Northwest Auto Co. v. Harmon

250 F. 832 | 9th Cir. | 1918

ROSS, Circuit Judge

(after stating the facts as above). [1] The main contention on the part of the plaintiff in error is that the contract was not assignable, for the reason that it entered into it because of the personal characteristics of F. E. Harmon, relying on'his ability to sell the Reo machines; that every one has the right to select and determine with whom he will contract, and cannot have another thrust upon him without his consent. Conceding to the fullest the latter proposition, it does not apply to this case, for this contract was not made with F. E. Harmon individually, but with the Harmon Motor car Company of which, according to the express terms of the contract, he was president. In their brief counsel for the plaintiff' in error say:

“Tbe Hannon Motorcar Company mentioned in said contract was supposed by the plaintiff in error, the Northwest Auto Company, to he a corporation, and the record shows that there had formerly been a corporation known as the MeKenna-Harmon Company. Mr. McKenna afterwards retired, and it was sought to change the name of the company to the Harmon Motorcar Company, and papers seem to have been prepared with that end in view; but such, consummation seems never to have been brought about, owing to the fact that the papers were n,ever legally filed. The business, however, of what had formerly been the MeKenna-Harmon Company, continued to be transacted under the name of the Harmon Motorcar Company. As above stated, the plaintiff in error assumed, in dealing with the Harmon Motorcar Company, that it was a corporation, and that F. E. Hannon was the president and general manager of the same, and it was in full reliance upon F. E. Harmon individually having full control of the management and operation of the business that said eon-', tract was entered into. No negotiations were made with any person in con-' nection with said contract other than E. E. Harmon. If the Harmon Motorcar Company was not a corporation under the facts as they exist, 'then the ■Harmon Motorcar Company was, so far as the plaintiff in error was concerned, merely the trade-name of F. E. Harmon.”

It is not contended, either in the pleadings or proofs, that the contract as executed was not the mutual agreement of the parties, nor that any mistake or false representation was at any time made.. Indeed, we find in the record this admission of counsel for the plaintiff in error:

“The evidence clearly shows that the Harmons believed implicitly they were a corporation organized under the name of the Harmon Motorcar Company. Now, it is fundamental they couldn’t deceive anybody actionably, unless they did it deliberately and knowingly.”

The contract was exécuted by each party as a corporation, and contained no provision regarding the personal services of F. E. Harmon or any other particular person. Without conflict the evidence shows that a corporation called MeKenna-Harmon Company was engaged in the business of selling motorcars, having commenced such business in 1912, and that McKenna shortly thereafter sold his stock in that corporation to F. E. Harmon and his wife (the present defendant in error), and that steps were thereafter taken to change the name of the corporation to Harmon Motorcar Company, and that papers were executed to cany that intention into effect and left with an attorney to be filed, who neglected to do so, of which fact neither of the parties to the contract here involved had knowledge until Feb - ruary, 1915 — it being theretofore supposed by both parties to this contract that the papers referred to had been filed. The parties having contracted and dealt with each other as corporations, each is estopped to deny the corporate capacity of the other. Whitney v. Wyman, 101 U. S. 392, 25 U Ed. 1050; Ivy Press v. McKechnie, 88 Wash. 643, 153 Pac. 1067.

[2] It appears without dispute that the contract was prepared by the plaintiff in error, expressly reserving therein the right to cancel it in but two instances, to wit, in those instances specified in paragraphs 2 and 8. The contention that the right of cancellation on the part of the plaintiff in error also arose from that clause of paragraph 3 by which the seller reserved the right to reapportion the territory at any time during the life of the contract, if in the opinion of the seller the dealer was not properly promoting the sale of the cars, is without merit. It is apparent from the mere reading of that clause that it was designed only to secure to the seller proper effort on the part of the dealer to make sales of the cars, and in the event the latter did not, in the opinion of the seller, make such effort, then to con • fer upon the seller the right to again apportion the territory it had by the contract assigned to the dealer within which to make sales. Such is the clear and only meaning that can be properly drawn from the express language of that clause. It had no reference even by inference to any cancellation of the contract, which was expressly provided for, as has been shown, in paragraphs 2 and 8.

[3, 4] Nor, according to the record, did the evidence in the case afford the slightest ground for complaint of any lack of effort on the part of the dealer to sell the cars within the allotted territory. On the contrary, it shows without conflict that the Harmon Motorcar Company was well equipped for the business it undertook under the contract, having one of the best locations in the city of Seattle, sub-agencies in various parts of the territory assigned to it, a well-equipped service and repair shop and garage in Seattle, promptly sold all the cars the plaintiff in error delivered to it, had procured purchasers for a large number of the remaining cars the plaintiff in error had contracted to deliver, and had made urgent and repeated requests of the plaintiff in error for such delivery without avail, and there was evidence given tending to show that it could and would have easily sold, within the allotted territory and within the time specified in the contract, the whole of the remaining number of cars the plaintiff in. error agreed to sell and deliver to it. For the appellant’s default in that regard we therefore regard it as clear that the defendant in error was properly awarded by the jury damages in the amount that she and her predecessor in interest would have realized, had the plaintiff in error performed its part of the contract. Fifty-seven of the 100 cars the plaintiff in error contracted to sell and deliver to the Harmon Company the latter company had, according to the uncontradicted evidence, actually sold, while the plaintiff in error actually delivered but 9 of them; and there was abundant evidence to justify the jury in finding in effect that the remaining 43 cars could and would have been sold within the stipulated time, had the plaintiff in error observed its agreement to- deliver them. That such reasonably certain profits are recoverable as damages is well settled. Anvil Mining Co. v. Humble, 153 U. S. 540, 14 Sup. Ct. 876, 38 L. Ed. 814; United States v. Behan, 110 U. S. 338, 4 Sup. Ct. 81, 28 L. Ed. 168; Wakeman v. Wheeler & Wilson. Mfg. Co., 101 N. Y. 205, 4 N. E. 264, 54 Am. Rep. 676; Federal I. & B. B. Co. v. Hock, 42 Wash. 668, 85 Pac. 418.

[ 5 ] Plaintiff in error points to the provision of paragraph 10 to the effect that the shipment of the machines covered by the contract should be “subject to prior orders of other dealers, and as the business of the manufacturer will permit,” and contends that not more than 40 or 50 cars could have been furnished by the plaintiff in error subsequent to the termination of the contract, had it not been broken. It was, however, shown by the plaintiff in error’s own records that prior to the execution of the contract here involved it had contracted to sell and deliver only 60 of the Reo cars, and that between October 17, 1914, and July 31, 1915 (the period covered by the contract), it had received from the manufacturer 350 of the cars.

[6,7] The record shows that, when the president of the plaintiff in error went to Seattle in response to the telegram from E. E. Harmon, he found the latter in jail charged with disorderly conduct, and then visited the place of business of the Harmon Motorcar Company, where he found the present defendant in error in charge. There was conflict in the testimony regarding what occurred between the two in respect to the contract and the financial ability of the defendant in error to carry out the obligations imposed thereby on the Plarmon Motorcar Company. The record shows that, after the arrival of Vogler, the president of the plaintiff in error, in Seattle, in response to Harmon’s telegram, the latter assigned all of his stock in the Mc-Kenna-Harmon Company, as well as all of his interest in the Harmon Motorcar Company, to the defendant in error, which assignments, according to the testimony of the latter, were made at the instance of Vogler, of which testimony we find no contradiction in the evidence, but, on the contrary, some confirmation.of it in this excerpt from the answer of the defendant in the action:

“The defendant states to the court that, had the plaintiff been able to secure the capital necessary to conduct the business, and had she been able to have canned out said contract, this defendant would have been ready and willing to have had the same carried out by her as representing the said Harmon Motorcar Company; that this defendant only terminated said contract.when finally informed that neither the plaintiff nor the Harmon Motorcar Company would be able to fulfill the contract or carry it out by its terms or otherwise.”

There was testimony given on behalf of the plaintiff in error to the effect that during Vogler’s stay of about a week in Seattle he ascertained that the defendant in error had not the financial ability to carry out the contract of the Harmon Motorcar Company, and on liis return to Portland he directed the cancellation of the contract in and by this letter:

“Northwest Auto Go., Inc.

“Registered. Portland, Ore., Feb. 22, 1915.

“Hannon Motorcar Company, Seattle, Wash. — Gentlemen: Wo herewith give you notice that we are obliged to cancel the contract covering the sale of Reo cars and parts now existing between ns. The factory advise that, owing to the condition of affairs at present existing in Seattle, for the best interests of all concerned, it is desirable that a change be made. We will call your attention also to the clause attached to the contract regarding the payment of a certain note, which note has not been paid as agreed. Under the circumstances, therefore, we will consider the contract canceled ten days from to-day, as per clause No. 3 in same.

“Yours very truly, Northwest Auto Company,

“W.TO 3*5 By W. .1. H. Clark, Secy.”

Regarding the note referred to in the foregoing letter and in the contract, the evidence showed without dispute that it was fully paid long before the letter of cancellation was written — paid, it is true, in installments, but such installments were accepted by the plaintiff in error without any objection. It is needless to cite authorities to the effect that by such acceptance the plaintiff in error is bound.

The only other reason assigned for the breaking of the contract was “the condition of affairs” at the time existing in Seattle, by which, according to the brief of the plaintiff in error, was meant the financial inability of the defendant to carry out on behalf of the Harmon Motorcar Company its part of the contract. But the conclusive answer to that contention is that there was abundant evidence to the contrary, which the jury by its verdict found in effect to be true.

The remission made by the defendant in error of $893.95 from the amount of damages fixed by the jury appears to have been made lest it should he held that the estimates of selling the 43 cars remaining unsold at the time of the cancellation of the contract were erroneous. Looking at the whole record, we are unable to hold the verdict, thus corrected, unwarranted by the proof, and deeming it unnecessary to make special mention of any other points made in argument, the judgment is affirmed.