Interstate Plywood Sales Company, a Corporation v. Interstate Container Corporation, a Corporation

Appellee Interstate Container Corp. (referred to hereafter as “Container Corp.”), a producer of Digger pine veneer, desired to enter the plywood manufacturing business. In order to do so Container Corp. needed to install machinery to manufacture finished plywood from the veneer material it was then producing. To this end it entered into a contract with appellant Interstate Plywood Sales Co. (hereafter referred to as “Sales Co.”) on October 31, 1955, wherein Sales Co., a seller of plywood, undertook to supply the necessary machinery to Container Corp. on credit, and to loan funds to Container Corp. to enable it to enter the plywood business.

The contract provided that Sales Co. was to have

The contract contemplated that Sales Co. would exercise its option to buy plywood if and when it had firm orders from its customers for the purchase of a quantity of plywood. In the event that Sales Co. was unable to market the entire 95% of production it was to inform Container Corp. of the portion it did not intend to option. Container Corp. would then be free to sell that part of its output through brokers or its own sales organization. Sales Co. was to be, in effect, the exclusive…