Source: http://masscases.com/cases/sjc/345/345mass333.html
Timestamp: 2019-04-23 09:54:31+00:00

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JAMES M. DAVIDSON vs. RICHARD S. ROBIE.
CONTRACT. Writ in the Superior Court dated December 19, 1958.
The action was tried before Hudson, J.
James D. St. Clair for the defendant.
CUTTER, J. The declaration in substance alleges an express contract in that Davidson, at Robie's request, rendered service in connection with selling stock of Boston Storage Warehouse Company (Storage), that Robie agreed to pay Davidson "ten per cent . . . of any profit realized by . . . [Robie] from the transaction, and . . . with regard to any sales of stock received by . . . [Robie] in connection with . . . [the] transaction," and that Robie received such a profit but did not account to Davidson. Robie filed a general denial and pleaded the six year statute of limitations. See G. L. c. 260, Section 2 (as amended through St. 1948, c. 274, Section 1). There was a verdict for Davidson of $9,050 taken under leave reserved. Robie saved exceptions to the denial of his motions for a directed verdict and for entry of a verdict under leave reserved. A motion for a new trial was denied upon condition that Davidson remit $750 of the verdict, which he did. To the denial of this motion, also, an exception was saved. The evidence is stated in its aspect most favorable to Davidson.
About 1951 Robie caused Davidson to be employed for six months by a company controlled by Robie. Davidson's salary was $10,000. Robie asked Davidson "to keep his eyes open for deals on the outside. Robie was interested in them and told Davidson he would take care of him."
Robie's company. Robie then owned no stock in Storage. Subsequently Davidson called Robie's attention to other deals, including one relating to Taunton Pearl Works. Robie "had an agreement with . . . [Davidson] to pay him a commission with respect to the Taunton Pearl Works . . . but [claimed that] he had no such agreement" as to Storage. The Taunton Pearl Works deal was put in writing (see fn. 1, infra) at Robie's suggestion. There was "no written agreement . . . [about] the stock of . . . Storage . . . and Robie did not suggest" one.
In 1951, Davidson told Robie that one Babson owned 20% of the stock of Storage and that two other groups could not obtain control because of Babson's interest. Robie, in Davidson's presence, called one Nordblom (who was in one of these groups) and thereafter told Davidson that "Nordblom had agreed to sell his 40% control to Robie. Robie told Davidson that he would make the same deal with him as he had on Taunton Pearl Works." Davidson's recollection was that Robie then proposed as compensation "ten percent of the profit when . . . Robie finally made a profit." [Note 1] Compare the testimony described in fn. 3, infra.
Davidson was aware that "Robie intended to buy all" the stock of Storage. "Davidson was able to have Babson agree to sell" his stock but "had nothing to do with the acquisition of the Nordblom stock." Davidson knew also that Robie was undertaking to purchase all the stock of Storage, that he had made a deposit of $80,000, and that he intended to borrow the balance of the total purchase price of "about a million dollars." Davidson did not assist Robie in getting financing.
of" the then existing Storage corporation (the old company). The deal actually made was one in which Robie became owner of 20% of the stock of a new company. Robie found that he "could not borrow . . . the money necessary to complete the purchase. Rather than lose his deposit he employed . . . [one] Harber to help him find a purchaser for all the shares." Harber "introduced Robie to Messrs. Berdon and Levine," who formed a new corporation (the new company) in May, 1952, to acquire the stock of the old company. The new company "made a tender to all shareholders of the old company to purchase their stock" and eventually acquired all the stock of the old company which was then dissolved. Robie transferred to the new company all his rights to purchase stock in the old company and received back $55,000 of his $80,000 deposit and a 20% stock interest in the new company.
Except for the $25,000 (not returned from the $80,000 deposit) "Berdon and Levine . . . put up all of the money (for the old company stock) . . . approximately $975,000." Davidson "did not bring Berdon and Levine to Robie" and "never talked to . . . Harber." He did talk "with Berdon and Levine before they put money in and explained the warehouse to them and its future possibilities."
money in and explained the . . . possibilities." [Note 5] The indefinite arrangement discussed in the testimony called at most for preliminary investigation by Davidson of possible business ventures, and a disclosure of them to Robie which, if profitable, would give rise to compensation in the nature of a commission, or, perhaps what is sometimes called a "finder's fee," to be paid "to one who brings to . . . [the promisor] a deal out of which he makes money." See Cray, McFawn & Co. v. Hegarty, Conroy & Co. Inc. 27 F. Supp. 93, 97, fn. 1 (S. D. N. Y.) [Note 6] affd. per cur. 109 F. 2d 443 (2d Cir.).
about the Taunton Pearl Works arrangement (see fn. 1, supra).
Even upon this imprecise and scanty evidence (and the evidence of Robie's subsequent conduct), we think the jury were warranted in concluding, at least by reference to the Taunton Pearl Works letter, (1) that Robie asked Davidson to put "deals" before him for consideration and gave Davidson the reasonable expectation that he would be paid for doing so (see Williston, Contracts [3d ed.] Section 36); (2) that, when the Storage deal was mentioned to Robie, he agreed to pay Davidson "ten percent of the profit" from sale of the interest which Robie might acquire in Storage (see fn. 1), to be measured by the "difference between the sale price and the purchase price plus all expenses"; (3) that Robie indicated by his conduct that he expected to carry on negotiations himself (see Bloomberg v. Greylock Bdcst. Co. 342 Mass. 542, 546-547; see also Kuffler v. List, 144 F. Supp. 776, 778-779 [S. D. N. Y.]) and required no further services from Davidson by way of negotiation or otherwise; and (4) that the compensation was to be payable with respect to any profitable sale transaction reasonably and proximately growing out of the Storage proposal brought to Robie by Davidson. See Corleto v. Prudential Ins. Co. 320 Mass. 612, 616-617; Morad v. Haddad, 329 Mass. 730, 734-735; Seckendorff v. Halsey, Stuart & Co. 259 N. Y. 353, 356-357. See also Bloomberg v. Greylock Bdcst. Co. 342 Mass. 542, 547-548, 550.
in any event, were oral and nebulous with respect to a substantial matter as to which careful business people would be likely to make some written agreement, as was done in the Taunton Pearl Works matter. The seemingly unsubstantial services to be performed by Davidson were only sketchily defined. This unusual type of oral arrangement as the cases already cited (see fn. 6, supra) indicate, is unquestionably susceptible of misstatement and exaggeration and can lead to unwarranted claims. All these and other circumstances, however, go only to the weight and reliability of the testimony, matters for the jury, and to the reasonableness of the various permissible inferences to be drawn from it.
2. Robie contends that his acquisition of Babson's 20% holding of shares in the old company was the only effect produced by Davidson's efforts to which the alleged contract for compensation related. This stock was sold to the new company and Berdon and Levine not later than June, 1952 (see fn. 2, supra), more than six years before this action was commenced on December 19, 1958, and thus, Robie says, any claim for compensation was barred by the statute of limitations.
as the completion of the whole Storage transaction) when Robie clearly "finally made a profit," than in 1952 when he received 20% of the shares of the new company, of uncertain value. There is nothing in the circumstances that would permit us to rule as matter of law that the profit was realized in 1952. The jury could reasonably have concluded that the amount of compensation was not determined until the 1957 sale.
3. Robie argues that the trial judge erred in permitting the verdict to stand because its amount is inconsistent with all the evidence about the profit made by Robie, even taking into account the $750 remittitur. There is no serious dispute about the evidence relating to the amount of profit (see fn. 2, supra). On the basis most favorable to the plaintiff, the cost of Robie's interest in the new company was $25,000. Davidson knew that Harber had been paid $7,500, which we regard as clearly a proper deduction from the gross profit on the sale. Without the financing by Berdon and Levine, obtained by Harber, the deal might have been unprofitable. There was no testimony indicating that Robie received any other price than $103,750 for his 20% of the stock in the new company. Robie's profit at most could be found to be $71,250.
the verdict (April 20, 1961) interest upon $7,125 should have been awarded. The verdict computed in accordance with the principles already stated would have been somewhat less than the verdict, as reduced by the remittitur, of $8,300.
There is no occasion for a retrial merely because the remittitur did not reduce the verdict sufficiently. The amount of the verdict is to be recomputed in the Superior Court in accordance with this opinion and judgment is to be entered (see G. L. [Ter. Ed.] c. 235, Section 8) upon the verdict as so recomputed. See Salter v. Leventhal, 337 Mass. 679, 700. See also G. L. c. 231, Sections 124, 127 (as amended through St. 1945, c. 578, Section 1).
4. The exceptions are overruled, subject, however, to recomputation in the Superior Court of the amount of the verdict in accordance with this opinion.
[Note 1] There was in evidence a letter to Robie, relating to the Taunton Pearl Works deal, signed by Davidson (and signed also, "Agreed Richard S. Robie") dated January 23, 1952, describing the proposed transaction. It concluded, "in the event of your sale of the . . . Pearl Works . . . whether the sale is through the sale of your stock or otherwise, I am to receive ten per cent of the profit. In estimating the profit we agree that it shall be the difference between the sale price and the purchase price plus all expenses."
[Note 2] An exhibit showed the profit on the transaction in 250 shares of the new company stock to have been computed as follows:-- Date of sale -- January 21, 1957.
[Note 3] No claim for a commission on the Taunton Pearl Works deal was ever made because on that a loss was suffered. Although Davidson claimed (1) that Robie with respect to the Storage deal had promised him "the same kind of deal as the Taunton Pearl [Works]" and (2) that in the Taunton Pearl Works situation he was "to get 10% of the operating profits . . . if any, and 10% of the profits realized from the sale of Robie's share[s] . . . when . . . sold," Davidson in his testimony did not claim 10% of the operating profits of old Storage.
[Note 4] Other cases include Burke v. Campbell, 258 Mass. 153, 155-156, Adhesive Prod. Co. v. Ridderstrom, 270 Mass. 485, 489-490, and Caggiano v. Marchegiano, 327 Mass. 574, 580. Cf. Weiner v. Pictorial Paper Package Corp. 303 Mass. 123, 131-133.
[Note 5] He does not seem to have intended to associate himself with Robie as a joint adventurer or to incur any exposure to loss himself. Cf. Cardullo v. Landau, 329 Mass. 5, 8; Williston, Contracts (3d ed.) Sections 318-319C; annotation, 138 A. L. R. 968. Cf. also Fitch v. Ingalls, 271 Mass. 121, 125.
[Note 6] In the Cray, McFawn & Co. case, Judge Woolsey quoted, with approval, Berle, Cases and Materials on Corporation Finance, p. 602, "The finder's commission is a fruitful subject of dispute. It is often not agreed on in advance, though good practice would suggest this . . .." See Palmer v. Wahler, 133 Cal. App. 2d 705, 709-710; Jackson v. New Orleans Bd. of Trade, 207 La. 571, 583-584; Towers v. Doroshaw, 5 Misc. 2d (N. Y.) 241, 248-252, and cases cited. In the Towers case the court (at p. 249) points out that, with respect to an alleged agreement, not reduced to writing "to pay compensation to a `finder' for the disclosure of a name alone, without an introduction or negotiations leading to an eventual transaction," it is incumbent on a plaintiff to establish the contract "by evidence of a quality and quantity sufficient to satisfy the court of a clear and unequivocal intention by the defendant to pay for the mere disclosure." The resemblances and differences between a "finder" and a broker are illustrated in Shaffer v. Beinhorn, 190 Cal. 569, 573-574, McKenna v. Edwards, 19 Cal. App. 2d 327, 331, Crofoot v. Spivak, 113 Cal. App. 2d 146, 148, Freeman v. Jergins, 125 Cal. App. 2d 536, 547 et seq., and Kuffler v. List, 144 F. Supp. 776, 778-779 (S. D. N. Y.). See also Lindeman v. Textron, Inc. 229 F. 2d 273, 274-275 (2d Cir.), S. C. 143 F. Supp. 955 (S. D. N. Y.); Bittner v. American-Marietta Co. 162 F. Supp. 486, 488-489 (E. D. Ill.); Wells v. Dent, 4 App. Div. 2d (N. Y.) 307, 308-309; Corson v. Keane, 4 N. J. 221, 225-227.
[Note 7] See also Cochrane v. Forbes, 267 Mass. 417, 420; Crowley v. Boston, 342 Mass. 344, 350; Bright v. American Felt Co. 343 Mass. 334, 336; Corbin, Contracts, Sections 1046, 1048. Cf. H. D. Foss & Co. Inc. v. Whidden, 254 Mass. 146, 151-152.

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