"The McCall Company, plaintiff in the court below, is now, and was at the date of the institution of this suit, a private corporation with its residence and place of business in the state of New York. The record shows that in May, 1905, it entered into the following written contract with J. J. Segal, defendant below, who was at the time a resident of the state of Texas:
"`City or Town, Jefferson. State, Texas
"`Date, May 15, 1905
"`The McCall Company, 113-115-117 West 31st Street, New York:
"`Please deliver to Morgan Line at New York City, addressed to me, a stock of McCall patterns, at the uniform price of 7½ cents for each pattern (excepting those retailed for 10 cents, the price of which is 5 cents each), amounting to $200.97 net, including the July issue $42.42 payable thirty days after shipment; $33.55 to take up exchange credit of like amount; and the balance $125.00 is to remain as a standing credit, which, together with the $75.00 now on hand, makes a total of $200.00, which is to remain as a standing credit during the term of this contract-order, upon which interest is to be paid by me at the rate of four per cent. per annum, semiannually, January and July 1. When this contract is closed as herein provided, patterns unopened and not defaced and in good salable condition, purchased of you under this contract-order, may be returned, at prices stated above in payment for said standing credit. Also ship me each month by Morgan Line not exceeding an average of $20.00 per month of your own selection of the new monthly patterns, at same prices as above, commencing with August issue; also fashion sheets and other publications in quantities, and at prices specified below, during the term of this contract, commencing with July issue. (Then follows a list of items and details not material.)
"`We will reorder at the prices named, once each week or oftener, all patterns sold, thus keeping patterns on hand as above specified. The patterns are not to be sold for other than catalogue retail prices, and the stock of patterns is to be kept and offered for sale on the first (main) floor. We will send you an inventory of our stock of patterns on hand at your request, not exceeding twice each year. All goods ordered for delivery are to be paid for on or before the 5th day of the month succeeding date of shipment; if not then paid, subject to sight draft. All prices quoted are net. We will not sell any other patterns than the McCall patterns received from you during the term of this contract-order. We will not transfer the stock of McCall patterns from Jefferson, Texas, without your written consent, and we will pay all transportation charge to and from your New York office.
"`Discarded Patterns. — All patterns purchased from you under this contract-order that are reported discarded by you semiannually — January and July—can be returned by us at 100% contract price, in exchange for other patterns at full contract price, at any time within sixty days from the date such discarded patterns are respectively reported by you, provided this contract shall be in force at the time of such return. All patterns returned by us under any such discard report are to be credited to a special account, to be known as our discard exchange account, the credit to same to continue for a period of six months from the date of such discard report, unless this contract shall be sooner terminated; and all patterns ordered by us within such period of six months and while this contract is in force, excepting our monthly standing order, shall be charged to such discard exchange account unless our credit to the same is earlier exhausted.
"`If either of us shall intentionally break this contract or shall refuse or fail promptly to perform the same after two weeks' notice in writing given by the other, then the other shall have the right to exercise the option of being released from all future obligations under it, and to recover and receive as liquidated damages, and not as a penalty, a sum equal to the agreed charge for fashion sheets during the entire term of this contract. Failure to require compliance with the strict letter of this contract-order shall not forfeit nor prejudice any right thereunder, nor constitute a waiver thereof. This contract is to remain in force from date, and for five years after first shipment of patterns, and thereafter until the expiration of three months' notice given by either party in writing, subsequent to the expiration of such five years. All terms are in printed or written form. Signed in duplicate after being read. Date, May 15, 1905. Purchaser's name, ____.
"`Guarantee Against Loss in Patterns.—It is agreed that at the end of five years and three months from date of first shipment of patterns, provided this contract shall have continued in force so long, the above purchaser may take an invoice of the stock of patterns on hand, purchased
under this contract, and if the result of the business shows that the above purchaser has paid us more cash for patterns purchased under this contract than has been received for them, we will, upon demand made by such purchaser and receipt of the patterns at our New York office within thirty days after the expiration of such five years and three months, pay such loss in cash, provided all terms of this contract have been complied with. The above contract-order is accepted subject to the approval of the home office. The McCall Company (Incorporated State of New York), by James E. H. Cawall, Auditor. Date, May 15, 1905.
"`Approved and accepted, New York, N. Y., May 19, 1905. The McCall Company, by James
E. H. Cawall, Auditor. (2022.)
"`Date, May 15, 1905
"`It is further understood and agreed as a part of and supplement to the provisions of the annexed contract that if, at any time in the months of January and July, in any year during the term of the said annexed contract, after the discarded patterns reported by you are taken from our stock in accordance with the conditions of the annexed contract, the stock of patterns purchased of you then remaining in our hands exceeds $400.00, at cost price, then we shall have the privilege (provided all the terms of the annexed contract have been fully complied with by us), after such discards are taken out, of returning to the McCall Company any patterns we may select from such remaining stock, to an amount sufficient to reduce our stock to such sum of $400.00; and same is to be credited to our current account at full cost price, in payment for our monthly standing order for patterns under said contract or for any other patterns that we may order until such credit is exhausted; it being the purpose of this clause to provide that we may, if we...
