Velie Motor Car Co. v. Kopmeier Motor Car Co., 194 F. 324

Velie Motor Car Co. v. Kopmeier Motor Car Co.

194 F. 324 | 7th Cir. | 1912

KOHLSAAT, Circuit Judge

(after stating the facts as above). Plaintiff contends that the contract is, in law, an agreement for the sale by plaintiff to defendant of 50 automobiles at an agreed price which plaintiff was willing to perform, and that by repudiating the contract defendant subjected itself to liability to respond as for a breach.

Defendant, on the other hand, contends that the contract is an ex-ecutory agency contract, the consideration for wdiich rests in mutual *330promises; that by reason of the option reserved by plaintiff to terminate it at its pleasure, defendant was entitled to a like option; “and that,” in the language of the trial judge:

“This right to cancel the contract arbitrarily conferred upon the plaintiff destroys the mutuality, whether the contract be one of sale or agency; that until there has been some performance under the contract, it was nudum pactum and would not sustain the present action.”

In support of its contention that the contract was one of sale, plaintiff cites the following excerpts from said contract, viz.:

“In consideration of the above, it is understood and agreed that the Velie automobiles shall be invoiced to the party of the second part at the following net prices, f. o. b. Moline, Illinois” (giving same).

“Party of the second part agrees to keep at least one Velie automobile in stock for exhibition and demonstrating during the life of tills agreement, and to order for shipment at least 50 before October 31, 1910.”

Also :

“The party of the first part agrees and does hereby extend to the party of the second part, the exclusive right of sale during the continuance of this contract for the Velie line of automobiles in the following territory:” (Some 21 counties in the state of Wisconsin.)

Plaintiff further contends that defendant held and enjoyed such exclusive right of sale in said territory from the time the contract went into effect, i. e., the fall of 1909, and that defendant thus having received the consideration agreed to be given to it, the contract was in part executed, and therefore not wholly executory.

For defendant the following clauses, in substance, of said contract are cited, in support of the claim that the contract was executory and one of agency. The contract imposes upon defendant certain conditions in the handling of Velie automobiles, in substance as follows, viz.: To sell under a one-year guaranty, to pay transportation charges to and from factory; to keep cars sold by them in good repair and satisfy their customers; and to maintain a repair shop; and also confers on plaintiff the right to return the $1,000 and cancel the contract, giving notice by writing a letter to that effect to defendant.

[1] From the foregoing, it will be seen that plaintiff did not obligate itself to sell and deliver to defendant any automobiles. It virtually reserved the right to do nothing at all. Defendant had the right to sell to its customers, but was entirely at the mercy of plaintiff when it came to filling the order. Whatever automobiles plaintiff might choose to supply to defendant were to be invoiced at a stipulated price. None in fact were ever ordered by defendant.

In Dows v. First National Exchange Bank, 91 U. S. 618, 23 L. Ed. 214, it is said, “An invoice is not a bill of sale nor is it evidence of sale.” Unless the defendant received a consideration for its undertakings by being given the exclusive right to sell within the given territory, the contract lacks mutuality. But it will be seen that such right, if any, was made subject to plaintiff’s right to arbitrarily, and without assigning any cause, cancel the contract. Defendant might well decline to go to the expense and trouble of advertising and de*331veloping the territory named, when its rights might at any time be terminated.

Whatever construction should be given to the contract, whether it be one of sale or of agency, while it remains executory there must be mutuality. Attel v. Bartholomew, 69 Wis. 43, 33 N. W. 110, 5 Am. St. Rep. 103; Lowber v. Connit, 36 Wis. 183.

Can it be said that any exclusive right to sell in the territory named passed to defendant under the facts as here presented? In American Agricultural Chemical Company v. Kennedy (1904) 103 Va. 171, 48 S. E. 868, the court, dealing with this question, says:

“In this case the plaintiff made a proposition to sell, which the defendants accepted, but the plaintiff's offer left it optional with it whether or not it would sell. It did not bind itself to sell. The defendants made no continuing offer to purchase. Their engagment was to purchase upon the terms and conditions stated in the plaintiff’s proposition to sell. As that proposition did not bind the plaintiff to sell, there was no consideration for the defendants’ promise to purchase, and, as we.have seen, neither party was bound at that time. The plaintiff, after that time, never did any act or made any promise which bound it to complete the contract. There never was a time when the defendant had the right to tender the price and demand the fertilizer. In the absence of such obligation on the part of the plaintiff and of such right on the part of the defendants, there never was a binding engagement between the parties which a court of law would enforce.”

[2] It is a fundamental rule of law that contracts, in order to be binding, must be mutual. 9 Cyc. 327, and cases cited. The phrase of the contract which reads, “and of Sl.00 each to the other paid,” etc., imports no consideration. As said by the trial judge, it may well mean the exchange of the same dollar. Taking into consideration the whole contract, we are of the opinion that by reason of want of mutuality the contract is, under the circumstances, unenforceable.

There was no error in the judgment of the Circuit Court, and it is therefore affirmed.