion was testimony "that it was the custom of the trade in the community in which these sales were handled to terminate an agency with a distributor at any time."

In this court the case was submitted on briefs. S. M. Salny, for the plaintiff.

H. H. Hartwell & J.

F. Driscoll, for the defendant Harvard Brewing Company.

COX, J. The plaintiff seeks to have the defendant Harvard Brewing Company, hereinafter referred to as the defendant specifically perform an alleged agreement whereby the plaintiff was appointed an exclusive distributor in a certain district of merchandise manufactured by the defendant, and also to recover damages alleged to have been incurred by reason of the alleged wrongful termination of said agreement by the defendant. The relief originally sought on account of alleged misrepresentations by the defendant and discriminatory practices against the plaintiff is no longer an issue. The allegations in respect to these matters are not found to have been sustained. The suit was referred to a master, who states in his report that "his findings of fact, upon which" his "ultimate findings have been made, are based upon the subsidiary facts reported".

The master found that the plaintiff, a corporation organized on June 24, 1937 took over a business that had been conducted by a partnership under the name of Phoenix Spring Company. In February, 1935, this partnership was appointed as "exclusive draught distributor of Harvard products for a certain district." Provisions were made for the terms of credit upon which merchandise was to be sold to the partnership, and, thereafter, additional sales territory was assigned to it. On November 23, 1936, the defendant's president wrote the following letter to the partnership: "Gentlemen. It has been brought to my attention that rumors are being spread in the field, regarding the Harvard Brewing Co., to the effect that, sooner or later, we will withdraw the agency from you. These statements are untrue, and I will [sic] like to go on record and state that we have positively no intention of withdrawing the Harvard agency from you. I am glad to offer you a contract, to assure you that your Harvard franchise shall be at no time in danger, as long as you are willing to represent us loyally and effectively. We leave nothing undone to give the public a quality product, and the Harvard franchise should prove increasingly valuable to you. Mr. Baumann will get in touch with you, within the very near future, and discuss with you our future mutual relations, in detail. Your kind cooperation with us is greatly appreciated, and I look forward to many years of mutually profitable business relations with you."

Under date of December 10, 1936, the partnership received the following communication that was signed in behalf of the defendant by its vice president: "Gentlemen: It is with great pleasure that we confirm your appointment as a selected case goods and draught goods distributor for the cities and towns listed on the attached sheet. Please sign and return this copy to us immediately. The success of our new sales policy is dependent upon exclusive case goods and draught goods sales rights. It is of the utmost importance that you respect territorial boundary lines at all times to insure your just share of profit, and to remain a Harvard distributor. Numerous distributors have been eliminated, in order to insure staple retail case goods prices. Please be advised that you cannot sell BELOW our established retail prices. You will note an increase in our draught goods prices, and a decrease in our case goods prices, and we are enclosing herewith our price list, as of December 14, 1936. The increase in draught amounts to 50 cents per half. The ever-increasing acceptance of Harvard bottle goods has made appreciable production savings possible. We are now ready to pass these savings on to our distributors. Reduced bottle goods prices will increase your volume and ours. Increased volume will bring Increased Profits to us all. We have great faith in your continued cooperation, and will do all we can to make the coming season a boom year for Harvard products, in bottles and in barrels." It seems that the following was attached to, or was a part of this communication: "December 14, 1936 I agree not to sell Harvard case goods BELOW the established retail prices, as shown on the attached sheet, and I acknowledge that the following localities constitute the territorial limits of my present sales rights to Harvard Products . . . [the territory is set out in detail]. I further agree not to sell Harvard products to a sub-distributor or to any other wholesaler." "This agreement was executed by the plaintiff" and was sent to and received by the defendant.

Thereafter, the defendant made changes in the territory previously assigned, taking away several towns and one city. The plaintiff's treasurer objected to these changes and asked to have the territory restored, but it was not. He made no claim, however, that the defendant did not have the right to make such changes as it saw fit. There is a statement that any reference in the report to the plaintiff will be understood as ". . . [the treasurer] acting for and speaking for the plaintiff."

In the fall of 1940, arrangements were made for the giving of a bond or "guarantee" for the payment of the plaintiff's outstanding account. The question arose as to what assurance would be given to the...