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Stoner v. Bellows

decided: May 21, 1952.

STONER ET AL.
v.
BELLOWS ET AL. STONER V. BELLOWS ET AL.



Author: Staley

Before MARIS, MAGRUDER and STALEY, Circuit Judges.

STALEY, Circuit Judge.

Prior to November 16, 1950, defendant corporation, Downing and Bellows Company, Ltd., conducted a wholesale and retail liquor business in Charlotte Amalie, St. Thomas, Virgin Islands. On the above date, defendant corporation sold its retail business to plaintiff Frank Stoner in accordance with a written contract entered into between the parties. The two actions which are the subject of these appeals both arise out of this sale.

The contract of sale with which we are concerned consists of an offer dated September 6, 1950, made by Frank Stoner to Charles Bellows as president of defendant corporation, together with a counter-offer by the latter, dated November 14, 1950, accepting Stoner's proposal with a few modifications. Stoner in turn accepted the counter-offer on November 16 by returning it with his signature affixed.

The pertinent portions of the contract are as follows:

"1. Mr. Stoner to form a Corporation or partnership to purchase for cash certain assets of the retail business of Downing & Bellows Co., Ltd., as follows:

"(a) All liquors, wines, gourmet items, food products, tourist items, etc., carried in the retail department of Downing & Bellows; this inventory to be purchased at Downing & Bellows' cost or wholesale price; * * *.

"4. As part of the purchase price for this established retail business Mr. Stoner agrees to pay Downing & Bellows Co. Ltd., 4% of the gross annual sales up to $50,000.00; 3 1/2% on sales from $50,000.00 to $60,000.00; 3% on sales from $60,000.00 to $70,000.00 and 2 1/2% on all sales above $70,000.00 for a period of 5 years; after that time 2 1/2% as long as the name 'Bellows' is used; * * *.

"5. Downing and Bellows Co. Ltd. at all times to give Mr. Stoner their lowest possible wholesale prices and to assist in every way the development of the retail business;

"6. Downing and Bellows Co. Ltd. will not at any time enter into the retail business in competition with Mr. Stoner or his partnership or corporation unless agreed to in writing by Mr. Stoner; Mr. Stoner, his partnership or corporation will not enter into the wholesale business in the Virgin Islands, unless agreed to in writing by Downing & Bellows Company, Ltd."

The first action (herein called contract action) is brought by plaintiffs Frank Stoner and Irene Stoner*fn1 against Charles Bellows, and Downing and Bellows Company, Ltd.; plaintiffs seek damages for breach of contract and an injunction restraining defendants from competing in the retail liquor business in the Virgin Islands (appeal at No. 10,560). Plaintiffs contended below that defendants violated paragraph 1(a) of the contract by overcharging them for the inventory. Defendants were also charged with entering into retail competition with plaintiffs. Finally, it was alleged that defendant Charles Bellows and objected to the use of his name by plaintiffs as a part of their trade name. Defendants counterclaimed, demanding, inter alia, an injunction against the use by plaintiffs of the name Bellows except as a part of a corporate name.

The second action (herein called tort action) is brought by Frank Stoner against Charles Bellows and Doris Bellows and is based on fraudulent misrepresentation (appeal at No. 10,561).The trial court reserved decision on defendants' motion to dismiss the complaint in this action until a hearing on the merits. Both actions were then tried together to the court without a jury, although the record does not that a formal order of consolidation was entered. After trial, the court granted defendants' motion to dismiss the complaint in the tort action. In the contract action the court rendered findings of fact and conclusions of law. The judgment entered in that action enjoined plaintiffs from competing with defendants in the wholesale liquor business in the Virgin Islands and likewise enjoined defendant corporation from competing at retail in the Virgin Islands. Plaintiffs were enjoined from doing business under the name Stoner and Bellows "unless such business is organized as a corporation or limited partnership and the name clearly shows such form of organization, or unless the name is so styled or used in any other manner or form that will guarantee no liability in the use thereof on the part of either Charles Bellows or Downing and Bellows Company, Ltd."

Contract Action (No. 10,560)

Since the sale was consummated, plaintiffs have been conducting their business as partners under the trade name of Stoner and Bellows. Defendant Charles Bellows has protested against the use of his name in that form, contending that he might thereby be subjected to partnership liability by estoppel.Plaintiffs, however, have resisted Bellows' requests that they protect him by forming a corporation or a limited partnership with ...


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