Rubinger v. International Telephone & Telegraph Corp. (310 F.2d 552, 1962)

LUMBARD, Chief Judge'.

This is an appeal from a judgment of the United States District Court for the Southern District of New York, 193 F. Supp. 711 (1961), entered in two actions consolidated below. In No. 27205, the plaintiffs appeal from the dismissal of their complaint. In No. 27234, the defendants appeal from an award to plaintiffs in the amount of certain commissions claimed to be due them under an agreement between the parties. Jurisdiction is based on diversity of citizenship; the parties have stipulated that New York law is applicable. We affirm the judgment in No. 27205. We agree that the judgment as to the first order in No. 27234 should be affirmed. Judge Moore agrees with Judge Hays’ view, stated in a separate opinion, that the judgment as to the second order should likewise be affirmed. As to this, I dissent, and state my reasons therefor later in this opinion.

Early in 1956, the plaintiffs, David Rubinger and William McAllister, entered into discussions with the defendant, International Telephone & Telegraph Corporation, concerning a merchandising arrangement for the Capehart-Farns-worth Company, a separate division of the defendant, which manufactured such products as radios, television sets, and phonographs. On March 15, 1956, Cape-hart entered into an agreement, effective as of March 8, with the Rubinger-Mc-Allister Corporation, established by the plaintiffs for that purpose, whereby Ru-binger-McAllister became Capehart’s regional merchandiser for the New York City area. The contract, titled “Regional Merchandiser’s Agreement,” gave Ru-binger-McAllister an “exclusive franchise” to merchandise most of the Cape-hart. products in the territory covered. Rubinger-McAllister agreed to devote its best efforts “to the promotion of the sale and use of the Capehart products * * * and to the marketing thereof through retail dealers directly franchised by the Company”; to maintain and stock a showroom for the display of Capehart products; to maintain an office and pay its own business expenses; to employ a sales force which would call on retailers at frequent intervals; to supervise retailers’ service facilities; to solicit retailers and recommend them to Capehart for a franchise; and generally to assist Capehart in its local business. Capehart agreed to make shipment on all orders received directly from retailers or transmitted by Rubinger-McAllister and accepted by Capehart subject to the usual exceptions for war, strikes, etc. It retained the right “to allocate and allot its production, sales and shipments in such manner as it shall deem best”; in addition, it was privileged to “make shipments in part or no shipment against any order of the Regional Merchandiser