Case Name: E. Porter Fraker, Appellant, v. A. G. Hyde & Sons, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-12-03
Citations: 135 A.D. 64
Docket Number: 
Parties: E. Porter Fraker, Appellant, v. A. G. Hyde & Sons, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 135
Pages: 64–66

Head Matter:
E. Porter Fraker, Appellant, v. A. G. Hyde & Sons, Respondent.
First Department,
December 3, 1909.
Master and servant — contract to pay percentage of net profits in addition to salary — contract not void for indefiniteness.
■ Where the contract of a corporation, evidenced by resolution of its board of directors, promises to an employee in addition to a salary a certain percentage of'.the net profits of the business after allowing for the annual dividend, the • contract is not void for indefiniteness- in that the resolution did not determine what dividends should be paid before ascertaining the net profits.
A recovery by the promisee cannot be defeated upon the ground that the corporation failed to declare a dividend, or because. the net profits of the business could not be ascertained until the end of the business year. '
Appeal by the plaintiff, E. Porter Eraker, from a judgment of the Supreme Court in favor of the defendant, entered in the office .of the clerk of the county of Hew York on' the 12th day of March, • 1909, upon the dismissal of- the complaint by direction of. the court' after a trial at the HewYor.lt Trial Term, arid also from an order entered in said clerk’s office on the 23d day of March, 1909, denying the plaintiff’s" motion for' a new ' trial made upon the minutes. -
John J. Lenehan, for the appellant.
James J. Allen, for the respondent.

Opinion:
Ingraham, J.:
This case was. before this court on a former appeal, where a.judgment dismissing the complaint was reversed-and a new.trial ordered. ' (127 App. Div. 620.) The facts are stated in that opinion arid it is not necessary to restate, them. We there held -that the resolution of the board of- directors providing for the employment- and compensation of the plaintiff was-evidence of the. contract, áhd that under that agreement the plaintiff Was entitled to receive from the defendant, in- addition to the $10,000 a year as treasurer, seven per cent of the net profits, and the plaintiff having performed the contract, was. entitled to receive the amount so provided. The' plaintiff had been in the employ of the" defendant several years prior to'the'year 1905. • He had received during these years an annual salary, and for the .year 1904 bad, under a resolution of the board of directors- passed February twenty-third of that year, in addition to his salary six and seventy-five or¡e-hundredtlis per cent of the profits of the business. On January 9, 1905, there was an agreement signed by the defendant corporation by its president employing the plaintiff for the term of one year from January 1,1905, to December 31,1905, at a salary \ of $1.0,000 a year, payable -semi-annually, it being understood that either party could annul the contract by giving* thirty days' notice in writing to the other party. At a meeting of the* board of directors of March 4,-1905, it was resolved " that -the Board of Directors apportion to the following named gentlemen the specified percentage of net profits of the business for the year 1905, after allowing -for the annual dividend, set opposite their respective names: -x- E. P. Fraker 7 per cent," and at the same meeting the / board of directors fixed the salary of the president at $60,000 and the salary of the other officers-of the company. On the same day a letter was written by the president advising the plaintiff that at a meeting of the board of directors it was decided to apportion to him seven per cent of the net profits of the business of the year 1905, after_a]ln.wing for the dividend of six per cent.
After the parties had rested the defendant moved to dismiss the complaint upon the "ground that the contract of employment was too indefinite, as it provided that the seven per cent was to be computed upon the net profits of the business after the payment of the ^ annual dividend ; that' there was no statement in the resolution as to what dividend should be paid ; that the directors at the end of - the year declared no dividend and that this left the whole contract , indefinite. The court adopted that contention and dismissed the complaint. In this, I think, the court was clearly in error. Under this resolution the plaintiff was to receive, in addition to his salary, seven per cent of the net profits of the business after deducting i from such profits such annual dividend as the company should be I pleased to declare. If the company declared no dividend then there was nothing to deduct from the annual net profits. If the company actually declared the dividend then the dividend so declared was to be deducted from the net profits and the amount of net profits, less such dividend, was to be the amount upon which the plaintiff's percentage was to be calculated. Certainly the defendant could not by refusing to declare a dividend relieve itself from the obligation assumed by it by this resolution. The contract was either definite or indefinite when made. It certainly could not be rendered indefinite by any act of the defendant after the contract was made. There is no doubt as to just what the parties meant and just what obligation the defendant assumed. The company had been in the habit of paying a dividend of six per cent upon its capital stock and agreed to divide among these employees-a certain percentage of the profits óf the company, less such dividend as the directors of' the company should annually declare. If it declared a .dividend that amount was-to be deducted; If it declared none, then each of these employees was entitled to his percentage upon the net profits when deducted. It is quite true that the amount to which the plaintiff would be entitled could not be ascertained until the close of the business year when the net profits would be ascertainable ; but the fact that the amount to which the plaintiff would be entitled could not be ascertained until the completion of the year did not make the contract indefinite; and the -fact as to whether or not there should be net profits being indefinite did not make the contract indefinite by which the defendant obligated itself to pay a percentage of the net profits if such existed. That such was clearly the intention of the corporation appears by the construction that they had given to this resolution by paying to each of the employees named the salary fixed and in addition this percentage of the net profits.
It seems to me clear that there was no ambiguity in the contract. Upon the proof, the plaintiff was clearly entitled to recover seven per cent'of the net profits of the business during the year,'in addition to the salary fixed, and for that amount the plaintiff was entitled to judgment. .
It follows .that the judgment appealed from must be reversed and a new trial ordered, with costs-to the appellant to abide the event.
Patteeson, P. J., McLaughlin, ' Laughlin and Claeke, JJ., concurred.
Judgment reversed, new trial ordered, costs to appellant to abide event.