plaintiff would open a letter of credit for the order with the Union Bank of Switzerland.
Novimex shipped the first of the orders, for 57,600, which plaintiff accepted and 25% of which Reborn purchased immediately from plaintiff. Mr. Milton Ford of Reborn took the position that Reborn would purchase the remaining 75% of the order of 57,600 when it had distributed the 25% portion which it had already purchased from plaintiff.
Plaintiff objected to this position on the part of Reborn, and contacted Mr. Ammann of Novimex by telephone requesting that until plaintiff and Reborn resolve their dispute, Mr. Ammann not ship the order of 44,640 spouts which Mr. Klausner had also ordered. Plaintiff subsequently telegramed Novimex to the same effect, ordering Novimex not to ship the order for 44,640 units.
Mr. Ammann, however, informed plaintiff that he had to ship the order for 44,640 spouts because he was under pressure from the manufacturer and might lose his agency with the spout manufacturer if he failed to ship the order.
Despite Mr. Ammann's requests, plaintiff did not obtain a letter of credit for the order of 44,640 spouts which Mr. Klausner had ordered on plaintiff's behalf, and for which plaintiff had signed an invoice to Novimex.
When plaintiff continued to attempt to persuade Mr. Ammann not to ship the order for 44,640 spouts, Mr. Ammann said he would ship the order directly to Reborn and would pay plaintiff per unit of all units shipped to Reborn and the Fords until December 31, 1970, at which point plaintiff would be eliminated from any further relationship with Novimex.
On October 16, 1970, plaintiff received a letter from a Dr. Faessler, acting as attorney for Novimex, which informed plaintiff that because plaintiff had not fulfilled its commitments of the agreement of March 12, 1970, with Novimex, Novimex was no longer bound by that agreement and thus no longer required to recognize plaintiff as the exclusive distributor of the spouts exported by Novimex.
Thereafter, Novimex ceased dealing with plaintiff and commenced direct sales to Reborn.
Against these facts, we turn to the charges which plaintiff alleges against the defendants. First, plaintiff charges Defendant Novimex with breach of contract for suspending shipments of the pour spouts to plaintiff. As noted above, the contract between plaintiff and Novimex provided that Swiss law would govern the construction of the contract. The only evidence we have as to Swiss law, however, namely, the letter from Dr. Faessler to plaintiff on behalf of Novimex, shows that under Swiss law plaintiff breached its contract with Novimex, and not vice versa.
Even if Swiss law did not govern the above contract, however, we think it clear that plaintiff breached its contract under the most basic principles of our contract law. As noted above, the contract between plaintiff and Novimex provided that terms of payment for individual shipments would be subject to individual arrangement. Under the agreement subsequently made for the order of 44,640 spouts, plaintiff was to obtain and forward a letter of credit for that shipment, which Novimex was to ship at the end of August. When plaintiff failed to obtain such letter of credit, and instead tried to persuade Novimex to hold the shipment, plaintiff breached the terms of the agreement for the shipment, and thus breached its contract with Novimex, since that contract expressly incorporated the terms of the agreement for the shipment of the 44,640 spouts. This breach was a material one, since it involved the terms of payment for the shipment.
Accordingly, once plaintiff committed this material breach of the contract, Novimex was free thereafter, without committing any breach of contract on its own part, to refuse to honor its promise under the contract to ship the spouts to plaintiff for resale in the United States. We thus find no merit in plaintiff's claim that Novimex breached its contract with plaintiff.
We similarly find no merit in plaintiff's claim that Defendants Reborn and the Fords induced the breach of contract by Novimex. As noted above, Novimex committed no breach of contract with plaintiff, and thus Defendants Reborn and the Fords cannot be said to have induced a breach of contract.
More important, however, we do not believe plaintiff's evidence in any way shows any activity taken by Reborn and the Fords with the purpose of inducing Novimex to cease its business relation with plaintiff. Plaintiff introduced evidence only that the Fords met with Mr. Ammann of Novimex without plaintiff, after plaintiff had introduced them to each other, and that when the dispute between plaintiff and the Fords over payment first arose, Milton Ford conducted an overseas telephone conversation with Mr. Ammann immediately after a three-way conversation between plaintiff, Milton Ford, and Mr. Ammann had been cut off. Plaintiff introduced no evidence whatsoever, however, as to the substance of these conversations, and we simply cannot conclude from the evidence only that the conversations occurred that the Fords said anything in these conversations with the purpose of inducing such cessation of dealings between Novimex and plaintiff.
Finally, the evidence fails to show that anything the Fords might have said or done in any way caused the break between Novimex and plaintiff. To the contrary, plaintiff's own evidence showed clearly that even after the above-described conversations between the Fords and Mr. Ammann, Novimex continued to deal with plaintiff on the same basis as had always existed, and that Novimex ceased dealing with plaintiff only after plaintiff failed to honor its payment obligation to Novimex.
Plaintiff also contends that Reborn's importing agreement with Novimex after Novimex ceased dealing with plaintiff constituted a breach of Reborn's agreement with plaintiff. We fail to agree, for the evidence shows that no contract existed to bind the Fords not to import the spouts from Novimex. As noted above, the document which the Fords executed not to compete with plaintiff expressly provided that such agreement by the Fords was contingent upon plaintiff's executing an agreement appointing Reborn the exclusive distributor for plaintiff. Since plaintiff never executed such latter agreement, the Fords' promise not to compete had no binding effect, and the Fords' subsequent agreement with Novimex constituted no breach of contract between plaintiff, Reborn and the Fords.
There remains one claim outstanding in this case as yet. Defendant Reborn brought a counter-claim against plaintiff for trademark infringement. At the time we granted the defendants' motions for directed verdicts at the trial of this case, counsel respectively for Defendant Reborn and plaintiff expressed the view that they believed they could reach a settlement on the counterclaim without further court proceedings. Accordingly, we did not proceed with the trial of the counterclaim.
As of the date of this memorandum, however, no such settlement has been reached. We shall thus enter our order today as to plaintiff's claims since we see no reason to delay the entry of judgment on these claims, see F.R.C.P. 54(b), and we shall set a date for trial of the counterclaim.
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