Bobrick Chemical Co. v. Prest-O-Lite Co.

This action was instituted by plaintiff corporation, which is the assignee of G.A. Bobrick of a contract for a term of three years under which Bobrick agreed to furnish defendant, an Indiana corporation, eleven thousand sets of parts of tire-inflating apparatus (each set consisting of one valve, one coil, and one bushing), for a specified price per set, the defendant agreeing to order and pay for five thousand of said sets during the first year of the term, and three thousand of said sets during each of the second and third years of the term. The contract was dated December 6, 1906. By a provision contained therein, defendant at once ordered three thousand of said sets, at the scheduled price of $4.45 per set. On June 4, 1907, it notified both Bobrick and plaintiff that it canceled this agreement, and would not receive any more goods thereunder. It had then received 1137 of the three thousand sets ordered, which it retained and paid for. This action was brought to recover $8290.35 for the remaining 1863 sets of the three thousand sets ordered, which defendant refused to receive or pay for, and $23,600.00 loss of profits on the remaining eight thousand sets, caused by defendant's refusal to go on with the contract, making an aggregate of $31,890.35. Judgment went for defendant, and we have here an appeal by plaintiff from such judgment.

The appliances referred to in this agreement were the result of an invention of Mr. Bobrick, constituting, according to his claim, a great improvement in the appliances then in use for the inflation of tires, and one that could be manufactured *Page 211 and sold for considerably less than a device which defendant was then using, under a contract with the United States Liquid Air Oxygen Company, a California corporation, which contract was dated February 21, 1906. The appliances were to be manufactured by him, or under his order, and delivered by him ready for use to defendant. The contract between the defendant and the United States Liquid Air Oxygen Company was also for the term of three years. The last-named contract granted to defendant the exclusive right to sell the tire-inflating devices manufactured by the United States Liquid Air Oxygen Company, which will hereafter be designated herein as the Air Oxygen Company, in all of the states and territories of the United States except nine. Under paragraph XII of its contract with the Air Oxygen Company defendant was obligated to order and pay for each year at least one thousand of the devices described therein, and, further, not to order such devices, or any part thereof, from any other source than the Air Oxygen Company.

There was evidence sufficient to sustain conclusions that the devices covered by Bobrick's later contract with defendant involved some features that were the product of an earlier invention by him which he had conveyed to the Air Oxygen Company; that these features were contained in the devices covered by the contract of the Air Oxygen Company with defendant; that this contract was defendant's sole authority for the sale of any device containing such features, and that it was therefore essential to defendant's being able to sell the device covered by the Bobrick contract that the Air Oxygen Company contract should remain in force. It was also important that said contract should remain in force to protect it from competition in the sale of such devices as were covered thereby. At the same time, it is clear that defendant considered it absolutely necessary that it should be relieved from the burden imposed by paragraph XII of that contract, if it was to assume the burden proposed to be created by the Bobrick contract. Bobrick was, at the time of the negotiations preceding the execution of his contract and at the time of such execution, a director and vice-president and mechanical engineer of the Air Oxygen Company, and had been sent east from *Page 212 California by such company on its business, and, among other things, to confer with defendant company and endeavor to settle certain difficulties that had arisen in regard to the contract of February 21, 1906. Although there is some conflict on the point, the evidence was certainly sufficient to support the conclusion that defendant insisted that the contract proposed by Bobrick could not be entered into by it unless the Air Oxygen Company contract was modified by the elimination of paragraph XII thereof, and, as so modified, continued in force, and would enter into the new contract only on such understanding. The evidence was also legally sufficient to support the finding of the trial court that Bobrick, for the purpose of inducing the execution of the contract, represented to defendant that he, as an officer and one of the principal owners of the stock of the Air Oxygen Company, could and did, to a large extent, control said company, and as such officer, etc., orally promised and agreed with defendant that if defendant would enter into said agreement with him, for the purchase and sale of his device for inflating tires, he would cancel or cause to be canceled and eliminated from the Air Oxygen Company contract paragraph XII, and that said agreement with the exception of paragraph XII should remain and continue in full force, and that the elimination of paragraph XII of said contract would be a part of the consideration for entering into the new agreement with him. The written agreement between Bobrick and defendant contained no reference to this matter.