W. P. Iverson & Co. v. Dunham Mfg. Co.

• Decision Date: 30 June 1958
• Docket Number: Gen. No. 47307
• Citation: 18 Ill.App.2d 404,152 N.E.2d 615
• Parties: W. P. IVERSON & COMPANY, Incorporated, a Delaware corporation, Appellant, v. DUNHAM MANUFACTURING COMPANY, an Illinois corporation; Motor Chemical Corporation, a Delaware corporation; National Cylinder Gas Company, a Delaware corporation; Leo Corporation, an Illinois corporation; G. R. Stewart, and Dean Francis, Appellees.
• Court: United States Appellate Court of Illinois

Page 615

152 N.E.2d 615

18 Ill.App.2d 404

W. P. IVERSON & COMPANY, Incorporated, a Delaware corporation, Appellant, v. DUNHAM MANUFACTURING COMPANY, an Illinois corporation; Motor Chemical Corporation, a Delaware corporation; National Cylinder Gas Company, a Delaware corporation; Leo Corporation, an Illinois corporation; G. R. Stewart, and Dean Francis, Appellees.

Gen. No. 47307.

Appellate Court of Illinois, First District, First Division.

June 30, 1958.

Eckhart, Klein, McSwain & Campbell, Chicago, William A. McSwain, James O. Sillian, Chicago, of counsel, for appellant.

Percival Thompson, and Richard A. Lewin, Chicago, for Motor Chemical Corp.

Kirkland, Fleming, Green, Martin & Ellis, Chicago, Howard Ellis, J. Benjamin Cleaver, Don H. Reuben, and Ervin R. Klika, Chicago, of counsel, for Dunham Mfg. Co., Nat. Cylinder Gas Co., and G. R. Stewart.

McCORMICK, Presiding Justice.

W. P. Iverson & Company, Incorporated, a Delaware corporation, the plaintiff (also referred to herein as 'Company'), brought suit against the defendants to recover damages caused by defendants' alleged malicious interference, without legal cause or justification, with the contractual relationship between plaintiff and the defendant Motor Chemical Corporation, which interference it is alleged resulted in a termination of the contract between the plaintiff and the Motor Chemical Corporation. This appeal is taken from an order entered in the Superior Court of Cook County striking plaintiff's third amended complaint and dismissing the suit.

The amended complaint is in two counts. Count one is against the Dunham Manufacturing Company, an Illinois corporation (hereafter referred to as 'Dunham'), Motor Chemical Corporation, a Delaware corporation (hereafter referred to as 'Motor'), National Cylinder Gas Company, a Delaware corporation (hereafter referred to as 'National'), Leo Corporation, an Illinois corporation, G. R. Stewart and Dean Francis. It is alleged that on June 1, 1950 the plaintiff entered into a contract with Motor whereby Motor appointed the plaintiff as agent for a term of five years, on a commission basis, for the sale of products known as PD and PD-F, fluids which are used to reduce carbonization in gas combustion engines. A copy of the contract was attached to the complaint. It further alleges that National, Leo Corporation, Stewart and Francis, 'or some of them, owned or controlled the patents and trademarks related to said PD products'; that Francis and Stewart were officers and directors of Motor; that Stewart was vicepresident of both Motor and Dunham, that Dunham was a wholly owned subsidiary of National; and that National, Motor and Dunham had the same Chicago address. It also alleges that plaintiff has expended time and effort in advertising and promoting the products PD and PD-F and that thereby a lucrative market for such products developed throughout the world; that from the date of the inception of the contract to December 13, 1951 Motor paid to plaintiff the agreed commissions on sales made by it; that National, Leo Corporation, Stewart, Francis, Motor and Dunham, 'or some of them, with full knowledge of the rights of plaintiff and the obligations of defendant Motor under said contract, wrongfully conspired, combined and confederated among themselves to and did in fact (a) make it impossible for Motor to perform its obligations under the contract, (b) deprive plaintiff of its profits under the contract, (c) defeat plaintiff's rights thereunder, and (d) continue the sale of PD products through Dunham in order to avoid payment to plaintiff of its rightful profit under plaintiff's contract with Motor'; that the defendants had secured from the plaintiff the plaintiff's trade and business methods and know-how, customer contacts and lists of customers and potential customers, in order to successfully carry on the business through Dunham; that the plaintiff had developed a new market for the products in the marine industry, an industry in which the plaintiff was well acquainted; that on November 28, 1951 the defendants caused Motor to be voluntarily dissolved for the purpose of avoiding the contract between plaintiff and Motor, and in a manner presently unknown to plaintiff the defendants, 'or some of them,' caused the assets of Motor to be dissipated by action of Motor's stockholders and caused the inventory of Motor to be acquired by, and the business of supplying PD products to be transferred to, Dunham; that the defendants during January, February, March and April of 1952 had constantly reassured the plaintiff as to the nature of the relationship between the plaintiff and Dunham, and at the same time Stewart was secretly engaged in establishing a New York sales office for Dunham in order to take over plaintiff's business; that on April 30, 1952 and plaintiff was notified that its services and sales would no longer be accepted after May 1, 1952.

In count two, filed against Dunham and Motor, the plaintiff, after alleging the relationship between National, Motor, Dunham and Stewart, stated that on December 27, 1951 and January 2, 1952 notice of dissolution of Motor was sent to Motor's customers by Dunham, advising them that Dunham had acquired the assets of Motor and that plaintiff was Dunham's marine and export agent, and advising Motor's customers to place all orders through plaintiff as they had done in the past; that on January 11, 1952 Dunham furnished plaintiff with new invoice forms and orders for sales, substituting the name Dunham for Motor, and also furnished the plaintiff with new stationery carrying the letterhead Dunham and the subhead 'Reply to: W. P. Iverson & Co., Inc., Export and Marine Representatives'; that on January 10, 1952 plans were proposed by Dunham for advertising PD products, which plans were made in conjunction with plaintiff and Dunham contemplating a long range advertising campaign using plaintiff as Dunham's agent; that Dunham paid commissions in accordance with the contract between plaintiff and Motor and accepted sales made by plaintiff; that plaintiff, believing that Dunham had adopted the contract, continued to perform its duties thereunder as the agent of Dunham until April 30, 1952, at which time its further services were refused by Dunham. Both counts prayed for damages.

A motion to strike both counts of the amended complaint was filed by Motor, and a separate motion was filed by Stewart, Dunham and National. In both motions, as one of the grounds, it was alleged that the contract is void for want of consideration and also that it lacks mutuality. That question was argued before us and must first be determined, since it is obvious that if there was no valid contract there could be no basis for the suit.

In order to determine whether or not the consideration is sufficient it is necessary to consider the contract as a whole. The contract, attached to the complaint, was entered into on June 1, 1950, between Motor Chemical Corporation and W. P. Iverson & Company, Incorporated, in the contract referred to respectively as 'Motor' and 'Company.' It recites that Motor is engaged in the promotion of a product known as PD for association with fuel for use in internal combustion engines and a product known as PD-F for association with fuel oils for use in boilers on ships, and that the Company desires to promote PD and PD-F in certain territories and locations and Motor desires to have the Company make such promotion. It provides that Motor agrees to pay the Company commissions on sales in accordance with the provisions therein contained, and the Company agrees to do no advertising of the products without submitting the copy of the advertising to Motor for its approval, and Motor reserves the right to terminate the making of any sales if for any reason the activities of the buyer are not satisfactory to Motor. In the contract Motor reserves the right to terminate the agreement (1) if in any anniversary year the total of sales made by the Company pursuant to the terms of the agreement shall be less than $150,000, such termination to be effected by Motor giving to the Company written notice of such termination not less than 90 days prior to the effective date thereof; (2) if Motor elects to sell to another all of its right, title and interest in respect to the promotion of PD and PD-F, by giving the Company written notice of such termination 60 days prior to the effective date thereof, and on the effective date paying to the Company a bonus in a sum equal to the commissions paid by Motor to the Company under the agreement during the two years immediately preceding such effective date, unless in connection with the said sale Motor works out with the purchaser an agreement under which the purchaser shall proceed with the Company on terms similar to the instant agreement; (3) if Motor elects to go out of the business of promotion of PD and PD-F, such termination to be effective by Motor giving to the Company written notice of such termination not less than 60 days prior to the effective date thereof; and (4) if W. P. Iverson, the present principal owner of, and in control of, the Company, shall cease to be the principal owner of or relinquishes control of the Company, or shall cease to be active in the affairs of the Company, which termination may be effective by Motor giving the Company 60 days' notice. There is a further provision that the contract is solely a sales agreement and nothing in the same shall be considered to give the Company any property or other right in or to the trade-marks and trade-names of PD and PD-F. The Company on its part agrees that during the terms of the agreement and for a period of six months after the end of such term it will not engage in the promotion or sale, directly or indirectly, of any product competing or in competition with PD or PD-F, and Iverson, individually, makes the same agreement. It is also provided that no assignment of the...