No. 20987.United States Court of Appeals, Second Circuit.
November 9, 1948.
Appeal from the United States District Court for the Eastern District of New York.
Proceeding by Maurice D. Astor and others, doing business as a limited partnership under the name of Union Products Manufacturing Company, for reorganization under Bankruptcy Act, § 301 et seq. 11 U.S.C.A. § 701 et seq., wherein Joseph L. Abrams filed a claim for damages for breach of contract. From an order expunging such claim, claimant appeals.
Maurice D. Astor and two other individuals, doing business as a limited partnership under the name of Union Products Manufacturing Company, filed their petition for reorganization under Chap. XI of the Bankruptcy Act in the District Court for the Eastern District of New York. In the course of the proceedings thus begun, the appellant filed two claims against the debtors. One for unpaid commissions was allowed in part, and no appeal has been taken from that order. One for $13,000.00 damages for breach of contract was expunged, and the claimant has appealed.
The appellant was engaged by the debtors as their agent in 1945 to sell, on a commission basis and to jobbers only, merchandise manufactured by them. On November 26, 1946 the agreement was executed in writing in the form now controlling. Appellant was to pay his own expenses and to have as his exclusive sales territory the New England states and the state of New York. It was a part of the agreement that it could be cancelled by the debtors at any time within one month after the appellant failed to procure orders acceptable to them of at least twelve and one half per cent of their gross output for four consecutive months.
The evidence in the record shows that after a period during which the appellant sold in satisfactory volume the amount of his sales dropped greatly and that on March 18, 1947, shortly before the expiration of four consecutive months during which his sales would have failed to equal twelve and one half per cent of the gross output of the debtors, he was called to their office to talk matters over. At that time the situation was discussed by the appellant with at least two of the debtors. It was pointed out by them that his sales had fallen below the required amount necessary to prevent cancellation of the contract at the end of the four month period. He explained that the jobbers in his territory were not buying and that he did not intend for some time to make any more trips in an endeavor to sell to them because he did not believe he could earn enough to pay his expenses. He was asked to sell directly to retailers at jobbers’ prices and was told that the debtors’ affairs were in such condition that it would be necessary for them to try to move their goods in that way. He flatly declined to sell direct to retailers, however, saying that he was too old for that kind of work. There was evidence, which the referee evidently believed, that, when the conversation had reached an impasse as above outlined, one of the debtors said to appellant, “Mr. Abrams, you leave us no alternative but (to) get somebody else who can and will sell to dealers” and that the appellant replied, “I wish you the best of luck; I cannot sell to dealers because it doesn’t pay me. If you can get somebody
else to sell dealers you go your way and I will go my way, there will be no hard feeling.” The interview was then ended and the parties had no further communication with each other until on March 24, 1947 the debtors wrote him as follows: “This is to confirm notice given you at our conference on March 18, 1947 that our agreement with you as our selling agent is cancelled and terminated as of that date.”
The petition for reorganization having been filed after this, and the appellant having filed his claim for damages for breach of contract, the matter was heard before the referee. He found and reported to the district judge that the appellant told the debtors on March 18, 1947 “that he was quitting his agency and that the contract was terminated” and that the debtors confirmed that and cancelled the agency contract as of March 18, 1947 by letter as above quoted. The district judge confirmed the findings and sustained the orders of the referee, which in effect allowed the claimant his unpaid commissions on the sales he had made but no damages for any breach of the contract.
Louis Jacobus, of New York City, for appellant.
David Romanoff, and Bernard R. Selkowe, both of New York City, for appellees.
Before L. HAND, Chief Judge, and SWAN and CHASE, Circuit Judges.
CHASE, Circuit Judge.
On an appeal like this, where the issue of breach of contract must be resolved largely on the oral testimony of witnesses heard by a referee whose findings were accepted by the district judge, there must be an absence of any supporting testimony or something inherently improbable in the testimony relied on to support the findings before we can say that they are “clearly erroneous.” Unless we can come to that conclusion the findings are to be given effect, as we have many times held. In re Lawrence, 2 Cir., 134 F. 843; In re Oriel, 2 Cir., 23 F.2d 409; Oneida Valley Nat. Bank v. Balish, 2 Cir., 130 F.2d 255; Morris Plan Industrial Bank v. Henderson, 2 Cir., 131 F.2d 975; Michelsen v. Penney, 2 Cir., 135 F.2d 409; Mergenthaler v. Dailey, 2 Cir., 136 F.2d 182; In re Caplan, 2 Cir., 149 F.2d 731.
In this instance there is some evidence that the claimant told the debtors, in effect, that he was, indeed, “quitting his agency,” as the referee found. While appellant did not use those exact words, what he did say could in its setting reasonably be so construed. After the parties had discussed the debtors’ need to have sales made directly to retailers, and the appellant had declined the suggestion that he so sell, he wished the debtors the best of luck and said, “If you can get somebody else to sell to dealers you go your way and I will go mine, there will be no hard feeling.” This is not the language one would expect from a man who was insisting upon having the terms of his existing contract carried out but that of one who was offering to bring it to an end by mutual agreement. The letter the debtors wrote him a few days later shows their acceptance and supports the finding of the referee to that effect. Thereafter both parties were relieved of their obligations in futuro under the contract and the disallowance of the claim was correct. Coletti v. Knox Hat Co., 252 N.Y. 468, 169 N.E. 648; Eames Vacuum Brake Co. v. Prosser, 157 N.Y. 289, 51 N.E. 986; Savage Arms Corp. v. United States, 266 U.S. 217, 45 S.Ct. 30, 69 L.Ed. 253; Benward v. Automobile Ins. Co., D.C., 60 F. Supp. 995 affirmed, 2 Cir., 155 F.2d 521; Rest. Contracts §§ 406, 407; Williston, Contracts § 1826.