Sorensen v. Pyrate Corporation
| Decision Date | 26 June 1933 |
| Docket Number | No. 6938.,6938. |
| Citation | 65 F.2d 982 |
| Parties | SORENSEN et al. v. PYRATE CORPORATION. |
| Court | U.S. Court of Appeals — Ninth Circuit |
A. L. Abrahams and Paul Bardsale D'Orr, both of Los Angeles, Cal., for appellants and cross-appellees.
Harold M. Sawyer, Alfred T. Cluff, and Daniel W. Evans, all of Los Angeles, Cal., for appellee and cross-appellant.
Before WILBUR and SAWTELLE, Circuit Judges, and NORCROSS, District Judge.
This is the second time that this case has been before this court. Since, in our view, all issues save one were disposed of on the first appeal, reference is here made to the decision of this court on the former presentation. Pyrate Corporation v. Sorensen et al., 44 F.(2d) 323.
The former opinion of this court contained a full statement of the facts, which we summarize hereinbelow, with such omissions and additions as are rendered desirable by the situation on the present appeal:
The appellee and cross-appellant, a corporation having its principal place of business at Portland, Or., and hereinafter referred to as the plaintiff, entered into a contract with the appellants and cross-appellees, hereinafter to be designated as the defendants Sorensen and Dee, who are both residents of Los Angeles, Cal. Under the contract, the defendants were given the exclusive right to sell "a cleansing product known as and sold under the registered trade name of `Pyrate,' both in bulk and package form."
The contract is dated July 10, 1925, and was to continue for a period of twelve months from that date, with the privilege of renewal for a further period of four years, and, at the expiration of the second period, for an additional five-year period.
The agreement between the parties may be briefly summarized as follows:
The contract recites that the plaintiff is the exclusive owner of all varieties of Pyrate; that the defendants desire to act as exclusive agents for the marketing of the product in California, and, in consideration of being granted that right "and other advantages," agree "that they will purchase during every twelve months' continuation of the within contract, a minimum quantity of 800,000 pounds of the" product. The contract fixed the price per pound of the commodity, but provided for a change in cost in accordance with the fluctuations of the market. The plaintiff was to furnish to the defendants formulas of the special mixtures supplied to them, provided that such formulas should remain the property of the plaintiff, and that "upon the cancellation of the within contract by either party the buyers agree to deliver to the seller, on demand, all records of sales of bulk Pyrate and/or special mixtures." These records and formulas are not in controversy here.
The contract also provided that "buyers will not at any time engage in a similar or competing business, or make use of formulas or information furnished them under the terms of the within contract, to further the interests of any similar or competing business," and that the "buyers will conduct their business during the life of this contract under the name of `Pyrate Products of California.'"
Finally, the agreement set forth that the plaintiff would not be held responsible by the defendants for delays in shipment not due to the former's neglect, or for failure to supply Pyrate because of any cause over which the plaintiff had no control.
While the contract was dated July 10, 1925, it was not actually signed until September 8, 1925. In that interval, some pertinent correspondence took place between the parties.
On July 31, 1925, the defendant Dee wrote to the plaintiff suggesting that "one-fourth of the stipulated quantity be used as a basis in writing the contract for our mutual benefit." On August 4, 1925, the plaintiff, in a letter to the defendant Dee, wrote as follows:
The business of selling "Pyrate" was continued by the defendants, acting under the name of the Pyrate Products Company of California, until September 9, 1927, when the defendants by letter notified the plaintiff that, "on and after October the 15th, we will no longer continue as your distributor." The reason given was the plaintiff's alleged "angling for a deal to sell out the Pyrate Corporation to the Oakley Chemical Company," which the defendants asserted they "construed in the light of a breach of faith."
In the first proceedings, the court below held that the contract had not been expressly renewed at the expiration of the first twelve-month period, and that such express renewal was necessary "to work a renewal of the contract for the additional four years."
Accordingly, the court awarded the plaintiff damages of only $500, for the defendants' failure to deliver to the plaintiff certain sales records, issued an injunction restraining the defendants doing certain acts in connection with "Pyrate," not involved in the present controversy, and awarded the plaintiff its costs. The District Court, however, ignored the plaintiff's prayer for an accounting and damages, in connection with the defendants' sale of "Turco," a product similar to that of the plaintiff, since September 9, 1927. The plaintiff appealed from the decree of the District Court.
When the case was presented on the first appeal, this court said:
The cause was referred to a special master for "findings of fact and recommendations as to a decree in respect to the nature and amount of the damages, if any, suffered by the plaintiff as a result of the abandonment by the defendants L. C. Sorensen and M. J. Dee of the performance on their part of the terms of the contract between the parties dated July 10, 1925." The reference, described as being "general," was dated March 16, 1931.
On May 11, 1931, the plaintiff filed a supplemental complaint, containing only one count, which dealt solely with the question of the amount of damages, asserted to be $50,000.
On May 12, 1931, more than three and a half years after the plaintiff had filed its original complaint, the defendants filed a pleading denominated "answer to supplemental complaint," but in reality setting up a separate defense in no way related to any new matter contained in the supplemental complaint, which, as we have said, was confined strictly to the question of the amount of damages. This defense related to alleged "false and fraudulent representations" by the plaintiff that "the cleansing product known and sold under the registered trade name of `Pyrate' was a secret combination of raw materials originated and owned by plaintiff," etc.
The report of the special master at the second trial sets forth that under their answer to the plaintiff's supplemental...
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