225 F.2d 615 (9th Cir. 1955), 14400, United Producers and Consumers Co-op. v. Held

Docket Nº:14400.
Citation:225 F.2d 615
Party Name:UNITED PRODUCERS AND CONSUMERS CO-OPERATIVE, a Corporation, and Southwest Co-Operative Wholesale, a Corporation, Appellants, v. Ralph W. HELD, Appellee.
Case Date:August 22, 1955
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 615

225 F.2d 615 (9th Cir. 1955)

UNITED PRODUCERS AND CONSUMERS CO-OPERATIVE, a Corporation, and Southwest Co-Operative Wholesale, a Corporation, Appellants,

v.

Ralph W. HELD, Appellee.

No. 14400.

United States Court of Appeals, Ninth Circuit.

August 22, 1955

Scoville & Linton, Phoenix, Ariz., for appellants.

Jennings, Strouss, Salmon & Trask, O. M. Trask, Phoenix, Ariz., for appellee.

Before HEALY, BONE and ORR, Circuit Judges.

Page 616

BONE, Circuit Judge.

The two Arizona corporate appellants here involved are, for operating purposes, almost identical. Southwest Co-Operative Wholesale (hereafter Southwest) is a wholesale company whose principal customer is United Producers and Consumers Co-Operative (hereafter United). United is a retail organization composed of, and sells to, several thousand members. The personnel operating the two corporations are the same; the locations of their offices are the same; several of the incorporators of each are the same; and several of the officers and directors, including the President and Auditor are the same.

In December, 1951 the two corporations were in need of a general manager. One of the directors wrote a letter to appellee in Des Moines, Iowa, where he was a co-operative executive, seeking to find a manager for the two appellant corporations. In January, 1952 the same director arranged a meeting in Chicago between the appellee and Walter Smith, president of both corporations, and Lewis Walmsley, auditor of both appellant corporations. At the meeting, the appellants' representatives offered to pay the expenses of the appellee if he would go to Phoenix and look over the two corporations with an eye toward becoming their general manager. The appellee accepted this offer and spent two days in Phoenix inspecting the corporations and being entertained by members of the appellant corporations. Appellee informed the president of the two corporations that he was not interested in any offer to become manager and returned to his position in Des Moines.

In February, Smith, president of both corporations, telephoned appellee in Des Moines and told him that they were definitely interested in making him a proposition. Appellee replied that he was almost committed to a position in St. Louis and didn't believe he would be interested. Two days later Smith called again and strongly requested appellee to again come to Phoenix at the expense of the two corporations and take a second look at their proposition. Appellee answered appellants' request and flew to Phoenix in early March. Appellee was again shown through the corporate operations and dined with several directors.

On March 6, 1952, the board of directors of both corporations met jointly and interviewed appellee about becoming their general manager. There is testimony that during this meeting appellee told the joint board of directors that he would not consider employment for less than a three year term.

Following the interview, appellee was excused and the joint boards of directors then held a special closed meeting where these boards discussed the offer they would make to appellee. An original incorporator, officer and director who was present at the meeting testified that the joint boards authorized an offer of up to $10, 000 a year plus 5% of the net; discussed the three year term appellee had requested, and that there was no objection to this 'term' by any member of the boards. Both boards unanimously passed an identical resolution authorizing Smith, the president of both corporations and Walmsley, the auditor of both corporations to employ appellee as general manager of both corporations and work out the terms of employment. Smith came out of the meeting and told appellee that both boards had given him authority to employ appellee. Smith arranged a dinner engagement for appellee and Walmsley on the same evening, during which the employment terms were discussed.

The following afternoon a written contract was dictated by Smith and appellee. Smith signed two copies of the contract as president of the two corporations and gave them to appellee who said he would further consider this offer and the St. Louis offer and let Smith know his decision.

On March 20, 1952, Smith again telephoned appellee who was then in Des Moines, Iowa to learn whether appellee had reached a decision. Appellee advised Smith he would accept and would place the signed contract in the mail,

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which he did. Smith died suddenly on March 25, 1952 which was the day the signed contract arrived. The contract was for a three year term of employment at a salary of $10, 000 a year plus two per cent of the net income of the corporations for the second and third years of the agreement. Appellee went to Phoenix and...

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