Virginia Impression Products Co., Inc. v. Scm Corporation, Virginia Impression Products Co., Inc. v. Scm Corporation , 448 F.2d 262 ( 1971 )

CRAVEN, Circuit Judge.

After SCM Corporation cancelled its dealership agreement with Virginia Impression Products Co. (VIP), this suit for treble damages was brought by VIP alleging that territorial and customer restrictions imposed by SCM violated the antitrust laws.¹ SCM posed a general settlement agreement between the parties as a defense, urging that it effectively released antitrust claims as well as all others, and that VIP was barred from bringing the present action. We agree.

Between September 1962 and April 1964, VIP operated as an exclusive dealer for SCM photocopy equipment in the Richmond, Virginia, area. At the same time VIP maintained exclusive dealership arrangements with at least thirteen manufacturers of other types of office equipment. As part of its sales program, SCM gave dealers like VIP exclusive territorial sales privileges for SCM photocopy products, but these dealers were prohibited from selling to customers outside the prescribed territory or to customers who were not “users.” The latter provision was an attempt to keep SCM equipment out of the hands of unauthorized dealers who did not sell SCM photocopy paper. However, two machines originally delivered to VIP were found in the hands of an unauthorized non-user outside VIP’s sales area. SCM, believing that VIP had violated its customer and territorial restrictions, cancelled the dealership agreement. In the present action, VIP claims that SCM’s sales restrictions violated the antitrust laws and that it was damaged as a result of SCM’s unlawful activity.

After the cancellation of the dealership agreement, Mr. Sexton of SCM’s legal department engaged a member of a Richmond law firm, Mr. George G. Freeman, Jr., to negotiate a settlement agreement. Sexton informed Freeman that he wanted a general release from VIP to insure that SCM would not later be confronted with an antitrust suit. After preliminary negotiations between VIP and SCM over financial differences were completed, Freeman drafted a proposed agreement and sent copies to Mr. Red-man, president of VIP. The proposed settlement agreement contained the results of the financial negotiations and additionally contained mutual general releases. The entire agreement is set out in the margin.² Paragraph two of the agreement purported to release SCM “from any claim, demand, cause of action, and liability of every kind or character, known and unknown” arising from the cancellation of the dealership agreement. Redman, without consulting an attorney and without seeking clarification of the terms of the agreement from anyone at SCM, signed the settlement agreement as it had been submitted to him.

In 1968 the instant action was begun by VIP. SCM set up the release given in the settlement agreement as a defense. The district court, however, found the terms of the release ambiguous, and submitted the question of the intent of the parties to the jury along with questions of mutual mistake and fraud. This appeal was taken from a general verdict in favor of VIP.

We think the language of the settlement agreement, especially paragraph two, is plainly a general release without ambiguity. It could hardly be plainer. The district court found an ambiguity in the “WHEREAS” clause which stated that the parties “have had certain differences” arising from the dealership termination, and that they “now desire to settle those differences.” The court below read the clause as limiting the scope of the agreement to “those differences” and reasoned that if it could not be determined from the face of the document what “those differences” were, the intent of the parties presented a factual issue for the jury.

If the agreement purported to be a special release, and not a general one, such a construction might be appropriate. But the very nature of a general release is that the parties desire to settle all matters forever. A general release such as we have here not only settles enumerated specific differences, but claims “of every kind or character, known and unknown.” Compare Walder v. Paramount Publix Corp., 132 F.Supp. 912, 916-917 (S.D.N.Y.1955).

A release is just another contract in which the intent of the parties is to be derived from the face of the instrument viewed as a whole. See Worrie v. Boze, 191 Va. 916, 62 S.E.2d 876, 880 (1951). Viewing the settlement agreement as a whole, the intent of the parties to agree to mutual general releases is clear. It is significant, we think, that the release agreement recites that the specific “differences” are “in regard to and growing out of” termination of the very dealership agreement now said to have been unlawful and in violation of the antitrust laws. It is true Paragraph one sets out the terms of the agreement on accounts. Had the parties intended to limit their agreement to financial matters there recited they could have stopped there. Instead they went further. The broad language of a general release was included in the context of settling termination of the very Equipment Dealer agreement which is now the basis for claimed antitrust law violations. In such a context we must give effect to the plain meaning of words. W. F. Ma-gann Corp. v. Virginia-Carolina Electrical Works, Inc., 203 Va. 259, 123 S.E. 2d 377, 380-381 (1962); William Schlu-derberg-T. J. Kurdle Co. v. Trice, 198 Va. 85, 92 S.E.2d 374, 377 (1956). See also Clarke Baridon, Inc. v. Merritt-Chapman & Scott Corp., 311 F.2d 389, 394 (4th Cir. 1962).

We think there was no jury issue as to mutual mistake, fraud,, or misrepresentation. It was clearly established at the trial that Mr. Sexton of SCM’s legal department clearly desired a general release, and communicated that desire to Freeman in Richmond. There is no evidence that he ever desired anything less. For a mutual mistake to vitiate the effect of this release, both parties must have intended not to include a general release in the settlement agreement. Marshall v. Cundiff, 211 Va. 673, 180 S.E.2d 229, 232 (1971). Unilateral mistake is not enough. See DeHart v. Richfield Oil Corp., 395 F.2d 345, 348 (9th Cir. 1968).

Nor can we discern any evidence whatsoever of fraud or misrepresentation of a material fact. VIP points to Sexton’s desire, which was not expressed to Redman, that a general release be obtained to avoid possible antitrust litigation. The law imposes no obligation on a party to a general release, dealing at arms length, to reveal all the possible legal theories that the other may possibly use against him. The law merely requires one to reveal material facts if they are unknown to the others. Clay v. Butler, 132 Va. 464, 112 S.E. 697, 700 (1922). Redman was not “acting under a mistake as to undisclosed material facts,” Restatement of Contracts § 472 (1) (b) (1932), when he signed the agreement because he knew as well as Sexton all the material facts.³ At most he simply failed to appreciate their significance, and failed to consult a lawyer, a dereliction not chargeable to SCM. He was not misled and indeed was encouraged by Mr. Freeman to consult his lawyer before signing the agreement.⁴ Neither VIP’s failure to appreciate the significance of the known facts, nor Red-man’s lack of expertise in the antitrust laws is sufficient to excuse VIP’s compliance with the terms of the release. See Corbett v. Bonney, 202 Va. 933, 121 S.E.2d 476, 481 (1961).

Since there were no questions of fact to be submitted to the jury, the construction of the contract was for the court. Its meaning is clear, and we find no prohibition in the statutes or in the policy behind the antitrust laws that prohibits the disclaimer of antitrust claims by a general release. Although private enforcement is a hallmark of the antitrust laws, Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 336, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971), it is not mandatory and federal policy does not prohibit agreements among private individuals releasing such claims.

While the federal policy of jealously regarding the rights of private antitrust claimants should not as a matter of law preclude their being able to release claims — even unknown claims— nor protect them, after-the-fact, from their conscious though unwise action, we think it does allow — and is supported by — a rule which requires the court to determine that they knew and intended that the release cover all that it is being held to cover.

Novak v. General Electric Corp., 282 F. Supp. 1010, 1023 (E.D.Pa.1967) (first emphasis added).⁵

Because we conclude that, as a matter of law, the settlement agreement expresses the intent of the parties to grant mutual general releases, the verdict rendered below will be vacated, and the complaint dismissed.

Reversed.

1 . See United States v. Arnold, Schwinn & Co. (1967). , 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249

2 . SETTLEMENT AGREEMENT

Whereas, SOM Corporation, a New York corporation with its principal office in New York, N. Y. (SCM), and Virginia Impression Products Company, Incorporated, a Virginia corporation with its principal office in Richmond, Virginia (Impression Products), have had certain differences in regard to and growing out of the termination on April 8, 1964, of their Office Equipment Dealer Contract, dated December 10, 1963 (the Equipment Agreement), and the parties now desire to settle those differences.

Now, THEREFORE, SCM and Impression Products agree as follows :

1. Impression Products hereby delivers to SCM cheeks made payable to the order of SCM, one in the amount of $9,157.39 and dated July 31, 1964, and one in the amount of $2,000 and dated August 27, 1964. Impression Products also delivers to SCM 7 notes of Impression Products, Number 2 through 8, each dated July 27, 1964, and in the amount of $2,000, but each payable on the date indicated below:

No. 2 September 27, 1964

No. 3 October 27, 1964

No. 4 November 27, 1964

No. 5 December 27, 1964

No. 6 January 27, 1965

No. 7 February 27, 1965

No. 8 March 27, 1965.

2. Impression Products hereby releases, quit-claims and discharges SCM, its successors and assigns from any claim, demand, cause of action, and liability of every kind or character, known and unknown, now existing or which may hereafter arise from the Equipment Agreement, or its cancellation, including, without limitation, the cancellation of all outstanding purchase orders, which orders Impression Products hereby withdraws.

3. SCM hereby releases, quit claims and discharges Impression Products, its successors and assigns, from any claim (including without limitation all claims for amounts due on material delivered by SCM to Impression Products), demands, cause of action, and liability of every kind of character, known and unknown, now existing or which may hereafter arise from the Equipment Agreement, or its cancellation, except as provided in Section 4 below.

4. This settlement is based on the assumption that Impression Products will pay promptly at maturity each of its notes delivered to SCM pursuant to Section 1 above and for that reason Impression Products has been given by SCM a $5,022 credit on its purchases, which represents credit of the 7% discount usually allowed only for 10-day payment; accordingly, if Impression Products defaults in the prompt payment at maturity of any such note, Impression Products shall immediately forfeit the $5,022 credit and such amount shall immediately become due and payable hereunder to SCM Impression Products.

5. This Agreement shall be governed by Virginia law.

IN WITNESS WHEREOF, each of the parties has caused these presents to be signed in its name and on its behalf by its President or Vice President, attested by its Secretary or an Assistant Secretary, both being thereto duly authroized, [sic] all as of the 15th day of September, 1964.

3 . Significantly SCM never concealed its . reason for dealership termination or pretended a fictitious one. Presumably VIP could as well have concluded at the time of signing the settlement agreement as subsequently that it was terminated “because it had sold machines to a non-user in violation of its territorial agreement and to a competitive paper seller * * ” Brief for Appellee at 16.

4 . Freeman encouraged Redman to seek legal advice when he submitted the proposed settlement agreement for his consideration.

September 11, 1964

Dear Mr. Redman:

In accordance with our recent conversations regarding settlement of your controversy with SCM Corporation, I enclose 4 copies of the Settlement Agreement. After you have reviewed it with your counsel, as you have indicated you would like to do, if he has any questions, I would he delighted to consult with him. If you find the Agreement in order, would you please execute two copies and return them to me. I will then forward them promptly to

SCM Corporation for execution and upon their return to me we could effect the settlement here in our office.

* ❖ * * *

If I could receive your comments pr the Agreement on Tuesday or Wednesday of next week we would be able to have the final settlement during the week of the 21st.

Sincerely yours,

George G. Freeman, Jr. (emphasis added)

5 . In Novah, Judge Higginbotham noted that

Mere shorthand references such as “general release” are not in themselves sufficient. Nor do I think that ritualistic incantations * * * are sufficient to deprive one of unknown antitrust claims. It is not too much to require the conspicuous insertion of a phrase stating that the release covers, for example, “all claims, whether presently known, or unknown, suspected or unsuspected, arising out of the same or of different product lines as are here involved and whether related or unrelated to the present dispute as to law or facts or both,” before we hold that as a matter of law, the parties must have intended to cover a prior unknown and unrelated claim.

Novak v. General Electric Corp., 282 E.Supp. 1010, 1023 n. 44 (E.D.Pa. 1967). See also Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 342-343 n. 10, 91 S.Ct. 795, 28 L.Ed. 2d 77 (1971). Compare the language in paragraph 2 of the VIP-SCM settlement agreement, supra note 2, which is equally explicit under the facts before us. Such a requirement, as Judge Hig-ginbotham would impose on the release of antitrust claims, appears consistent with Virginia’s construction of general releases. See Smith v. Hensley, 202 Va. 700, 119 S.E.2d 332, 334 (1961).