Petrolia Manufacturing Co. v. Jenkins

Barrett, J.:

The defense mainly relied upon is the alleged failure by the plaintiff to fulfill the covenants to be performed by its assignors under the contract of March 28, 1896. The principal breach alleged is a failure to manufacture and deliver true Coal Oil Johnny soap within the meaning of the contract. The contract does not define the composition of the soap and a resort to extrinsic evidence became necessary. A great variety of parol proof was taken which can be only briefly considered.

The objection of the defendants to the soap was that it did not contain a sufficient quantity of petroleum. Coal Oil Johnny soap was first made for Jenkins (who was a soap dealer, but not a manufacturer), in 1893, by one Burk. Burk testifies that he put no petroleum in it. He continued to make the soap, in 1894 and 1895, in the same manner throughout. In 1895 one Grant manufactured the soap at his factory in Pleasantdale, N. J., for the firm of Bell & Bogert, who sold it to Jenkins. The evidence shows that at first he-put in about three per cent of petroleum, but later ceased to use it at all. Toward the close of 1895, and during 1896, Bell & Bogert made the soap for Jenkins at a factory in this city. The preponderance of evidence justifies the conclusion that the soap manufactured by this firm contained about four per cent of petroleum. Jenkins registered the trade mark for the soap in February, 1894, and in his declaration stated that it was made “ with a liberal use of petroleum,” but, as has been seen, for a long time thereafter he bought and sold soap which had none at all.

From these and other facts the trial court was called upon to-decide whether the plaintiff’s soap, which at first contained no-petroleum, and at no time more than six-tenths of one per cent thereof, substantially complied with the contract. The defendants, contend that the contract referred to the Coal Oil Johnny soap-which Bell & Bogart were then making. There is just as much reason for holding that the reference was to the original soap manufactured by Burk, which contained no petroleum. During the greater part of the time that Jenkins dealt in Coal Oil Johnny soap-lie bought and disposed of soap containing no petroleum, or but a. very small percentage thereof, and, prima facie, the finding is justified that the parties did not contemplate the manufacture of a soap-in which petroleum was an important ingredient.

It is true that Jenkins testifies that Grant, in the fall of 1895, had furnished him a sample of soap containing a considerable quantity of petroleum, which proved very satisfactory, and that he insisted that the soap to be made under the contract should be in accordance with Grant’s formula, and contain what he calls “ a commercial amount of petroleum.” Grant’s relation to the transaction thus-becomes material, and, in fact, furnishes a complete answer to this contention. He was Jenkins’ agent to supervise the output of soap from the plaintiff’s factory. As Jenkins himself says : “ 1 said that without Mr. Grant’s supervising the factory and taking full charge-of it, as he was a practical soap man, I would not sign a contract., * * * If he would not be retained to look after .the crude oils, and the sodas, and the petroleum, and the machinery, and to have-absolute charge of the business, I would not sign it.” The plaintiff' supplements this by abundant evidence that, though not employed by it, Grant was constantly present at the factory, supervising the manufacture of the soap. That Grant was receiving from Pitcher & Martin a royalty for services already rendered in no way disturbs the inference from these facts that he was the defendants’ representative, authorized to pass upon and approve the quality of the soap.

The plaintiff shows quite conclusively that the soap which it delivered to Jenkins was approved by Grant. He had little or nothing to do with the actual process of manufacture, but he saw it when made, and commended it, and it was sent to Jenkins with his authority. It is evident that all objections originated with Jenkins, not with Grant. Beginning, apparently, with a letter written September 16, 1896, Jenkins commenced to complain of the soap because it did not contain a sufficient quantity of petroleum. He assigns two reasons — the necessity of protecting his trade mark, and the necessity of protecting and increasing his trade. It is quite evident that the first reason is the true one. He had become involved in difficulties with other soap dealers, and was threatened with prosecution for failing to have his soap conform to his filed statement. This is the reason which he himself assigned for his position when Pitcher called upon him after the letter of September sixteenth, and it was evidently what actuated him principally in writing that letter. His own testimony reinforces that of Pratt, plaintiff’s operator, who says that Grant told him to put just enough petroleum in the soap to satisfy Jenkins. It is plain that Grant was satisfied with the soap, and it is a fair inference that Jenkins (despite some unsatisfactory evidence as to loss of custom) was merely endeavoring to protect his trade mark. But the plaintiff was not bound to manufacture in accordance with this trade mark, which had been departed from for months when his assignors made their agreement. It fulfilled its whole duty when it made what Jenkins had for years been receiving as such, and what Jenkins’ agent, Grant, was satisfied to accept.

The alleged breach, which we have considered, is the only one which Jenkins assigned as a reason for terminating the contract. The others now urged may be briefly disposed of. It is said that the plaintiff’s plant was not a proper Coal Oil Johnny plant. What has been said is a sufficient answer. If the soap furnished complied with the contract, the plant must have been sufficient. We need only add that the trial judge would have been amply justified in finding that a plant like the plaintiff’s, ostensibly made for the manufacture of “Petrolia” and “Balm of Gilead” soap, was competent to make “Coal Oil Johnny” also.

It is said that the plaintiff’s plant could not make 400 boxes of soap a day. The evidence tends to show that, although the plant had turned out as many as 400 boxes in a day, yet that it could not do so day in and day out without certain additions. But the necessity for these additions never arose ; and we think that the plaintiff substantially fulfilled its agreement when it built a plant which was adequate for all existing needs, and which, when it became necessary, might readily have been put into shape to manufacture the full quantity of soap specified in the contract.

The contract did not so lack mutuality as to prevent its enforcement in equity. There was a plainly implied covenant on the plaintiff’s part to furnish to the defendants the soap necessary in their business up to the limit of capacity of the plant contracted for. The defendants could obviously not buy the soap unless the }fiaintiff supplied it for sale; and, where performance by one party to a contract presupposes the doing of some act by the other, a covenant on the part of the latter is implied, for the breach of which there may be a rescission or an action for damages. (Mansfield v. N. Y. C. & H. R. R. R. Co., 102 N. Y. 205.)

There is no other valid objection to an action for specific performance. The plaintiff should not be remitted to an action at law for many reasons. It is sufficient to mention the insolvency of the defendant Jenkins (of which there was adequate proof), which always justifies the assumption of jurisdiction by equity (Lindsay v. Jackson, 2 Paige, 581); and that otherwise a multiplicity of actions will be necessary as continuing breaches occur. This case is not like Fargo v. N. Y. & N. E. R. R. Co. (3 Misc. Rep. 205), and the cases there cited. It was there said: “ The contract is exceedingly comprehensive, and * * * its working details are most minute. These details almost invariably provide for special and varying contingencies, and the elements of discretion and judgment with regard to such contingencies abound. It is apparent that the -due execution of such a contract must involve the ascertainment of what it is right and proper that the parties should' do from day to day with regard to ever-varying circumstances.” There is here no multiplicity of agreements, applicable to a variety of contingencies, and calling for the exercise of discretion; but a single covenant to purchase. The precise scope and meaning of the agreement are beyond doubt. It is no objection to an injunction that it looks to the future, and prescribes or forbids a course of conduct. In fact, equity is frequently invoked to prevent a succession of acts merely in order to avoid the necessity of suing at law upon each.

It is contended that the complaint should have been dismissed as to the defendant Jenkins, at least. This contention is based upon an allegation in the complaint that he made'the contract in suit “ in his own name, but in fact as agent for and on behalf of ” the defendant corporation. If the complaint had also stated that he disclosed his principal, and assumed to act for him, there might, perhaps, be force in the argument. Without such disclosures, however, it is plain that Mr. Jenkins is personally liable. The proof, with which the allegations of the complaint in no way conflict, shows that the plaintiff's assignors and officers did not know of the existence of the company till some time after the contract was executed.

It is said that Mr. Jenkins had no authority to execute the agreement of June 19, 1896, in behalf of the defendant corporation. The evidence tends strongly to show that he was, in truth, the sole proprietor of the company-—-that it was merely a name under which he did business. He disputes this, however, and we need not consider the evidence in detail. What does appear conclusively is, that he was in complete and absolute control of the affairs of the corporation. It performed no acts, except through him and his immediate employees and subordinates. Ordinary rules and presumptions have no application to such a case. Doubtless the president of a corporation has not usually power, in the ordinary course of business, to execute such an agreement. But where a corporation constitutes its president its universal agent, it is bound by any act of his —• at least by all such as are within the corporate powers. "It is said that this agreement was ultra vires, because the certificate of incorporation states that “ the objects for which the company is formed are to manufacture soaps and oils and to sell the same.” We think that a fair construction of these words permits the corporation to sell soaps other than those of its own manufacture. If otherwise, however, the facts show such laches on the part of the shareholders as must now estop them from setting up this defense.

Judgment was properly rendered against the defendants jointly and severally. The defendant Jenkins was personally liable under the original contract, and he was never released from this liability. The effect of the second agreement was to give to the plaintiff’s assignors the benefit of the additional liability of the defendant corporation.

It is said that the judgment is too broad, since it absolutely en joins the defendants from breaking their covenant, regardless of what the plaintiff may do. It is doubtful whether anything in the judgment would estop the defendants, in case of a future breach by the plaintiff ; but for the sake of clearness and certainty the judgment should be modified, so as to provide that the injunction is conditional upon the plaintiff’s performance of its obligations under the contract. As thus modified it should be affirmed, with costs to the plaintiff.

Rumsey and O'Brien, JJ., concurred; Van Brunt, P. J., and Ingraham, J., dissented.