A-1 Beverage Co. v. American Dry Ginger Ale Co.
A-1 Beverage Co. v. American Dry Ginger Ale Co.
Opinion of the Court
This is an action of contract to recover the sum of $1,992.80 under the terms of a written contract executed by the parties on June 16, 1953. The contract, in which the plaintiff and the defendant are referred to respectively as A-l and American, provided in part as follows:
“The Agreement between the said parties dated March 16,*89 1953 is hereby cancelled, annulled and declared to be of no further legal effect, and the said parties do hereby mutually release each other from all the obligations contained in said Agreement, with the exception of the following:
“1. American hereby agrees that it is presently indebted to said A-l in the sum of four thousand, three hundred seventy-four dollars and eighty cents ($4,374.80), said sum representing recharges for merchandise sold and delivered by said A-l. American hereby agrees to pay to said A-l the said amount in the following manner and upon the following dates:
$1868.65 on 30, 1992.80 on July 7, 1953 513.35 on July 14, 1953. . . .
“4. A-l hereby agrees that Paragraph 15 of the Agreement dated March 16, 1953 shall survive this cancellation of said Agreement insofar as it applies to the manufacture, bottling, sale and distribution of American Dry beverages and to any claims growing out of any acts of A-l prior to this date.”
The agreement of March 16, 1953, to which reference is made was a so called “franchise” agreement whereby the defendant granted the plaintiff an exclusive license within a described territory to bottle, sell, and distribute beverages known as “American Dry” under the defendant’s trade marks and trade names. The plaintiff agreed in paragraph 3 to “purchase the concentrate, extracts and salts necessary for the manufacture” of the beverages from the defendant, in paragraph 6 to bottle the beverages “in accordance with the directions, formulae and specifications as furnished by the Licensor,” and in paragraph 13 to “exert its best efforts to properly and competently bottle and distribute American Dry beverages throughout the prescribed territory.” Paragraph 15 of this March agreement provided that “The Licensee shall assume full responsibility in connection with the manufacture, bottling, sale and distribution of American Dry beverages in the prescribed territory, and in no event shall the Licensor be held responsible
In its answer, in addition to general denial and averment of payment, the defendant pleaded, “the plaintiff negligently and improperly manufactured and bottled said beverages, and by reason of the failure of the plaintiff to perform its obligations as created by the said agreement between the parties, the defendant has sustained serious damages, liabilities and losses, and the damages so sustained it claims to be entitled to recoup in this proceeding.” At the trial the defendant offered evidence in support of its answer in recoupment “that the plaintiff by reason of its negligent or other improper preparation, manufacture, and bottling of carbonated beverages, which were distributed by the plaintiff before June 16, 1953, and which beverages contained the trade mark and label of ‘American Dry,’ the property of the defendant, caused injury to the good will of the defendant, with resulting loss of patronage from the defendant’s customers to whom these unsatisfactory and improperly prepared products had been delivered by the plaintiff.” On objection by the plaintiff this evidence was excluded and the case reported to the Appellate Division on the correctness of such exclusion. The Appellate Division ordered that the report be dismissed and the defendant appealed.
Since the right of the defendant to recoup must spring from the contract under which the plaintiff seeks recovery (American Bridge Co. of New York v. Boston, 202 Mass. 374, 376) and the plaintiff was released from all of its obligations under the March agreement by the provisions of the first paragraph of the June agreement, except those arising under paragraph 15 of the March agreement, it is manifest that the answer in recoupment is intended to allege a failure by the plaintiff to comply with the provisions of that paragraph. The admissibility of the excluded evidence, which is the only matter of law reported, depends on whether under that paragraph the defendant can recover for injury to its good will due to negligent and improper manufacture and
We think that the defendant cannot recover for damage to its good will under the provisions of paragraph 15. The evidence offered by the defendant was rightly excluded.
Order dismissing report affirmed.
Reference
- Full Case Name
- A-1 Beverage Company, Inc. v. American Dry Ginger Ale Company, Incorporated
- Status
- Published