Opinion
No. 4926.
July 19, 1933.
Appeal from the District Court of the United States for the Southern District of Indiana, Terre Haute Division; Robert C. Baltzell, Judge.
Action in equity by the College Inn Food Products Company against the Loudon Packing Company and another. From a decree dismissing the bill for want of equity, plaintiff appeals.
Affirmed.
By this action appellant sought to enjoin appellees from selling or soliciting the sale of tomato juice cocktail to others than appellant except with the consent of appellant during the period of a year beginning August 1, 1932, and to enjoin appellees from indulging in unfair competition by using a list of names in soliciting business obtained from shipping orders given by appellant and by representing that the tomato juice cocktail manufactured by appellees was the same as the product sold by appellant, and asked for an accounting. The court made special findings of facts and rendered conclusions of law thereon, and dismissed the bill for want of equity.
The errors assigned arise out of the action of the court in dismissing the bill, and the rulings, with reference to the admission of certain interrogatories and the refusal to order appellees to answer certain interrogatories.
The court found that on June 11, 1930, appellant, designated as purchaser, and the Loudon Packing Company, an appellee, designated as seller, entered into a contract containing the following provisions among others:
The seller agreed:
"1. To furnish to Purchaser all of the tomato juice cocktail required by Purchaser in the operation of its business of selling tomato juice cocktail from August 1, 1930, up to and including August 1, 1933, subject to the ability of Seller to furnish such requirements, and subject to the Purchaser and Seller agreeing upon the price to be paid for such tomato juice cocktail, as hereinafter provided.
"2. To manufacture such tomato juice cocktail in accordance with the direction, supervision and recipes furnished to Seller by Purchaser. * * *
"8. Not to sell tomato juice cocktail to any other person, firm or corporation during the continuance of this contract."
The purchaser agreed:
"1. To purchase from Seller all of the tomato juice cocktail required by Purchaser in the conduct of its business during the continuance of this contract, subject to the ability of Seller to furnish such requirements, and subject also to Seller and Purchaser agreeing upon the price to be paid for such tomato juice cocktail, as herein provided. * * *
"3. Not to manufacture themselves or purchase any tomato juice cocktail from any other persons, firm or corporation during the period of this contract whenever Seller is able and willing to furnish the requirements of Purchaser, at the agreed price for each particular year."
It was mutually agreed:
"* * * 4. That prior to the first day of February of each year during the term of this contract Purchaser and Seller shall agree upon a price to be paid by Purchaser to Seller for such tomato juice cocktail packed during the ensuing packing season, which price shall be acceptable to Purchaser and on a competitive basis to enable purchaser to maintain its position in a competitive field with its necessary profit, and acceptable to seller to enable it to earn its necessary profit. In case Seller and Purchaser are not able in any year to agree upon a price to be paid by Purchaser to Seller and accepted by Seller for the ensuing packing season, then Seller shall be released from its obligations under this contract during such season, and Purchaser shall have the right, during such season, to purchase its requirements of persons other than the Seller, or manufacture the same itself."
The court further found that the appellant and appellee, the Loudon Packing Company, agreed upon the prices to be paid by appellant to said appellee for tomato juice cocktail to be packed during the packing seasons of 1930 and 1931, and that on April 28, 1931, appellant and both appellees entered into a supplemental agreement, which after referring to the former contract and setting forth section 8 of seller's promises therein, contained the following provisions:
"Whereas, It is the mutual desire of the parties hereto to modify the said agreement insofar as the Seller is restricted by said Paragraph 8 from selling tomato juice to any other person, firm or corporation during the term of said written agreement;
"Now, therefore, In consideration of the mutual covenants hereinafter contained, It Is Hereby Covenanted and Agreed as follows, to wit: * * *
"Second: It Is Hereby Covenanted and Agreed That during the period commencing with the packing season of 1931 and ending with the packing season of 1932 (but at no other time during the continuance of the written agreement of June 11, 1930), the said seller, by and through its said subsidiary, the American Packing Company of Indiana, shall have the right, and it is hereby given the right, to sell tomato juice cocktails, but only for private label, to a selected list of customers, provided that such list shall be first submitted to Purchaser and by it approved in writing. * * *
"Tenth: The Purchaser hereby agrees that during the period above mentioned, the said Purchaser will sell its own brand of College Inn Tomato Juice Cocktails at the following minimum prices: * * *" (Here follow the prices).
Further findings of the court were stated by it as follows:
"That complainant and defendants were not able prior to the first day of February, 1932, to agree upon a price to be paid for tomato juice cocktail during the packing season of 1932, and complainant elected to purchase its requirements of tomato juice cocktail for the packing season of 1932 from others than defendants.
"That complainant during the packing season of 1931 sold its tomato juice cocktail at prices below the minimum prices provided for in the supplemental agreement dated April 28, 1931, and has taken orders for tomato juice cocktail to be delivered during the packing season of 1932 at prices below the minimum provided for in the supplemental agreement of April 28, 1931.
"That complainant prior to the filing of this cause of action construed the supplemental agreement dated April 28, 1931 to apply only to the year 1931.
"That complainant breached the supplemental agreement * * * by selling tomato juice cocktail during the packing season of 1931, at prices below the minimum prices provided for in said supplemental agreement.
"That during the packing season of 1932, the complainant is selling and intends to continue to sell tomato juice cocktails at prices below the minimum provided for in said * * * agreement of * * *.
"That the term `packing season' as used in the contracts * * * was intended to mean the period commencing with August First of each year and ending with August First of the next year, it being intended by `packing season' to include the period during which tomato products are packed in Indiana and the period during which the pack of each season is usually sold. * * *
"That defendants have never compiled a list of the customers of complainant and have never endeavored to solicit customers for tomato juice cocktail from any list compiled from information furnished defendants by complainant.
"That defendants have never represented that the tomato juice cocktail to be sold by defendants during the packing season of 1932 and thereafter was the same as the tomato juice cocktail theretofore manufactured by defendants for complainant."
Edward Sonnenschein, Hugo Sonnenschein, David Levinson, and I.E. Ferguson, all of Chicago, Ill. (Robert G. Howlett, of Chicago, Ill., of counsel), for appellant.
Samuel D. Royse, Gilbert W. Gambill, and Frank J. Crawford, all of Terre Haute, Ind., and Frank C. Dailey, Perry E. O'Neal, George S. Dailey, and Robert A. Efroymson, all of Indianapolis, Ind., for appellees.
Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
The issues presented by this appeal are (1) whether, after the parties had failed to agree upon a price for cocktails during the packing season of 1932, and after appellant had contracted with others for the manufacture of its cocktails for that packing season, the appellees were obligated under the first contract to refrain from selling tomato juice cocktail to others than appellant during the packing season of 1932, or under the second contract to refrain from selling the cocktails except under private label with the consent of appellant, (2) whether there was error in admitting in evidence certain interrogatories and answers thereto and refusing to order appellees to make further answers to certain interrogatories propounded by appellant, and (3) whether appellees were guilty of unfair competition.
It is contended by appellant that by virtue of section 8 of seller's promises under the first contract, the first issue must be decided in its favor, regardless of the fourth section of the mutual agreements, which provides that in case the parties are unable in any year to agree upon a price to be paid for the cocktails for the ensuing season, the seller shall be released from its obligations under the contract during that season; that section 8 is a negative covenant which is in no way connected with section 4, and that it was the intention of the parties that the seller should be bound thereby during all the time from the date of the first contract to August 1, 1933, irrespective of any failure to agree on price, and that, therefore, under the first contract the seller was not permitted to sell cocktails to anyone except appellant, during the entire time.
In this construction we think appellant is in error. All parts of the contract should be construed together if possible, and no reason is apparent why it cannot be done without violence to the plain and ordinary meaning of the words used. We think section 8 must be read in the light of section 4, and that when considered together they mean that section 8 was to be applied in each year for which the price had been agreed upon, and if for any year or years contemplated by the contract, the price was not fixed, then for that period section 8 was not applicable, for it was to operate only during the continuance of the contract. Without an agreement as to price the contract would never have become operative, and when, after it came into operation, there was a failure to agree on the price in one of the subsequent years, a hiatus in its operation was thereby created for that year, and during that time the seller was relieved from all of its obligations including the negative covenants. There is no doubt that a negative covenant can be enforced by injunction, but we find no case in which a defendant has been thus enjoined when according to the plain terms of the contract he had already been released from all obligations arising out of it by the occurrence or non-occurrence of some certain event.
Nor do we think the second contract supports appellant's contention in any respect. Its declared object was to make section 8 of seller's promises less restrictive, and it in no manner affects the binding force of section 4 of the mutual promises in the original contract. It is true that the first covenant of the second contract grants to appellees a restricted right to sell cocktails to others than appellant during the period commencing with the packing season of 1932, and at no other time during the continuance of the first contract. This modification of section 8 must be construed with section 4 in the same manner as was section 8 of the original contract. Moreover, the first contract cannot be said to have been in effect from August 1, 1932 to August 1, 1933, because there had been no agreement as to price for that year, and appellant had contracted to purchase from others. That being the last year of the contract, it was of no force or effect after February 1, 1932, because the agreement as to price for 1932, in order to be effective, must have been made prior to that date. We think the trial court's construction of both contracts was right, and that appellees have not violated them in any way. Furthermore, appellant, in violating the provisions of the second contract with respect to sales of its goods below the agreed prices, was in no position to ask relief from a court of equity.
Appellant's contention with relation to unfair competition cannot be considered by this court, because the alleged facts upon which it is necessarily based have been found by the trial court not to exist, and there is substantial evidence to support those findings.
On April 22, 1932, appellant propounded forty-two interrogatories to be answered by appellees, which they answered or purported to answer on May 14, 1932. The trial was begun on September 6, 1932. As a part of appellant's evidence, it introduced twenty-three of the interrogatories and the answers to them. Thereafter, appellees, as a part of their case, offered in evidence all the interrogatories and answers as an entirety. The court received them as an entirety over appellant's objection, but no exception was taken by it to that ruling. The latter fact is a sufficient answer to this assignment of error, but a perusal of the interrogatories and the answers thereto which appellant did not introduce convinces us that they were properly admitted in explanation and elucidation of those which it did introduce, and appellant admits that this rule is the proper test of their admissibility.
It is further contended that the court erred in not requiring appellees to answer more completely interrogatories 29, 30, 31, 38, and 39. The first three asked for the names and addresses of all persons, firms or corporations solicited by appellees after February 1, 1932, to enter into contracts, and for copies of all letters written for that purpose. Appellees answered that they had solicited such contracts and written such letters relative to cocktail made from tomatoes grown after August 1, 1932, generally to all persons, firms and corporations engaged in the business of purchasing tomato juice cocktails, but that to give the names and addresses and copies of the letters would be practically impossible on account of their volume. Interrogatories 38 and 39 asked for copies of all contracts for the sale and delivery of cocktail entered into by appellees after February 1, 1932. Appellees answered that the information thus sought related to business secrets to which appellant was not entitled. The court refused to require further answers, and appellant saved no exception to the ruling. We do not concede that there was error in this ruling, but even if there were, the court was warranted in refusing to interfere with the progress of the trial by requiring further answers at that time when appellant had raised no objections to the answers since receiving them on May 14, 1932. We find no error in the record.
Decree affirmed.