Eastern Woodworks, Inc. v. Vance

Brune, C. J., delivered the opinion of the Court. The appellee, Vance, filed a bill in equity in the Circuit Court of Baltimore City against the appellant, Eastern Woodworks, Inc. (Eastern) seeking a construction of an agreement between the parties, an accounting to determine the amount claimed to be due Vance under the agreement by Eastern and a monetary decree for the payment of the amount so determined. Eastern both demurred to the bill and answered, its demurrer was overruled, and the case went to trial and resulted in a decree in favor of Vance for $12,852.12, with interest from thé date thereof. The appeal is from that decree.

The questions presented are these: (1) Is the agreement on which the appellee’s claim is founded unenforceable under the Statute of Frauds; (2) Is the agreement void as contra to public policy; (8) Did the appellee perform his part of the agreement; and (4) Does equity have jurisdiction of the case? The agreement upon which the appellee’s case is founded is set forth in a letter dated December 31, 1951, from Eastern to Vance appointing him “the firm’s manufacturing representative covering all business arising out of Bendix Aviation Corporation either locally here in Baltimore or in its other locations.” It then names four other concerns as “included in the group of accounts we will expect you to service” and provides for the addition of others by mutual consent. The next paragraph, which lies at the heart of the present controversy, reads as follows: “In consideration of your sales contacts and engineering efforts Eastern Woodworks, Inc. will pay you five per cent (5%) of the total contract value arising from any of these accounts during the period of the next ⁴²⁴ two years unless other compensation is mutually agreed to in writing in regard to specific jobs.” Vance is a manufacturer’s representative and has been engaged in that business since 1945. He had obtained some business for Eastern prior to December 31, 1951, on which he had earned some commissions at the rate of 5% on the sales, amounting to about $2,900, but by reason of an advance of $4,500, he was overdrawn (apart from business with Bendix) on his account with Eastern by nearly $1,600.

He was, however, working on some contracts with Bendix, and a statement as of December 31, 1951, showed that commissions on Bendix business reduced his overdraft to about $700. The pending contract with Bendix was expected to be substantially larger than other contracts theretofore obtained by Vance for Eastern, and negotiations had progressed to the stage where it was anticipated that a contract would soon be executed. Vance had no written agreement with Eastern and became somewhat concerned about the matter because Mr. Robertson, the President of Eastern, had had a heart attack. The letter above referred to was written at Vance’s request, and testimony indicates that it was verbally approved by the two other then directors of Eastern.

Robertson was the principal stockholder of Eastern. The projected contract on which Vance was working when the letter was written was for sets of cases for spare parts to be furnished by Bendix to the United States Air Force. The contract as executed on January 28, 1952, was for 55 sets consisting of 29 boxes per set. The price per set was $2,083.73, and the aggregate price was $114,605.15.

By an amendment of the contract made on November 5, 1952, the number of cases (or boxes) per set was increased to 60, and the unit price per set was increased to $6,511.16, and the total contract price to $358,113.80. Vance was paid $2,500 by Eastern on the signing of- the original contract and was allowed a drawing account of $150.00 a week against his esti ⁴²⁵ mated commissions. These weekly payments continued until December, 1952. Robertson died of another heart attack in September, 1952.

He was succeeded briefly by Mr. Arold Ripperger as President. A controversy arose over Mr. Robertson’s will, and in November, 1952, his divorced second wife, Mrs. Mae Robertson, who had for a time been employed as secretary by Mr. Robertson and who had some familiarity with Eastern’s business, became President. About a month later Vance was notified by a letter dated December 12, 1952, from Eastern, signed by Mrs. Mae Robertson as President and sent with the approval of the Board, that “as a result of your failure to give Eastern Woodworks, Inc. the engineering effort and the service called for in the agreement of December 31, 1951, we must consider the agreement terminated and no further monies due to you.” This suit resulted. The case was heard on demurrer by Judge Byrnes and on the merits by Judge Mason. 1.

The Statute of Frauds. The appellant makes these claims in connection with the Statute of Frauds: first, lack of mutuality, because the letter contains no promise on behalf of the appellee; second, that it is too vague and indefinite to be enforceable as it stands and that the deficiencies cannot be supplied by parol testimony; and third, that any “supposed” part performance cannot save the contract under the “year clause.” Each of these contentions is pressed with vigor and learning but we do not agree with any of them. With regard to the alleged lack of mutuality because of there being no express promise on the part of Vance in the letter of December 31, 1951, to perform any services for Eastern, we think that such an obligation is inferable from the terms set forth. In Hendler Creamery Co. v. Lillich, 152 Md. 190 , 136 A. 631 , it was objected that there was no obligation on the part of a manufacturer or processor to sell its products to a retailer because there was no express promise to do so.

This Court held, however, that when the retailer accepted the manufac ⁴²⁶ turer or processor’s proposal, (which clearly contemplated sales) the latter, at the very least, came under an implied obligation to furnish the commodities. Likewise, in Foster-Porter Enterprises v. De Mare, 198 Md. 20 , 81 A. 2d 325 , it was urged that there was no mutuality of obligation because there was no express provision by which a distributor agreed, (after an initial purchase) to buy any' specific number of machines manufactured by the seller. It was held, however, that, despite-this lack of an express promise, the distributor became obligated to buy as many of the seller’s machines as, by his best endeavors, he was able to sell. In each of these cases the obligation was implied.

In the Foster-Porter Enterprises case, the Court quoted with approval from an opinion by Judge Cardozo, speaking for the Court of Appeals of New York in Wood v. Lucy, Lady Duff-Gordon, 222 N. Y. 88, 90-91 , 118 N. E. 214 , (which case had also been cited in the Hendler Creamery case) the following: “It is true that he does not promise in so many words that he will use reasonable efforts to place the defendant’s indorsements and market her designs. We think, however, that such a promise is fairly to be implied. The law has outgrown its primitive stage of formalism when the precise word was the soverign talisman, and every slip was fatal. It takes a broader view today.

A promise may be lacking, and yet the whole writing may be 'instinct with an obligation,’ imperfectly expressed [citing authorities]. If that is so, there is a contract.” Eastern’s further objection, pressed under its fourth contention relating to equity jurisdiction, that an agreement to render personal services is unenforceable, is beside the point, since the evidence appears adequate to support the conclusion that Vance did accept Eastern’s proposal and did render services in accordance with the agreement. In fact, as well as can be determined from a statement prepared from Eastern’s books by an accountant employed by Vance, which does not purport to go into details of identification of contracts and amend ⁴²⁷ ments thereto, it appears that somewhere in the neighborhood of 75% to 80% of the total billings upon which Vance’s claim is based grew out of the contract which he was working on when the letter of December 31, 1951 was written and which was actually executed and later substantially increased by an amendment made during his period of service. If we assume that some of the contracts were obtained after Vance was notified of his discharge and before December 31, 1953, the amount of such sales may serve as a measure of damages for loss sustained by Vance as a result of Eastern’s breach of the contract, and such damages may be awarded to him in this proceeding.

See McKeever v. Washington Heights Realty Corp., 183 Md. 216, at 226 , 37 A. 2d 305 , which aso involved a sales agency. Benjamin v. Bruce, 87 Md. 240 , 39 A. 810 , is heavily relied upon by the appellant, but it is distinguishable from this case both as to damages and as to the enforceability of the contract. On the subject of damages, in the Benjamin case, the agreement was that the agent should be paid 5% commission on all sales made by him in the territory assigned to him; and though the principal was obligated not to sell in that territory, there was no provision by which he was to pay 5% commissions on any sales made by him in violation of his covenant. It was accordingly held that there was no definite, fixed and ascertained sum payable to Benjamin either by way of commissions or for breach of contract, upon sales not made by him.

On the matter of enforceability, it was pointed out in the Benjamin case that the claim was not for services preformed. In the instant case, Vance did perform services under the contract, and Eastern reaped benefits therefrom. The Court also pointed out that Benjamin did not obligate himself to sell any of the products of the principal. In this respect also we think that the present case differs from the Benjamin case.

Eastern’s objection that the contract is too vague and indefinite to be enforced also seems without merit. This ⁴²⁸ objection is directed mainly against the use of the term “contract value” as the measure of commissions. Probably a better term could have been found, but both parties seem to have understood it without any question at the time of its execution and at least for some time thereafter. The practice established by them prior to the letter of December 31, 1951, was to base commissions on the amounts billed to Eastern’s customers on contracts procured by Vance.

This was also the practice followed after that date, and we think that evidence thereof was properly considered. See McKeever v. Washington Heights Realty Co., supra. See also, as to the practical construction put upon a contract by the parties, if its meaning is doubtful: Baltimore & Ohio R.R. v. State, 45 Md. 596 ; Mattingly Lumber Co. v. Equitable Bldg. & Savings Ass’n, 176 Md. 403 , 5 A. 2d 458 . The third ground of attack allegedly based on the Statute of Frauds is that part performance will not save a contract which is unenforceable under the “year clause”.

Since this contract was to run for more than .a year, the Statute had to be satisfied in order to make it