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MAXWELL v. SCHAEFER (03/14/55)

March 14, 1955

MAXWELL
v.
SCHAEFER, APPELLANT.



Appeal, No. 309, Jan. T., 1954, from decree of Court of Common Pleas of Lancaster County, in Equity, No. 10, in case of Lloyd R. Maxwell v. Lester W. Schaefer and Leo Halpern. Decree vacated in part.

COUNSEL

Herbert S. Levy, with him Appel, Ranck, Levy & Appel, for appellant.

Bernard J. Myers, Jr., for appellee.

Before Stern, C.j., Stearne, Jones, Bell, Chidsey and Musmanno, JJ.

Author: Jones

[ 381 Pa. Page 14]

OPINION BY MR. JUSTICE JONES

Schaefer and Halpern, the named defendants, of Lancaster, Pennsylvania, were engaged in the manufacture of a quick-drying enamel paint capable of being sprayed on surfaces with a unit sprayer in the paint container. The product was marketed under the trade name "Spritzit" which, in Pennsylvania Dutch, means "spray it". Being desirous of securing a wider market

[ 381 Pa. Page 15]

    for their manufactures, Schaefer and Halpern entered into a written agreement with Maxwell, the plaintiff, on November 1, 1950, which gave him the exclusive right to the commercial distribution of "Spritizit". The agreement provided, inter alia, that the manufacturers would supply Maxwell with their product on a cost plus basis; that he would have the exclusive right to control the sale of "Spritzit" throughout the world; that he would have the right to examine the manufacturers' books of account from time to time to check costs; that, except for certain limited sales to a named corporation in New York, the manufacturers would make no sales to third persons without Maxwell's consent; and that, during the term of the agreement, Maxwell would not engage in the distribution of any product similar to "Spritzit". The writing further provided that "The term of this Agreement is indefinite, but either Party may terminate it by giving to the other written notice of the termination ..., and the contract shall thereafter terminate one year from the date of delivery of the aforesaid notice."

Maxwell proceeded to act in accordance with the distribution agreement but, on Aprill 11, 1951, the manufacturers notified him of their intention to terminate the agreement. On May 20, 1952, Maxwell instituted the present suit in equity to restrain the manufacturers from selling or distributing "Spritzit" to any person other than himself and to compel and accounting of allegedly improper sales already made. After preliminary objections by the defendants, challenging the legality of the agreement, had been overruled, the defendants answered over and the suit came on for hearing. While the hearing was in progress, the suit was discontinued as to Halpern who had dissociated himself from the venture some time after the execution of the distribution agreement. Maxwell conceded that he

[ 381 Pa. Page 16]

    was not entitled to injunctive relief inasmuch as the agreement had already been effectively terminated by Schaefer pursuant to the notice served as the contract permitted.

Following the hearing, the chancellor found the facts to be substantially as above recited and further concluded that Schaefer had breached the distribution contract by not supplying Maxwell with the entire output of "Spritzit" during the year from April 11, 1951, to April 11, 1952; that Schaefer had sold to others approximately 5,000 cases of "Spritzit" in violation of the distribution agreement; that Maxwell, who had realized a profit of $2.64 per case of "Spritzit" sold through him, suffered damages in the amount of $13,200; and that, by reason of his expenditure of certain moneys for promotional purposes, Maxwell had sustained an additional loss in the amount of $7,500. The chancellor accordingly entered a decree nisi awarding Maxwell damages in ...


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