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UTILITY APPLIANCE CORPORATION v. KUHNS. (06/30/58)

THE SUPREME COURT OF PENNSYLVANIA


June 30, 1958

UTILITY APPLIANCE CORPORATION, APPELLANT,
v.
KUHNS.

Appeal, No. 25, March T., 1958, from judgment of Court of Common Pleas of Westmoreland County, Oct. T., 1955, No. 23, in case of Utility Appliance Corporation v. Emma A. Kuhns, individually and doing business as H. J. Kuhns Company. Judgment reversed.

COUNSEL

Joseph S. D. Christof, with him Irving M. Green, and McCloskey, Best & Leslie, for appellant.

John M. Noel, for appellee.

Before Jones, C.j., Bell, Chidsey, Musmanno, Arnold, Jones and Cohen, JJ.

Author: Cohen

[ 393 Pa. Page 415]

OPINION BY MR. JUSTICE COHEN

Plaintiff, a manufacturer of air cooling units, brought an action in assumpsit against the defendant distributor to recover $3,929.88 with interest for goods sold and delivered. Distributor admitted the debt, but alleging the breach of an oral contract for the exclusive sale and distribution of Manufacturer's products, counterclaimed for $22,682.78 which sum represented commissions allegedly due her on sales made in her territory in 1954 directly by Manufacturer.

The issue of the existence of the alleged contract was submitted to a jury which returned a verdict in favor of Distributor on her counterclaim in the amount of $11,300. After Manufacturer's motions for judgment n.o.v. and, in the alternative, for a new trial were dismissed by the court en banc, this appeal was taken.

Viewing the evidence and the inferences to be drawn therefrom in the light most favorable to the Distributor, we hold that the oral agreement was not an enforceable contract.

Although Distributor's business dealings with Manufacturer began in 1947, the manager of Distributor's business testified that the parol arrangements creating the exclusive distributorship were made with Manufacturer's sales director at a meeting in Pittsburgh sometime between 1950 and 1952. By the terms of the

[ 393 Pa. Page 416]

    agreement Distributor was granted an exclusive franchise to sell Manufacturer's appliances to dealers within a radius of "approximately" 150 or 200 miles of the Borough of Vandergrift. No effective date for this agreement was specified, neither was the duration of the franchise fixed.*fn1 In the event that Manufacturer sold air coolers directly to dealers within the territory, Distributor was to be paid a commission on each unit sold equal to "more or less" the difference between the distributor and dealer costs.*fn2 It is upon this provision that Distributor bases her counterclaim for commissions on the sales made directly by Manufacturer in 1954.

Although the terms of the oral agreement are vague and indefinite, Manufacturer's obligations thereunder were to sell its products exclusively through Distributor

[ 393 Pa. Page 417]

    in the area covered by the franchise, and to pay Distributor a commission on all appliances sold directly to dealers therein. But what was Distributor's undertaking?

Distributor was under no duty to purchase any of Manufacturer's air cooling units. She did not agree to refrain from selling the air conditioning appliances of competitors, or from selling Manufacturer's appliances outside her territory. As a matter of fact, Distributor did not even promise to invest either her time, money or effort to promote the sale of Manufacturer's products: Distributor's witness testified that such matters were left entirely to her discretion. In this regard the record indicates that she continued to engage in the plumbing and heating business at her establishment in addition to marketing Manufacturer's air cooling units. In short, Distributor's obligations under the oral agreement were illusory and capable of performance without detriment to herself or benefit to Manufacturer.*fn3 This lack of consideration relieves Manufacturer from any obligation under the oral agreement for the exclusive sale and distribution of Manufacturer's products.*fn4 P. P. Willams Co. v. Colorado

[ 393 Pa. Page 418]

Milling and Elevator Co., 246 F.2d 240, 244-245 (5th cir. 1957); Motor Car Supply Co. v. General Household Utilities Co., 80 F.2d 167, 170 (4th cir. 1935). Cf. Moon Motor Car Co. of N.Y. v. Moon Motor Co., 29 F.2d 3, 4 (2nd cir. 1928) (opinion by L. HAND, C.J.).*fn5

Accordingly, the court below should have entered judgment on plaintiff's claim and judgment n.o.v. on defendant's counterclaim.

Disposition

Judgment for defendant reversed. Judgment here entered for plaintiff n.o.v.


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