Stutzman v. C. A. Nash & Son Inc

• Decision Date: 25 April 1949
• Court: Virginia Supreme Court
• Parties: STUTZMAN et al. v. C. A. NASH & SON,inc.

53 S.E.2d 45

189 Va. 438

STUTZMAN et al.

v.C. A. NASH & SON, inc.

Supreme Court of Appeals of Virginia.

April 25, 1949.

Appeal from Law and Chancery Court of City of Norfolk; Lawrence W. I'Anson, Judge designate.

Action by Ira E. Stutzman and wife against C. A. Nash & Son, Inc., to recover for alleged breach of contract, and for damages for lost profits. From an adverse decree, the complainants appeal.

Decree affirmed.

Before HUDGINS, C. J., and GREGORY, EGGLESTON, SPRATLEY, BUCHANAN, STAPLES and MILLER, JJ.

Louis Lee Guy, of Norfolk, for appellants.

Williams, Cocke & Tunstall, of Norfolk, for appellee.

SPRATLEY, Justice.

In the year, 1936, Ira E. Stutzman, long engaged in the work of cleaning wooden floors, developed a formula consisting of a combination of several ingredients, which added together and diluted with water in the proportions of sixteen parts water to one part of a soap compound made what was claimed to be an excellent floor cleaning fluid. Desirous of placing the cleaner on the market, he sought to have C. A. Nash & Son, Inc., a wholesale merchant of paints, varnishes, floor cleaners, and similar articles, become its distributor to the retail trade. He induced the corporation to purchase five gallons of the fluid for use in experimental purposes to determine if there was any sales outlet for it. The corporation further purchased ten gallons in 1937, and fifty gallons in 1938. As a result of the experiment, William H. Nash, president of C. A. Nash & Son, Inc., on behalf of the corporation, in February, 1939, drafted and presented to Stutzman a contract dealing with the distribution of the latter's product. The contract, in the form of a letter, was duly accepted and executed by the complainant and his wife, Mrs. Bertha L. Stutzman. It reads as follows:

"Mr. I. E. Stutzman, "831 W. 36th St., "Norfolk, Va.

"Dear Mr. Stutzman:

"For and in consideration of One Dollar ($1.00), the receipt of which is hereby acknowledged by your signature, and as a further consideration of our agreement to sell and further the sale of your 16-to-1 Cleaner, it is understood that we are to have the exclusive sale of this Cleaner on the following basis:

"We are to be your sole distributors through our agents, salesmen, etc.

"Advertising: We are to spend not less than $50.00 per year for advertising.

"Prices: Your prices to us are to be as follows:

5-Gal. cans.........per Gal. net.... $1.25

55-Gal. Drums.......... per Gal. net.... 1.10

"It is understood and agreed that you, the seller of the 16-to-l Cleaner, will supply material to us, to be transferred to our containers; i. e., you, the seller, will not be put to container expense. It is further understood that we, the buyer, are to purchase not less than 50 gals. 16-to-l Cleaner per year.

"Formula: In the event of your death or incapacity to the extent that you cannot manufacture this material, it is further agreed by you that without further cost the formula will be given to us, we to manufacture the Cleaner and pay Mrs. Stutzman, or your assigns, a royalty of 25¢ per gallon.

"This agreement made in triplicate on the 23rd clay of February, 1939.

"Witness the following seals and signatures:

"C. A. Nash & Son, Inc.,

"Wm. Herbert Nash, Pres. (Seal) "Accepted by: Ira E. Stutzman (Seal) "Accepted by: Bertha L. Stutzman (Seal)"

During 1939, 1940, 1941, and 1942, approximately three hundred gallons of the fluid were delivered to the corporation by Stutzman. No delivery was made from December 19, 1942, to March 29, 1943. On the last date Stutzman made his last delivery amounting to eight gallons. On the grounds that deliveries were unsatisfactory and that a change had been made by Stutzman in the original ingredients of the fluid, the corporation began to purchase a floor cleaner fluid from other sources beginning on April 1, 1943.

The parties hereto will be hereinafter referred to as follows: Ira E. Stutzman as Stutzman, William H. Nash as Nash, and C. A. Nash & Son, Inc., as the corporation.

In September, 1945, this proceeding was brought by Stutzman and Bertha L. Stutzman, his wife, against the corporation, for an alleged breach of the contract of February 23, 1939, and damages for lost profits. Their bill of complaint is based on two alleged agreements between the corporation and the complainants. The bill alleged that Stutzman, under an oral agreement, was the owner of the floor cleaner preparation and its tradename "16 to 1;" that the control, ownership and rights in connection with the preparation and sale of complainants' floor cleaner under its tradename were valuable assets; that, under the written contract, Stutzman had retained in himself the exclusive right to manufacture the preparation, granting to the corporation exclusive right to sell it to the public; that the corporation, in violation of the written contract, had been procuring its supply of the cleaner fluid from sources other than the complainants and was selling it under the tradename of "16 to 1, " although complainants were, at all times, ready, willing and able to fulfill the term of the contract, thereby depriving complainants of an estimated profit of sixty cents upon each gallon sold by the corporation. It prayed for specific performance, an accounting of profits, and injunctive relief.

The corporation answered, denying all of the material allegations of the bill, and specifically any breach of the provisions of its contract. It averred that the complainants had failed to carry out their obligations under the written contract to furnish it with sufficient cleaner fluid to supply the demands of the trade which it had built up by the expenditure of thousands of dollars in advertising; that, in effect, complainants had abandoned the manufacture of the preparation with its original ingredients; and that it had become necessary for it to secure a supply of a cleaner fluid from other sources. It further averred that the trade-mark under which it was sold belonged to it, and denied that the complainants were entitled to damages by way of profits on materials sold, or by way of royalties, or entitled to specific performance or injunctive relief.

After consideration of the pleadings, the depositions, and the argument, the trial court, on March 1, 1948, held that the complainants were not entitled to relief prayed for in their bill, and dismissed the suit.

The evidence, taken by depositions, was sharply conflicting and contradictory. The judgment of the chancellor, under the circumstances, is presumed to be correct and stands until error has been pointed out. Lavenstein v. Plummer, 179 Va. 469, 471, 19 S.E.2d 696. It cannot be disturbed if it is reasonably supported by substantial, competent and credible evidence. Ashby v. Dumouchelle, 185 Va. 724, 731, 40 S.E.2d 493, and cases cited.

A summary of the essential portions of the evidence shows the following:

Stutzman testified that prior to his negotiations with the corporation, he had used the name "16 to 1" in describing his product because of the proportions of its components; that he told Mr. W. H. Nash in the negotiations leading up to the contract that he intended to have the fluid registered in his name under the trademark "16 to 1, " and that Nash replied, "Let me do it for you. I have a lawyer I hire by the year and it will not cost you as much;" and that he agreed in order to save the lawyer's fees, and thought that registration had been made in his name prior to 1943.

Stutzman further said that he had been, at all times, ready and willing to fulfill the terms of the contract; that there hadbeen no time at which he had been unable to fill orders if they had been received; and that when he learned early in 1943 that the corporation was purchasing a cleaner from other sources, which it was distributing under the trade-mark "16 to 1", he saw Nash and made a protest about not getting any orders. He admitted that during the years 1937-1942, he was...