Before WATERMAN, MOORE and SMITH, Circuit Judges.
Harry M. Perrin, a Pennsylvania food broker, brought this contract action in the United States District Court for the Southern District of New York against defendant-appellant, a New York manufacturer of dog food products. Federal jurisdiction was grounded upon a diversity of citizenship. Perrin claimed loss of prospective profits resulting from his discharge in breach of an alleged oral agreement under which he was to represent defendant in western Pennsylvania as long as both parties remained in business. After a trial by jury and the denial of defendant's timely motion for a directed verdict, judgment was entered upon a verdict for the plaintiff in the amount of $45,000.
Defendant appeals, claiming error in the denial of his motion for a directed verdict on the grounds that (1) the alleged agreement was void and unenforceable under the New York statute of frauds, and (2) the evidence failed to establish a contract between the parties other than one at will. Defendant further maintains that in any event a new trial is required as there was no foundation in the evidence upon which the jury could have assessed the damages it awarded plaintiff for loss of prospective profits. We hold that the judgment must be reversed and we remand for a new trial.
The facts of the case are somewhat obscure, and are vigorously disputed. Plaintiff, a lawyer, testified at trial that he had been in the food brokerage business in Pittsburgh, Pa. and had known the defendant Pearlstein since 1935. In 1938 or 1939, plaintiff testified, Pearlstein telephoned plaintiff from New York to discuss with plaintiff the will of Pearlstein's father-in-law, a will that plaintiff had drawn. Defendant allegedly stated: "Well, Harry, remember, as long as I am in the dog food business and you are in the food brokerage business, you are always going to represent me." Plaintiff claims to have responded: "I appreciate what you have done for me, and I am glad to hear you say what you did, that I will always represent you in the dog food business."
No written memorandum of this alleged telephone conversation and agreement was ever made.
Thereafter, plaintiff acted as sales representative in an area of Western Pennsylvania for the dog food products of the Lar-Dan Packing Company, a New York partnership composed of the defendant Pearlstein and one Larry Baff.
In 1943 or 1944, the Lar-Dan partnership was dissolved when Mr. Baff withdrew in order to form a competing company. Some time after the dissolution, Pearlstein formed a new partnership, the Re-Dan Packing Company, for the manufacture of dog food; and, at that time, according to plaintiff's testimony, Pearlstein again telephoned him and said:
"Harry, I want you to represent our firm, Re-Dan Packing Company, and I don't want you to represent the firm that Larry Baff is forming." "If you do that, I will assure you once again as long as I am in the dog food business and you are in the food brokerage business you are going to represent me."
Plaintiff allegedly responded:
"Dan, that is enough for me. Then I agree to that and I will continue to represent you as long as I am in the brokerage business."
Again, no written memorandum was made of alleged agreement, but plaintiff represented Re-Dan until 1956 when he was discharged and another broker was appointed for the Western Pennsylvania area. It is agreed that plaintiff received all brokerage commissions earned by him up to the time of his discharge.
Defendant flatly denies that either of the conversations testified to by Perrin took place. Perrin's initial employment, defendant testified, was arranged by conversations between the parties in New York in 1936 or 1937. Defendant further claims that the contract was for an indefinite term, leaving Pearlstein free to discharge the plaintiff at will or after a reasonable period of time after the formation of the agreement.
Our first inquiry is directed to an examination of whether the alleged agreement is an enforceable one. In his instructions to the jury, the trial ...