Canaras v. Lift Truck Services, Inc.

O’Donnell, J., delivered the opinion of the Court. The appellant, George T. Cañaras (Cañaras), a Maryland attorney in the full-time employ of the Social Security Administration, brought suit in the Circuit Court for Baltimore County against Lift Truck Services, Inc. (Lift Truck) for breach of a contract of employment whereunder he was to render to Lift Truck services “as a member of its board of directors, as a consultant to the general manager and as an arbitrator”, as well as other part-time professional services and advice. Disappointed that the trial court (Raine, J.), following a non-jury trial, entered a judgment in his favor, for $2,200.00 instead of the $41,448.84 1 he claimed, Cañaras asks us to reverse. We decline to do so. ³⁴⁰ Beginning in about 1965, when Cañaras prepared the incorporation documents, he had from time to time performed part-time legal services for Lift Truck, had “offered business guidance”, participated in meetings, assisted in obtaining a franchise, drafted agreements, had discussed a pension plan, handled some collection matters, and had, in at least one tort litigation, engaged as co-counsel with insurance counsel.

For such services he was paid on a per hour basis, except in collection cases where his compensation was a percentage of the recovery. Lift Truck is a small closely held corporation specializing, as its name connotes, in the servicing and repair of material-handling vehicles. The principals, Messrs. Kenneth M. Gent, president, Frank J. Szumlanski, vice president, and William K. Hufham, Sr., secretary-treasurer, were not only its stockholders, but constituted as well the board of directors.

Each possessed mechanical and technical expertise, but was generally unskilled in business management. In mid-1971, wishing to devote themselves exclusively to the technical aspects of the operation, they discussed the employment of a general manager to run its day to day business operations. The principals had decided upon Leroy W. Applegate, then the sales manager of Lift Truck, to be promoted to general manager. 2 Cañaras testified that such discussions also involved his retention as a consultant to such a general manager and as an arbiter of any potential rifts between the general manager and the principals of Lift Truck. On his own initiative, at a meeting held on December 1, 1971, Cañaras submitted to the principals two proposed contracts of employment — each pre-dated December 1, 1971 — one formalizing the employment of Applegate as general manager and the other proposing his employment.

Cañaras’ contract basically proposed that he be employed on a one year basis, from December 1, 1971 to December 1, 1972, at a net salary of $200.00 per month, for services not to ³⁴¹ exceed eight hours per month. Included in the proffered agreement was a provision for its renewal, as set forth in Paragraph Ninth, which has here become the principal source of contention. That paragraph reads as follows: “Ninth: The Employer shall have the option to renew this agreement and to extend Employee’s employment upon the same terms and provisions as are contained herein for one additional period of Five years (5) years; such renewal shall take effect automatically unless the Employer shall give to the Employee written notice of its election not to renew this contract at least nine full months prior to November 1, 1972. This contract shall then automatically be renewed for another additional five year period unless the Employee shall notify the Employer of his election not to renew this contract, such notice to be given nine months prior to November 1, 1977.” Cañaras submitted at the same time, similarly pre-dated as December 1, 1971, proposed minutes of a board of directors meeting and of a special meeting of the stockholders — (not yet held) — undertaking to record the execution of a contract with a management consultant (himself) and the execution of a contract with a general manager, as well as his election to the board of directors.

The evidence is uncontradicted that at that meeting on December 1, 1971, the proposed contracts were submitted, read and discussed, but the officers and directors refused to accept the contract for Cañaras’ employment. Hufham stated that he “wanted to consult his attorney” to have him inspect the Ganaras proposal, and his attorney advised against execution of the contract; Szumlanski was “concerned about the cost”, the “financial burden” to be assumed by Lift Truck under such a contract. The officers and directors at that meeting advised Cañaras that the documents were not acceptable and they would not sign them. Not to be thwarted, however, by such lack of enthusiasm on the part of the principals for his employment, ³⁴² Cañaras — apparently by his persistence — resubmitted the contract proposals at meetings of the board held on December 9, 1971, April 12, and May 4, 1972, at each of which, after similar discussions, the board equally rejected their execution.

Within the interval David Monoker, the accountant for Lift Truck, who was also an attorney, reviewed the Cañaras proposal and similarly advised the board not to execute it. At a meeting of the stockholders and of the board on May 18, 1972, each of the principals was present as were Applegate, Monoker and Cañaras. At that meeting Applegate’s contract as general manager was executed even though he had been serving in that capacity since December 1971. He testified that he never requested such a contract, did not believe that he needed a written contract of employment, that the subject matter had been initiated by Cañaras and that he had executed the contract “at the request of the directors.” While Applegate’s contract was being discussed Cañaras requested that he leave the meeting; Monoker left as well.

The Cañaras contract which had been drafted on his initiative and which was originally presented by him at the meeting of December 1,1971 — and had been regularly thereafter rejected — came to be executed. The evidence was undisputed that no signing of either of the contracts, nor of the minutes — although dated December 1,1971 — occurred until May 18,1972. Messrs. Gent, Szumlanski and Hufham — all called as witnesses by Cañaras — each testified that they had no intention of executing Cañaras’ employment contract, had no recollection of having so executed it, intended only to execute Applegate’s contract and the minutes of the meeting; that all the papers had been submitted together and could only explain the execution of the Cañaras contract by concluding that it was “part of the bunch of papers” submitted to them for signature by Cañaras whom they trusted as their attorney.

Notwithstanding these protestations, Gent, the president, acknowledged the authenticity of his signature on the Cañaras contract, as did Hufham, a witness to both ³⁴³ signatures; all identified their signatures to the stockholders’ minutes and Hufham acknowledged the genuineness of his signature to the minutes of the board of directors meeting. At lunch time, on June 13,1972, Cañaras visited the office of Lift Truck; he advised the bookkeeper-office manager that he was then “on the pay roll” — although she had received no information from anyone placing him in that status — and he directed that she prepare a check for him in the net amount of $200.00. 3 The check was hand carried to Gent and Hufham who were at work in the service area of the shop and was jointly signed by them. When the matter was discussed that very afternoon with the principals she was instructed by Applegate to transfer the Cañaras payment from the pay roll account and record it as “payment for legal services.” On July 6, 1972, Cañaras had turned over a check from a collection matter and simultaneously had received his $170.00 percentage fee for such work. After several unsuccessful attempts to locate Cañaras he was advised by Monoker, on or about August 1, 1972, that his services were no longer required; his request for a salary check for July was not honored and he was formally thereafter requested to return all books and records.

The trial court, although finding that there was a confidential attorney-client relationship between Cañaras and Lift Truck, found no evidence of fraud. The court further found that the principals, whom he described as “high grade mechanics” and who impressed him as being “extraordinarily obtuse”, could not be allowed to repudiate the execution of the Cañaras contract by merely stating “We don’t remember signing it, and as far as we are concerned, we didn’t sign it.” Having found in fact that the contract was executed on May 18, 1972, the court concluded that “at the time it was signed the automatic renewal provision contained in Paragraph Ninth was completely nugatory ³⁴⁴ since it could not, under any circumstances, be complied with.” Although Cañaras claimed damages for an 11 year interval by concluding that the contract twice renewed itself for two'additional five-year periods since Lift Truck “did not give him written notice of its election not to renew [the] contract at least nine full months prior to November 1, 1972,” he was awarded damages at $2,200.00 (for 11 months) for the breach of a one-year contract beginning May 18, 1972. The appellant here argues that the trial court impermissibly rewrote his employment contract by holding that Paragraph Ninth was “nugatory”, that by the execution of the contract on May 18, 1972, Lift Truck thereby waived the provision providing it the option not to renew the contract. As a subordinate argument he contends that the denial by the principals of Lift Truck of the execution of his contract constitutes a waiver of the right to rely upon the findings that Paragraph Ninth was “nugatory.” In Merit Music Service, Inc. v. Sonneborn, 245 Md. 213 , 225 A. 2d 470 (1967), where one of the appellees had identified her signature to a contract and admitted it to be her signature, and her husband, though not “so sure,” “believed it to be his signature,” Judge Finan quoted with approval the language of Chief Judge Sobeloff, speaking for the Court, in Rossi v. Douglas, 203 Md. 190, 199 , 100 A. 2d 3, 7 (1953), as follows: “ ‘There is no claim here of fraud or duress or mutual mistake, and it is well established that in the absence of these features one having the capacity to understand a written document who reads it, or, without reading it or having it read to him, signs it, is bound by his signature.

Spitze v. B. & O. R.R., 75 Md. 162 , 23 A. 307 ; Columbia Paper Bag Co. v. Carr, 116 Md. 541 , 82 A. 442 ; McGrath v. Peterson, 127 Md. 412 , 96 A. 551 ; Western Maryland Dairy v. Brown, 169 Md. 257, 262 , 181 A. 468, 471 ; Gardiner v. Gardiner, 200 Md. 233 , 88 A.2d 481 ; Ray ³⁴⁵ v. Eurice, supra; [4] Williston, Contracts, sec. 90 A; Restatement of Contracts, sec. 70. Indeed Williston says that even if an illiterate executes a deed under a mistake as to its contents, he is bound both at law and in equity if he did not require it to be read to him or its object explained. This is everywhere the rule. Williston, Contracts, sec. 1577.’ ” Id. 245 Md. at 220 , 225 A. 2d at 474 .

Judge Finan continued: “There is a qualification to the above mentioned rule which this Court recognized in Binder v. Benson, 225 Md. 456 , 171 A. 2d 248 (1961). Judge Hammond (present Chief Judge), speaking for the Court, said (p. 461, 171 A. 2d 250 ): ‘A qualification of the rule is that an apparent manifestation of assent will not operate to make a contract if the other party knows, or as a reasonable person should know, that the apparent acceptor does not intend what his words or other acts ostensibly indicate. Restatement, Contracts, Sec. 71(c); 3 Corbin, Contracts, Sec. 610; 17 C.J.S. Contracts, Sec. 143, p. 497; Frederich v. Union Electric Light & Power Co. (Mo.), 82 S.W.2d 79, 86 ; General Electric Supply Corp. v. Republic Construction Corp. (Ore.), 272 P. 2d 201 ; Beatty v. Donahue (Ky.), 249 S.W.2d 33 ; Lange v. United States (C.C.A. 4th), 120 F. 2d 886, 889 .’ ” Id. 245 Md. at 221 , 225 A. 2d at 474 . Notwithstanding Gent’s testimony that he “didn’t recall” signing Cañaras’ contract and that he only intended to sign Applegate’s contract and the minutes, and notwithstanding ³⁴⁶ that Hufham could not remember' having witnessed the signatures on Cañaras’ contract and they each, as well as Szumlanski, testified that there was no intention on the part of the principals to sign the contract, it was firmly established that the contract had been read, had been fully discussed, by them on a number of occasions.

There is nothing in the facts of this case to justify the application of the exception recognized in Binder v. Benson, 225 Md. 456, 461 , 171 A. 2d 248, 250 (1961). Since the trial court found no fraud in the relationship between Cañaras and Lift Truck — nor was any duress or mutual mistake found — the holdings in Rossi v. Douglas, supra, and Binder v. Benson, supra, are particularly appropriate in compelling the conclusion that Lift Truck became bound under the contract with Cañaras by the signature of its president. 5 Concerning the formation of a contract, our predecessors, more than 50 years ago in Buffalo Pressed Steel Co. v. Kirwan, 138 Md. 60 , 113 A. 628 (1921), stated: “A contract has been defined as an ‘agreement which creates an obligation,’ 13 C.J. 237, and such an agreement may be defined as the concurrence of two or more, persons in a common intent to affect their legal relations, and for the purposes of this case these definitions may be taken as sufficiently accurate. The agreement referred to must rest finally upon an offer made by one party and the acceptance thereof by the other party to that contract. Brantly, Contracts, par. 7.

An ‘offer is a proposal to enter into a contract’ (13 C.J. 266, also Bouvier), and an acceptance is the assent of the party to whom the offer is addressed to its terms. The offer must be certain and definite and the acceptance must ‘in every respect meet and correspond with the offer.’ 13 C.J. 278; Brantly, Contracts, par. 9. That is to say both parties to the ³⁴⁷ contract ‘must actually give their assent to that proposal and acceptance, be it what it may, which de facto arise out of the terms of their communications.’ 1 Elliott, Contracts, par. 26.” Id. 138 Md. at 64 , 113 A. at 630 . See also Post v. Gillespie, 219 Md. 378, 384 , 149 A. 2d 391, 395 (1959).

In Eastover Stores, Inc. v. Minnix, 219 Md. 658 , 150 A. 2d 884 (1959), a construction contract between the parties provided that the work “shall be commenced immediately and shall be substantially completed in 330 days.” A dispute arose in the trial as to whether the date named in the written agreement, August 29, 1956, or the date on which the contract was executed by the appellees, September 19, 1956, should prevail in computing the starting date for the 330-day period. In holding that the chancellor had properly admitted parol evidence to show that the contract, although dated earlier, was not in fact executed until the latter date, Judge Prescott (later Chief Judge) for the Court stated: “It is universally held that a manifestation of mutual assent is an essential prerequisite to the creation or formation of a contract. It is likewise universally agreed that it is possible for parties to enter into a binding informal or oral agreement to execute a written contract; and, if the parties contemplate that an agreement between them shall be reduced to writing before it shall become binding and complete, there is no contract until the writing is signed. And the intention of the parties in this respect must be determined by the facts and circumstances in each particular case.

Peoples Drug Stores v. Fenton, 191 Md. 489, 493 , 62 A. 2d 273 ; Power Service Corporation v. Joslin, 175 F. 2d 698, 702, 703 (9th Cir., 1949); 1 Williston, Contracts (Rev.Ed.), Sec. 28. It is likewise, just as broadly and consistently held that parol evidence is inadmissible to vary, alter or contradict a writing which is complete and unambiguous, where no ³⁴⁸ fraud, accident or mistake is claimed, Glass v. Doctors Hospital, Inc., 213 Md. 44, 57 , 131 A. 2d 254 ; but where doubt arises as to the true sense and meaning of the words themselves or difficulty as to their application under the surrounding circumstances, the sense and meaning of the language may be investigated and determined by evidence dehors the instrument. Vary v. Parkwood Homes, Inc., 199 Md. 411, 418 , 86 A. 2d 727 ; Rinaudo v. Bloom, 209 Md. 1, 11 , 120 A. 2d 184 .” Id. 219 Md. at 665-66, 150 A. 2d at 888 . (Emphasis supplied.) See also Artukovich v. Pacific States Cast Iron Pipe Co., 78 Cal.

App. 2d 1 , 176 P. 2d 962 (1947); District of Columbia v. Camden Iron Works, 181 U. S. 453 , 21 S. Ct. 680 , 45 L. Ed. 948 (1901). This principle of law concerning parol evidence, as set forth in Eastover Stores, Inc. v. Minnix, supra, has been restated in Pumphrey v. Kehoe, 261 Md. 496, 504 , 276 A. 2d 194, 199 (1971); Foreman v. Melrod, 257 Md. 435, 441-42 , 263 A. 2d 559, 562-63 (1970); Davidson v. Katz, 254 Md. 69, 76-77 , 255 A. 2d 49, 52-53 (1969); Rice v. Rice, 246 Md. 212, 217 , 227 A. 2d 742, 744 (1967); Allen v. Steinberg, 244 Md. 119, 127 , 223 A. 2d 240, 245 (1966); see also Restatement of Contracts §§ 237, 238 (1932). No issue was raised in the trial concerning the admissibility of parol evidence; the appellant, as well as the witnesses called by him, Gent, Szumlanski, and Hufham, all gave testimony concerning the submission, discussions, rejections and the signing of Cañaras’ contract. That evidence was undisputed that notwithstanding that the document had been pre-dated December 1,1971, by Cañaras, it did not in fact come to be signed until May 18,1972.

It was only on that latter date that Cañaras’ repeatedly submitted offer became accepted by Lift Truck by the signature of Gent, its president. The evidence dehors the instrument was properly admissible in ascertaining the effective date of the contract. As the trial court properly found, no contract arose until May 18, 1972, that was the time when the last act ³⁴⁹ necessary for its formation occurred. See Chesapeake & Potomac Tel.

Co. of Md. v. Allegheny Construction Co., 340 F. Supp. 734 (D. Md. 1972). Parties to a contract may execute an agreement on one date and provide that all the rights, obligations and liabilities thereto will attach respectively as of a retroactive date. Such agreements have been held to be neither void nor objectionable. See Thornton Bros.

Inc. v. Gore, 252 Miss. 27 , 172 So. 2d 425 (1965); Wright v. Prudential Ins. Co., 27 Cal. App. 2d 195 , 80 P. 2d 752 (1938); and 17 C.J.S. Contracts § 61 (1963). The parties may similarly provide at the time of its execution that the contract is entered into “as of” an earlier date than that on which it was in fact executed; such agreements are then effective retroactively as to the earlier date and the parties are bound accordingly.

See Brewer v. National Surety Corp., 169 F. 2d 926, 928 (10th Cir. 1948); American Credit Indem. Co. v. Hecht, 137 Ky. 261 , 125 S. W. 697 , petition for rehearing overruled, 129 S. W. 340 (1910); Matthews v. Jeremiah Burns, Inc., 205 Misc. 1006 , 129 N.Y.S.2d 841 (Sup. Ct., N. Y. Co. 1954); 17 Am. Jur. 2d Contracts § 69 (1964).

There was no evidence offered that at the time the contract was signed the parties agreed that it was being executed “as of” December 1, 1971, nor any evidence of an intention that the rights, obligations and liabilities spelled out therein were to have retroactive effect. Cañaras testified that he had told the principals that “if we did not use the December 1st date that all the dates in the contracts would have to be changed to reflect the May 18th date, but that if we signed the contracts with December 1st dates in them that the contracts would be in effect immediately without any provisions for curtailing the length of the contracts.” Such self-serving declaration was not supported by the testimony of any of the principals whom he called as his witnesses and standing alone — although the dates were not changed — falls far short of establishing by probative evidence that the contract was intended to be retroactive to December 1, 1971. 6 Indeed Cañaras’ request for one month’s ³⁵⁰ salary on June 13, 1972, is inconsistent with any contention of retroactivity. It is, of course, as the appellant contends, under Hankins v. Public Service Mut. Ins.

Co., 192 Md. 68, 84 , 63 A. 2d 606, 613 (1949), improper for the court to rewrite the terms of a contract, or draw a new contract for the parties, when the terms thereof are clear and unambiguous, simply to avoid hardships. See also Compania de Astral, S. A. v. Boston Metals Co., 205 Md. 237, 271 , 107 A. 2d 357, 372 (1954), 49 A.L.R.2d 646 , cert. denied, 348 U. S. 943 (1955). Appellant is similarly correct when he asserts that “where a contract is plain and unambiguous there is no room for construction and it must be presumed that the parties meant what they expressed.” See Lawless v. Merrick, 227 Md. 65, 71 , 175 A. 2d 27, 31 (1961); Weber v. Crown Central Petroleum Corp., 214 Md. 115 , 132 A. 2d 857 (1957); Strickler Eng. v. Seminar, 210 Md. 93 , 122 A. 2d 563 (1956). Where, however, “doubt arises as to the true sense and meaning of the words themselves or difficulty as to their application under the surrounding circumstances, the sense and meaning of the language may be investigated and determined by evidence dehors the instrument.” Pumphrey v. Kehoe, supra, at 504, 276 A. 2d at 199 (emphasis supplied).

See also Foreman v. Melrod, supra; Davidson v. Katz, supra; Allen v. Steinberg, supra. “[I]t is equally well settled that where a question arises as to the general intention of the parties, concerning which the instrument is not decisive, proof of independent facts collateral to the instrument, may be admitted,” Chesapeake Brewing Co. v. Goldberg, 107 Md. 485, 488 , 69 A. 37, 39 (1908), and “if any doubt arises from the language of a contract as to the intention of the parties, extraneous evidence may be admitted to aid the court in comprehending its meaning,” Sommers v. Dukes, 208 Md. 386, 394 , 118 A. 2d 660, 664 (1955), both cited with approval in Davidson v. Katz, supra, and Schuman v. Gordon Inv. Corp., 247 Md. 265 , 232 A. 2d 256 (1967). ³⁵¹ Although the trial court found the provisions in Paragraph Ninth to be “crystal clear and unambiguous,” there was patently an uncertainty and ambiguity concerning the intention of the parties and the relationship inter sese of Paragraph Ninth to the first paragraph of the agreement, which undertook to employ Cañaras for a one-year term; there was equal “difficulty as to the application of the true sense and meaning of the words themselves [used in Paragraph Ninth] under the surrounding circumstances.” The issue before the trial court was whether Lift Truck by the execution of the contract on May 18, 1972, thereby intended to employ Cañaras for a six-year term since on that date, the period of time required for notice of non-renewal — nine full months prior to November 1, 1972 (February 1, 1972) — had expired. Chew v. DeVries, 240 Md. 216 , 213 A. 2d 742 (1965), involved the interpretation and construction of two clauses in an option; the first provided that the election by the optionee to purchase the property “shall be given the optionors at any time within four (4) years of the date of the option.” The second clause provided that the option “shall not be revocable for four years from the date hereof and shall remain in force and effect thereafter until terminated by the optionors; that such termination may be effected at any time after the expiration of the four year period by the optionors giving 90 days prior written notice to the optionee of such termination, provided, however, that no right to terminate it be exercised by the optionors after the optionee has elected to purchase the property.” Chief Judge Prescott, concerning the construction to be given to the provisions in the option, stated: “There is a well-established rule of contractual construction that where two provisions of a contract are seemingly in conflict, they must, if possible, be construed to effectuate the intention of the parties as collected from the whole instrument, the subject matter of the agreement, the circumstances surrounding its execution, and its ³⁵² purpose and design. Lumber Co. v. Bldg. & Savings Assn., 176 Md. 403 ; Sagner v. Glenangus Farms, 234 Md. 156, 167 ; 17 A C.J.S. Contracts § 309 (with a long