Court Opinion

ID: 6475415
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:37:06.707248+00
Date Added: 2024-06-11T15:53:57.600323
License: Public Domain

WINDES, Justice
(dissenting).
Regretfully I am compelled to disagree with my associates in the decision reached herein. The problem presented herein is clear-cut and comparatively simple. It is merely a determination of what the contracting parties intended when plaintiff was employed by the defendant and they agreed that plaintiff’s compensation was to be as follows:
“Upon motion duly made and seconded, the salary of John L. McAtee is fixed at $600 per month plus 10% of the first $80,000 of the earnings of the earnings of the company each year; the $600 per month to be paid monthly and the 10% of the earnings to be paid on the 15th day of January following the close of the year; provided, that in the event of the death or termination of employment, the total amount of the monthly salary and, per cent of earnings shall become immediately due and payable.” (Emphasis supplied.)
*194This contract provides for the payment of compensation in addition to salary of 10 per cent of the first $80,000 earned each year; ' The opinion correctly construes this to mean 10 per cent each year oil'all 'earniilgs up'to $80,000. The contract also provides that this annual 10 per cent is to be paid on January 15th, provided that if the employment terminates this percentage shall become immediately payable.
In order to interpret this contract it is imperative that we determine what the parties intended when they stated that if the contract is terminated before January 15th, the percentage should become immediately payable. We cannot do this correctly without applying the law that defines the purpose of a proviso following a general provision in a contract. It is universally the law, and so far as I have been able to discover never disputed, that the purpose and reason for such a proviso is to restrict, limit or qualify a prior provision to which it is applicable. It conditionally defeats or avoids the obligation formerly provided. 17 C.J.S., Contracts, § 343; Sears v. Childs, 309 Mass. 337, 35 N.E.2d 663, 667. In this case the Massachusetts court expresses the purpose very clearly in the following language:
“The word ‘provided’ in common speech naturally expresses a qualification, limitation, condition, or an exception respecting the scope and operation of words previously used. ‘Although a proviso in statutes, contracts or wills not infrequently introduces new or independent matter, its true office and its general purpose is to restrict the sense or make clear the meaning of that which has gone before.’ Attorney General v. [City of] Methuen, 236 Mass. 564, 573, 129 N.E. 662, 665”.
Applied here the proviso that in the event of termination of the employment the percentage shall be immediately payable limits and qualifies the preceding provision that the percentage is not payable until January 15th of each year. The payable date of January 15th becomes inoperative and is defeated and avoided upon the happening of the condition set forth in the proviso to-wit: termination of employment. By the proviso the payable date of January 15th of each year is conditionally modified and applies only to conditions wherein the employment is not terminated. I have been unable to find any authority that this is not the true function of a proviso. The majority opinion ascribes to the proviso a function and purpose diametrically opposed to the true function as announced by all courts. In other words, the majority refuses to allow the proviso to operate as the law directs. Their refusal to allow immediate payment of any percentage (as is expressly provided therein) gives an effect which would require the proviso to read as follows:
*195“ * * * provided in the event of termination nothing shall 'be payable until the following January 15th but the amount ultimately found to be due shall draw interest (at some unknown rate) from the date of termination.”
Thus, it is plain not only no qualifying, limiting or restrictive effect on the preceding provisions of the contract is given the proviso, but the court has struck the provision therein for immediate payment, thereby limiting the proviso itself rather than the prior provision to which it is applicable, and thereby giving it the reverse effect to that which the law requires. In addition, the court has added an interest provision which I am sure never occurred to the contracting parties. To me this amounts to the interpretation of a court made contract.
I interpret the majority as an expression of the opinion that there is an irreconcilable .conflict between the provisions of the proviso and the preceding provisions of the contract. A proviso is not intended to harmonize with the provisions of the contract to which it applies. We must assume the parties intended no such conflict. Should there be irreconcilable differences, the provisions in the proviso will be considered as a more likely expression of the intention of the parties. Sears v. Childs, supra. In any event, there is no irreconcilable repugnancy here.
One of the reasons stated for not giving the effect the law requires to the provision is that its provisions are incapable of execution for lack of certainty. This is another way of saying that the provision for immediate payment is void for -uncertainty. The contract withoüt the provision requires payment of the percentage on the first $80,000 payable on January 15th. With the proviso it requires immediate payment of a percentage on some basis. I find no difficulty in finding a base from which to calculate this percentage. The only possible base would be the profits at the time of termination. I think, in the absence of evidence concerning the intention of the parties as to what this base should be, it would of necessity be the profits at the time of termination. However, if there should exist in some minds uncertainty on this point, such has been completely eliminated by the evidence submitted at the trial. There was evidence to the effect that upon the termination of the plaintiff’s employment, the president of the defendant corporation caused to be posted in the books a credit to the account of the plaintiff of an amount equal to 10 per cent of the profits at the time of termination. It likewise appears that in settling the partnership affairs of the president of the corporation and the plaintiff, this item was used as a liability of the corporation. The plaintiff, the president and one of the members of the board of directors of the defendant are the ones who made the contract of employment with the plaintiff. From this evidence the *196trial court had a right to conclude that the parties by their conduct interpreted the contract to mean that the base to be used in calculating the percentage payable at the time of termination was the profits accrued at that time. When it was expressly stipulated that some amount was payable on the date of termination and all we are asked to determine is what amount, certainly the method used by the defendants- in calculating the amount is of substantially compelling force and certainly takes it out of the category of being void for uncertainty. The rule is simply and clearly stated in 12 Am.Jur., Contracts, section 249, as follows:
“In the determination of the meaning of an indefinite or ambiguous contract, the interpretation placed upon the contract by the parties themselves is to be considered by the court and is entitled to great, if not controlling, influence in ascertaining their understanding of its terms.”
The majority brushes this important evidence aside and gives it no effect upon the asserted ground it was immaterial because the president of the corporation had no authority to interpret the contract for the corporation. Frankly, it is difficult for me to follow such reasoning. This contract was made by officers of the corporation constituting its board of directors. The intention of the officers must of necessity be the intention of the corporation. Consequently, when the identical officers who negotiated the contract say by their conduct, while still acting for the corporation, what their intention was when the contract was made, they are telling us what the corporation intended at the time the contract was negotiated.
In my view, it was very important and should control, and when the effect is given the proviso which the basic law requires, either with or without the evidence of the parties as to interpretation, the trial court arrived at the only reasonable or legal conclusion and its judgment should be affirmed.