Lind v. Schenley Industries, Inc.

• Decision Date: 06 April 1960
• Docket Number: No. 12880.,12880.
• Parties: Dan LIND, Appellant, v. SCHENLEY INDUSTRIES INC.
• Court: U.S. Court of Appeals — Third Circuit

278 F.2d 79 (1960)

Dan LIND, Appellant, v. SCHENLEY INDUSTRIES INC.

No. 12880.

United States Court of Appeals Third Circuit.

Argued October 6, 1959.

Reargued March 8, 1960.

Decided April 6, 1960.

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Bernard Kramer, Newark, N. J., for appellant.

John Milton, Jr., Jersey City, N. J. (Milton, McNulty & Augelli, Jersey City, N. J., Milton B. Seasonwein, John J. Hanlon, Jr., New York City, on the brief), for appellee.

Before BIGGS, Chief Judge, and GOODRICH, McLAUGHLIN, KALODNER, STALEY, HASTIE and FORMAN, Circuit Judges.

BIGGS, Chief Judge.

This is a diversity case. Lind, the plaintiff-appellant, sued Park & Tilford Distiller's Corp.,¹ the defendant-appellee, for compensation that he asserts is due him by virtue of a contract expressed by a written memorandum supplemented by oral conversations as set out hereinafter. Lind also sued for certain expenses he incurred when moving from New Jersey to New York when his position as New Jersey State Manager of Park & Tilford terminated on January 31, 1957. The evidence, including Lind's own testimony, taking the inferences most favorable to Lind, shows the following. Lind had been employed for some years by Park & Tilford. In July 1950, Lind was informed by Herrfeldt, then Park & Tilford's vice-president and general sales-manager, that he would be appointed assistant to Kaufman, Park & Tilford's sales-manager for metropolitan New York. Herrfeldt told Lind to see Kaufman to ascertain what his new duties and his salary would be. Lind embarked on his new duties with Kaufman and was informed in October 1950, that some "raises" had come through and that Lind should get official word from his "boss", Kaufman. Subsequently, Lind received a communication, dated April 19, 1951, signed by Kaufman, informing Lind that he would assume the title of "District Manager". The letter went on to state: "I wish to inform you of the fact that you have as much responsibility as a State Manager and that you should consider yourself to be of the same status." The letter concluded with the statement: "An incentive plan is being worked out so that you will not only be responsible for increased sales in your district, but will benefit substantially in a monetary way." The other two district managers under Kaufman received similar memoranda. Lind assumed his duties as district sales manager for metropolitan New York. During the weeks following Lind's new appointment, Lind inquired of Kaufman frequently what his remuneration would be under the incentive plan referred to in the letter of April 19, 1951, and was informed that details were being worked out. In July 1951, Kaufman informed Lind that he was to receive 1% commission on the gross sales of the men under him. This was an oral communication and was completely corroborated by Mrs. Kennan, Kaufman's former secretary, who was present. On subsequent occasions Lind was assured by Kaufman that he would get his money. Lind was also informed by Herrfeldt in the autumn of 1952 that he would get a 1% commission on the sales of the men under him. Early in 1955, Lind negotiated with Brown, then president of Park & Tilford, for the sale of Park & Tilford's New Jersey Wholesale House, and Brown agreed to apply the money owed to Lind by reason of the 1% commission against the value of the goodwill of the Wholesale House. The proposed sale of the New Jersey Wholesale House was not consummated.

Notice to produce various records of Lind's employment was served on Park & Tilford but one slip dealing with Lind's appointment as district manager was not produced and is presumed to have been lost. The evidence was conflicting as to the character of the "incentive compensation" to be offered Lind in connection with his services as a district manager. Herrfeldt designated the incentive an "added incentive plan with a percentage arrangement". Kaufman characterized the plan as "bonuses and contests". Weiner, Park & Tilford's Secretary, said that the incentive was a "pension plan." Kaufman testified, however, that the pension plan had nothing to do with the bonus incentive he referred to.

The record also shows that Lind commenced his employment with Park & Tilford in 1941, that from 1942 to 1950 he worked on a commission basis, that on August 31, 1950, he became an assistant sales manager for the New York metropolitan area at $125 a week, which was raised to $150 a week on October 1, 1950, plus certain allowances. After Lind became district manager on April 19, 1951, he continued to receive the same salary of $150 a week but this was increased to $175 in January 1952. On February 1, 1952, Lind was transferred from New York to New Jersey to become state manager of Park & Tilford's business in New Jersey. He retained that position until January 31, 1957, when he was transferred back to New York.

Park & Tilford moved for but was denied a directed verdict at the close of all the evidence under Rule 50, Fed.R.Civ. Proc., 28 U.S.C. However, the court below invoked Rule 50(b)² and submitted the case to the jury subject to a later determination of the legal questions raised by Park & Tilford's motion to dismiss. The court then requested the jury to answer the following five questions: "1. Did Kaufman offer plaintiff one percent of gross sales effected by the salesmen under plaintiff?" "2. If the answer to question 1 is yes, when was plaintiff to commence such commissions?" "3. If the answer to question 1 is yes, when was the commission arrangement to terminate?" "4. Did defendant cause the plaintiff to believe that Kaufman had authority to make the offer to plaintiff referred to in question 1?" "5. Was plaintiff justified in presuming that Kaufman had the authority to make the offer?"

The answers provided by the jury amounted to a determination that Kaufman did offer Lind a 1% commission on the gross sales of the men under him; that the agreement commenced April 19, 1951; that the agreement terminated February 15, 1952, the date of Lind's transfer to New Jersey; that Park & Tilford did cause Lind to believe that Kaufman had authority to offer him the one percent commission; and that Lind was justified in assuming that Kaufman had the authority to make the offer. In addition, the jury awarded Lind $353 as reimbursement for moving expenses incurred by him at the termination of his position as New Jersey State Manager.

The jury did not give a dollar award for the commission deemed owing but the court "molded" the verdict in accordance with the jury's findings and judgment was rendered in favor of Lind against Schenley for $36,953.10 plus interest for the commission and $353.00 for the moving expenses. However, the judgment was nullified by the court's decision to enter a verdict for the defendant under Rule 50(b) in accordance with Schenley's first motion. The court, also under Rule 50(b), granted a new trial in the event that the judgment in favor of the defendant was subsequently reversed. See D.C. N.J.1958, 167 F.Supp. 590.

The Judgment for Defendant

The decision to reverse the verdict for Lind with respect to the 1% commission was based on two alternative grounds. First, the court found that Lind had failed to prove a case of apparent authority in that the evidence did not disclose that Park & Tilford acted in such a manner as to induce Lind to believe that Kaufman had been authorized to offer him the 1% commission. Also the court concluded that the issues of "actual" and "implied" authority had somehow been eliminated from the case. Second, the court reasoned, that even if the jury could find apparent authority, the alleged contract was not sufficiently definite nor specific to be enforceable against Park & Tilford. The trial judge rejected a contention by Park & Tilford that a document signed by Lind on January 31, 1957, upon receiving his last pay check as New Jersey State Manager, should be construed as a release of his claims for commissions.

A federal court sitting in a diversity case must apply the same law as would a court of the state in which the district court is located. Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. We therefore must look initially to New Jersey law. But the contract at bar was made and was to be performed in New York and since we must apply the New Jersey doctrines of conflicts of law, Klaxon Co. v. Stentor Elec. Mfg. Co., 1941, 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477, the substantive law of contracts and agency applicable here will be that of New York. James H. Rhodes & Co. v. Chausovsky, 1948, 137 N.J.L. 459, 60 A.2d 623; Polyckronos v. Polyckronos, 1939, 17 N.J.Misc. 265, 8 A.2d 265.

The principle of Erie R. Co. v. Tompkins does not determine the division of functions between court and jury. This is controlled solely by Federal law. Ettelson v. Metropolitan Life Ins. Co., 3 Cir., 137 F.2d 62, certiorari denied 1943, 320 U.S. 777, 64 S.Ct. 92, 88 L.Ed. 467; Diederich v. American News Co., 10 Cir., 1942, 128 F.2d 144. Federal law provides that the answers to questions relating to the scope and extent of an agent's apparent authority are for the triers of the facts, here the jury. See Gilmore v. Royal Indemnity Co., 5 Cir., 1956, 240 F.2d 101. Parenthetically, it may be noted that the New York rule on this point is identical. Hedeman v. Fairbanks, Morse & Co., 1941, 286 N.Y. 240, 36 N.E.2d 129. The jury clearly found that Kaufman had apparent agency power to offer Lind the 1% commission and this verdict may be reversed only if there is no substantial evidence which could support the verdict. Snead v. New York Cent. R. Co., 4 Cir., 1954, 216 F.2d 169; Stanford v. Pennsylvania R. Co., 7 Cir., 1948, 171 F.2d 632.

The problems of "authority" are probably the most difficult in that segment of law loosely termed, "Agency". Two main classifications of authority are generally recognized, "actual authority", and "apparent authority". The term "implied...