Baum Associates, Inc. v. Society Brand Hat Co.

477 F.2d 255
CourtCourt of Appeals for the Eighth Circuit
DecidedApril 19, 1973
DocketNos. 72-1253, 72-1256
StatusPublished
Cited by3 cases

This text of 477 F.2d 255 (Baum Associates, Inc. v. Society Brand Hat Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Baum Associates, Inc. v. Society Brand Hat Co., 477 F.2d 255 (8th Cir. 1973).

Opinion

MEHAFFY, Circuit Judge.

This is a diversity action by a New York corporation, Baum Associates, [257]*257Inc.,1 against a Missouri clothing manufacturer, Society Brand Hat Company,2 to recover commissions allegedly due plaintiff for the procurement of customers for defendant. In the district court defendant Society Brand argued that plaintiff’s claims for commissions (1) were barred by the statute of limitations ; (2) were barred by the statute of frauds; and (3) were excessive because they included commissions on an account not actually procured by the plaintiff. The trial court, with The Honorable H. Kenneth Wangelin presiding, heard the matter without a jury and rendered judgment in favor of plaintiff for most of the commissions sought in the complaint. Baum Associates, Inc. v. Society Brand Hat Co., 340 F.Supp. 1158 (E.D.Mo.1972). Defendant has appealed from the judgment in favor of plaintiff, and plaintiff has cross-appealed for recovery of that portion of the commissions not allowed by the district court. For the reasons stated below we affirm the judgment of the district court.

The background facts of this case have already been reported in some detail in the district court’s opinion. We will therefore limit our discussion of the facts to a summary of the elements necessary to our decision.

The issues presented in this appeal arise out of three separate contracts between plaintiff and defendant. The first contract is a formal written agreement in which plaintiff agreed to solicit McGregor-Doniger, Inc. as a customer for defendant and defendant agreed to pay plaintiff a 60?! commission for each dozen pair of trousers thereafter delivered by defendant to McGregor.3 The second contract is similar to the first, except that: (1) it involved the solicitation of Campus Sportswear, Inc.; (2) the commission agreed upon was 30^ per dozen; and (3) the agreement was not reduced to writing in a single formal document. The third contract is also similar to the first except that: (1) the contract dealt with the solicitation of Comus, Inc.; (2) the commission was 25?! per dozen; and (3) the contract was not reduced to a single written instrument.

The findings of fact of the district court reflect that each of the three customers was solicited and procured by plaintiff for defendant. The trial court also found that defendant manufactured trousers for each of the customers and paid plaintiff commissions on the production until August 1963. On August 13, 1963, however, defendant wrote plaintiff a letter purporting to terminate all of their contracts. No further commissions were paid by defendant to plaintiff after this letter of termination. Plaintiff refused to accept defendant’s attempted termination and on April 2, 1970 filed this action.

The first problem presented in this appeal is the selection and application of the appropriate statute of limitations. The parties agree that Missouri law is controlling but they disagree over [258]*258which Missouri limitation should be applied. In its cross-appeal plaintiff argues that the ten year limitation for actions on written promises to pay, Rev.Stat.Mo. § 516.110(1) (1969), V.A.M.S., should be used. Defendant contends that the five year statute, Rev.Stat.Mo. § 516.120(1) (1969), Y.A.M.S., is applicable. We agree with the district court and the defendant that the five year statute should be applied. The pleadings in the trial court and on appeal clearly indicate that plaintiff’s cause of action is not one upon a written promise to pay as contemplated in the ten year statute. See Martin v. Potashnick, 358 Mo. 833, 217 S.W.2d 379 (1949).

Having determined that the five year limitation is controlling, a more difficult problem arises in the application of the statute. Defendant argues that the contracts in dispute were contracts in perpetuity and therefore were terminable at will, or at least after a reasonable time. Superior Concrete Accessories v. Kemper, 284 S.W.2d 482 (Mo.1955). Given this terminability, defendant contends that plaintiff’s cause of action (if it had any) accrued as of the August 13, 1963 letter of termination and was barred five years thereafter. The district court agreed that the defendant was entitled to terminate the contracts at will insofar as they authorized plaintiff to solicit new customers or to service existing accounts for defendant. The court also held, however, that the defendant could not terminate at will the plaintiff’s right to receive a continuing commission on the accounts it had already procured for defendant so long as the defendant enjoyed the ongoing benefit of those accounts. Based upon this reasoning the court held that defendant’s August 13, 1963 letter had no effect on plaintiff’s rights to future commissions on the three disputed accounts and, applying Rev.Stat.Mo. § 516.100 (1969), V.A.M.S., computed the period of limitations on each commission installment from the date the individual installment became due. The result of the district court’s holding was to allow the plaintiff recovery of all commission installments that accrued after April 2, 1965.

We agree with the district court’s application of the statute of limitations. We recognize that Missouri, like most other jurisdictions, generally refuses to enforce an obligation in perpetuity. E. g., Superior Concrete Accessories v. Kemper, supra; Paisley v. Lucas, 346 Mo. 827, 143 S.W.2d 262 (1940). Three considerations, however, persuade us that this general rule is not applicable in the ease before us. First, as a practical matter, the general policy is not violated herd since the parties have agreed that plaintiff will not claim any commissions beyond the date of the filing of the complaint.

Second, contractual relationships between businessmen are not abstract matters that are to be judged without reference to the customs and usages of the industry. Although we have found no Missouri cases dealing with textile contract brokerage agreements, other courts, when faced with such questions, have realistically measured the agreements of the parties in light of industry practices and the relative positions of the parties. In this case defendant Society Brand was heavily dependent upon government contracts and was anxiously seeking some means to enter the private od civilian market. Mr. Baum, on the other hand, was a man with several decades of experience in the clothing industry. It is clear that Baum’s efforts in effecting the shift for Society Brand from the government market to the private market was a very valuable service which defendant could not afford to purchase other than on a long-term commission basis. In light of these practical considerations we do not feel that this case is an appropriate one for an automatic application of the general rule against enforcing obligations in perpetuity. Compare, e. g., Zupan v. Blumberg, 2 N.Y.2d 547, 161 N.Y.S.2d 428, 141 N.E.2d 819 (1957), with Annot., 19 A.L.R. 3d 196 (1968).

[259]*259Third, this case falls squarely within the purview of at least two of the rules by which Missouri has qualified its general policy against any enforcement of an obligation in perpetuity.

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