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PAXTON v. DESCH BLDG. BLOCK CO.

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA


November 1, 1956

Curtis F. PAXTON
v.
DESCH BUILDING BLOCK CO., Inc. (two cases)

The opinion of the court was delivered by: DUSEN

These actions are now before the court for disposition on motions of the defendant to dismiss and for judgment on the pleadings in both of plaintiff's cases, and on motion by plaintiff in the replevin action (Civil Action No. 19,953) to strike the counterclaim.

Facts.

 On March 12, 1953, Curtis F. Paxton, *fn1" plaintiff in this action, *fn2" entered into an agreement with Jerrold Oakley and J. Nevins McBride for the sale of his interest in a partnership conducted by him under the name of Walker Cement Products Company *fn3" at Little Ferry, New Jersey, excepting, in part, 'the plant of the partnership situated at Lancaster, Pennsylvania, and all assets and property whatsoever connected therewith' (defendant's Exhibit B, paragraph 1). The plaintiff agreed not to compete with the purchasers for a period of five years (until March 12, 1958) 'within any of the states of the United States except the State of Utah, and excepting that Curtis F. Paxton, one of the sellers may operate the Lancaster, Pennsylvania, plant of the sellers for the purpose only of manufacturing and selling the products of said plant to the Highway Department or any instrumentality of the State of Pennsylvania or for projects that may receive Federal or State aid.'

 Modifying this agreement on August 5, 1954, the Walker Cement Products Company, a corporation of the State of New Jersey formed by Oakley and McBride, *fn4" agreed:

 '* * * that for a period of five (5) years it will not set up or operate, directly or indirectly, a plant or installation in the State of Pennsylvania for the manufacture of porous concrete pipe, nor will it, directly or indirectly, sell, lease, furnish or install porous concrete pipemaking machinery to be used in said State for a like period of five (5) years.'

 On December 8, 1954, the agreement under which the instant actions are brought was entered into by Paxton and the defendant, Desch Building Block Company, Inc. (hereinafter called 'Desch'), a Pennsylvania corporation. By the terms of this agreement (hereinafter called the 'Paxton-Desch agreement'), the parties covenanted that Paxton would lease and deliver to Desch a pipe machine for the manufacture of porous concrete pipe with slip joints for multiple production, together with a formula and process used in connection with the manufacture of the pipe. Such lease would be for a term of ten years and two months *fn5" and the total rent would be $ 75,000, with stated lump sums payable in advance *fn6" and quarterly payments of $ 1,000. *fn7" Paxton further granted Desch the exclusive *fn8" right to sell pipe manufactured on the pipe machine in an area called the 'Territory,' *fn9" but limited such sales to the Highway Department or any instrumentality of the Commonwealth of Pennsylvania, or for projects that may receive federal or state aid. These limitations on sales within the territory were to be effective only until March 12, 1958 (see Sec. 9 of plaintiff's Exhibit A). *fn10"

 The Walker Cement Products Company, under its new name, the Walker Poroswall Pipe Company, *fn11" brought suit against Paxton and Hanson *fn12" in the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C1615-54, charging that Paxton had violated the terms of the March 12, 1953, agreement and the August 5, 1954, modification thereof (1) by entering into a business competitive to their business, (2) by selling porous concrete pipes to others than the Highway Department or any instrumentality of the State of Pennsylvania or projects that may receive federal or state aid, (3) by entering into leases for machinery for the manufacture of porous concrete pipe, and (4) by otherwise selling concrete pipe within and without the State of Pennsylvania other than in the State of Utah. *fn13"

 On July 11, 1955, the suit was settled out of court by an agreement between Paxton, Hanson, and the Walker Poroswall Company (defendant's Exhibit 1), providing that the parties would share equally in all past and future profits and losses arising out of the Paxton-Desch agreement and that Paxton assigned to the parties' respective attorneys, Thomas L. Zimmerman and Floyd V. Amoresano, as agents for Paxton and the Walker Poroswell Pipe Company, all of his right, title and interest in the Paxton-Desch agreement *fn14" The said agents were to have full power, on behalf of the parties, to enforce and carry out the terms and conditions of the latter agreement. *fn15"

 By letter of August 3, 1955, Desch claimed the commission of a fraud on itself by Paxton's failure to disclose the agreements of March 12, 1953, and August 5, 1954, at the time of the execution of the Paxton-Desch agreement. This letter claimed that such prior agreements rendered Paxton without legal capacity to make the representations that induced Desch to enter into the agreement, and purported to rescind the agreement.

 Paxton, by his attorneys, Robert H. Jordan, Floyd V. Amoresano, and the Hon. Thomas L. Zimmerman, brought two actions: one in replevin, *fn16" No. 192, January Term 1956 (now Civil Action No. 19953), and the other in assumpsit, *fn17" No. 193, January Term 1956 (now Civil Action No. 19952) in the Court of Common Pleas of Lehigh County, Pennsylvania, on November 16, 1955. The defendant removed both actions to the instant Federal District Court and filed a counterclaim to both actions.

 The Paxton-Desch contract is governed by the law of New Jersey. *fn18"

 The defendant apparently contends that plaintiff's failure to elect a contract or a replevin action requires dismissal of both actions at this time, but the defendant has repudiated the agreement in its entirety and, even in the absence of a specific provision in the contract authorizing the maintenance of an action or the declaring of a forfeiture, the plaintiff is entitled to maintain an action for damages which will compensate him for all the consequences which naturally follow the breach. Dun & Bradstreet v. Wilsonite Products Co., 1943, 130 N.J.L. 24, 31 A.2d 45, 47; Miller & Sons Bakery Co. v. Selikowitz, 1950, 8 N.J.Super. 118, 73 A.2d 607, 609; Williston on Contracts, Rev.Ed., § 1317; see, also, Restatement, Contracts, § 318. Such action may either be one that upholds the contract and seeks damages or one that treats the contract as terminated and seeks replevin of the articles leased under it. Miller & Sons Bakery Co. v. Selikowitz, supra; *fn19" cf. Williston on Contracts, Rev.Ed., §§ 1291 and 1464; and Restatement of Contracts, §§ 381 and 384.

 In the absence of a specific provision in the agreement permitting both the recovery of the rental due and the replevying of the leased machinery upon the breach of the contract, the plaintiff must elect his remedy and cannot elect to rescind the contract and recover the property, while at the same time affirming the contract by suing to recover the total rental due. See Lizak v. Rottenbucher, 1947, 140 N.J.Eq. 76, 53 A.2d 362, 366, and Blum Bldg. Co. v. Ingersoll, 1936, 99 N.J.Eq. 563, 134 A. 176, 178, affirmed per curiam on the reasoning of the lower court opinion, 1927, 101 N.J.Eq. 291, 137 A. 916. See, also, Barton v. Silver, 1930, 107 N.J.Eq. 314, 152 A. 382; Hurbanis v. Schultz, 1940, 128 N.J.Eq. 215, 15 A.2d 886; and Knight v. Electric Household Utilities Corp., 1943, 133 N.J.Eq. 87, 30 A.2d 585, affirmed per curiam 1944, 134 N.J.Eq. 542, 36 A.2d 201.

 Under the federal rules, great leeway in the pleadings is assured to the plaintiff and he can include alternative legal remedies, even in one action. Cf. Fed.Rules Civ.Proc. rule 8(e)(2), 28 U.S.C. *fn20" Under these circumstances, he does not have to make any final decision as to the election of which remedy he will pursue until either at the pre-trial conference or at the trial. *fn21" Cf. Republic of China v. Pong-Tsu Mow, 1954, 15 N.J. 139, 104 A.2d 322, 325, and Ajamian v. Schlanger, 1954, 14 N.J. 483, 103 A.2d 9, 12.

 Also, the defendant raises these inapplicable grounds for his motions:

 1. Defendant contends that the Walker Poroswall Pipe Company is an indispensable party to this suit. By the settlement agreement of July 11, 1955, power of attorney to enforce the Paxton-Desch agreement was granted by Paxton and the Walker Poroswall Company to Zimmerman and Amoresano in their name or in the name of Paxton (see page 5 of the Facts). *fn22" Therefore, all persons materially interested in the subject matter of these actions are parties to these suits.

 2. Defendant contends that the Paxton-Desch agreement breached the prior inconsistent agreements of Paxton with Oakley and McBride of March 12, 1953, and with the Walker Cement Products Company of August 5, 1954. *fn23" Since the settlement agreement *fn23" was executed before the repudiation of the Paxton-Desch contract by the letter of August 3, 1955, any such inconsistency had become moot. *fn24"

 3. Defendant's contention that the agreement is illegal and unenforceable since it is a violation of Section 1 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 1, and Section 3 of the Clayton Anti=Trust Act, 15 U.S.C.A. § 14, is not established by the record. *fn25" The defendant will have the opportunity to present any proof of this defense at the trial. *fn26"

 For the reasons above-mentioned, the motions for dismissal of these actions will be denied, without prejudice to the defendant's right to make a motion to dismiss the replevin action at the pretrial conference or the trial.

 Counterclaim.

 In a replevin action, a counterclaim cannot be asserted. See Rule 1082, subparagraph (a), of the Pennsylvania Rules of Civil Procedure, 12 P.S.Appendix, Rules of Civil Procedure. *fn27" Therefore, defendant's counterclaim to Civil Action No. 19953 will be stricken.

 Order in Civil Action No. 19952.

 And Now, November 1, 1956, It Is Ordered that defendant's motion to dismiss and for judgment on the pleadings, filed June 1, 1956, is Denied.

 Order in Civil Action No. 19953.

 And Now, November 1, 1956, It Is Ordered that defendant's motion to dismiss and for judgment on the pleadings is Denied and that plaintiff's petition to strike defendant's counterclaim, filed March 14, 1956, *fn28" is Granted.


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