Magnavox Company v. Jones

McKENZIE, J.,

pro te

m.

During the first week of September, 1926, a Mr. Osborne, who had done business with plaintiff, which is a corporation having seven directors, but was not a director or officer of plaintiff, called defendant’s attention to the possibility of obtaining from plaintiff corporation an exclusive sales contract for Magnaray electric heaters, a product manufactured by plaintiff. In turn Mr. Osborne introduced defendant to Mr. Travers, who was a director and general sales manager for plaintiff. At this

[100]

meeting the proposition of Mr. Jones’ obtaining an exclusive sales contract was discussed in a general way, and a few days later, at Mr. Travers’ request, Jones went to Mr. Travers’ office and then and there negotiations began in earnest regarding the exclusive sales contract. After the negotiations started there were three representatives of plaintiff that discussed the proposition with Jones, namely: Mr. Travers, sales manager; Mr. Steers, president, and Mr. Sperry, treasurer. All three were directors of the corporation. There were four other directors, but Jones had no dealings or talk with the others. After the first meeting the negotiations were mostly between Jones and Sperry. After several meetings, one at least of which was at the office of plaintiff’s attorneys, it was agreed that the sales contract should include Magnalux lamps as well as Magnaray heaters. The two articles were to constitute one contract, but the attorney preparing the contract directed the attention of the parties to the difficulty of embodying the terms relating to the two articles in one document owing to the fact that the territory covered, the terms, discounts, etc., were so different. It was then agreed that the conditions and terms for the heaters would be set forth in one paper and the lamps in another. Whereupon, the two forms of contract, Defendant’s Exhibits “A” and “B,” were prepared. The entire controversy involved in this action centers around those exhibits and the actions of the parties concerning them.

Exhibits “A” and “B” on their face appear to contain all the terms and" conditions of a very complicated exclusive sales agreement and it would take pages to quote them. We deem it only necessary to specifically direct attention to two of the provisions. In the first place, the contracts (and by this term we mean only the documents), show that the plaintiff was making a departure from maintaining its own sales organization in eight of the Pacific Coast states and British Columbia, and in lieu thereof was to sell for ten years to none other than defendant, who agreed to purchase a minimum quantity of each article, amounting to approximately $2,000,000 during the ten-year period. In the second place, the contract relating to Magnaray heaters provided: “17. Guaranty. Contemporaneously with the execution and delivery, of this agreement, and as a part of the same transaction, distributor will furnish the manufac