Rosenbaum Bros. v. Nowak Milling Corp.

• Decision Date: 07 December 1943
• Docket Number: 27917.
• Parties: ROSENBAUM BROS. v. NOWAK MILLING CORPORATION.
• Court: Indiana Supreme Court

51 N.E.2d 623

222 Ind. 108

ROSENBAUM BROS. v. NOWAK MILLING CORPORATION.

No. 27917.

Supreme Court of Indiana

December 7, 1943

Appeal from Jasper Circuit Court; Moses Leopold, Judge.

Jay E. Darlington, of Hammond, for appellant.

Tinkham & Tinkham, of Hammond, for appellee.

FANSLER Chief Justice.

The appellant began this action to procure a declaratory judgment.

The complaint alleges that the parties entered into a certain contract, which is exhibited, by the terms of which the plaintiff purchased a large part of the defendant's milling business, merchandise on hand, and certain trade-marks, for a consideration consisting of cash and certain royalties. Clause 15 of the contract provides that should the party of the first part (the defendant) 'engage in the business of manufacturing and selling feeds in competition with the party of the second part during any of the first three years following the taking of the joint inventory, then the party of the second part shall not be obliged to pay any further royalties * * *.' Clause 17 provides: 'It is further agreed that, in consideration of the sale and purchase herein, and the agreement to pay royalties for the use of trade names and trade marks of the party of the first part by the party of the second part, the party of the first part will not engage in a competitive business with the party of the second part any time within the period of one year from the date of the joint inventory, at any place within 250 miles from Hammond Indiana; provided further, that should at any time within a period of three years from the taking of the joint inventory the party of the first part, or any of the officers thereof engage in any competitive business with the party of the second part, whereby such business is carried on under any name similar to the name Nowak Milling Corporation, then, in that event, all royalties provided under paragraph 15 hereof shall immediately cease to be due from the party of the second part.' It is alleged that the defendant in its own name 'undertook to engage in the business of manufacturing and selling feeds in competition with plaintiff' from July 2, 1938, until July 14, 1938, and that thereafter the defendant 'engaged' in the same business from July 14, 1938, until July 21, 1938. It is alleged that the plaintiff paid all royalties due prior to July 1, 1938, and the plaintiff asks an adjudication that, by reason of the facts, the plaintiff was under no duty to pay any further royalties. The royalties which would have been due under the contract were paid into court.

Part of the court's findings is as follows: 'The Court further finds that a real controversy exists between the plaintiff and the defendant as to whether or not the defendant engaged in the business of manufacturing and selling feeds in competition with the plaintiff from the 13th day of February, 1938, the same being the day of the taking of said joint inventory, up to and including the month of March, 1939; and, which of said parties is entitled to all of said royalties paid by the plaintiff to the Clerk of the Lake Circuit Court. The Court now finds that the defendant did not violate the terms of said contract by engaging in the business of manufacturing and selling feeds in competition with the plaintiff up to and including the month of March, 1939; and that the defendant is entitled to receive from the Clerk of the Lake Circuit Court * * * the amount of royalties.'

The purpose of the action was to procure a construction of the contract in the light of the facts. The complaint alleges that the defendant undertook to engage in, and did engage in, the business of manufacturing and selling feeds in competition with the plaintiff, and does not rely upon the defendant having engaged in any other or different business. The language of clause 17 of the contract differs somewhat from the language of clause 15. By clause 15, the party of the first part is permitted to 'engage in the business of manufacturing and selling feeds in competition with the party of the second part' at any time within three years, and the only effect of the action would be a forfeiture of further royalties. The first part of clause 17 is an unconditional agreement that the party of the first part will not 'engage in a competitive business with the party of the second part any time within the period of one year from the date of the joint inventory, at any place within 250 miles from Hammond, Indiana.' The proviso enlarges the condition of clause 15 by providing that if at any time within three years 'the party of the first part, or any of the officers thereof, engage in any competitive business with the party of the second part,' the right to royalties shall cease. This difference is noted, however. Clause 15 is conditioned that should the party of the first part 'engage in the business of manufacturing and selling feeds in competition with the party of the second part,' while the proviso of clause 17 is conditioned upon the party of the first part, or any of its officers, 'engaging in any competitive business with the party of the second part.' It appears that clause 17 was prepared by the attorney for the plaintiff, and any ambiguity arising out of it must be construed against the plaintiff. The two clauses must be read together. The plaintiff seems to have been in doubt as to the effect of these provisions or it would have discontinued paying the royalties. It chose rather to seek a construction of the contract by the court, while paying the royalties into court to avoid a breach of the contract. It may be concluded that the sole purpose of the ...