Williams v. MacOndray Co. , 57 Cal. App. 359 ( 1922 )

This is an appeal by the defendant from a judgment for $5,000 in favor of plaintiff entered upon a verdict of a jury.

The complaint alleges that on or about January 10, 1918, plaintiff and defendant entered into an agreement whereby plaintiff was employed by defendant to solicit trade with and, if possible, obtain orders from persons, firms, and corporations doing business in or residing in the Republic of China (excepting Manchuria), Hongkong, Philippine Islands, Dutch Indies, Straits Settlements, Australia, and New Zealand for the purchase through defendant of goods and merchandise in the United States for the account of such persons, firms, and corporations, and that in and by said agreement it was understood and agreed that plaintiff should solicit said orders and promote said trade by communicating by mail or cablegram or otherwise with such persons, firms, and corporations, and it was agreed by and between plaintiff and defendant that in consideration of the performance of such services by plaintiff, the defendant would on demand pay the plaintiff a commission oftwenty-five per cent of the gross profits made or earned bydefendant on all business received by defendant from persons, firms, or corporations so residing or doing business in the said countries, or any of them, regardless of whether or not said business was received by defendant as the result of solicitation or efforts by plaintiff. That immediately after the making of said contract, plaintiff entered upon the performance thereof and that plaintiff thereafter continued to fully carry out and perform the said contract until the thirtieth day of April, 1919, at which latter time defendant, wrongfully and unlawfully and without any cause or reason whatever, refused to allow plaintiff further to carry out and perform said contract, and that defendant has ever since refused, and still refuses, to allow plaintiff further to carry out and perform said contract, and that plaintiff has at all times since the said refusal of defendant been and he still is, ready, able, and willing to carry out and perform said contract on his part. That while plaintiff was, as aforesaid, carrying out and performing said contract, defendant received orders from persons, firms, and corporations residing and doing business in said countries for the purchase by the defendant in the United States of goods for the account of said persons, firms, and corporations and for the shipment of said goods to said persons, firms, and corporations, and that all of the goods called for by the said orders were purchased by defendant in the United States for the account of the persons, firms, and corporations giving such orders and have been shipped by defendant to said persons, firms, and corporations.

It is further alleged that defendant has paid plaintiff the commissions that became due on certain of said orders, but that defendant has made and earned gross profits on others of the said orders, amounting to the sum of $45,600 and that plaintiff is entitled to twenty-five per cent thereof.

Appellant's first contention is that there is a material variance between the proof and the allegations of the complaint. The argument is based upon the following facts: The profit made by defendant upon which it refused to pay plaintiff a commission was made upon one transaction with the Kailan Mining Administration of Tientsin, North China. There is no dispute about the fact that this business came from the territory covered by the contract between the parties. The record shows that the materials called for by this order were steel rails and that these rails were not purchased by the defendant "for the account" of the customer, but a quotation of price or a "firm offer" was made to the customer by the defendant after defendant had secured quotations of price from the manufacturers. This offer to the customer was for a price three per cent in excess of the price asked at that time by the manufacturers. The customer accepted, by cable, defendant's offer to furnish the rails. Deliveries were to be made at different times in the future. At the time of the offer and acceptance steel prices were unusually high because of the World War. Defendant however, did not place its orders with the manufacturers at this time, but waited for several months, during which time a great reduction in the price of steel occurred, due to the signing of the armistice. Defendant thereupon purchased the rails at the greatly reduced prices, but held the customer to its acceptance of the offer at the higher price, thus making a large profit.

[1] Defendant now seeks to escape liability to plaintiff, urging that he has pleaded that he was "employed . . . to solicit orders . . . for the purchase through defendant of . . . merchandise . . . for the account of such persons, firms and corporations"; also, that the complaint alleges that "all of the goods called for by the said orders were purchased by defendant in the United States for the account of the persons, firms and corporations giving such orders. . . ." It is asserted that such allegations do not warrant a recovery on the facts shown.

With reference to the allegations of the complaint regarding the terms of the contract between the parties, we are of the opinion that such allegations are sufficiently broad to cover the facts proven. Aside from the allegation above quoted and referred to by appellant as being insufficient to include the facts proven, there is, as previously stated, an allegation that defendant promised to pay the plaintiff a commission of twenty-five per cent of the gross profits made or earned by defendant on all business received by defendant from persons, firms, or corporations so residing or doing business in the said countries. This allegation is sustained by the testimony of plaintiff and is sufficient to include the transaction admitted to have taken place between the defendant and the Kailan Mining Administration.

[2] While there is some variance between the allegation that the indebtedness arose by reason of orders for the purchase by defendant of goods for the account of persons in the territory named, and the proof, which showed that the commission was due upon business handled in a somewhat different manner, we are not disposed to regard this matter as material because it could not have misled the defendant to its prejudice in maintaining its defense under all the facts in evidence in this case. (Code Civ. Proc., sec. 469; Fielding v. Iler, 39 Cal.App. 559, 562 [179 P. 519 ]; Holden v. Mensinger, 175 Cal. 302 [165 P. 950].) Plaintiff would have been entitled to have amended his pleading to conform to the proof or the fact could have been found in accordance with the proof. (Code Civ. Proc., sec. 470.)

It is argued by appellant that it is unlikely that the defendant intended to contract to pay a commission upon profits made upon direct sales to customers, but that it is more reasonable to suppose that defendant intended to contract with plaintiff to pay a commission only upon purchases "for the account" of customers. We do not see the force of this reasoning. It is entirely clear from the record that the defendant was in the habit of handling its business in either of two ways: by purchasing for the account of a customer, charging a commission for its services, or by making a "firm offer" to the customer and then buying the goods in the open market for resale to the customer. The circular letters and advertising matter sent out by the plaintiff in pursuance of his contract with the defendant, solicited business from prospective customers in the prescribed territory, under either of these arrangements. The cablegrams covering the Kailan Mining Administration transaction were submitted to Macondray, by plaintiff, before they were sent out. Mr. Macondray was in charge of the department where plaintiff worked and plaintiff necessarily deferred to his judgment and advice as to the method of handling business that came to the defendant company. Macondray was, therefore, in a position to direct that the business be handled in either manner. There seems to be equal reason for allowing plaintiff a commission upon the one transaction as upon the other. Regardless of the way the business was handled by the defendant, it came to them out of the territory assigned to plaintiff and in response to his advertising methods, and plaintiff has testified that the agreement made with him was for "an interest to the extent of twenty-five per cent of gross on business done or coming from China" and the other countries mentioned.

Defendant seeks to charge plaintiff with negligence because, immediately upon receipt of the acceptance from the Mining Administration of the offer made to it by defendant, plaintiff did not place orders with the manufacturers for the merchandise required. Of course, the question of whether or not the plaintiff performed his duties carefully or negligently or used good or bad judgment during his period of service with the defendant is not an issue in this case. It would seem, however, that criticism of plaintiff's method of procedure would come rather ungracefully from the defendant in view of the fact that plaintiff's failure to immediately place such an order resulted in a profit of many thousands of dollars to defendant, while the pursuit of the only other method suggested as proper would have made anything more than a nominal profit an impossibility. Defendant contends that the fortunate outcome was the result of merest chance and that plaintiff was not warranted in taking this chance. However, plaintiff has testified that when he made the offer to the Mining Administration it was after consultation with the president of the defendant company, who was also the manager of the export department; that prices of steel were then so high that the defendant was assured they would not go higher and, in fact, the defendant was expecting a drop in such prices and also a drop in the freight rates. By the time shipment was made of this order freight rates had decreased by fifty per cent and the price of steel had declined sufficiently to afford the defendant a profit, as shown by their books, of $30,661, after deducting a "manager's bonus." The jury allowed to the plaintiff $5,000.

[3] Complaint is made of the refusal of the trial court to give certain instructions to the jury by which the contract pleaded is construed to cover only transactions with customers by which goods are bought for the account of such customers. Our previous discussion of the pleadings answers this objection of appellant. We do not consider the contract pleaded to be so limited in its scope, and we think such instructions would have been erroneous. It is true, as contended by appellant, that the question of the interpretation of a contract is a question of law for the court, but the instructions offered by defendant on this subject do not fairly interpret the contract which plaintiff pleaded and which he proved not only by his own testimony, but by numerous other facts and circumstances appearing in the record and hereinafter referred to.

[4] The appellant also contends that there is no proof of the authority of Mr. Macondray to enter into such a contract on behalf of the corporation. Briefly, and in substance, the proof is: All of the shares of the capital stock of defendant were owned by Mr. Macondray and Mr. Rathbone. Mr. Macondray was the president of the company; Mr. Rathbone was the vice-president and the manager of the insurance department. Mr. Macondray was, ostensibly, at least, the manager of the export department of defendant, to which department of its business the contract with plaintiff related. Macondray employed and discharged clerks in said department, ordered goods and saw that it was shipped out. No one but Macondray and Mr. Connolly participated in the business connected with the export department; the contract with the Kailan Mining Administration, upon which this commission is claimed, was made by Macondray on behalf of the defendant. There were four directors of defendant: Mr. Macondray, Mr. Kittle, Mr. Connolly, and Mr. Rathbone. The directors, practically, never held a meeting. Mr. Kittle, one of the directors, was merely a "dummy" director owning but one share of the stock and never participated in the business. Mr. Connolly discussed with both plaintiff and Mr. Macondray the contract involved here and was, apparently, satisfied with the same. Mr. Rathbone knew of the contract with plaintiff about January or February, 1918, which was shortly after it was made, and, apparently, he made no objection to it. Mr. Connolly himself had a contract with defendant which was similar to the contract held by plaintiff, and such contract had been made with Connolly by Mr. Macondray as president of the defendant. It was never authorized by or acted upon in any way by the directors, and yet such contract was recognized by the defendant as a binding obligation and payments were made thereunder to Connolly. Defendant also recognized plaintiff's contract, and furnished him with a statement of commissions due him thereunder — in fact, paid $500 upon such commissions and tendered another small sum in full settlement, which was refused. It was only when plaintiff insisted upon having a commission upon this large transaction with the Kailan Mining Administration that any question was raised regarding the authority of Macondray to enter into this contract on behalf of defendant.

Under all of these facts we think the implied finding of the jury that Macondray did have authority to enter into this contract on behalf of the defendant was justified. (Crowley v. Genesee Mining Co., 55 Cal. 273, 276; Stevens v.Selma Fruit Co., 18 Cal.App. 242, 250 [123 P. 212]; Streeten v. Robinson, 102 Cal. 542, 545, 546 [36 P. 946];Scott v. Superior Sunset Oil Co., 144, Cal. 140 [77 P. 817];Newhall v. Levy Bag Co., 19 Cal.App. 9, 25 et seq. [124 P. 875]; Aigeltinger v. Burke, 176 Cal. 621, 626, 627 [169 P. 373]; Reardon v. Richmond Land Co., 21 Cal.App. 357, 358 [131 P. 894].)

There are no other matters requiring discussion. The judgment is affirmed.

Sturtevant, J., and Nourse, J., concurred.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on June 15, 1922.

All the Justices concurred, except Shurtleff, J., and Waste, J., who were absent.