St. Joseph Drug Co. of Massachusetts v. United Drug Co.

• Decision Date: 11 June 1930
• Docket Number: 28198
• Parties: St. Joseph Drug Company of Massachusetts v. United Drug Company, Appellant
• Court: Missouri Supreme Court

29 S.W.2d 107

325 Mo. 606

St. Joseph Drug Company of Massachusetts v. United Drug Company, Appellant

No. 28198

Supreme Court of Missouri

June 11, 1930

Respondent's Motion for Rehearing Overruled June 11 1930.

Appeal from Daviess Circuit Court; Hon. John L. Schmitz Judge.

Reversed and remanded (with directions).

W. H. Woodward, John G. Parkinson, L. B. Gillihan and J. C. Leopard & Son for appellant; Fordyce, Holliday & White of counsel.

(1) The instructions are entirely proper, especially since instruction 1 was consented to. (a) An agent is held to absolute good faith, fidelity and loyalty. Evans v. Evans, 196 Mo. 1, 19; McAnaw v. Moore, 163 Mo.App. 598; Burch v. Conklin, 204 S.W. 47; Seeburg v. Norville, 204 Ala. 20; Meacham on Agency (2 Ed.) 877; Champion Spark Plug Co. v. Auto. Sundries Co., 273 F. 74; Lee v. Natl. Bank, 150 Tenn. 275, 263 S.W. 89; McLeod v. Gaither, 113 So. 687; Scott v. Weaver, 2 S.W.2d 870. (b) Plaintiff cannot complain of Instruction 1 and the necessary definitions required thereunder, because plaintiff assented thereto and saved no exception. State v. Stevens, 242 Mo. 439; State v. Pfeiffer, 267 Mo. 223; St. Louis Natl. Bank v. Flanagan, 129 Mo. 196; Shelton v. Ford, 7 Mo. 211. (c) A party cannot complain of instructions more favorable than he had a right to ask. Kunze v. Evans, 129 Mo. 1; Mahany v. Rys. Co., 286 Mo. 601, 228 S.W. 821; Stanley v. Wab. Ry. Co., 100 Mo. 435.

William K. Amick for respondent.

(1) Defendant's instructions 2, 3, 5, 6 and 7 should have been refused, each and all of them. Since the defendant in all its letters assigned as the sole reason for cancelling the contract that the St. Joseph Drug Co. failed to buy for sale the average amount of goods sold in cities of the same size, by taking this position the defendant bound itself and it had no right to put forth any other defense at the trial and had no right to any of the above instructions. Failing to sell the average amount of goods sold in other cities was no defense whatever in law. 21 C. J. 1222, sec. 226; Page on Contracts (1905) sec. 1504; Ohio & Miss. Ry. v. McCarthy, 96 U.S. 258, 24 L.Ed. 696; Sikes v. Freeman, 204 S.W. 948; Luckenbach S. S. Co. v. Grace Co., 267 F. 676; Union Cent. L. Ins. Co. v. Drake, 214 F. 547; Bank Tiawan v. Union Natl. Bank, 1 F.2d 65; Honesdale Ice Co. v. Lake Ladore Co., 232 Pa. 293; Wright v. Land Co., 100 Wis. 269, 72 N.W. 1000; Johns & Knuth v. Am. Indem. Co., 196 N.W. 569; Board Trustees v. Spitzer, 255 F. 147; Davis v. Wakelee, 156 U.S. 691, 39 L.Ed. 535. The above rule of law is so well established that there is practically no dispute about it. No other ground for rescinding the stated or intimated. This being no legal ground to rescind the contract the defendant was not entitled to any of the instructions numbered 2, 3, 5, 6 and 7. (a) Defendant's Instruction 2 should have been refused for the further reason that it entirely ignores the provisions of the contract. This instruction imposes upon the St. Joseph Drug Co. the obligations of a person having an "exclusive selling agency" and leaves it to the jury to determine what such obligations were. It entirely ignores the obligations imposed upon the parties under the contract. (b) It was error to give defendant's Instruction 3. This instruction declares that the contract creates "a special selling agency" which was misleading to the jury and failed to define what a special selling agency is. (c) It was error for the court to tell the jury in defendant's Instruction 6 that the motives and feelings which prompted the defendant to terminate the agency are immaterial. Under the evidence the sole ground assigned for rescinding the contract was failure to sell the average of cities of the same size, which was no legal ground whatever for terminating or rescinding the contract. In the present case the motives of the defendant in terminating the contract are very material.

Henwood, C. Davis and Cooley, CC., concur.

OPINION

HENWOOD

This is a suit for damages in the sum of $ 113,000 based upon the alleged breach of a contract originally made by and between the St. Joseph Drug Company, Incorporated, a Missouri corporation, the plaintiff's assignor, and the United Drug Company, a New Jersey corporation, the defendant's predecessor. The suit was filed in the Circuit Court of Buchanan County, and, upon the defendant's application for a change of venue, transferred to the Circuit Court of Daviess County. The trial in that court resulted in a verdict and judgment for the defendant. The plaintiff was granted a new trial, and from that order the defendant has perfected this appeal.

The contract (Plaintiff's Exhibit 1) reads as follows:

"Plaintiff's Exhibit 1.

"Agreement, made this seventeenth day of January, in the year one thousand nine hundred and eight, between the United Drug Company, a corporation organized under the laws of the State of New Jersey, and having its office and laboratory in the city of Boston, State of Massachusetts, Party of the First Part, and the St. Joseph Drug Company, Incorporated, at St. Joseph, Missouri, Party of the Second Part.

"Whereas, the party of the first part is in the business of making and selling the Rexall Remedies and other products.

"Whereas, the party of the second part has purchased from the party of the first part a portion of its capital stock, and desires to be appointed special selling agent of the party of the first part in the city of St. Joseph, Missouri.

"Now, therefore, this agreement, witnesseth, that the parties hereto, in consideration of the sum of one dollar, by each to the other paid, the receipt whereof is hereby acknowledged, hereby agree as follows:

"First: The party of the first part hereby constitutes and appoints the party of the second part its special selling agent in above named place, and agrees not to sell its products to any other dealer in said place, so long as the party of the second part shall perform the terms of this agreement.

"Second: The party of the first part hereby agrees that should the party of the second part become dissatisfied with the agency given him by this contract, or should the party of the second part feel that any misrepresentation has been made him by the party of the first part, or his representatives, he can by notifying the party of the first part, sell, and the party of the first part hereby agrees to purchase any capital stock of the United Drug Company that the party of the second part may hold, at its par value, plus seven per cent interest on the same since the date of issue, less any dividends that may have been applied, and the party of the first part furthermore agrees that in the event of the party of the second part notifying the party of the first part of his desire to sell his stock, the party of the first part will, in addition to buying his capital stock, take back any and all merchandise that the party of the second part may have on hand at the price such merchandise may have cost the party of the second part.

"Third: The party of the first part further agrees to keep a record of all advertising and other expenses directly charged to the territory of the party of the second part, and to credit said record with all purchases, said record to be open to inspection of the party of the second part.

"Fourth: The party of the second part agrees to uphold all of the products of the party of the first part to the full list retail prices set by the party of the first part, and further agrees never under any circumstances to sell or allow said products to be sold to the wholesale or retail dealers except at full retail price.

"Fifth: The party of the second part further agrees to confine the sale of the products of the party of the first part to his own retail stores and to consumers only, and it is mutually agreed and understood that in the event of any violation of the terms of articles fourth and fifth of this agreement by the party of the second part or its servants the party of the first part shall thereupon become entitled to and the party of the second part shall pay the sum of one hundred dollars as liquidated damages for each and every such violation.

"Sixth: In the event of the party of the second part owning the preferred stock of the United Drug Company, it is agreed by the party of the first part, if it is mutually agreeable, to waive the three years' redemption clause inserted in the preferred stock certificate, so long as the territory controlled by the party of the second part shall prove profitable to the party of the first part, and so long allow him to control said stock.

"Seventh: It is further agreed that the party of the second part will, in case he desires to sell the United Drug Company stock, first offer it to the executive committee of the party of the first part, giving ten days' notice.

(Seal) "United Drug Company,

"Louis K. Liggett, General Manager.

(Seal) "St. Joseph Drug Co., Inc.,

"D. H. Spencer, Treas.

"All conditions that exist in connection with this agreement are above stated."

The defendant, a Massachusetts corporation, concedes that, in 1916, at the time of its organization, it assumed the obligations of its predecessor, United Drug Company, a New Jersey corporation, under said contract. And, for the purpose of this opinion, it may be conceded that on April 16, 1923, the St. Joseph Drug Company, Incorporated, a Missouri corporation, assigned to the plaintiff, a Massachusetts corporation, its claim for damages arising out of the alleged breach of said contract, although the validity of said assignment and the plaintiff's right to prosecute this suit are challenged by the defendant.

In substance, it is alleged in the petition that, on January 17 1908, the St....