Raisler Sprinkler Co. v. Automatic Sprinkler Co. of America

171 A. 214, 36 Del. 57, 6 W.W. Harr. 57, 1934 Del. LEXIS 5
CourtSuperior Court of Delaware
DecidedJanuary 4, 1934
DocketNo. 19
StatusPublished
Cited by15 cases

This text of 171 A. 214 (Raisler Sprinkler Co. v. Automatic Sprinkler Co. of America) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Raisler Sprinkler Co. v. Automatic Sprinkler Co. of America, 171 A. 214, 36 Del. 57, 6 W.W. Harr. 57, 1934 Del. LEXIS 5 (Del. Ct. App. 1934).

Opinion

Layton, C. J.,

delivering the opinion of the Court:

With respect to the first ground of demurrer, the plaintiff contends that the contract should be so construed as to give a reasonable meaning to all its parts, and not to leave a part of it useless and inexplicable. 2 Williston, Contr., § 619.

Wherefore it argues two questions arise for determination by jury, (1) was the defendant’s refusal to extend the license in good faith, (2) was there reasonable ground for the defendant’s dissatisfaction.

The defendant contends that the subject matter is one involving opinion and judgment, which when announced is final, and, even if good faith is material, the declaration does not aver bad faith on its part.

Contracts providing for performance to the satisfaction of a party are classified generally thus, (1) where the subject matter involves fancy, taste, sensibility or judgment, (2) where the subject matter has to do with mere operative fitness, mechanical utility, or commercial value.

To which class does this contract belong? Obviously it is a matter for construction; and consideration must be [63]*63given to the subject matter, the language of the contract, the relationship of the parties, the objects to be accomplished and the inducements for contracting. Nash v. Towne, 5 Wall. 689, 18 L. Ed. 527.

The defendant is the patentee and sole manufacturer of the apparatus. By the contract it had granted a non-exclusive license to the plaintiff to "buy, use, sell and deal in the apparatus in certain defined territory at a fixed license fee. It agreed to extend the license to cover additional states upon an expressed condition, that the defendant’s organization in such additional territory should be sufficient in its, the defendant’s opinion.

It is, we think, clear that mere success in making sales of the apparatus was not the sole object of the defendant in granting the license. The volume of sales in the licensed territory was only one factor. Another, and important factor, involved its good will, the handling and servicing of the apparatus when installed.

Both factors, sales and service, depended upon the nature and kind of organization set up in the additional territory. To safeguard both, the defendant took care to constitute itself the judge of the fitness of the organization.

"We think the disputed provision of the contract is one involving opinion and judgment, and not one concerning mere operative fitness.

Individuals have, and are entitled to have, different opinions of the sufficiency of sales and service organizations. Ideas and methods differ. What seems sufficient and efficient to one, may be regarded as entirely inadequate by another, and both ideas may be wholly honest. It is not a question of the operative fitness, or the mechanical utility or commercial value of a machine, a mere question of accomplishing work in a reasonable manner. It is a question of theory, of idea, of apprehension and perception of what is necessary to make and constitute a sufficient human [64]*64structure, rather than a mechanical contrivance. Opinion and judgment are mental conditions, and there is nothing illegal or immoral in a contract which conceives of a fixed opinion as a conditional fact.

With respect to a contract involving preference or judgment providing, as here, that performance by the plaintiff shall be to the satisfaction of the defendant, we think the just rule is this:

“That the parties must stand to their contract as they have made it, and, if the one party has agreed to do something that shall be satisfactory to the other, he constitutes the latter the sole arbiter of his own satisfaction, at least so long as he acts in good faith and his dissatisfaction is real and not feigned or a mere subterfuge.” 2 Elliott,o Contr., § 1605.

Wüliston, Contr., Vol. 1, § 44, is to the same effect in this language:

“Such a promise is usually considered as requiring the promisor to render performance which shall be satisfactory to the promisee, if he exercises an honest judgment. But the promisee must give fair consideration to the matter. A refusal to examine the promisor’s performance, or a rejection of it not in reality based on its unsatisfactory nature but on fictitious grounds or none at all, will amount to prevention of performance of the condition and excuse it.”

This we consider to be the rule, in effect, laid down by this Court in Taylor v. Trustees of Poor, 1 Penn. 555, 43 A. 613, 614. In this case the plaintiff contracted with the Trustees of the Poor, of New Castle County, to furnish good wheat bread for a given time. The defendant contended that there was a condition annexed to the contract and accepted by the plaintiff, that if the quality of the bread “not be what the superintendent, in his judgment, considered good, he (the superintendent) should have power to cancel the contract. * * *”

The Court instructed the jury that if the condition was accepted by the plaintiff and the superintendent canceled the contract in the exercise of the power granted him, “then the plaintiff cannot recover anything for the breach of the [65]*65contract, no matter whether the bread was good or bad, or what may have been the quality thereof, because * * * the superintendent would have been made the judge of the quality of the bread, and his judgment, when exercised, would be final and conclusive.”

The Court did not say, nor did it mean to say, that the superintendent could cancel the contract without fair consideration. Such would not be an exercise of judgment, and a failure to consider and judge would be bad faith. We think also the Court meant to say, and did say, that the judgment of the superintendent, honestly exercised, was final and conclusive, and the reasonableness of his judgment was not a matter of inquiry.

Cases will be found holding, apparently, that the question of bad faith is not material in any event, as well as those holding that the question of reasonableness is a matter to be determined by triers of fact. Reconciliation of ■ cases is impossible. Different conclusions have been reached by Courts in cases not always clearly distinguishable on the facts.

Generally see 13 C. J. 678; 39 C. J. 73; 6 R. C. L. 952; 3 Elliott, Contr., § 1881; 2 Elliott, Contr., supra; Williston, Contr., supra, and cases cited in these authorities; Brown v. Retsof Mining Co., 127 App. Div. 368, 111 N. Y. S. 594; Crawford v. Mail, etc., Pub. Co., 163 N. Y. 404, 57 N. E. 616.

With this conception of the rule in mind, does the declaration state a cause of action? We think it does not, for the reason that bad faith on the part of the defendant is not averred.

It is true, the plaintiff alleges that its organization at New Orleans was “eminently fitted and entirely sufficient,” but this language, of itself, is the pleader’s conclusion, and the expressions must be coupled with the facts concerning its organization set forth in its letter of January 16. When [66]

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171 A. 214, 36 Del. 57, 6 W.W. Harr. 57, 1934 Del. LEXIS 5, Counsel Stack Legal Research, https://law.counselstack.com/opinion/raisler-sprinkler-co-v-automatic-sprinkler-co-of-america-delsuperct-1934.