Super Hooper, Inc. v. Dietrich & Sons, Inc., 10559

• Decision Date: 29 March 1984
• Docket Number: No. 10559,10559
• Parties: SUPER HOOPER, INC., Plaintiff and Appellant, v. DIETRICH & SONS, INC., Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 152

347 N.W.2d 152

SUPER HOOPER, INC., Plaintiff and Appellant, v. DIETRICH & SONS, INC., Defendant and Appellee.

Civ. No. 10559.

Supreme Court of North Dakota.

March 29, 1984.

Farhart, Rasmuson, Lian & Maxson, Minot, for plaintiff and appellant; argued by Steven C. Lian, Minot.

Ployhar, Thorson & Weisenburger, Valley City, for defendant and appellee; argued by Roger R. Weisenburger, Valley City.

PEDERSON, Justice.

In December 1979, corporate officers of Super Hooper, Inc. and Dietrich & Sons, Inc. met to discuss the marketing of a device which, when affixed to a basketball hoop, would reward an accurate shot by returning the ball to the shooter. Theoretically, a missed shot requires the shooter to chase after the ball. Within a few days after this discussion, the two corporations exchanged letters and those letters constitute the contract now disputed. ¹ About three months elapsed and Super Hooper sued Dietrich for breach of contract, seeking (1) specific performance (later abandoned) and (2) damages. In answering, Dietrich (1) denied the existence of a contract (apparently abandoned), (2) claimed it had fulfilled its obligations under the contract, and (3) alleged that Super Hooper breached the contract.

The case was tried to the court without a jury, resulting in a judgment for Super Hooper in the sum of $43,854.46 and terminating Dietrich's "right to act as manufacturer, distributor and representative of said Super Hooper product." Super Hooper appealed from the judgment and from a post-judgment order denying prejudgment interest. Dietrich did not cross-appeal. We affirm the judgment and the order.

Super Hooper argues that Dietrich did not "test market" the Super Hooper device and therefore it is entitled to recover damages of $150,000, representing the value of a reasonable "test market" effort, plus lost royalties of $239,500. As required by Rule 52(a), NDRCivP, the trial court found as fact:

"That the Defendant [Dietrich] expended approximately Sixty Thousand Dollars ($60,000.00) in promoting the product. Subject contract contemplated expenditures of Fifty Thousand Dollars ($50,000.00). The evidence indicates that it is as likely that the product failed as a result of lack of public acceptance as from inadequate test marketing. The test marketing efforts of the Defendant [Dietrich] were within the contractual contemplation of the parties." (Finding of Fact VII.)

Although neither party contended that the contract between Super Hooper and Dietrich is ambiguous, and there is no special finding or separate conclusion to that effect, the terms of the contract are obviously ambiguous and the parties appropriately offered oral testimony which was appropriately received and considered by the trial court.

The construction of a written contract is a question of law, not fact, as is the determination of whether or not a contract is ambiguous. Johnson v. Mineral Estate, Inc., 343 N.W.2d 778, 780 (N.D.1984); Sorlie v. Ness, 323 N.W.2d 841, 844 (N.D.1982). But if the intent of the parties cannot be determined from the agreement alone, because of ambiguity or otherwise, interpretation of intent is a question for the fact finder. See Zitzow v. Diederich, 337 N.W.2d 799 (N.D.1983); Bohn v. Bohn Implement Co., 325 N.W.2d 281 (N.D.1982).

If we were to assume that the contract between Super Hooper and Dietrich was free of ambiguity and interpret "as a matter of law" what obligations are imposed upon Dietrich by the words "doing a test market," without further definition, we would conclude that both the technique used and the extent of funds and effort expended are at the reasonable discretion of Dietrich. The phrase "test market" is labeled by Super Hooper as "words of art" but no definition is supplied and our research discloses no judicially recognized definition.

The Georgia Court of Appeals, in a case where the contract documents were much more explicit than the Super Hooper-Dietrich contract, upheld a trial court determination that there was no failure to test market as a matter of law where it had been shown that there were sufficient efforts under any reasonable construction of the agreement. Knight Industries, Inc. v. Turner Marketing, 157 Ga.App. 177, 276 S.E.2d 860 (1981).

The United States Court of Appeals, Sixth Circuit, in a case that also involved a test marketing contract that was considered "unambiguous," but otherwise very similar to this case, apparently found no need to define "test marketing." That court pronounced several maxims in Booker v. Ralston Purina Co., Inc., 699 F.2d 334 (6th Cir.1983) which apply directly or by analogy here:

"Plaintiff had the opportunity at the bargaining table to insert clear and specific provisions in the contract, and his failure to do so cannot be corrected years later by a post hoc guess ..." [Emphasis in original.] 699 F.2d at 336.

"We similarly find no merit in appellant's final suggestions that we allow damages based on some concept of foregone opportunity or rental value. Once again we are faced with a situation where plaintiff has not shown any means of measuring such a foregone opportunity or rental value. His product was innovative and untried. On one hand, it may have made Booker a millionaire but it may also have been commercially unattractive." 699 F.2d at 337.

See also Circuit Judge Arnold's opinion in Unique Systems, Inc. v. Zotos Intern., Inc., 622 F.2d 373 (8th Cir.1980).

If we understand correctly, it is Super Hooper's contention that from Dietrich's own evidence as to a reasonable "test market," it can be determined as a matter of law that Dietrich defaulted to the extent of $150,000 on its obligation to test market the Super Hooper device. We said in First Nat. Bank of Fargo v. Ketcham, 336 N.W.2d 140, 144 (N.D.1983) that:

"Testimony unfavorable to one's own contention can be a 'judicial admission.' "

Nevertheless, as we previously pointed out in Malarchick v. Pierce, 264 N.W.2d 478, 480 (N.D.1978), "it is still for the trier of fact to decide the issue upon all the evidence." [Emphasis in original.]

Super Hooper has explained no basis upon which this court should declare that Finding of Fact VII, or any other in this case, is clearly erroneous under Rule 52(a), NDRCivP. There is no justification in the record for Super Hooper's claim that Dietrich "totally failed" to perform a "test market." The court did not err in failing to award $150,000 for the default in test marketing.

Another contention by Super Hooper is that the trial court erred in failing to award $239,500 for lost royalties. The letter from Dietrich to Super Hooper states: "We would at that time [when products on hand are sold and Dietrich takes over the manufacture of additional units] work out a percentage of manufacturing cost or so much per unit." There is little enlightening testimony explaining the statement. On its face it appears to be an agreement to agree on a royalty at some future time.

This court in Hayashi v. Ihringer, 79 N.D. 625, 58 N.W.2d 788 (1953), at syllabus 1, held that: "A mere statement of an intention to act in a certain way is not a promise ..." See also Bottineau Public Sch. Dist. # 1 v. Currie, 259 N.W.2d 650, 654 (N.D.1977). It is an elementary principle of law that agreements to agree are rarely enforceable. See Opdyke Inv. Co. v. Norris Grain Co., 413 Mich. 354, 320 N.W.2d 836 (1982); Deadwood Lodge No. 508, Etc. v. Albert, 319 N.W.2d 823 (S.D.1982); 17 Am.Jur.2d Contracts Sec. 26.

It was not error for the trial court to fail to find that Super Hooper was entitled to lost royalties from Dietrich.

In rejecting Super Hooper's claim for prejudgment interest the trial court, after citing authority (22 Am.Jur.2d Damages Sec. 185) that "in a growing number of jurisdictions, the allowance of interest on unliquidated claims is discretionary," held:

"... In the subject case, there were several problems which led the Court to find that the interest in this case was not liquidated.

"First, there were allegations of fraud and improper marketing procedures for which the Plaintiff claimed extensive damages. The...