Tees v. Lee

• Decision Date: 07 May 1940
• Parties: TEES v. LEE.
• Court: Wisconsin Supreme Court

234 Wis. 607

291 N.W. 792

TEES

v.LEE.

Supreme Court of Wisconsin.

May 7, 1940.

Appeal from a judgment of the Circuit Court for Milwaukee County; Walter Schinz, Judge.

Affirmed.

Action begun June 29, 1939, by J. M. Tees against Royal Lee to recover a balance alleged to be due on a contract. Judgment was in favor of plaintiff. Defendant appeals.

The defendant, a manufacturer of vitamin products, had engaged the services of the plaintiff to market his products, and the plaintiff had built up a sales organization which he operated under the name of Vitamin Products Sales Company. Differences between them having arisen, a contract was negotiated April 13, 1939, tending to separate their interests. Under that agreement the defendant purchased from plaintiff the sales organization including his contracts and accounts with his distributors, and agreed to pay therefor $2,000 a month for six months, and make certain allowances on those accounts.

The defendant set up by way of counterclaim a cause of action based on the breach of an alleged oral agreement by the plaintiff not to engage in a competitive business in the territory in which they were interested for a period of two years, and also that there was an unlawful interference by the plaintiff with existing contracts between the defendant and his distributors in an effort to undermine the good will of defendant's business.

The case was tried to the court and jury. At the conclusion of the evidence, the court directed a verdict in favor of the plaintiff and granted judgment accordingly. The assignments of error and terms of the contract upon which the action is based will be referred to in the opinion.

Francis E. McGovern and John J. Devos, both of Milwaukee, for appellant.

Harry V. Meissner and Robert L. Piper, both of Milwaukee, for respondent.

FAIRCHILD, Justice.

The appellant is a sole trader doing business under the name of Vitamin Products Company. The respondent was the owner of a distribution organization which he had operated for several years under the name of Vitamin Products Sales Company. He sold this business to the appellant who agreed to pay therefor $12,000 in $2,000 monthly instalments. In the contract it was agreed that in the event of a default of any monthly payments the total amount was to become due and payable. By the middle of June, 1939, $5,000 had been paid. Plaintiff brought this action to recover the balance of $7,000 now claimed to be due. Appellant seeks to avoid liability and claims: (1) that there exists an agreement not included in the written contract of sale between him and respondent in which respondent agreed to refrain from engaging in a competing business in the territory prescribed for a period of two years; and (2) that by “letters, advertisements, announcements and other devices he (respondent) solicited, enticed and encouraged said members of said distributors' organization to terminate their relations with defendant.”

With reference to the alleged agreement not to enter into competition with appellant for two years, the trial court was of the opinion that the appellant's claim could not be sustained, since no mention is made of the matter in the written instrument embodying the terms of the agreement of sale entered into by the parties. The appellant in his answer says that the negotiations for the contract of settlement consumed several weeks, and the terms were frequently discussed by the parties and their attorneys; “that during such discussions the defendant requested a written agreement on the part of the plaintiff that he would not, for a period of two years, engage in the manufacture or sale of any vitamin products within the territory described in the contract of March 3, 1937, and plaintiff stated repeatedly that such a provision was unnecessary for the reason he had no intention of engaging in a similar business at any time in the future, and thereupon orally agreed that he would not so engage or compete with the defendant in any manner whatsoever.” That such a promise was made was denied by the respondent, but under the ruling of the circuit court no evidence could be adduced because of the parol evidence rule, and the question first to be considered is the correctness of that ruling.

This is not a suit to reform a contract nor is there any claim of fraud having been resorted to by the respondent to induce appellant to purchase respondent's existing business and the facilities of his organization. As to this point it seems that the length of time consumed in the negotiations and the discussion of the very stipulation now claimed to exist and to constitute the independent agreement, together with plaintiff's refusal to have that stipulation included in the memorandum of sale, furnish sufficient reason for the holding that appellant was attempting to vary the terms of the written instrument by oral testimony.

[1][2]Parol evidence is admissible to alter the terms of a written instrument only when: (1) it does not contradict, vary, add to or subtract from the terms of a valid written agreement, or (2) fraud, mistake or accident are shown to be present. 2 Jones, Evidence, 4th Ed., p. 819, § 434; Mitchill v. Lath, 247 N.Y. 377, 160 N.E. 646, 68 A.L.R. 239, 240;70 A.L.R. 758; 10...