Argued at Charlotte Amalie February 11, 1952.
STALEY, Circuit Judge.
Prior to November 16, 1950, defendant corporation, Downing and Bellows Company, Ltd., conducted a wholesale and retail liquor business in Charlotte Amalie, St. Thomas, Virgin Islands. On the above date, defendant corporation sold its retail business to plaintiff Frank Stoner in accordance with a written contract entered into between the parties. The two actions which are the subject of these appeals both arise out of this sale.
The contract of sale with which we are concerned consists of an offer dated September 6, 1950, made by Frank Stoner to Charles Bellows as president of defendant
The pertinent portions of the contract are as follows:
The first action (herein called contract action) is brought by plaintiffs Frank Stoner and Irene Stoner
The second action (herein called tort action) is brought by Frank Stoner against Charles Bellows and Doris Bellows and is based on fraudulent misrepresentation (appeal at No. 10,561). The trial court reserved decision on defendants' motion to dismiss the complaint in this action until a hearing on the merits. Both actions were then tried together to the court without a jury, although the record does not reveal that a formal order of consolidation was entered. After trial, the court granted defendants' motion to dismiss the complaint in the tort action. In the contract action the court rendered findings of fact and conclusions of law. The judgment entered in that action enjoined plaintiffs from competing with defendants in the wholesale liquor business in the Virgin Islands and likewise enjoined defendant corporation from competing at retail in the Virgin Islands. Plaintiffs were enjoined from doing business under the name Stoner and Bellows "unless such business is organized as a corporation or limited partnership and the name clearly shows such form of organization, or unless the name is so styled or used in any other manner or form that will guarantee no liability in the use thereof on the part of either Charles Bellows or Downing and Bellows Company, Ltd."
Contract Action (No. 10,560)
Since the sale was consummated, plaintiffs
Plaintiffs' right to use the name Bellows is not clearly set forth in the contract.
We think the court erred in entering an injunction against plaintiffs restraining them from making sales at wholesale in the Virgin Islands. Defendants did not request such relief in their counterclaim nor is there any evidence in the record that plaintiffs had violated their agreement not to compete at wholesale. This part of the court's judgment in No. 10,560 must be reversed.
A third contention advanced by plaintiffs is that the district court erred in its interpretation of Section 1(a) of the contract. This section provides that the inventory is to be purchased by Stoner at the corporation's cost or wholesale price. Plaintiffs urge that this must be interpreted to mean cost or wholesale, whichever is lower. Since the meaning of the expression is unclear, we must consider the surrounding circumstances and the situation of each of the parties in an effort to give effect to their intention. The only reasonable
In their complaint plaintiffs seek damages for breach of contract, and the case was tried below on that theory. In this court for the first time plaintiffs now present a brand new theory and a request for a new kind of relief. They ask this court to "cancel" the entire contract with the exception of that portion dealing with the sale of the inventory and fixtures. Their object, of course, is to be relieved of the continuing obligation to pay agreed percentages of their gross sales to defendant corporation. (Paragraph 4 of the contract.) While plaintiffs have not conceptualized their new theory, the relief they now request is really in the nature of a declaratory judgment discharging them from any liability for failure to pay the agreed percentages of gross sales because of an alleged failure of consideration on the part of defendants. See 5 Williston on Contracts § 1454 A, p. 4063 (Rev.Ed.). In addition, plaintiffs assert that the contract (with the exception of those portions dealing with the sale of the inventory and fixtures) is unenforceable because of uncertainty.
We think that, except in an extraordinary case, an appellant should not be allowed to demand a new kind of relief based on a theory not asserted below. See Hormel v. Helvering, 1941, 312 U.S. 552, 556, 61 S.Ct. 719, 85 L.Ed. 1037; Eliscu v. Fiber, 3 Cir., 1946, 157 F.2d 136, 140. Since we must review the record de novo in this appeal,
Tort Action (No. 10,561)
The tort action brought by plaintiff Frank Stoner is one for fraud and deceit and is based on the assertion that defendants Charles Bellows and Doris Bellows knowingly misrepresented the volume of gross profits and net profits of defendant corporation's retail business prior to the sale to plaintiffs. The opinion of the judge of the district court carefully analyzed the evidence on this point. We think he was correct in concluding that not only were the representations accurate, but also that plaintiffs did not rely on them in so far as net profits are concerned.
After the trial, the court, on motion of defendants, entered an order "dismissing the complaint" with prejudice, holding that there was no evidence of fraud or misrepresentation in support of the allegations of the complaint. While it was not so denominated, we view the court's order as in substance an entry of judgment for defendants on plaintiff's complaint. Although the court did not render formal findings, adequate findings are set forth in the opinion of the court.
The judgment in No. 10,560 (contract action) will be reversed in so far as it enjoins plaintiffs from selling liquor at wholesale in the Virgin Islands in competition with Downing and Bellows Company, Ltd. In all other respects, the judgment will be affirmed.
In No. 10,561 (tort action), in order to clarify the record, the cause will be remanded with instructions to enter judgment for defendants on plaintiff's complaint.