KOELSCH, Circuit Judge.
In 1953, Standard Oil Company of California entered into a consignment contract with Clyde A. Perkins, Lee G. Powell and the Harris Oil and Distributing Companies.
In 1956 a new contract was executed which "terminated and superseded" the 1953 contract. After operating under the 1956 agreement for two years, Perkins terminated his relations with his co-consignees and Standard. In 1959 he then commenced an action in the Superior Court of the State of Washington against Standard, seeking damages for breach of contract. The action was predicated on Standard's refusal to provide Perkins with products for distribution in the Yakima area.
Alleging diversity of citizenship between the parties, Standard sought and obtained removal of the action to Federal District Court.
Standard then moved to dismiss the action on the ground that diversity jurisdiction was lost, since Perkins and Powell were both citizens of Washington. The district court thereupon realigned Powell and the Harris Companies as parties plaintiff to preserve diversity jurisdiction, and denied the motion to dismiss, 29 F.R.D. 16. The cause was then tried to a jury, which rendered a substantial verdict in favor of Perkins.
Standard moved for judgment notwithstanding the verdict and for a new trial; after these motions were denied and judgment was entered Standard appealed. Thereafter Standard filed a motion in the district court for relief from judgment pursuant to Rule 60(b).
We reject Standard's threshold contention that diversity jurisdiction was lacking. In substance, it is Standard's view that Powell is an indispensable party; that his interests are "adverse" to Perkins, requiring his alignment as a defendant; and that proper alignment would destroy diversity among the parties. These same arguments were presented to the district court, which realigned the parties upon an examination of their "real and true interests." Perkins v. Standard Oil Co. of California, 29 F.R.D. 16 (D.C.Or.1961).
Nothing before us demonstrates that Powell was asserting an interest in the claim; nor do we find that Powell's position was "adverse" to that of Perkins in the sense that required him to be made a party defendant. To say that Powell did not agree with Perkins that an action should have been brought, is not to say that he occupied the position of a defendant having an immediate stake in the suit. We believe the district court's realignment finds support in these cases. See Poole v. West Point Butter and Cheese Ass'n, 30 F. 513 (C.C.Neb. 1887) Appeal Dismissed, 140 U.S. 694, 11 S.Ct. 1026, 35 L.Ed. 600; Cf. Federal Mining and Smelting Co. v. Bunker Hill & Sullivan M. & C. Co., 187 F. 474 (D.C. Ida.1909); Henley v. Protective Life Ins. Co., 95 F.Supp. 988 (D.C.Miss.1951).
We need pause only briefly to deal with Standard's contention that the jury erred in determining that the Yakima area was included as part of the marketing territory allotted to Perkins
Two procedural issues are raised, the proper resolution of which, Standard contends, operate to bar this action. Neither, in our estimation, has compelling merit.
In the first, Standard argues that Perkins' failure to comply with a contractual provision requiring him to give Standard notice of any claim of breach precludes his action. The contract provides "In the event of any breach by Standard of any provision of this agreement, consignee shall give Standard written notice of any such breach and Standard shall have five days within which to comply with the provisions breached. If said breach is not corrected within said five-day period, consignee may, at its option, terminate this agreement by giving Standard 25 days' notice thereof in writing."
Nowhere in the agreement is notice made an express condition precedent to suit. And a court will not imply that a covenant is a condition unless it clearly appears the parties so intended it, particularly when the limitation period provided by the contract is very short. It bears emphasis that we here deal with a so-called "adhesion" contract prepared by Standard.
Moreover, as Professor Merrill has stated in his text:
In short, to accord the contractual provision the effect contended for by Standard would be neither warranted by the express language of the contract nor by sound considerations of policy.
So it is likewise with the contention that the 1956 agreement which "terminated and superseded" the agreement sued on would thus divest plaintiff's cause of action. Parties may of course
We are of the view that when rights are created not by the contract itself, but vest as an incident of its breach, it takes language more explicit than a general expression of intent to terminate and supersede the terms of the earlier contract to divest them. See 5A Corbin, Contracts § 1236 at pp. 534, 538-40 (1964). Reduced to its simplest terms, the contrary rule contended for would make a provision to "terminate and supersede" an implied release. And an implied release premised on general and equivocal language should not and will not be lightly inferred. We are not inclined to sanction what could become "traps for the unwary," particularly when, as here, an adhesion contract is involved. See generally, 45 Am.Jur., Release § 26 (1943).
The crucial question in the case involves the interworking of the so-called "going business" rule of damages with the effect of the parol evidence rule. Standard points out that unless plaintiff operated a going business there can be no valid evidence of damage because his loss is too speculative and not reasonably certain. See Buck v. Mueller, 221 Or. 271, 351 P.2d 61, 66-67 (1960); Putnam v. Lower, 236 F.2d 561, 571-572 (9th Cir. 1956). Standard acknowledges that there is an exception to this rule, where the plaintiff has been given an exclusive agency within a territory and the defendant has breached the agreement by permitting another to sell products within the same territory.
As to whether the Perkins agency was in fact exclusive, the jury's determination that it was must be sustained if supported by substantial evidence. Although the record shows that Perkins recognized that the strict letter of the contract permitted Standard to supply other jobbers in the territory, it also shows that Perkins vigorously objected when Standard did so. This tends to corroborate the testimony of Allen Perkins with regard to the limited meaning attached by Standard to the contract language. He testified that:
This testimony was also corroborated, in a measure, by A. P. Johnson, former head of Standard's jobber department. When asked whether it was Standard's policy to "have a single jobber in a single area, with rare exceptions" he responded that "It was good business for us to keep them segregated as much as we possibly could." And a long time Standard employee, who had been a vice president in charge of marketing, E. J. McClanahan, testified that: "We wanted them to be able to handle their business without competing with another jobber that we were supplying. So, generally, we try to give them a field and let them work there without another jobber interfering with their operations." He did, however, say there were exceptions to this policy, but indicated there were relatively few instances where there was overlap between jobbers (about six out of 17-20). But it was never more than an implication, and one which the jury is presumed to have considered, that Perkins was such an exception.
It remains, however, to determine whether the parol evidence rule operates to exclude the evidence recited above. Standard strenuously contends that it does. Perkins, no less strenuously, contends that it does not and claims to fall within virtually every known exception to the parol evidence rule.
Examination of the consignment agreement reveals no facial ambiguity warranting resort to extrinsic evidence, for paragraph 3 clearly provides: "Consignee is authorized to sell products hereunder on a non-exclusive basis. * * *" The question then is whether courts are confined to the four corners of the instrument in ascertaining the existence of ambiguity or whether they may explore the surrounding facts and circumstances, including customs in the trade, to determine the parties' intent. The answer, as we shall see, is founded on the policy underlying modern day applications of the rule.
Although it is often said that an instrument unambiguous on its face permits of no extrinsic evidence, and dicta in at least one case
Quoted with approval in Walsh v. Walsh, 18 Cal.2d 439, 116 P.2d 62, 65 (1941).
Considerations underlying the parol evidence rule are fully consistent with our view that extrinsic evidence is admissible in the circumstances disclosed. Wigmore tells us that the parol evidence rule had its genesis in the reluctance of early day judges to permit illiterate jurors to rely on oral testimony at variance with the writing of the contract itself. Accordingly, a rule of absolute exclusion subject to the control of the court, was formulated. See 9 Wigmore, Evidence § 2461 at p. 188 (1940). As the law developed, it became apparent that absolute certainty could not always be found in even seemingly clear language, and the consequence of over rigid application of the parol evidence rule was often to defeat the intentions of the parties. Therefore, a growing number of extrinsic facts and circumstances were admitted into evidence if the "open sesame" of ambiguity was first established. As long ago as 1890, Justice Bowen warned against making facial ambiguity a touchstone conditioning admissibility of extrinsic evidence. Alliteratively, he viewed the single plain meaning rule less as a "command of construction" than as a "counsel of caution." See In re Jodrell, 44 Ch.D. 590; 9 Wigmore, Evidence § 2462 at p. 193 (1940).
Today, mechanical application of the single plain meaning rule should be resisted; paramount consideration should be given the modern rationale and purpose of the parol evidence rule to provide reasonable stability to the meaning of words used by parties in their contracts. Ibid. This is but a variant of and wholly comports with the court's first duty of effectuating the parties' mutual intention. See Arbogast v. Pilot Rock Lumber Co., 215 Or. 579, 336 P.2d 329, 331, 72 A.L. R.2d 712 (1959). And here it seems clear that the parties' usage of the term "nonexclusive" was intended to have the meaning, "exclusive except for Standard." That is what the jury impliedly found and what the evidence indicated. In short, the real issue here, and one that must be resolved against Standard, is not so much what a ritualistic interpretation of the contract language might indicate, but what the parties intended their contract to mean.
Over objection from Standard, the District Court admitted as evidence bearing on the issue of damages:
Several considerations support the decision of the District Court to admit the evidence. "[I]t is to be borne in mind that the mere fact that damages may not be exactly calculated is not sufficient reason for disallowing them." Cross v. Harris, 230 Or. 398, 370 P.2d 703, 707-708 (1962). A necessary corollary is that there is "* * * no objection to placing before the jury all the facts and circumstances * * * having a tendency to show damages and their probable amounts so as to enable them to make the most intelligent and probable estimate that the nature of the case will permit." Turner v. Jackson, 139 Or. 539, 4 P.2d 925, 11 P.2d 1048, 1053 (1932). The reason for permitting such evidence rests on the fundamental proposition that no man may be permitted to profit from his own wrong. "Since defendant made it impossible for plaintiff to realize any profits, it cannot complain if the probable profits are of necessity estimated." National Soda Products Co. v. City of Los Angeles, 23 Cal.2d 193, 143 P.2d 12, 17 (1943). Professor Corbin states the consequence well:
5 Corbin, Contracts § 1022 at pp. 142-146 (1964). Thus, once a foundation of reasonable comparability was shown,
Standard also objects that Perkins' claim for expenses in connection with preparation for a move into the Yakima area was improperly submitted to the jury. Standard contends that it was not apprised of this claim, contrary to the mandate of Rule 9(g) F.R.Civ.P.
It is clear, however, the jury award was based on loss of profits, a theory totally incompatible with an award based on a claim for "out of pocket" expenses, such as the one disputed here. Moreover, the court clearly instructed the jury:
No prejudice could or did befall Standard. We do not, therefore, reach the question of whether this item of expense was improperly submitted to the jury.
It is Standard's contention that the real party in interest in this case was Perkins Oil Company, a closely held corporation owned by Perkins, his son and his nephew. Standard argues that Perkins brought the suit as an individual and was not in fact an assignee of the Perkins Oil Company when this action was commenced. If, however, Perkins sued as an assignee of the corporation, he may of course recover on the corporate claim.
(a) To begin at the beginning, Standard sharply disputes the jury's factual determination that the claim had
(b) Whether Perkins' failure to plead or otherwise inform Standard of the assignment prior to trial will defeat his action must be answered by determining if Standard probably suffered prejudice because of a lack of notice. We do not perceive that any resulted, or could have resulted, here. In reality, the claims of the Perkins Corporation, a corporation almost solely owned by Perkins, were those of Perkins himself. In these circumstances, notice of the substantive claim is sufficient; the status of the party bringing it is immaterial. Cf. New York C. & H. R. R. Co. v. Kinney, 260 U.S. 340, 43 S.Ct. 122, 67 L.Ed. 294 (1922).
Standard specifies as prejudicial misconduct requiring a new trial six instances where counsel for Perkins, in the presence of the jury offered gratuitous observations that suggested Standard was a malevolent Goliath and Perkins a righteous David.
Such conduct is not to be condoned and certainly should not be rewarded. But to warrant a reversal, the flavor of misconduct must sufficiently permeate an entire proceeding to provide conviction that the jury was influenced by passion and prejudice in reaching its verdict. In this trial, as protracted and complex as it was, we cannot attach enough significance to any of the matters or all of them collectively to conclude with any degree of assurance that the verdict was tainted.
Standard next attacks an instruction given by the court on the issue of mistake. The instruction reads:
The error asserted is the double negative which, it is contended, was confusing and contradictory to the jury.
While it is the judge's duty to adequately and clearly instruct the jury on the law of the case, counsel likewise shares some responsibility and his failure to make timely objection to an instruction, proposed or given and to "* * * distinctly [point out] the matter to which he objects and the grounds of his objection," precludes a party's appeal on that point, unless the error is plain and prejudicial. Rule 51, F.R.Civ.P. Here counsel for Standard did not make such an objection. And although the instruction is less than a model of clarity, prejudice is not apparent. Moreover, the court, in concluding its instructions, clarified the earlier statement saying "If you find from a preponderance of all the evidence in the case that it was never mutually understood between the parties that Perkins should have the Yakima area, and that the inclusion of the Yakima area on the map was through inadvertence of the person who prepared it, then that would end plaintiff's claim for damages and your verdict would have to be for the defendant * * *"
Standard's final point relates to their counterclaim against Perkins. It is based on Perkins' alleged failure to return or pay for consigned products in his possession at the termination of the 1956 contract. Examination of the record dealing with this aspect of the case reveals vagueness and uncertainty surrounding the claim. The issue was submitted to the jury, and its implied finding against Standard is fully supported by the evidence.
There being no reversible error, the judgment is affirmed.
DUNIWAY, Circuit Judge (concurring).
I concur in the decision of the Court and in all of the opinion of my brother Koelsch, except Part VII relating to the assignments from Perkins Oil Company to Perkins. In my opinion, it does not lie in the mouth of Standard to assert in this breach of contract case that Perkins Oil Company, rather than Perkins, is the real party in interest. The contract was between Standard and Perkins. By its own terms, it was not assignable without Standard's consent. No assignment was ever made by Perkins, nor would Standard consent to any such assignment. Standard dealt only with Perkins. Consequently, I think it immaterial whether the purported assignment is valid, and that we ought not to decide that question in this case.