Home News, Inc. v. Goodman

Collins, J., delivered the opinion of the Court. One Seymour J. Goodman, complainant below, appellee here, employed formerly as an advertising solicitor by the Baltimore Post, did not continue his position when that paper was absorbed by the Baltimore News in 1934. Messrs. Joseph and Walter Goldstein at that time were partners in a printing business using the name, Twentieth Century Printing Company.

The Goldsteins had in their establishment a rotary press which they were anxious to keep busy. Goodman approached them with the idea of organizing a shopping paper in Baltimore to be owned and financed by the merchants and to be printed by the Goldsteins. The Goldsteins were interested in such a paper, but it later became apparent that the merchants were not interested. Later a shopping paper, known as the Home News, was organized and printed by the Twentieth Century Printing Company. ⁵⁸⁸ There is much dispute in the record as to the contract of employment made with the appellee, Seymour P. Goodman.

It was verbal. The chancellor who heard the case below and who had the witnesses before him concluded from the conflicting testimony of the witnesses that the verbal contract of employment of Goodman, as an advertising solicitor, was substantially as follows: “T (Goldstein) will pay 20% commission on all advertising that you secure for the paper as long as those advertisers continue to place advertising in the paper.’ That figure of 20% commission did not apply to National Advertising for which the rate was 15% commission.” Without reciting in this opinion the conflicting testimony offered to establish this contract, this court agrees with the chancellor that the contract of employment was as stated above. Goodman continued to solicit advertising for Home News until 1938. At that time a dispute arose between him and Joseph Goldstein as to solicitation of new territory.

Joseph Goldstein became irritated with Goodman and said that the paper belonged to him and told Goodman that he was going to run things around there to suit himself and if Goodman did not like it, he could get out, which Goodman did. Joseph Goldstein apparently regretted his action. Goodman later went back and had a conference with Joseph Goldstein, and Goodman agreed to come back with the understanding that his agreement was to continue on and that he was to receive commissions on all the advertising that he secured for the paper as long as those advertisers continued to place advertising in the paper. Seymour Goodman continued to work until April, 1941, when he became ill.

He went to the hospital on April 22nd and remained there until July 21st when he went to Westminster, Maryland, for a rest. While in the hospital, he continued to receive weekly checks, based on his commissions on advertising which he had secured, until August 15, 1941, when he was sent checks for §50 per week for six weeks until September 26, 1941. He returned from West ⁵⁸⁹ minster and went to the office of the Home News on October 13, 1941. He questioned Joseph Goldstein as to why his checks had been reduced to $50 and Gold-stein questioned him about the sum of $7,000 which he said Goodman was to pay for a one-third interest in the Home News.

Goodman continued soliciting advertisments until October 21, 1941. On that day, he and Joseph Goldstein had an argument about soliciting the account of Food Fair and, as a result of that argument, Joseph Goldstein discharged Goodman. On June 5, 1942, the appellee, Seymour P. Goodman, filed an amended bill of complaint in Circuit Court No. 2 of Baltimore City against Home News, Inc., Joseph Goldstein and Walter Goldstein, asking that court for proper accounting to determine the amounts due the complainant from the defendants, that the defendants be directed to pay the complainant the amounts found to be due, that the court retain jurisdiction of the cause for amounts coming due in the future to the complainant, and for other and further relief. After answer filed, testimony was taken in open court before the chancellor, who decreed on July 9, 1943, that (1) the complainant, Goodman, was entitled to commissions at certain rates designated in the decree on all business received by the defendants or any of them for advertising in the Home News from certain customers set out in the decree between the 15th day of August, 1941, and the 21st day of October, 1941; (2) the complainant was entitled to commissions on all business received by the defendants or any of them for advertising in the Home News from certain customers set out in the decree since the 15th day of August, 1941, to the date of the decree; (3) the complainant was entitled to commissions on all business received by the defendants or any of them for advertising in the Home News from the customers and at the rates set forth in (2) such right to commissions to begin as of the date of the decree and to continue on a weekly basis, when and as long as advertising business is placed in the Home News by said customers. ⁵⁹⁰ The chancellor referred the papers to the court auditor to state an account and ordered the defendants to pay the costs.

An appeal is taken to this court from that decree. After the auditor’s account was stated, certain exceptions were taken to that account, and from the decree of the chancellor on the audit, a further appeal is taken to this court. Was the chancellor correct in decreeing against all of the defendants, Home News, Inc., Joseph Goldstein and Walter Goldstein? The appellee was entitled to compensation.

When the appellee, Goodman, approached the Goldsteins about the organization of a shopping paper to be printed on their rotary press, they were much interested for the reason that they desired the printing business. They paid the cost of the luncheon for the merchants when the idea was presented to them and also paid for the circulars distributed at the luncheon. Goodman was paid a weekly salary by the Goldsteins during the promotional period. He acted as chairman of the luncheon meeting, and Mr. Joseph Goldstein attended and had his secretary take minutes of the meeting, which did not result in the merchants forming such a paper.

The Goldsteins undertook to publish and produce such a newspaper. Later a corporation, Home News, Inc., was formed. Walter Goldstein ratified everything that his partner did concerning the corporation and the operation of the paper. The appellee, Goodman, testifies that he was originally employed by Joseph Gold-stein.

The appellants offered testimony to the contrary. Although -Joseph Goldstein testified that he had nothing to do with the paper until 1936, the record, however, reveals that he was the prime mover in the organization of the newspaper for the purpose of getting the printing and was elected a director of Home News, Inc., at the first meeting of the incorporators on September 27, 1934. All expenses incident to the publication of the newspaper before the incorporation were paid by the Goldsteins. The appellee testified that shortly before the incorporation was perfected, he, hearing of it, asked ⁵⁹¹ Joseph Goldstein about it and was told by him: “Don’t worry about that, that is merely a form to protect my interests in case I am sued, but I am the boss around here and you look to me.” Appellee further said: “And I always did look to him up to the very last moment, and it continued all the time.” The certificate of incorporation was approved by the State Tax Commission on October 2, 1934, at which time the corporation came into existence.

The first issue of the paper appeared September 28, 1934. The incorporators were Edward E. Ullrich, an employee of the Twentieth Century Printing Company; Howard A. Burman, an advertising solicitor; and the attorney, Albert A. Levin. None of these incorporators had any money invested in the concern. All expenses of the incorporation had been paid by the Gold-steins.

Ullrich was paid by the Twentieth Century Printing Company and was never paid anything by the Home News, Inc. Speaking of the Home News, he said: “It was to be my baby. It operated under the rotary press which was under my jurisdiction.” At the first meeting of the incorporators held on September 27, 1934, Burman, Ullrich and Joseph Goldstein were elected directors. Home News, l'nc., never had any assets or property of any kind. Mr. Ullrich testified that he thought that a drawing account for the Home News was put up by the Twentieth Century Printing Company and further testified that he was working for the Twentieth Century Printing Company, Home News and anything else that had anything to do with the working of the rotary press.

Joseph Goldstein also signed a note for the Home News. He testified that he and his brother paid the debts of the Home News and also when asked how the Home News got any credit at the bank, he testified: “As long as the Twentieth Century Printing Company, of which I and my brother are partners, he and I operate the Home News, naturally the Twentieth Century Printing Company is looked upon as a guarantee for whatever accounts they owe.” He also said that the Home News was operating on the credit of the Twen ⁵⁹² tieth Century Printing Company, and he and his brother who were operating as a partnership, stood back of the Home News and its obligations. The office, headquarters, bookkeepers and clerks of the Twentieth Century Printing Company and Home News, Inc., were the same. The first meeting of the directors was held on January 11,1936, when the resignations of Edward E. Ullrich as director and treasurer and Albert A. Levin as secretary were accepted.

At that meeting, Walter Goldstein was elected director and treasurer and Joseph Goldstein was elected secretary, and both of the Goldsteins have been directors ever since. Apparently no stock was issued by the corporation until 1936. At a meeting on March 2nd of that .year, the Goldsteins subscribed to 1500 shares of the capital stock of Home News, Inc., with the understanding that the proceeds of the subscriptions for this stock in the amount of $15,000 was to be paid to the Twentieth Century Printing Company on account of indebtedness due from Home News, Inc., and this stock was so issued. Present at that meeting were Howard A. Burman, president; Joseph Goldstein, director and secretary; and Walter Goldstein, director and treasurer, constituting all of the officers of said company.

At a meeting on June 15, 1936, when the whole Board of Directors was present, at that time consisting of Walter Goldstein, Joseph Goldstein and Christian Rodekurt, the bookkeeper for Twentieth Century Printing Company, a motion was passed that Joseph Goldstein, elected president on April 21st of that year, be paid a salary of $4,000 a year and that Walter Goldstein, treasurer, be paid a like salary of $4,000 a year. At the directors’ meeting on October 1, 1937, a resolution was passed authorizing the issuance of 500 shares of stock at the par value of $10 per share to Joseph Goldstein and a like-amount of 500 shares at $10 a share to Walter Goldstein to appply on their salaries as president and vice-president of the corporation to September 30, 1937. A prospectus was issued in October; 1937, and an editorial appeared in the paper stating that Home News, ⁵⁹³ Inc., was under the personal supervision and direction of its publishers, Joseph and Walter Goldstein, and offering stock for sale. In addition to the 2500 shares of stock theretofore issued to the Goldsteins, 10 shares were issued to a Mr. Greenbaum, 100 shares to a Miss Smith, 100 shares to a Mr. Hooper, 10 shares to a Mr. Getzendenner, and 100 shares to a Mrs. Manson, a sister-in-law of Walter Goldstein.

One hundred twenty shares of this stock were paid back by the Goldsteins without any resolution made in the minutes. Mrs. Manson, who owned 100 shares, was paid 6 per cent, interest on the stock by Walter Goldstein, personally. Mr. Hooper was paid 6 per cent, interest on his 100 shares without resolution by the corporation to. pay any dividends on stock. From all of this testimony, we can reach no conclusion other than that Home News, Inc., was really Joseph and Walter Goldstein and that Joseph and Walter Gold-stein were really Home News, Inc. The appellant corporation was formed primarily for the benefit of the Goldsteins, trading as Twentieth Century Printing Company.

The Goldsteins ran both businesses. There is no evidence that any of the printing bills due Twentieth Century Printing Company were approved by the directors of Home News nor is there any evidence of another printer being given an opportunity to bid on the printing of the paper. The appellant corporation is insolvent as has been its condition since it was started and no dividend has ever been declared on the stock. “Where two or more persons are jointly interested to have certain services performed, they may be presumed to be'jointly obligated unless there is something to indicate a different intention.” 17 C. J. S., Contracts, Sec. 587, pp. 1228 and 1229. In the case now before this court, both Home News, Inc., and the Goldsteins were jointly interested in having the appellee secure advertisements, and they are jointly obligated.

The contract of employment being made originally by Joseph Goldstein, he is, of course, liable for whatever compensation is due the appellee. Walter Goldstein, hav ⁵⁹⁴ ing ratified and confirmed all his brother’s acts, is also liable. The facts, of course, show that the appellee was also employed later by Home News, Inc., and that corporation is jointly liable. Although not in writing, the agreement is not within the Statute of Frauds.

The main object is not to answer for the debts of another, but primarily to subserve the purposes of the Gold-steins. It is to be regarded' as an original undertaking for the Goldsteins’ own benefit, not merely as answering for the debts or default of Home News, Inc. The main object was to get business for the rotary press owned by the Goldsteins. Small v. Schaefer, 24 Md. 143 ; Dryden v. Barnes, 101 Md. 346