Philadelphia Storage Battery Co. v. Mutual Tire Stores

159 S.E. 825, 161 S.C. 487, 1931 S.C. LEXIS 152

• Court: Supreme Court of South Carolina
• Decided: August 6, 1931
• Docket: 13220
• Status: Published

Opinions

The opinion of the Court was delivered by

Mr. Justice Bonham.

June 1, 1929, the appellant and respondent entered into a written agreement by which respondent was constituted “Jobber” to sell the radio receivers, speakers, and tubes of appellant, who is designated “Philco” in the agreement. By its terms the agreement was to end on July 30, 1930, unless sooner terminated as by the provisions of the agreement, which were as follows: “This agreement may be terminated at any time before the end of the term by either Philco or the Jobber upon the giving of written notice of the termination by eithe^ party to the other.”

Januaryi4Tl930, appellant mailed to respondent a letter of cancellation of the contract, without previous notice of intention to cancel. January 25, 1930, and before the receipt of the letter of cancellation, respondent had mailed to appellant a check' for $1,508.96. Upon receipt of the letter of cancellation, it stopped payment of the check.

Appellant brought its action — declaring for a first cause of action on the check, for $1,508.96, and for a second cause of action on account in the sum of $4,457.96. Respondent answered, alleging that appellant had canceled the contract in pursuance of a fraudulent design of supplanting respondent, disrupting its business, and making contracts with its dealers, all in breach of the contract, and to the damage of respondent in the sum of $10,000.00 actual and $10,000.00 punitive damages. To this answer appellant demurred; on the ground that the allegations of the answer do not constitute a defense or counterclaim. Appellant by its demurrer affirms that it had done nothing that it was not authorized to do by the terms of the contract. It plants itself on the provisions of the contract; alleging that the things which it has done are nominated in the contract.-

Judge Townsend, who heard the demurrer on circuit, dismissed it in the following short order: “On hearing the demurrer to the answer and counterclaim, it is ordered that same be, and is hereby overruled.” The case comes to this Court on appeal from that order.

There are numerous exceptions, but in-the judgment of the Court the determination of two principal questions will dispose of the appeal.

The answer alleges that the jobber’s agreement, or contract, was terminated by appellants without notice to respondent. Apparently respondent holds itself aggrieved by this action. The question arises then, was ap pellant under any legal obligation to notify respondent of its intention to terminate the contract; or could it exercise its option to terminate it and then notify the respondent? One’s first impression, when this question is presented, is that it is not lawful abruptly to terminate a contract without giving notice to the other contracting party. But upon reflection it must be conceded that persons may enter into whatever contracts they see fit, which are not illegal, immoral, or against public policy.

“A contract may provide that it shall come to an end at the option of one, or either of the parties and such a stipulation, when fairly entered into, will be enforced if not contrary to equity and good conscience. * * *” 13 C. J., 606.

“It is a well-established rule of law that a contract may provide for its termination at the option of one or either of the parties, and such a stipulation, when fairly entered into, will be enforced if not contrary to equity and good conscience.” Maddox Motor Co. v. Ford Motor Co. (Tex. Com. App.), 23 S. W. (2d), 333, 338.

The clause relating to the right of cancellation of the jobber’s agreement has been hereinabove set out. It is clear cut in its terms, and is free from ambiguity. It is enforceable if it be not against equity and good conscience. It would seem to be a necessary corollary that it may not be terminated, if the manner of its termination be against equity and good conscience.

Conceding then that plaintiff had the right to termínate the jobber’s agreement, does it follow that the answer should have been dismissed on demurrer ? It is the settled rule of pleading in this jurisdiction that, if the pleading, assailed by demurrer, sets out any cause of action or defense, which entitles it to some sort of relief, it is not subject to be dismissed on demurrer. Norris v. Brown, 154 S. C., 138, 151 S. E., 274; Wilson v. Wilson, 158 S. C., 425, 155 S. E., 627.

The answer in this case alleges that these parties once before had a contract similar in import to this one; that upon termination by expiration of its time limit they entered into the present jobber’s contract; that, relying upon its relations with plaintiff and the contract, defendant bought heavily of the wares, merchandise, and products of the plaintiff; spent considerable sums of money perfecting its organization for handling of the wares and products of plaintiff; engaged and employed a number of agents and salesmen for this business; made contracts with dealers; paid for a special sign to advertise these goods; and spent large sums in otherwise advertising the business. It is further alleged by the answer that in January, 1930, and prior to the 24th day of that month, upon which date plaintiff exercised its option to terminate the agreement, “plaintiff formulated a scheme, design and conspiracy to defraud the defendant, and fraudulently decided to change the plan of distribution and to break its contract with defendant; that the plaintiff, while defendant was operating under the jobber’s agreement, and without notice to the defendant, and at the peak of the radio selling season by underhand, deceitful, fraudulent and improper methods, made an agreement with the jobber in Charlotte, North Carolina, supplanting the defendant, made separate contracts with the dealers of the defendant, and arranged to, and did undermine the organization of the defendant, — all in violation and breach of the jobber’s agreement between the plaintiff and defendant, and in furtherance of the conspiracy, design and scheme of plaintiff to defraud the defendant.”

If these allegations be true, and for the purpose of considering the demurrer they must be taken to be true, unquestionably they state a cause of action which would entitle defendant to some sort of relief; and thus render the answer impervious to attack by demurrer.

The answer alleges further facts indicative of the alleged fraudulent design and purpose of the plaintiff to wreck the business of defendant.

It further alleges that the plaintiff refused to take over and pay for the supplies in the hands of defendant; refused to• have an accounting; refused to provide defendant with means for fulfilling the warranties given by it with the equipment it had sold of the wares of plaintiff, and with the means of providing the service which defendant is required to give to dealers and purchasers of the products of plaintiff.

Analyzed, these allegations mean to charge plaintiff with bad faith and fraudulent conduct, in that, having induced defendant by means of the jobber’s agreement to buy heavily of its merchandise, for the payment of which it holds defendant, it now relieves itself of the obligation to fulfill the warranties on its goods, and the service to be furnished to the purchasers of them, by the expedient of terminating the contract.

The authorities cited, and there are others which may be cited, show that a contract such as this will be enforced if not contrary to equity and good conscience.

The defendant has, in the opinion of the Court, set forth in his answer these things which entitle him to show by the evidence, if he can do so, that it would be against equity and good conscience to permit plaintiff to exercise its option to terminate the jobber’s agreement in the manner, and with the intent and purpose alleged against it in the answer. We think defendant has alleged enough in its answer to entitle it to be heard in the trial Court.

The appeal is dismissed, and the order appealed from is affirmed.

Mr. Chief Justice BeEase and Messrs. Justices StabEER and Carter concur.