West, Weir & Bartel, Inc. v. Mary Carter Paint Co.

• Decision Date: 11 December 1969
• Citation: 25 N.Y.2d 535,307 N.Y.S.2d 449,255 N.E.2d 709
• Court: New York Court of Appeals Court of Appeals
• Parties: , 255 N.E.2d 709 WEST, WEIR & BARTEL, INC., Respondent, v. MARY CARTER PAINT COMPANY, Appellant.

Page 449

307 N.Y.S.2d 449

25 N.Y.2d 535, 255 N.E.2d 709

WEST, WEIR & BARTEL, INC., Respondent, v. MARY CARTER PAINT COMPANY, Appellant.

Court of Appeals of New York.

Dec. 11, 1969.

Adelbert C. Matthews, Jr. and Kenneth F. Astarita, New York City, for appellant.

A. Walter Socolow and Max E. Lynne, New York City, for respondent.

JASEN, Judge.

Mary Carter Paint Company (Mary Carter) is a manufacturer and distributor of paint and related products which in 1961 were sold at retail through approximately 600 franchised dealers and 80 company-owned stores located in 36 States throughout the country.

For a number of years prior to 1961, Mary Carter handled the advertising for its own stores. However, each franchise dealer placed his own advertising, selected his own media, directly entered into his own binding contracts with the media involved, and determined how much or how little he would spend on advertising, without limitation. The franchise dealer would be reimbursed by Mary Carter 50% Of the cost of such advertising.

About April, 1961, Mary Carter decided to hire a national advertising agency to handle its advertising. The account was subsequently awarded to plaintiff's predecessor, Ellington & Company, and a written agency agreement was consummated between Ellington and Mary Carter for the period from July 1, 1961 to June 30, 1962. Ellington's original plan was to nationalize all advertising so as to give Mary Carter more direct control over its franchise dealers.

Upon the execution of the contract, Mary Carter turned over to Ellington all of the advertising it controlled at that time--i.e., for the 80 company-owned stores. However, as to the franchise dealer changeover to direct national advertising, it was decided that only the western region of the country should be shifted over to 'national control', and that as anticipated problems in the changeover were resolved, the remainder of the country, the midwestern and eastern regions, would be converted.

In the words of the Appellate Division, the test changeover in the western region 'produced disastrous results' and 'the independent dealers, with few exceptions, complained of a breakdown in the handling of local advertising campaigns for lack of familiarity with local market conditions and local advertising media.' As a result, in December 1961, defendant decided to abandon the 'national control' plan as tested in the western region and reinstated its prior co-operative system of local advertising. It offered, however, to retain Ellington as its advertising agency on direct national advertising for its own stores, but Ellington declined because of the limited commissions it would receive in handling advertising for 80 stores. Instead, Ellington proposed on December 18, 1961 to modify the original agreement between the parties so as to perform certain limited services for the period ending September 26, 1962, to be compensated 'by an amount equal to the 17.65% Commission on net billings of $250,000 * * * plus a service fee in the amount of $21,000'.

Mary Carter declined to accept this proposed modification stating that '(e)ven under the terms of our contract, wherein you provide us with full services, the amount of money involved on advertising which we will offer between now and the conclusion of the contract, would not begin to approximate that figure.'

Plaintiff then commenced this action containing six causes of action alleging a breach of contract. After a trial without jury, judgment was awarded to plaintiff in the sum of $4,257 on the first cause of action; and in the sum of $59,145 on the second, third, fourth and fifth causes of action. The sixth cause of action was dismissed.

The Appellate Division affirmed the judgment on the first and sixth causes of action and modified the award of $59,145 on the remaining causes of action by increasing it to $100,935. This figure of $100,935 represented 15% Of the total amount of direct national advertising and franchise dealer advertising of Mary Carter products during the first half of 1962--a figure which would approximate plaintiff's commissions had the 'Ellington Plan' been carried out. From this amount was to be subtracted the actual savings to Ellington from the nonperformance of the contract. This saving was later determined to be $33,500 leaving damages of $67,435.

The judgment on the first cause of action represents services, costs and disbursements such as purchases of radio time made by Ellington and is not seriously disputed by defendant here. Consequently, the problems herein considered only relate to the second through fifth causes of action.

There are basically two issues presented on this appeal. First, whether Mary Carter breached its contract with Ellington; and, second, assuming that there was a breach, what is the proper measure of damages.

The Appellate Division, in modifying the trial court's decision, held that '(o)n the question of breach of the agreement and the liability for damages there was a mixed question of law and fact properly resolved by the trial court.' (25 A.D.2d 85, 267 N.Y.S.2d 33.)

We cannot agree. The rule in this State is well settled that the construction of a plain and unambiguous contract is for the court to pass on, and that circumstances extrinsic to the agreement will not be considered when the intention of the parties can be gathered from the instrument itself. (See Bethlehem Steel Co. v. Turner Construction Co., 2 N.Y.2d 456, 459, 161 N.Y.S.2d 90, 92, 141 N.E.2d 590, 592, 63 A.L.R.2d 1331; Heller & Henretig, Inc., v. 3620--168th St., 302 N.Y. 326, 98 N.E.2d 458; Johnson v. Western Union Tel. Co., 293 N.Y. 379, 387, 57 N.E.2d 721, 725.)

The third paragraph of the contract clearly states that '(w)e agree to pay you at current published rates For advertising we order in all media * * * In such cases we agree to pay you at current published rates plus...