Title: Peaseley v. VIRGINIA IRON, COAL AND COKE COMPANY
Citation: 194 S.E.2d 133, 282 N.C. 585
Docket Number: 89
State: north-carolina
Issuer: north-carolina Supreme Court
Date: February 2, 1973

194 S.E.2d 133 (1973)
282 N.C. 585
Mrs. Robert H. PEASELEY, Executrix of the Will of Robert H. Peaseley, Deceased
v.
VIRGINIA IRON, COAL AND COKE COMPANY, a corporation.
No. 89.

Supreme Court of North Carolina.
February 2, 1973.
*138 Helms, Mulliss &amp; Johnston, by E. Osborne Ayscue, Jr., and Fred B. Helms, Charlotte, for defendant appellant.
Blakeney, Alexander &amp; Machen by Whiteford S. Blakeney, Charlotte, for plaintiff appellee.
MOORE, Justice.
The Court of Appeals by its decision on the second appeal affirmed the judgment of the Superior Court, which held the defendant liable for unpaid commissions on sales subsequent to Peaseley's death and prior to the termination of the June 1963 contract. Plaintiff contends that when the Court of Appeals so held and this Court refused to allow certiorari that issue was definitively settled and became the law of the case.
In Hayes v. Wilmington, 243 N.C. 525, 91 S.E.2d 673 (1956), this Court said:
Therefore, when this case was appealed to the Court of Appeals the third time, that court was bound by its determination of the liability issue on the second appeal. The fact that the Court of Appeals was bound by its own decision does not mean, however, that this Court is similarly restricted by reason of its denial of certiorari.
G.S. § 7A-31 provides the statutory authority for discretionary review by the Supreme Court of decisions of the Court of Appeals. This statute reads in pertinent part:
Under this statute this Court is to review only those cases of substantial general or legal importance or in which review is necessary to preserve the integrity of precedent established by this Court. Denial of certiorari does not mean that this Court has determined that the decision of the Court of Appeals is correct. Denial may simply mean that in the opinion of this Court the case does not require further review under the provisions of G.S. § 7A-31 (c). This statute further specifically provides that discretionary review of interlocutory determinations by the Court of Appeals shall be exercised only in unusual cases where failure to do so would cause a delay in final adjudication or which would probably result in substantial harm. Denial in such cases may only mean that this Court has determined that no such harmful result is likely to occur if the petition is denied. In the present case the third appeal to the Court of Appeals is the first appeal taken from a final judgment. Absent such special circumstances as referred to in the statute, this is the first time that discretionary review by this Court has been appropriate under the statute.
Justice Lake in Builders Supplies Co. v. Gainey, 282 N.C. 261, 192 S.E.2d 449 (1972), commented on the effect of the denial of certiorari. In that case the trial court had directed a verdict for the defendant in a case in which plaintiff was seeking to be declared the owner of the right to remove sand and gravel from a certain tract of land. The Court of Appeals reversed and this Court denied certiorari. In its opinion the Court of Appeals called plaintiff's interest an easement. In a second appeal to the Court of Appeals, plaintiff's interest was denominated a profit a pendre, and a jury verdict for defendant was affirmed. *140 This Court allowed certiorari and affirmed the Court of Appeals, but determined that plaintiff's interest was neither an easement nor a profit a pendre. Justice Lake stated: "Such [prior] denial [of certiorari] does not constitute approval of the reasoning upon which the Court of Appeals reached its decision."
In State v. Case, 268 N.C. 330, 150 S.E.2d 509 (1966), this Court considered the effect of the denial of a writ of certiorari. In that case defendant was convicted of forgery. He petitioned for a writ of habeas corpus alleging certain errors in his trial and demanding release from prison. The trial judge ordered a new trial for errors committed in the first trial. Defendant petitioned for certiorari on two grounds. First, he said the judge erred in ordering a new trial which he did not want and had not requested. Second, he said the judge committed error in not ordering him released from prison. Defendant's petition for certiorari was denied by this Court. A new trial was held and defendant entered a plea of double jeopardy. The plea was not allowed, and defendant was convicted. This Court reversed, holding that defendant's plea of former jeopardy should have been allowed. In discussing the effect of the denial of certiorari, Justice Sharp quoted with approval Mr. Justice Frankfurter in Brown v. Allen, 344 U.S. 443, 73 S. Ct. 397, 437, 97 L. Ed. 469 (1952): "The denial of a writ of certiorari imports no expression of opinion upon the merits of the case. . ."
The United States Supreme Court in Hamilton-Brown Shoe Co. v. Wolf Bros. &amp; Co., 240 U.S. 251, 36 S. Ct. 269, 60 L. Ed. 629 (1916), dealt at length with the question of whether a denial of certiorari makes the lower appellate court's decision the final law of the case:
"It is, of course, sufficiently evident that the refusal of an application for this extraordinary writ is in no case equivalent to an affirmance of the decree that is sought to be reviewed. And, although in this instance the interlocutory decision may have been treated as settling `the law of the case' so as to furnish the rule for the guidance of the referee, the district court, and the court of appeals itself upon the second appeal, this court, in now reviewing the final decree by virtue of the writ of certiorari, is called upon to notice and rectify any error that may have occurred in the interlocutory proceedings. [Citations omitted.]"
Accord, Mercer v. Theriot, 377 U.S. 152, 84 S. Ct. 1157, 12 L. Ed. 2d 206 (1964).
As a general rule this Court will consider only those aspects of a decision of the Court of Appeals which are assigned as error in the petition for certiorari and which are preserved by argument or the citation of authority with reference thereto in the brief filed by the petitioner in this Court. In State v. Williams, 274 N.C. 328, 163 S.E.2d 353 (1968), Justice Lake discussed the scope of proper review on a petition for certiorari. In that case defendant was found guilty of robbery by the use of firearms. In his appeal to the Court of Appeals, defendant assigned as error the admission of an identification by the prosecuting *141 witness, the denial of his motion for judgment as of nonsuit, and a specified part of the instructions to the jury. The Court of Appeals affirmed the conviction finding no merit in any of the assignments of error. Defendant petitioned this Court for a writ of certiorari, which was allowed. In his petition and in his brief before this Court, the defendant did not discuss the denial of his motion for judgment as of nonsuit nor the alleged error in the instructions of the trial judge. Under these facts Justice Lake, speaking for the Court, said:
Under our general supervisory power, we could review the entire record, but in the present case defendant in its petition for certiorari to this Court assigned as error decisions of the trial court and of the Court of Appeals throughout the course of the litigation and preserved these assignments by arguments or citation of authorities in its brief filed in this Court. Under these facts we hold that the previous denials of certiorari do not constitute approval of either the reasoning or the merits of the prior decisions of the Court of Appeals. On the present petition this Court may review the entire proceedings and consider any errors which have occurred during the course of the litigation provided the parties have taken the proper steps to preserve the questions for appellate review.
The Court of Appeals, by its decision on the second appeal of this case (12 N.C.App. 226, 182 S.E.2d 810 (1971)), affirmed summary judgment entered by Judge Snepp in favor of plaintiff on the question of defendant's liability for commission on coal sold to Mill Power Company under the contract of 1 July 1963 after plaintiff's testate's death. The defendant contends this was error. Defendant has never questioned its obligation to pay Peaseley commission on coal sold and shipped by it to Mill Power prior to Peaseley's death, but insists that the contract of 6 September 1960 was a contract calling for the personal services of Peaseley and as such was terminated by his death. Plaintiff to the contrary contends that Peaseley had performed all the duties required of him by the 1960 commissions contract when the contract of 1 July 1963 was executed, that the sale so far as he was concerned was completed, and that he was entitled to commission on all the coal delivered under that contract.
Obviously, many contracts calling for the services of a salesman are made on the basis of that salesman's personality, experience, contacts, knowledge, industry, and ability. Such attributes are personal to the salesman involved. For that reason courts have held that many contracts of this kind are not assignable by the salesman and do not survive his death, the rationale being that the death of the person who was to perform the personal services makes further performance impossible. Stagg v. Spray Water Power and Land Co., 171 N.C. 583, 89 S.E. 47 (1916); Siler v. Gray, 86 N.C. 566 (1882). Cases from other jurisdictions supporting this proposition include: Neely v. Havana Electric Railway Co., 136 Me. 352, 10 A.2d 358 (1940); Otis v. Adams, 41 Me. 258 (1856); Cutler v. United Shoe Mach. Corp., 274 Mass. 341, 174 N.E. 507 (1931); Rubin v. Siegel, 188 App.Div. 636, 177 N.Y.S. 342 (1919); Folquet *142 v. Woodburn Public Schools, 146 Or. 339, 29 P.2d 554 (1934); George v. Richards, 361 Pa. 278, 64 A.2d 811 (1949); Blakely v. Sousa, 197 Pa. 305, 47 A. 286 (1900); Moran v. Wotola Royalty Corp., 123 S.W.2d 692 (Tex.Civ.App.1938); Kanawha Banking &amp; Trust Co. v. Gilbert, 131 W.Va. 88, 46 S.E.2d 225 (1947). However, in our view these cases are not pertinent to the decision in this case. Prior to the execution of the contract of 6 September 1960 defendant sent a proposed agreement to Peaseley which provided that "Beginning September 1, 1960 Virginia Iron Coal and Coke Company gives to you the exclusive right to offer and sell. . . ." (Emphasis added.) Peaseley refused to accept this contract and returned it to defendant. Thereafter, at Peaseley's insistence the contract was rewritten in its final form to provide that "Beginning September 1, 1960 the Virginia Iron, Coal and Coke Company gives to you or your associates the exclusive right to offer and sell.. . ." (Emphasis added.) Clearly, by the express terms of the contract entered into with complete knowledge of both parties not only Peaseley but his associates had exclusive right to sell defendant's coal.
In construing a contract the primary purpose is to ascertain the intention of the parties. Salem Realty Co. v. Batson, 256 N.C. 298, 123 S.E.2d 744 (1961); 2 Strong, N.C.Index 2d, Contracts § 12, p. 315. In the contract in question the parties made their intentions clear. Peaseley or his associates had the exclusive right to sell defendant's coal. The contract did not provide for the sole personal services of Peaseley. By its terms it included his associates. We hold, therefore, that the contract was not such a personal service contract as would be terminated by Peaseley's death, but that it survived him and could have been carried out by his associates.
The next question which arises is: What, if anything, was Peaseley or his associates required to do under the terms of the contract?
The heart of a contract is the intention of the parties and is to be ascertained from the language used, the subject matter, the end in view, the purpose sought, and the situation of the parties at the time. General custom in the business or trade may be considered in arriving at the intention of the parties, and words of a contract referring to a particular trade will be interpreted by the courts according to their widely accepted trade meaning. Phillips v. Construction Co., 261 N.C. 767, 136 S.E.2d 48 (1964); McAden v. Craig, 222 N.C. 497, 24 S.E.2d 1 (1942); Hughes v. Knott, 138 N.C. 105, 50 S.E. 586 (1905); 2 Strong, N.C. Index 2d, Contracts § 12, p. 315.
The rule is stated in Corbin on Contracts. Ch. 24, § 556, p. 525, as follows:
As stated by Chief Justice Stacy in McAden v. Craig, supra, ". . . (I)t has been held that the general custom in the business or trade may be considered in arriving at the intention of the parties."
The words of the contract "offer and sell" and "to sell this account" refer to the sale of coal by an independent coal broker and will ordinarily be interpreted by the court according to their widely accepted trade meaning. Phillips v. Construction Co., supra. Both parties to the contract in question construed it to mean that Peaseley was to "service" the account.
*143 Mr. F. X. Carroll, president of defendant, testified as to the custom of the trade in connection with coal brokers and as to what Peaseley did under the contract:
Plaintiff's evidence showed that Peaseley performed the following duties under the contracts: He received coal orders each month from Mill Power, each month's orders *144 differing from those of the preceding month, stating the type of coal, the number of carloads and where they were to be placed. He then forwarded these orders to defendant. If defendant could not fulfill the orders, he worked out some agreement with Mill Power to revise them. When defendant needed to overship, he arranged for Mill Power to take the excess coal. When floods or other events necessitated rearrangement or curtailment of shipments, he worked this out with Mill Power. When defendant needed to change the mix of the coal it shipped from various sources, he worked this out with Mill Power. If disagreements arose between Mill Power and defendant about the weight or quality of coal shipped, he dealt with Mill Power about it on defendant's behalf. When price adjustments became necessary because of variations in quality of coal delivered, he negotiated these with Mill Power. When a renegotiation of the basic price formula became necessary, he renegotiated this with Mill Power. These things required immediate attention on a daily basis. When he was absent from the office, his secretary, Mrs. Martha Patterson Byrd, performed these duties. Mrs. Byrd testified that after the 1963 coal contract was executed Peaseley constantly worked on this account, so that in the last two or three years of his life handling the account took most of his time. The Mill Power executive with whom Peaseley dealt testified that when something was wrong Mill Power went to Peaseley and he handled it with the coal supplier and corrected it. All of Mill Power's contacts about defendant's coal were with Peaseley. Defendant never dealt with Mill Power without Peaseley.
In the present case both the parties by their actions over a period of several years construed the contracts to mean that Peaseley was to perform those services an independent coal broker usually performed in the sale of coal; that is, to deal with the customer on a day-to-day basis, handling all the problems that arose under the contract for the sale of defendant's coal to Mill Power.
The best evidence of the intention of the parties to a contract is the practical interpretation given to their contracts by the parties while engaged in their performance. As said by Chief Justice Stacy in Cole v. Fibre Co., 200 N.C. 484, 157 S.E. 857 (1931):
See Commercial Nat. Bank v. Charlotte Supply Co., 226 N.C. 416, 38 S.E.2d 503 (1946); 2 Strong, N.C. Index 2d, Contracts § 12, p. 313.
Adopting the interpretation placed upon the contracts by the parties themselves, we hold that under the terms of the contracts Peaseley or his associates were required to perform the services ordinarily performed by a coal broker in handling all the variables written into the contract and dealing with all the problems which arose under itservices which Peaseley satisfactorily performed until his death.
Martha Patterson Byrd, Peaseley's secretary since 1955, testified at length concerning the desire of herself and Mrs. Peaseley, as associates of R. H. Peaseley, to continue to service the 1963 contract:
In an affidavit taken 8 January 1968 Martha Patterson Byrd testified:
Mr. Carroll, president of defendant, in an affidavit dated 14 January 1971 discussed the action which his company took to find someone to carry out the function that Mr. Peaseley had performed related to the 1963 contract prior to his death:
Defendant employed Mr. Birkhead to handle the problems with Mill Power as Peaseley had previously done. Nothing in the record indicates that Mrs. Peaseley and Mrs. Byrd or associates employed by them could not have continued to perform these services. They were not allowed to do so. The employment of Mr. Birkhead precluded further performance by Peaseley's associates even though Mrs. Byrd had tendered such continued performance.
Defendant's rejection of Mrs. Byrd's offer to perform constituted a breach by defendant of Peaseley's commission contract. ". . . (F)ollowing the consummation of a contract, the plaintiff must show that he offered to perform his part of the agreement, or that such offer was rendered unnecessary by the refusal of the defendant to comply, before an action will lie, either for its breach or for specific performance. . . ." McAden v. Craig, supra. See Seed Co. v. Jennette Bros. Co., 195 N.C. 173, 141 S.E. 542 (1928); Ducker v. Cochrane, 92 N.C. 597 (1885). In the instant case defendant not only rejected the offer of Peaseley's associates to comply with Peaseley's obligations under the contract but by employing Birkhead and assigning to him the duties formerly performed by Peaseley made further performance by Peaseley's associates impossible.
The commission contract of 6 September 1960 specifically provided for performance by "Peaseley or his associates." *147 However, as to the compensation to be paid under the contract it stated: "In consideration for the exclusive right to sell this account, you agree to limit your commission to (10¢) ten cents per net ton. This commission will be paid directly to you by separate remittance on tons actually shipped, determined by railroad weights." Clearly, the compensation was to be paid to Peaseley alone. At his death the right to receive these commissions inured to the benefit of his estate, and his executrix was the proper party to bring this action.
During his lifetime Peaseley paid the expenses of performing his obligations under the contract, and had Peaseley's associates been allowed to continue such performance Peaseley's estate would have been liable for the reasonable expenses incurred by his associates in performing such duties. The amount, then, to be recovered by the plaintiff in this action is the loss of net profits to Peaseley's estate resulting from the wrongful breach of the contract by defendant insofar as they may be determined with reasonable certainty, to the end that the parties may be placed as nearly as possible in the same monetary condition that they would have occupied had the contract not been breached. Rubber Co. v. Distributors, 253 N.C. 459, 117 S.E.2d 479 (1960); 2 Strong, N.C. Index 2d, Contracts § 29, p. 339.
Specifically, the loss of net profits which plaintiff is entitled to recover is ten cents per net ton of coal shipped under the contract of June 1963 from the date of Peaseley's death until the contract was terminated, reduced by such reasonable expenses as would have been incurred by his associates in servicing the contract had they been permitted to do so.
The burden of proof is on plaintiff not only to show the commissions lost as a result of the defendant's breach but also to show the reasonable expenses which Peaseley's associates would have incurred in servicing the contract. The rule is stated in 22 Am.Jur.2d, Damages § 296:
In Tillis v. Cotton Mills and Cotton Mills v. Tillis, 251 N.C. 359, 111 S.E.2d 606 (1959), plaintiff, a carrier, brought suit for breach of his shipping contract with defendant. Plaintiff established only the amount which he would have received under the shipping contract. This Court remanded for a new trial because plaintiff did not show the extent this amount would be reduced by the costs of transporting defendant's goods. Justice Clifton L. Moore, speaking for the Court, said:
See also Haddad v. Western Contracting Co., 76 F. Supp. 987 (D.C.W.Va.1948); Whiting v. Dodd, 39 Ala.App. 80, 94 So.2d *148 411 (1957); Clarkson v. Crawford, 285 Pa. 299, 132 A. 350 (1926).
For the reasons stated, the decision of the Court of Appeals affirming the judgment of the Superior Court of Mecklenburg County adjudging defendant liable to Peaseley's estate for commissions on coal shipped after Peaseley's death and prior to the termination of the contract of June 1963 is affirmed. The decision of the Court of Appeals affirming the judgment of the Superior Court of Mecklenburg County on the issue of damages is reversed, and this case is remanded to the Court of Appeals for the entry by it of a judgment reversing the decision of the Superior Court on the issue of damages and remanding the case to that court for its determination of damages in accordance with this opinion.
Modified and remanded.
HIGGINS, Justice (dissenting).
The pertinent facts in this case are clearly and succinctly stated in the Court's opinion. However, I am unable to agree with certain of the legal conclusions which the Court draws from the facts in evidence. Particularly I disagree with the conclusion that the words "or associates" in the contract give to the administratrix of Mr. Peaseley's estate the legal right to collect for the estate the commissions for sales made and commissions earned after his death.
The record discloses the manifold duties under the contract Mr. Peaseley was obligated to perform in return for a commission of ten cents per ton on all coal delivered by rail from the defendant's mines in West Virginia to the storage bins of the Duke Power Company in Charlotte, North Carolina, for use in the production of electric current. The sales agreement provided that the coal should meet certain tests and specifications as to quality and characteristics, including the moisture content, the ash and sulphur content, the size, softening temperature, and grindability. Deliveries were required at the proper time and in the quantity and quality called for by the purchaser. These requirements demanded the constant attention of the sales broker.
It is to be expected that a contract involving nearly a million tons annually would of necessity generate certain differences between the producer, the transporter, and the consumer. Settling of these differences was the function of Mr. Peaseley. He was an expert in the field. For the year preceding his death he negotiated sales and deliveries of more than 900,000 tons of coal. Did he have "associates" in the operation who were entitled to continue the contract in his name, render the services which he had contracted to render, and as associates are entitled to carry on his contract?
After the oral contract was negotiated, the coal company reduced it to writing and forwarded it to Mr. Peaseley at Charlotte for his approval. The contract provided that for his services in negotiating the sales and in performing the manifold duties involved in the deliveries of coal in the quantity and quality and at the intervals required by the purchaser, he was to receive ten cents per ton. After receiving the written memorandum of the contract, he returned it to the coal company and asked that the words "or associates" be inserted in the contract after his name. The Court says these words "or associates" exempt this contract from the general rule that a contract for personal services terminates at the death of the promissor. "Associates" in a business contract certainly carry the implication that they are in a position to perform the essential obligations required of the named party. "Associates" in a business undertaking mean something more than associates at the bridge table, the cocktail lounge, or the golf course. The added words "or associates" certainly do not imply that Mr. *149 Peaseley had associates in the business at the time. Otherwise, the contract should have said "and associates" and it would have been easy to name them.
There is no evidence in the record that after the contract was entered into, Mr. Peaseley ever selected or included any associates in the operation of the sales agreement. All of the evidence is to the contrary. The evidence discloses that Mr. Peaseley's office force consisted of Mrs. Martha Byrd, his secretary-bookkeeper, and himself. Mrs. Byrd was employed in 1955 and continued to work in the office in the same capacity thereafter. The evidence does not disclose any change in her status. True, she handled many of the details when Mr. Peaseley was absent and continued to do so as she became familiar with the procedures. She has made no claim of her ability, or of the ability of anyone else, to service the contract in such manner as Mr. Peaseley had been able to do. She testified as a witness in this case: ". . . I was asked, if during the years 1956 and up until the time of Mr. Peaseley's death in 1965, whether anybody else assisted him in handling this Mill Power account . . . other than myself. I answered `no', and that is correct."
The evidence further disclosed that Mr. Peaseley had a business telephone in his home and when he was away from Charlotte, Mrs. Peaseley answered the telephone and gave such information as to Mr. Peaseley's whereabouts or the business as she was able to furnish. So that the record discloses that never at any time did any person participate in the business other than Mrs. Byrd and Mrs. Peaseley, and they only to the extent here disclosed. It is a fair question to ask, this being so, why did Mr. Peaseley ask for the insertion of the words "or associates"? I think the record suggests the answer.
Prior to the Second World War, Mr. Peaseley and Mr. Charles J. Stokes operated an incorporated business together. It was not very successful. However, after the war, Mr. Stokes returned, entered business, and occupied an office near Mr. Peaseley in the Johnston Building. Mr. Stokes testified: "During this time I was always in contact with Bob, and, of course, we were always friends. . . . Very close friends. . . . He was my best friend. I would say that I saw him daily during the week. . . . From time to time he showed me his monthly shipments. . ." Mr. Peaseley could well have had in mind an invitation to his former partner, Mr. Stokes, to join him in his contract with the defendant. Mr. Peaseley was able to show that a place with a handsome salary was ready for him. The words "or associates" provided Mr. Peaseley with the right to select associates if he so desired.
As further proof that there were no associates, the record discloses that only Mrs. Byrd and Mrs. Peaseley had any connection whatever with the operation and they make no claim to any rights under the contract. Mrs. Byrd testified as a witness. Mrs. Peaseley brought the suit and claimed that all commissions were earned by her husband and belonged to his estate. There were no associates at the time the contract was entered into; none has joined thereafter; none was present before the court asserting a claim to commissions. "Associates" were straw men or women. There is no need to go through the motion of knocking them down because they have never stood up. Any "associates" entitled to share with Mr. Peaseley in the obligations and in the benefits of this business necessarily would be his partners or his agents. If partners, the survivors would be required by law, G.S. § 59-51, etc. to dissolve and to account. If as agents, the agency would necessarily terminate at the death of the principal.
In this case there is no allegation, no admission, and no finding by the Court that any associate of Mr. Peaseley rendered any service to the Virginia Iron, Coal and Coke Company in connection with the sale *150 and delivery of coal to Duke Power Company after Mr. Peaseley's death. The coal company made no move or acknowledgment that it consented to the continuation by any other person of the work Mr. Peaseley was obligated to do for the company under the contract. Everything indicates the coal company was paying, and well, for Mr. Peaseley's personal services and his know-how.
A contract for personal services of the type required of Mr. Peaseley is not assignable and does not survive his death. Of course, death makes performance impossible. Justice Ruffin many years ago stated the rule which successive cases have followed: "[W]here one party covenanted to serve another . . . the death of either party dissolved the contractsuch being an implied condition, it was said, in every contract for personal services . . . ." Siler v. Gray, 86 N.C. 566.
The decision of the Court does two things: (1) it continues in effect after death a contract for Mr. Peaseley's highly personal services; and (2) it requires the Virginia Iron, Coal and Coke Company to donate hundreds of thousands of dollars to the Peaseley estate. The Court thinks these results were within the contemplation of the parties when they entered into the contract of September 6, 1960. I am compelled to disagree and dissent. I vote to reverse the decision of the Court of Appeals and remand the case to the superior court with directions to dismiss the action.
LAKE, J., joins in this dissenting opinion.