Court Opinion

ID: 6748536
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:03:52.635581+00
Date Added: 2024-06-11T16:02:10.782038
License: Public Domain

DISSENTING OPINION
By MORGAN, J.
(Dissenting)
In this case the Municipal Court of Cleveland rendered .judgment for the plaintiff in the sum of $4,000.00 from which judgment the defendant appeals. All of the facts in Ghe case were stipulated by the parties.
On January 31, 1944, the plaintiff appellee entered into a contract of employment with the defendant doing business as George S. May Company, by which the plaintiff agreed to enter into the service of the defendant in securing clients for him in his business of management and industrial engineering.
The contract between the parties provided:
ti* * « * $
1. (a) This contract of employment may be terminated by either of the parties hereto upon giving to the other party not less than seven days of written notice of the intention to cancel this agreement, provided, however, that the restrictive covenants herein contained which are binding upon Employee, shall be effective for the period of time and in the territory hereinafter set forth.
a. The Employer agrees to pay the Employee commissions and bonuses as follows:
(a) a drawing account, applicable against commissions earned of $30.00 per-week.
*585(b) $25.00 where the Client sold has less than fifty (50) factory employees or does less than $250,000 in annual wholesale or retail sales volume.
$50.00 where the Client sold has more than fifty (50) factory employees or does more than $250,000 in annual wholesale or retail sales volume.
(c) In addition to payment due under provisions above, commissions will be paid Employee as shown below on all sums of money billed to. and collected from each individual client personally procured by the Employee; said .comfcnissions to be paid only during the time this agreement remains in full force and effect;
Two percent (2%) on the first $3000.00,
Three percent (3%) from $3000. to $10,000.
Pour percent (4%) from $10,000. to $15,000.
Five percent (5%) from $15,000 up......
JThe contract contained further restrictive provisions by which the plaintiff, as Employee, agreed during the life of the contract or at any time within a period of two years from the date of cancellation or termination of the agreement, not to enter into the employ of another engaged in the same business or to. become interested on his own account in such a business.
The plaintiff continued active in the said employment until December 23, 1944, when he received a letter mailed by the defendant to him, dated December 19, 1944, a copy of which is as follows:
“This it to advise you that we are cancelling your Special Representative Working Agreement dated January 31, 1944, effective date December 16, 1944. This notice is being sent to you after a thorough discussion with your Regional Manager, Mr. G. M. Noonan and your District Manager, Mr. George Matthews, as well as Mr. Moss, the Executive Supervisor.
We regret that our association did not prove to he mutually profitable, and in your particular instance your attitude has been execellent; however, we do have must performance standards, and under the circumstances have no other alternative.
We take this opportunity to wish you the very best of luck for the future and if we are able in any way to assist you in making a new connection do not hesitate to call on us.
*586If you happen to be in Chicago, we will be happy to see you if you care to drop in.
Very truly yours
GEORGE S. MAY COMPANY
(signed) E. B. Mulich
Director of Field Service.”
The defendant by the above letter of December 19, 1944, attempted to cancel plaintiff’s contract of employment “effective date December 16, 1944.” It is obvious that the attempt to cancel the contract as of December 16, 1944, three days before the date of the letter of the cancellation, was not effective as the contract required that seven days written notice of the intention to cancel be given to the other party.
It was stipulated by the parties that prior to December 23, 1944, the plaintiff had procured for defendant certain clients and among them were the Cleveland Trencher Company and the Buckeye Brass Company. These clients were procured by plaintiff for the defendant “many weeks prior to December 23, 1944, and upon whose payments plaintiff received commissions prior to Dec. 15, 1944.” As to what commission plaintiff had received on these accounts prior to December 15, 1944, was not stipulated.
It was stipulated by the parties, paragraph 6:
“That subsequent to December 15, 1944, and up to and including the period of time covered by the third amended petition the defendant made additional collections from said clients in the sum of $79,000.00 no part of which was ever paid to the plaintiff.” The third amended petition was filed on October 5, 1945. It is fair to assume that in fixing his price for his services to clients the defendant would include a 5% commission as a cost item. The effect of the reversal of this case is to enable the defendant to escape the payment of commissions to anyone on said $79,'000.00 of business received from clients produced by plaintiff, and to give the defendant the amount of such commissions as an additional profit.
If there had been no cancellation of this contract by the defendant, the plaintiff would have been clearly entitled to this commission without any further effort on his part. Under the contract he had earned his 5% commission when he procured the clients for the defendant.
The majority of this court consider themselves bound by •the express- terms of the contract that the commissions were “to be paid only during the time this agreement remains in *587full force and effect.” Inasmuch as the $79,000.00 from clients produced by plaintiff was collected after the defendant had cancelled the contract, the majority of the court have concluded that no commissions are. payable and that plaintiff’s claim is otherwise without merit. With this conclusion I do not agree for the following reasons:
The petition in this case contains three causes of action. The first seeks damages for a breach of contract; the second sounds in tort; and the third is based on quantum meruit. We shall consider them in order.
The contract between the parties clearly and explicitly states -that “commissions will be paid employees * * * on all sums of money billed to and collected from each individual client personally procured by the employee.” It is stipulated that $79,000 was billed to and collected from clients personally procured by plaintiff when an employee and that the plaintiff has received no commissions thereon. The plaintiff maintains that the intent of the clause immediately following, “said commissions to be paid only during the time this agreement remains in full force and effect” is not to deprive the employee of the commissions given him in the preceding sentence but to make certain that the employee would have no claim based on collections from clients with whom employee might have negotiated but who were not actually signed up and “procured” until after the agreement ceased to be in full force and effect.
Although this may seem to be a forced construction, reputable courts have sustained such a construction in similar cases.
In Brewer v Singer Sewing Machine Co. 93 S. W. 755, the supreme court of Arkansas permitted the recovery by the agent of commissions on collections made after his principal had terminated the employment although the contract contained provisions that the agreement could be terminated at the pleasure of either party and that all claims for commissions should “cease immediately upon the termination of this agreement.” The court said:
“It is the duty of courts when the contracts are fairly susceptible of more than one construction, to adopt such as will not work a forfeiture of the acquired rights of either party H: * * * *
While the cardinal rule for construction of contracts is to arrive at the real intention of the parties, if possible, yet where that intention is doubtful, or obscure, a construction *588should be adopted by the courts which is most fair and reasonable and which will impose the least hardship upon either of the contracting parties. Applying this solitary rule of construction, we think the trial-court properly interpreted the contract and allowed a recovery for commissions.”
See also: Braun v Consolidated Electric Lamp Co. 245 Wis. 170.
There is a second ground on which the judgment in this case should be affirmed. It is based on the second cause of action. The applicable principles of law are well stated in Restatement of the Law of Agency, Vol. 2, Sec. 454 as follows:
“An agent to whom the principal has made a revocable offer of compensation if he accomplishes a specified result is entitled to the promised amount if the principal in order to avoid payment of it, revokes the offer and thereafter the result is accomplished, the agent’s prior efforts being the effective cause thereof.”
In the comment following the above section 454, it is said in the Restatement of the Law of Agency:
“If, however, the agent would lose all compensation, if the principal were to terminate the employment, and if the agent is on the verge of success and, but for the aleatory element in the transaction, he would be entitled to practically full compensation for his services, the rule stated in this section is necessary in order to prevent sharp dealing. Under such conditions, if the principal attempts to revoke his offer to the agent, intending thereby to take the benefits of the agent’s services without paying for them, he acts in bad faith and if he thus acts, specific reparation is afforded the agent by disregarding the revocation and determining his right to the promised compensation as though no revocation had been made.”
In defendant’s letter of Dec. 19, 1944, when the defendant first informed plaintiff of its intention to terminate the latter’s contract of employment, the only reason given for the termination of the contract is as follows:
“We regret that our association did not prove to be mutually profitable and in your particular instance your attitude has been excellent. However we do have must performance *589standards and under the circumstances have no other alternative.”
As to what defendant’s “must performance standards” are the record is wholly silent. There is no reference to such standards in the contract and it is admitted in the stipulation of facts in this case, paragraph 10 “that plaintiff has not been informed by the defendant of minimum or ‘must’ standards of employment or production.” On the contrary the stipulation of' facts provides (paragraph 3):
“That pursuant to said agreement, the plaintiff entered into the employ of defendant and complied with all provisions of the agreement incumbent upon him to perform.”
The provisions of the agreement incumbent upon plaintiff to perform and which the stipulation of facts in this case shows that plaintiff complied with all of them, are as follows:
“Employee agrees that during the term of his employment he will devote his entire time and attention and give his best efforts and skill as a salesman exclusively to the business and in and about the interests of employer, and will perform such services in and about the business of employer as may from time to time be assigned to him and will in all respects do his utmost to enhance and develop the best interests and welfare of employer and its business.”
According to the stipulation of facts in this case plaintiff performed all of the said provisions.
That the reason for terminating the contract was not dissatisfaction with plaintiff’s services is shown by a paragraph in defendant’s letter dated January 11, 1945, to plaintiff as follows:
“I might add further, that Lloyd Smith was asking about you when in the Chicago office last week and I took the opportunity to heartily recommend your services to the New York office and I understand you have done some negotiating in this respect.”
If the defendant had some good reason for terminating its contract with plaintiff for Cleveland, defendant would not so soon have “heartily recommended” plaintiff for employment in the New York office.
*590The conclusion is irresistible that the termination of the contract by defendant was in bad faith and therefore should not deprive plaintiff of his claim for commission, under the principles set forth in the above Section 454 of the Restatement of the Law of Agency and in the following cases:
Watkins Co. v Rich, 254 Mich. 82
Studner v Carburetor Co. Inc. 172 N. Y. Supp. 836
Coleman v Michigan Mutual Life Ins Co. 100 S. W. 122
There is still a third ground for the affirmance of the judgment in this case. The third cause of action sought a recovery on the basis of quantum meruit. As already stated the result of the reversal of the judgment in this case is to save the defendant the 5% commission which under the contract It was to pay plaintiff for clients procured by him and which amount undoubtedly had entered into, defendant’s costs and had been covered in the amount to be paid by clients for defendant’s services. The defendant would be unjustly enriched by the amount of this additional profit secured from clients produced by plaintiff and on this ground alone plaintiff should be permitted to recover the reasonable value of his services even if he is not permitted to recover on the contract.
Section 457 of the Restatement of the Law of Agency states:
' “A principal for whom an agent has performed services in accordance with a voidable contract which is avoided by one of the parties or for whom an agent or purported agent has performed services without a promise by the principal to pay, is subject to liability to the agent to the extent that he has been unjustly enriched by such services.”
In 3 Corpus Juris Secundum, 88, it is stated:
“On the other Jband, in .the absence of an agreement to the contrary in the agency contract, a revocation of authority will not be allowed to work injury to the agent with reference to what he has already done under the appointment añd where an agency, terminable at the will of the principal, is revoked by him without any fault on the part of the agent, the agent is ordinarily entitled to commissions or salary already earned at the time of his discharge, or to a reasonable compensation for his services rendered before that time.”
In the case of Aetna Ins. Co. v. Nexsen, 84 Ind. 347 in an action by an agent for the amount agreed to be paid to *591him on renewal premium, which, however, were collected after his employment had been terminated, the court said at page 349:
“It may be true, as appellant asserts, that it had a right to dismiss the appellee at any time, and yet a right of action still exists. It would exist, beyond all question, for the commission upon the premiums collected prior to the dismissal, and, in our opinion, is not restricted to such commissions. The services of the agent in securing policies, upon which future premiums would in the ordinary course of business be received by the appellant, were of valué and that value should be paid to the agent. The service rendered by the agent gave him some claim for compensation, although the payment' of the premium would not be paid until some time in the future.”
The commission agreed to be paid the plaintiff in the absence of other evidence to the contrary, would also represent the reasonable compensation for his services so that as bearing on the amount of plaintiff’s recovery it is immaterial whether this amount is based on a breach of contract or on quantum meruit.
I conclude that even if the view of the majority of this court as to the proper construction of the contract is accepted the’ plaintiff is still entitled to the judgment. This record presents a case of the unjust enrichment of the defendant. The defendant has been enriched to the extent of the 5% commission, which unless the plaintiff is permitted to recover in this action, the defendant has saved for himself by terminating plaintiff’s employment. That this enrichment is unjust is shown by the statements and admissions stipulated in the record hereinabove set forth showing that the termination of plaintiff’s employment was for no good reason and in bad faith.
For the above reasons I dissent from the judgment of reversal in this case.