Nicolayson v. Chip Steak Co.

STONE, J. pro tem.* Appellant filed an action for damages for breach of a sales agency agreement. The trial court, sitting without a jury, decided in favor of respondent, and appellant takes this appeal on the judgment roll.

Respondent, Chip Steak Company, a corporation, entered into an agreement with appellant’s assignor, Packer Sales, Inc., giving Packer the exclusive right for one year to sell King Kold products manufactured by respondent in California. Although Packer was not obligated to order or sell any minimum quantity of King Kold products, nor to exert any effort whatever to sell the product, the agreement contained provisions covering price, time of payment, minimum case lot orders,† and place of delivery. Three and one-half months after the contract became effective, respondent notified Packer that it was terminating the agreement at the end of 30 days because of unsatisfactory results. After the 30-day period elapsed, respondent sold its King Kold products directly and Packer assigned to appellant a claim for 15 per cent commission on such sales.

The trial court decided the contract was illusory and lacked mutuality, finding that no consideration flowed from Packer Sales, Inc., appellant’s assignor, to respondent. Appellant’s sole ground of appeal is that this finding is erroneous. Specifically the court found that although respondent was bound to furnish King Kold products at specified prices, Packer was not bound to buy any amount or to do anything to promote the sale of the products. Appellant concedes that his assignor, Packer, made no promises but contends that the agreement was a valid unilateral contract—an offer by respondent which was accepted by Packer—similar to an exclusive real estate listing. Appellant adopted this theory in the trial court asserting acceptance of the unilateral contract by performance. In paragraph V off his complaint, it is alleged:

“Immediately upon the execution of said agreement Packer Sales, Inc. entered into the performance of said agreement and exerted its best efforts to promote the sale of King Kold brand products in the State of California, and expended a sum in excess of $3,000.00 in developing sales for King Kold brand products.”

[480]The trial court found all of the allegations of this paragraph of the complaint to be untrue, that is, that Packer did not perform and thereby accept the offer. In its answer, respondent, by way of affirmative defense, alleged Packer’s failure to comply with minimum lot order requirements, and to pay for merchandise in the manner specified in the contract. The trial court found these allegations to be true and further that Packer was in default at the time respondent served notice of cancellation.