Temperato v. Horstman

Decision Date09 March 1959
Docket NumberNo. 2,No. 46651,46651,2
Citation321 S.W.2d 657
PartiesSam TEMPERATO, Respondent, v. Walter HORSTMAN, Constance Horstman, Emil M. Ehrlacher and Theresa Ehrlacher, Appellants
CourtMissouri Supreme Court

Aubrey B. Hamilton, Richard A. Hetlage, St. Louis, for appellants.

Blumenfeld & Abrams, Harold J. Abrams, Stanley M. Rosenblum, St. Louis, for respondent.

EAGER, Judge.

In this suit plaintiff sought damages for the breach of a contract which may initially be described as a 'Dairy Queen' franchise for a territory in the City of St. Louis; he also sought certain injunctive relief. He recovered damages of $29,843.60 and was given a permanent injunction. Defendants had filed counterclaims, which were ruled adversely and which will be referred to later. The case was tried to the court. After an unsuccessful motion for a new trial, defendants appealed. We would merely encumber this opinion by reciting the pleadings; they fully cover the claims and defenses, pro and con. We note at the outset, however, that one of the defenses was and is that the contract was void because in violation of the Missouri and federal anti-trust statutes. The judge who heard the evidence retired before deciding the case, and it was thereafter submitted by stipulation to the present trial judge on the transcript, briefs, and oral arguments.

We may assume that the reocrd shows, though in part by inference and hearsay that a patent had been issued for a type of freezer which froze and delivered socalled 'soft-cream' through a special faucet; the final product, it is said emerged in a distinctive shape with a 'curl on top,'--at least where the frozen cream was visible in a cone or sundae. These freezers were used rather widely, in nearly all the states, under the name 'Dairy Queen.' The product was sold in cones, sundaes, shakes, pints, quarts, and possibly in other forms. The purported owners of the patent had applied for a trade-mark registration on the name, but this had been declined, expressly or by failure to issue, because of the prior registration of a trade-mark on that name to International Milk Company; that company eventually gave the holder of the Dairy Queen freezer patent a letter of nonobjection to its use of the name under certain conditions, but that agreement was made long after the controlling breach of contract involved here.

A complicated system of franchise operations had grown up in licensing the use of these freezers and of the name 'Dairy Queen'; there were state franchises, district franchises and 'sub-franchises,' the latter being for the operation of local stores. The freezers were generally leased to the store operators, who apparently owned or leased the stores, paid all their own expenses, and paid a royalty on all the 'mix' which was purchased and used in the freezers, in addition to any lump sum paid for the original contract or the territory. The 'mix' was the basic dairy product used, and it was purchased from outside sources. We shall not attempt to unravel the tangled system of royalties which the witnesses tried to describe, except to say that the defendants, as other store owners, paid a royalty to their immediate contracting party or parties. There were various competing companies or systems processing and selling soft-cream products, also sometimes referred to as 'soft-milk' products; these, of course, were operated under other names, such as Tasti-Freez, Zesto and Dairy Delight.

The contract now in question was executed on Sept. 2, 1948. We shall digest briefly its essential parts. William and Irene Bollini as owners 'of the exclusive right to the use of the Dairy Queen Freezers manufactured under Patent No. 2080971, and the exclusive right to the use of the tradename 'Dairy Queen' in St. Louis, Missouri, and St. Louis County, Missouri; * * *' thereby sold to defendants such rights for a certain defined area in the City of St. Louis for a period of ten years, with an option of renewal; they also agreed to furnish two freezers for each store, which were to remain the property of one Harry Axene and his wife and which should also continue to be personal property. Defendants agreed: to pay $3,600 for the use of the freezers, and a royalty of 54 cents per gallon on all 'mix' used; that no royalty should be cancelled or abated by reason of the expiration of the patent; that defendants would keep complete records which should be open to inspection by the Bollinis or their agents or by Axene; to make written reports and payment of royalties monthly; to erect at their own expense, a suitable building according to plans to be furnished and on an approved site; to pay all employees and all costs of operation; to maintain the 'standards and cleanliness' set up by Bollini, to comply with all health and sanitation laws, and to operate for at least six months of each calendar year. We quote, in part, the following additional provisions, which were also agreed to: 'that all mix and supplies, including cones, cups, containers, toppings, flavoring, coloring and like supplies and materials, shall meet the standards of quality and specifications therefor as may now or hereafter be set up by the Party of the First Part and shall be purchased only from sources approved in writing by the Party of the First Part and W. J. Lanaghan, Belleville, Ill., and these Parties reserve the right to change the list of approved sources of supply as it deems best. * * * that no product, other than Dairy Queen may or will be sold on the premises above described without the written approval of the Party of the First Part and W. J. Lanaghan, Belleville, Ill., first had and obtained. * * * Party of the Second Part agrees that the selling price of all Dairy Queen Products may be set from time to time by the Party of the First Part, and the Party of the Second Part agrees that it will not deviate from the prices so set.' Defendants did construct a building within the prescribed territory and began the operation in or about October, 1948. Under date of March 1, 1951, Bollini and his wife, Axene and his wife, and one William J. Lanaghan and his wife entered into a contract with plaintiff, Sam Temperato, by which they transferred to plaintiff all franchise rights in St. Louis City and County and in certain other territory, and their interest in the existing contracts, including that of these defendants.

Defendants operated under Bollini from the fall of 1948 until sometime in March, 1951, and under plaintiff from March, 1951, to July 14, 1951, when they repudiated the contract and so notified plaintiff. Bollini testified: that the form of contract involved here was one given to him by Axene and Lanaghan (his contracting parties and superior franchise holders) for use in his 'sub-franchise' arrangements; that defendants continually complained about the amount of the royalty and that he reduced it from 54 cents to 49 cents per gallon, but they still complained; that he made no demands that defendants purchase their supplies from stated sources, but at first had to tell them 'where they could buy their supplies,' because they did not know; that on certain items few sources were available; that to a large extent the different stores bought from different sources; he 'encouraged' a uniform paper source; that he got no 'kick backs.' Bollini's testimony concerning the retail prices of the products was somewhat conflicting, but, in essence, it was as follows: that there was a 'suggested selling price' at all times; that he made no demands on defendants, but that a new operator might put out either too much or too little material for his own good at a certain price, 'so we have to instruct what price to charge,' and that he arranged to have price lists painted in the stores 'at the beginning'; that he got directives from the Dairy Queen Trade Association on prices to be charged and set; that it was his policy to have uniformity of weights and prices in that area, and he wanted the stores to be as identical as possible; that, at the outset, defendants sold malts for 25 cents and shakes for 20 cents, and he called to their attention the fact that this 'was not correct as to the policy in the City of St. Louis' and that all stores, including drug stores, were charging the same prices; that they then 'corrected' it; that the 'policy' included Dairy Queen and 'all soft cream stores'; that on one occasion he called to defendants' attention a divergence in prices on ice cream sodas; that at a regional meeting at the Lennox Hotel in St. Louis in the spring of 1950, attended by most of the Dairy Queen operators, it was mutually agreed that the cost of supplies had gone up and that in order to make a profit 'you would have to get more money for your quart or pint containers,' or for these products generally; that thereafter most of the St. Louis stores raised their prices. Another witness was permitted to testify that: 'Mr. Bollini had told us the standard price that Dairy Queen had for their merchandise and all their stores we served had that same price * * *.'

Plaintiff Temperato had some connection with 'Dairy Queen' in another territory before he took over Bollini's franchise. He also held a 'Tasti-Freez' franchise from and after Sept., 1950. He testified: that after he took over he promptly reduced the St. Louis Dairy Queen royalties from 49 cents to 34 cents; that he made no demands concerning the purchase of supplies or the maintenance of retail prices; that he did discuss and tried to promote a method of volume purchasing of mix from the Pet Milk Company whereby a saving of 7 cents a gallon would have been accomplished under this plan all purchases would be billed to him or his nominee, 1 cent of the saving would go to his office for bookkeeping, and the other 6 cents would be split between himself and the store operators; that he held a joint meeting of Dairy Queen and Tasti-Freez operators on this proposal...

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7 cases
  • Morris v. Retz
    • United States
    • Missouri Court of Appeals
    • February 6, 1967
    ...credibility superior to that of the reviewing court. Giokaris v. Kincaid, Mo., 331 S.W.2d 633, 635, 86 A.L.R.2d 925; Temperato v. Horstman, Mo., 321 S.W.2d 657, 661; 3 Mo. Digest, Appeal and Error, Key No. The claim of Mrs. Retz was in two parts. The first part was for services to Lee Hayne......
  • Reddi-Wip, Inc. v. Lemay Valve Co.
    • United States
    • Missouri Court of Appeals
    • February 20, 1962
    ...likewise appear to conflict with our statute on agreements in restraint of trade, Section 416.040, RSMo 1949, V.A.M.S. See Temperato v. Horstman, Mo., 321 S.W.2d 657. The final question on appeal is whether the court erred in adjudging the defendants and the additional defendants guilty of ......
  • State ex rel. State Highway Commission v. Camden County
    • United States
    • Missouri Court of Appeals
    • August 23, 1965
    ...parties to an illegal agreement in the position in which they put themselves, refusing affirmative relief to either. Temperato v. Horstman, Mo., 321 S.W.2d 657, 666(12); Donovan v. Kansas City, supra, 352 Mo. at 440, 175 S.W.2d at 878(3); Hall v. Bucher, 240 Mo.App. 1239, 1242, 227 S.W.2d 9......
  • Meyers v. Smith, 49882
    • United States
    • Missouri Supreme Court
    • January 13, 1964
    ...same deference which it would accord had that court personally heard oral evidence in support of plaintiffs' claim. Temperato v. Horstman, Mo.Sup., 321 S.W.2d 657, 661; Schwartz v. Shelby Const. Co., Mo.Sup., 338 S.W.2d 781, 788[6-8]; Giokaris v. Kincaid, Mo.Sup., 331 S.W.2d 633, 635. This ......
  • Request a trial to view additional results
2 books & journal articles
  • Missouri. Practice Text
    • United States
    • ABA Antitrust Library State Antitrust Practice and Statutes (FIFTH). Volume II
    • December 9, 2014
    ...would be anticompetitive per se). 16. Rueschhoff Physical Therapy, Inc. , 980 S.W.2d at 134-35. 17. See, e.g. , Temperato v. Horstman, 321 S.W.2d 657, 663 (Mo. 1959) (explaining that the “test is not whether the [price fixing] agreement unreasonably lessens competition or increases prices .......
  • Missouri
    • United States
    • ABA Archive Editions Library State Antitrust Practice and Statutes. Fourth Edition Volume II
    • January 1, 2009
    ...would be anticompetitive per se). 16. Rueschhoff Physical Therapy, Inc. , 980 S.W.2d at 134-35. 17. See, e.g. , Temperato v. Horstman, 321 S.W.2d 657, 663 (Mo. 1959) (explaining that the “test is not whether the [price fixing] agreement unreasonably lessens competition or increases prices .......

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