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Montclair Distributing Co. v. Arnold Bakers Inc.

Decided: November 15, 1948.

MONTCLAIR DISTRIBUTING CO., INC., A NEW JERSEY CORPORATION, PLAINTIFF,
v.
ARNOLD BAKERS, INC., A NEW YORK CORPORATION, ET ALS., DEFENDANTS



Civil action.

Freund, J.s.c.

Freund

The defendants, Arnold Bakers, Inc., and Arnold Bread Sales Corporation, have moved for summary judgment in their favor on the pleadings and affidavits in accordance with Rules 3:56-2 and 3:56-3. On the main issue between the plaintiff and these defendants, there appears to be no substantial disagreement on the facts.

On March 3, 1947, defendant, Arnold Bakers, Inc., referred to as the bakery, entered into a written contract with plaintiff's assignors, whereby plaintiff was appointed the exclusive wholesale distributor of the bakery's products within prescribed territory. Plaintiff in turn entered into contracts, some written, others oral, with sub-distributors who sold to retailers and they to consumers. The contract provided that "Bakery will sell its products * * * to wholesale distributor * * * at regular wholesale prices as determined from time to time * * * The bakery reserves the right to fix wholesale and retail prices

pursuant to law." Defendant, Arnold Bakers, Inc., entered into identical contracts with 22 other wholesale distributors in areas within 14 states. The contracts entered into between the plaintiff and its sub-distributors have identical provisions, except that the word "wholesale" is omitted. The contract provided that the plaintiff could terminate the contract at any time upon 30 days' notice, but the bakery had "no right to revoke or cancel this agreement, so long as the wholesale distributor faithfully carries out the terms of this agreement."

The bakery from time to time fixed the prices of its products on all levels -- to the wholesale distributors, sub-distributors, retailers and to the consumers. The plaintiff, however, sold the bakery's products to the sub-distributors at a higher price than that stipulated by the bakery. Despite formal demand that it adhere to the price schedule and notice that the contract would be terminated, unless it conformed thereto, plaintiff persistently refused to comply, continuing to charge the higher prices; thereupon, defendant rescinded the contract. While additional reasons for rescission are asserted by defendant, I conclude that the principal cause was plaintiff's insistence on selling defendant's products at a price higher than that stipulated by defendant. Plaintiff asserts that the bakery has the power to fix minimum prices only; that it is at liberty to sell the merchandise at any higher price; and that a provision or construction to the contrary is void, and therefore an unlawful basis for rescission of the contract.

Defendant, Arnold Bread Sales Corporation, was organized by the defendant bakery and since the rescission of plaintiff's contract, it has acted as distributor of bakery's commodities, serving the sub-distributors formerly served by the plaintiff.

The complaint prays for an injunction against the bakery and the sales corporation from selling or delivering the baked goods to anyone other than the plaintiff in the exclusive area, and for a restraint against the sub-distributors from purchasing except from plaintiff.

Upon the filing of the complaint, plaintiff obtained an order to show cause why a preliminary injunction should not issue, and after argument thereon Judge Bigelow (then Vice-Chancellor)

discharged it for reasons set forth in an unreported memorandum opinion. He held that (1) under R.S. 56:4-3 to 6, an agreement between a vendor and a vendee fixing a "stipulated" price is valid; (2) that plaintiff's refusal to abide by the resale price fixed by defendant constituted a breach justifying rescission by the bakery; and (3) that the contract was unenforceable because of uncertainty. I concur in the conclusions for these and additional reasons. The pleadings and affidavits filed since the argument on the order to show cause, merely elaborate upon and augment the facts above recited.

The motion for summary judgment in favor of the defendants should be granted. If the contract is certain and definite, plaintiff has violated it. If it is uncertain ...


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