370 Pa. 225 | Pa. | 1952
Opinion by
Neal D. Ivey Company, appellant, filed a bill of complaint against Franklin Associates, Inc. and House-of-Charm Fabrics, Inc., appellees, for injunction and accounting. The proceeding was based upon a contract whereby Ivey was to conduct an advertising campaign for Franklin, payment therefor to be made out of gross proceeds of sales of Franklin’s products. Ivey claimed monies were due to it under its construction of the contract between the parties. Franklin and House-of-Charm filed an answer setting up a different construction of the contract and denying liability. After hearing, the chancellor rejected Ivey’s interpretation of the contract and dismissed the bill. Upon Ivey’s exceptions the court en banc made an order directing an accounting, to be based, however, upon the construction placed upon the contract by the chancellor, Judge Parry dissenting. Ivey excepted to this order. Franklin then filed an account and a supplemental account, to which accounting Ivey filed exceptions. During the course of the proceedings Ivey petitioned for examination of Franklin’s records relating to a certain account known as the “1318 account”. After answer to the petition and testimony taken, the rule issued was made absolute. Either by stipulation or in course all testimony
Ivey, a corporation, is an advertising agency. Franklin, a corporation, manufactures and sells slip covers for furniture, draperies and other fabrics. House-of-Charm, a corporation, throughout the transactions here involved acted as a selling agency for Franklin. On August 8, 1947 Ivey and Franklin entered into a written contract under which Ivey was to plan and place in magazines and newspapers mail order advertising for Franklin’s slip covers and draperies for the period of one year. Ivey was to advance the money for advertising costs, to be reimbursed therefor and also paid compensation for its services from gross proceeds of the sales, excluding therefrom return sales not exceeding 5% of the total sales resulting from the advertising. Franklin gave Ivey the exclusive right to place the advertisements (the extent and frequency of the advertising to be mutually agreed upon) and the slip covers and draperies were to be sold under the House-of-Charm trade name.
Paragraph 4 of the contract, out of which the issues in controversy principally arise, reads as follows : “4. In order that Party of the First Part [Ivey] may be reimbursed for the cost of advertising placed by it and be compensated for its services in planning and placing such advertising and for advancing all advertising costs, Party of the Second Part [Franklin] agrees to pay to Party of the First Part all the gross proceeds of sales resulting from each advertisement, as received, until the amount so paid by Party of the Second Part to Party of the First Part shall equal the amount of the published rate card of such advertise
Franklin’s contention, adopted by the chancellor and approved by the majority of the court below, was. that Ivey was to receive 30% of the proceeds of sales and no more under any circumstances. Ivey contended in the court below and contends here that under the contract, and especially paragraph 4 above set forth, the proceeds of sales resulting from the advertising must be paid and divided as follows: (1) All the pro-:
We are of the opinion that the agreement plainly calls for the construction claimed by the plaintiff Ivey. The chancellor whose conclusion was adopted by the lower court, ignores the provision contained in the first sentence of paragraph 4 of the agreement that “. . . Party of the Second Part [Franklin] agrees to pay to Party of the First Part [Ivey] all of the gross proceeds of sales resulting from each advertisement, as received, until the amount so paid by Party of the Second Part to Party of the First Part shall equal the amount of the published rate card of such advertisement”, the
It is a rule of universal application that in construing a contract each and every part of it must be taken into consideration and given effect if possible, and that the intention of the parties must be ascertained from the entire instrument. An interpretation will not be
Defendant-Franklin and the chancellor placed gome reliance upon the preliminary recital of the contract which in one “Whereas” clause referred generally to Ivey’s compensation as being 30% of the gross proceeds of sales, but a subsequent “Whereas” clause recited that Ivey consented to the proposals of Franklin “on the terms and conditions hereinafter stated.” The specific terms in the body of the contract control: See First National Bank of East Conemaugh, to use v. Davies, 315 Pa. 59, 172 A. 296; Philadelphia v. Philadelphia Transportation Company, 345 Pa. 244, 26 A. 2d 909.
It appears from the record that three successive billings by Ivey paid by Franklin at the beginning of the contractual relationship were in accord with Ivey’s construction of the contract but since we are of opinion that the contract speaks for itself, resort to course of conduct by the parties is not necessary as an aid in its interpretation.
Pursuant to the contract two advertising campaigns were conducted, one in the fall of 1947 and the other in the spring of 1948. In the course of the fall of 1947 campaign, at Franklin’s request Ivey permitted Franklin to sell under the name “House-of-Charm” by direct mail solicitation the same slip covers and draperies which Ivey advertised, along with other Franklin products. This independent venture by Franklin in which Ivey had no financial interest, covered former custom
In the course of their audit of Franklin’s account of the Ivey fall of 1947 campaign, Ivey’s accountants examined the “sales orders” prepared by Franklin and produced by it as the sales orders resulting from such campaign. Included in the sales orders produced were approximately 200 sales orders marked “1318”. These “1318” sales orders showed proceeds of sales aggregating $4,598.54. None of the proceeds of the sales shown by such “1318” orders had been included in Franklin’s accounts of the Ivey fall of 1947 advertising campaign and an analysis showed that a substantial percentage of such sales had been made to customers developed by Ivey’s campaign making inquiries as to advertised merchandise and to customers developed by Ivey’s campaign who made reorders after receiving delivery of the goods originally ordered. After the taking of testimony
Having thus found that a substantial number of sales orders of sales made by Franklin to customers developed by Ivey in the fall of 1947 campaign of slip covers and draperies advertised by Ivey in such campaign, had been marked “1318” and that none of the proceeds of such sales had been included in the proceeds of sales of the fall of 1947 campaign for which Franklin accounted but that all such proceeds had apparently been credited to Franklin’s own “1318” account, Ivey desired to examine all the books and records of Franklin’s “1318” account. The right to so examine the books and records of Franklin relating to sales of slip covers and draperies under the House-of-Charm name was expressly given in paragraph 6 of the contract. In the course of their original audit Ivey’s accountants therefore requested permission to examine the books and records of this “1318” account but Franklin refused the request. The same request was made after the conclusion of the audit, but Franklin by letter again refused the request. Ivey then obtained a rule to examine the books and records of Franklin’s “1318” account which, after depositions and argument, the court made absolute. However, when Ivey’s accountants sought to examine these particular books and records, Franklin only produced a cash receipts and disbursement book showing merely lump receipts and charges and 7 sales orders pertaining to the “1318” account. Failure to produce the essential records was blamed on a fire which occurred some two months after Franklin filed its. answer to the rule.' Ivey’s accountants therefore could not determine thé names of customers to whom goods had been sold or the kind of goods which had been sold in “1318” transactions except as to the 200 sales orders which they had previously examined.
The lower court refers to the opportunities to audit and the actual auditing made by Ivey of Franklin’s accounts with the latter’s permission. Ivey does not claim that it was not given full access to Franklin’s records with respect to the Ivey account, but complains that in the course of the examination of the Ivey account and discovery of the “1318” sales orders Franklin refused examination of the “1318” account. In Ivey’s petition for the rule to examine the books and records in the “1318” account it is averred in paragraph 13, “In the course of said audit plaintiff’s said accountants requested permission to examine the said ‘1318 Account’ and the records, orders and correspondence of the sales included therein, but such permission was refused by defendants.” Defendants’ answer to this paragraph is: “Admitted. ‘Ivey’ has no right to examine other books and records not related to the sales produced as a result of ‘Ivey’s’ advertising.” Since the auditing judge granted the rule, it is evident that he deemed Ivey entitled to the examination of the books and records bearing on the “1318” account. This is in contradiction of the general conclusion reached by the auditing judge, above stated, that Ivey had sufficient access to Franklin’s books. Under all the circumstances we are of opinion that in fairness and equity Franklin was properly chargeable with that proportion of all the gross proceeds of sales in Franklin’s “1318” account which the total amount of the proceeds of sales of slip covers and draperies to Ivey customers shown by the 200 available sales orders bears to the total amount of the proceeds of sales shown by. such 200 sales orders.
Franklin’s accounting showed gross proceeds from sales in round figures of $148,000 and monies returned to customers “. . . by reason of cancellations, rejections because of color, requests for special orders and returns,” somewhat over $27,000. This left total net receipts of about $120,000 on which amount Franklin based and paid 30% to Ivey. Ivey claimed that of the deductions in the amount of $27,000 there were return sales in excess of the 5% limitation and as to which Ivey was entitled to its commission percentage. It was admitted that refunds in the amount of somewhat over
“A sale of goods is an agreement whereby the seller transfers the property in goods to the buyer for a consideration called the price.”: Sales Act, 1915, May 19, P. L. 543, §1, 69 PS §1. While the word “sale” has many different connotations depending upon the transaction to which it is applied, obviously under the circumstances just described where the purchaser admittedly received exactly what he had ordered and paid for, there was a sale in the first instance and acceptance of a return of the merchandise with the price refunded should be regarded as a return sale. If not so regarded, then the provision as to return sales would
The order dismissing the bill is reversed, and the case remanded to the court below for further proceedings in accordance with this opinion.