Kiddie Rides, Inc., a Colorado Corporation v. Southland Engineering, Inc., a California Corporation

This is an appeal from a judgment in a case involving the interpretation of a contract. The jurisdiction of the District Court rested upon the provisions of 28 U.S.C. § 1332 (1964), and that of our court derives from 28 U.S.C. § 1291 (1964).

Appellee, Southland Engineering, Inc. is a California corporation engaged in the manufacture of children’s mechanical rides. One of its products is an elaborate coin-in-the-slot horse ride called a Western Trails Traveling Pony. It is designed so that a youngster, after depositing a coin, may mount a saddled model of a pony and ride around a ten-foot oval track, behind corral-type fences, for a period of time. On December 27, 1960, Southland entered into a written agreement with Palomino Trails Co., a partnership, whereby Palomino acquired exclusive franchise rights to sell the ride in the states of Texas, Louisiana, Oklahoma and Arkansas. It was agreed that Palomino should pay to Southland $25,-000 as deposit on the purchase of 100 units. The deposit was to be returned to Palomino by giving it credit at the rate of $250 per unit as delivered. Palomino sold only twenty units, and after allowing the agreed credits on these sales, the sum of…