Vilter Mfg. Co. v. Rolaff, 11569.

Decision Date08 April 1940
Docket NumberNo. 11569.,11569.
Citation110 F.2d 491
PartiesVILTER MFG. CO. v. ROLAFF.
CourtU.S. Court of Appeals — Eighth Circuit

COPYRIGHT MATERIAL OMITTED

Richmond C. Coburn and Thomas L. Croft, both of St. Louis, Mo. (Thompson, Mitchell, Thompson & Young, of St. Louis, Mo., on the brief), for appellant.

Milton Yawitz, of St. Louis, Mo. (Rassieur, Long & Yawitz, of St. Louis, Mo., on the brief), for appellee.

Before WOODROUGH and THOMAS, Circuit Judges, and NORDBYE, District Judge.

NORDBYE, District Judge.

This is an action brought by Claire Rolaff against the Vilter Manufacturing Company to recover the balance of minimum royalties owing under a contract. The action was commenced in state court and was removed by the defendant to the United States District Court. Timely objection was made by the defendant to the jurisdiction of the court; first, on the ground that the defendant was not doing business within the State of Missouri so as to subject it to service of process, and second, even though it was doing business within the meaning of the statute, the cause of action was on a contract executed in the State of Wisconsin and in no way related to the business done in the State of Missouri, and therefore no jurisdiction would rest in the Missouri courts to determine the controversy. Evidence was taken on the question of jurisdiction, and the trial court denied the motion to quash service. The case proceeded to trial with a jury, and at the close of all the testimony, both the plaintiff and the defendant made a motion for a directed verdict. The court directed a verdict in favor of the plaintiff in the sum of $7,000, with interest, making an aggregate finding in her favor in the sum of $8,102.50, and the defendant appeals. The principal points relied upon in this appeal are, first, that the court had no jurisdiction, and second, any obligation on the contract was discharged by an accord and satisfaction, or at least a jury question was raised by the evidence on that issue.

The contract was entered into on July 1, 1932, between the defendant and one Walter Rolaff, the husband of the plaintiff, and he later assigned the contract to his wife. Walter Rolaff held certain patents on rotary compressors, and licensed the defendant company for a period of five years to use the patents in the course of its business in the manufacture of large refrigeration machinery. Minimum royalties to be paid under the contract were $9,000 for the first year and $10,000 thereafter for the balance of the term. The $10,000 a year payment was to be made $2,500 quarterly, and Rolaff was authorized under the contract to accept less than the payments stipulated, but was not under any obligation to do so. The paragraph in the contract referring to the reduction of the royalty payments reads: "In view of the fact that conditions may arise during the term of this contract which would make the amount of royalties payable under this contract an excessive burden to party of the first part, it is hereby understood that the party of the second part may, at his option, reduce the percentage of royalty payable at his own discretion. It is understood and agreed, however that such reduction can only be made voluntarily by the party of the second part and is in no way a condition of this contract."

The business of the defendant was apparently less than was anticipated, and in 1934 it applied to the plaintiff, who at that time was the assignee of Walter Rolaff, for reduction in royalties. Negotiations were had between the parties which resulted in a reduction for the year 1934. Under the reduction arrangement, $600 monthly was accepted in lieu of the $2,500 payment due quarterly. This modification, however, was expressly limited to the year 1934. It appears that the defendant continued to make monthly payments of $600 beginning January 1, 1935, and on April 18, 1935, plaintiff wrote a letter to the defendant stating that it had just come to her attention that an error in royalty payments had been made since January 1, 1935; that the modification agreed upon expired on December 31, 1934, and that thereafter the royalty payments must be made in accordance with the contract; that $1,800 had been paid for the first three months instead of the $2,500 quarterly payment, and immediate payment of the balance of $700 was requested. Defendant replied on April 24, 1935, that the monthly payments had been continued on the assumption that plaintiff would continue the modification for the ensuing year because the same business conditions prevailed, and requested plaintiff to agree to a continuance of the modified schedule until business should improve. As an inducement, the defendant offered a ten per cent royalty on machines shipped to foreign countries. However, plaintiff responded with the contention that the foreign royalties were presently due under the contract and could not be used as a trading item. Further correspondence between the parties resulted. Plaintiff indicated a willingness to negotiate for a modification, but insisted on full information as to the business of the company and made it clear that she would not consider any modification until the balance of the minimum royalties due for the period that had elapsed in 1935 were paid in full. Defendant furnished some information, but neglected to make up the deficiency in the payments as requested, and therefore plaintiff refused to consider or acquiesce in any modification. On May 31, 1935, the defendant company sent a $600 check to the plaintiff, stating that it covered the May royalties. On June 5th, plaintiff acknowledged receipt of the payment stating that she would credit it on the royalty account for 1935, and made it clear that the statement in defendant's letter to the effect that the check covered the May royalty "is erroneous and not in accordance with the terms of the contract." Commencing with June, 1935, the defendant sent a monthly check in the amount of $600, with a statement on the check, "In full payment of all royalties to date." Defendant continued sending the monthly checks with the same recital until the expiration of the contract on July 1, 1937. Each monthly check was accompanied by a letter stating that the check represented full monthly payment of royalties to date. Correspondence passed between the parties during that two-year period, and plaintiff steadfastly maintained that the checks were being accepted only on account. For instance, on June 10, 1935, she wrote to the defendant as follows: "Some time ago, I called to your attention that an error has been made in the royalty payments in the contract between your company and myself. Your office persists in the same error, and I again call it to your attention for correction."

On September 5, 1935, she again wrote a letter, reading in part as follows:

"The enclosed statement shows the condition of the account between us pertaining to the contract existing and in full effect between the Vilter Manufacturing Company and myself. * * *

"The installment payments you are making from month to month are not sufficient to pay your indebtedness and as time goes on the unpaid balance becomes greater.

"This is to put you again on notice, that while I am accepting your installment payments to apply on your debt, I do so without granting for a moment that these payments are payments in full of what you owe, and that your inscription of your installment checks that they constitute payment in full have no validity with me since you cannot change arbitrarily and without my consent the contract in force between us, no matter how many inscriptions to that effect you may endorse on your checks."

On July 13, 1937, she wrote a letter to the defendant which stated, in part:

"I am in receipt of your check for $600 dated June 30, 1937, to apply as payment on contract of July 1, 1932.

"I note that this check carries the legend, `Payment in full under contract of July 1, 1932.' This is obviously not in accordance with the facts, since you owe me a balance of $7,367.71 of which you have been notified from time to time and for which statements have been rendered you every month. This is evidently an attempt on your part to obtain a receipt in full without having paid your debt in full."

It is admitted that there was no express agreement, written or oral, extending the agreement of May, 1934, when the contract was modified. It further appears that the plaintiff did not request monthly checks after December 31, 1934, but that that practice was continued by the defendant after the agreement expired. The general manager for the defendant testified that he had been advised by an attorney that if plaintiff accepted the $600 checks beginning with January 1, 1935, such acceptance would constitute a modification. At no time, however, did the defendant communicate to the plaintiff the advice that it had received from counsel. Evidently, such advice prompted defendant's course of action. The difference between the aggregate monthly payments made by defendant from January 1, 1935, to the end of the contract, and the minimum royalties during that period, is $7,000, which is the amount sued for herein and reflected in the directed verdict.

Plaintiff urges that the defendant has entered a general appearance and submitted to the jurisdiction of the court, because after making a special appearance which the court overruled in denying the motion to quash the service, it obtained a continuance and a resetting of the trial of the case; that it further during the trial agreed with counsel for plaintiff that a second cause of action set forth in the complaint might be dismissed. As we understand plaintiff's position, she maintains that where one has entered a special appearance and moved to dismiss for want of jurisdiction of the parties, which motion is later denied, any further action by such moving party must be consonant with its...

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