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Clancy v. Brunswick-Balke-Collender Co.

May 25, 1961


Author: Mclaughlin

Before GOODRICH, McLAUGHLIN and HASTIE, Circuit Judges.

McLAUGHLIN, Circuit Judge.

The only real problem on this appeal is whether the trial judge in his evidential rulings and jury instructions committed prejudicial error necessitating a new trial.

The litigation is for breach of contract. In 1928 plaintiff James A. Clancy, under an oral agreement with Horn Folding Partition Company, was appointed exclusive sales representative for Pennsylvania, Delaware and New Jersey by Horn of its gymnasium equipment products. In 1937 the agreement was reduced to writing and gave plaintiff certain exclusive Pennsylvania, New Jersey and Delaware territory. It contained the clause:

"This Sales Understanding shall continue in force from date noted until terminated for cause by either of the agreeing parties."

In February 1955, the territory was reduced by mutual agreement to eliminate three counties in Pennsylvania. Clancy had on January 1, 1944, formed a partnership with his wife and from that time the business continued under the partnership. Defendant succeeded the Horn Company on August 6, 1955. On June 10, 1955 defendant submitted to plaintiff firm a new form of agency agreement. The accompanying letter stated: "Of course this franchise rescinds all former franchises of any nature." The new form of agreement made the folding stages agency non-exclusive. There were other changes which need not be detailed, except the termination clause which provided for termination by either party without cause on sixty days notice to the other. The letter requested the plaintiff agency to sign the white copy of the franchise and return it keeping the blue copy. Clancy or the partnership never signed the agreement or returned it to defendant. The latter wrote regarding it on September 28, 1955. Clancy replied on October 10, 1955 objecting to the elimination of his exclusive selling rights to folding stages. He asked that the agency territory be expanded in both New Jersey and Delaware. There is testimony that Clancy endeavored to talk with defendant's representatives but they were allegedly too busy for this. Appellant would have it that plaintiff Clancy's evidence shows that his agency was deprived of its exclusive agency to sell folding stages. Actually Clancy there states that his requests to defendant for changes in its submitted new franchise were not granted. He was not asked and did not volunteer anything regarding whether he "acted only as non-exclusive agent" for the stages after the Brunswick letter of June 10, 1955.

On November 21, 1956 defendant wrote the Clancy agency saying:

"This letter will be notification to you that as of this date we are terminating our Manufacturers-Sales Agency Agreement, dated October 22nd, 1937, between your office and the Horn Brothers Company and, subsequently, The Brunswick-Balke-Collender Company."*fn1 (Emphasis supplied).

The only reason named for termination was:

"Our decision to take this action is not a result of hurried thinking. On the contrary, both your and our offices have been quite concerned about the FGS (Folding Gymnasium Stages) results in your area for the past two years.

"I understand that you have been, for the past year, attempting to find someone suitable to work the school market, but have been unable to do so.

"We honestly believe that we have found the solution and hence we are making this change."

On June 13, 1957 the Clancy agency sued defendant for damages arising out of its alleged improper termination of the 1937 agreement. Brunswick in its answer made no reference to the 1955 franchise it had submitted or any contention that it had been substituted for the 1937 agreement. However, at the pretrial conference permission was sought by the defense and allowed by the court to amend its answer by adding a third defense reading:

"Paragraph 3. The sales understanding, Exhibit A to the complaint, was modified by the parties as a result of correspondence between June 10, 1955, and October 25, 1955, and plaintiffs' conduct during that period and thereafter. As a result of this modification, defendant's right to terminate plaintiffs' agency was made unconditional."

Appellant first argues that its 1955 proposal was substituted for the 1937 agreement. Alternatively it urges that by its proposal it offered a new contract which the agency is so clearly shown by its actions to have accepted, a directed verdict should have been allowed defendant.

As indicated by the fact statement there was strong evidence that the 1955 franchise was not substituted for that of 1937 and that there was no new contract acceptance by plaintiffs. A direction of verdict in favor of defendant on either ground would have been reversible error.

It is argued also that there should have been a direction of verdict in favor of the defendant under the 1937 agreement. The theory advanced is that though the agreement stated it could only be concluded for cause, nevertheless either party could terminate it for no cause at all after a reasonable time. The nineteen years of the 1937 agreement is cited as a reasonable period for the life of the contract. The decision in Cummings v. Kelling Nut Co., 1951, 368 Pa. 448, 84 A.2d 323,*fn2 is named in support of this. The contract there was denominated by the court as an "experimental arrangement". The substantial nineteen year old working agreement between the parties that is before us presents an essentially different pattern.*fn3 The pertinent Pennsylvania authorities agree that the intention of the parties governs the type of agreement involved. Weidman v. United Cigar Stores Co., 1909, 223 Pa. 160, 72 A. 377; Slonaker v. P. G. Publishing Co., 1940, 338 Pa. 292, 13 A.2d 48. Whether under all the circumstances nineteen years was a reasonable time was for the jury not the court. Eastern Terminal Lumber Co. v. Stitzinger et al., 3 Cir., 1929, 35 F.2d 333. Whether indeed the parties had intended this agreement to be cancelable upon reasonable notice could not be determined by the trial court against the agency as a matter of law in the face of the record evidence to the contrary.

Finally, on this phase of the appeal, Brunswick's assertion that it was entitled to a direction of verdict as a matter of law on the ground that the undisputed evidence in plaintiffs' case showed that Brunswick had "cause" to terminate the agency, is without merit and needs no discussion.

This brings us to appellant's assertion that the trial judge refused to submit "* * * to the jury, the evidence supporting defendant's principal defense, i.e., that the 1955 ...

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