Canaras v. Lift Truck Services, Inc.

• Decision Date: 01 August 1974
• Docket Number: No. 256,256
• Citation: 272 Md. 337,322 A.2d 866
• Parties: George T. CANARAS v. LIFT TRUCK SERVICES, INC.
• Court: Maryland Court of Appeals

Page 337

272 Md. 337

322 A.2d 866

George T. CANARAS v. LIFT TRUCK SERVICES, INC.

No. 256.

Court of Appeals of Maryland.

Aug. 1, 1974.

Marvin I. Singer, Baltimore, for appellant.

Samuel S. Schenker, Baltimore (Samuel Blibaum and Fine & Klauber, Baltimore, on the brief), for appellee.

Argued before MURPHY, C. J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and O'DONNELL, JJ.

O'DONNELL, Judge.

The appellant, George T. Canaras (Canaras), a Maryland attorney in the full-time employ of the Social Security Administration, brought suit in the Circuit Court for Baltimore County against Lift Truck Services, Inc. (Lift Truck) for breach of a contract of employment whereunder he was to render to Lift Truck services 'as a member of its board of directors, as a consultant to the general manager and as an arbitrator', as well as other part-time professional services and advice. Disappointed that the trial court (Raine, J.), following a non-jury trial, entered a judgment in his favor, for $2,200.00 instead of the $41,448.84 ¹ he claimed, Canaras asks us to reverse. We decline to do so. Beginning in about 1965, when Canaras prepared the incorporation documents, he had from time to time performed part-time legal services for Lift Truck, had 'offered business guidance', participated in meetings, assisted in obtaining a franchise, drafted agreements, had discussed a pension plan, handled some collection matters, and had, in at least one tort litigation, engaged as cocounsel with insurance counsel. For such services he was paid on a per hour basis, except in collection cases where his compensation was a percentage of the recovery.

Lift Truck is a small closely held corporation specializing, as its name connotes, in the servicing and repair of material-handling vehicles. The principals, Messrs. Kenneth M. Gent, president, Frank J. Szumlanski, vice president, and William K. Hufham, Sr., secretary-treasurer, were not only its stockholders, but constituted as well the board of directors. Each possessed mechanical and technical expertise, but was generally unskilled in business management. In mid-1971, wishing to devote themselves exclusively to the technical aspects of the operation, they discussed the employment of a general manager to run its day to day business operations. The principals had decided upon Leroy W. Applegate, then the sales manager of Lift Truck, to be promoted to general manager. ² Canaras testified that such discussions also involved his retention as a consultant to such a general manager and as an arbiter of any potential rifts between the general manager and the principals of Lift Truck.

On his own initiative, at a meeting held on December 1, 1971, Canaras submitted to the principals two proposed contracts of employment-each pre-dated December 1, 1971-one formalizing the employment of Applegate as general manager and the other proposing his employment. Canaras' contract basically proposed that he be employed on a one year basis, from December 1, 1971 to December 1, 1972, at a net salary of $200.00 per month, for services not to exceed eight hours per month. Included in the proffered agreement was a provision for its renewal, as set forth in Paragraph Ninth, which has here become the principal source of contention. That paragraph reads as follows:

'Ninth: The Employer shall have the option to renew this agreement and to extend Employee's employment upon the same terms and provisions as are contained herein for one additional period of Five years (5) years; such renewal shall take effect automatically unless the Employer shall give to the Employee written notice of its election not to renew this contract at least nine full months prior to November 1, 1972. This contract shall then automatically be renewed for another additional five year period unless the Employee shall notify the Employer of his election not to renew this contract, such notice to be given nine months prior to November 1, 1977.'

Canaras submitted at the same time, similarly pre-dated as December 1, 1971, proposed minutes of a board of directors meeting and of a special meeting of the stockholders-(not yet held)-undertaking to record the execution of a contract with a management consultant (himself) and the execution of a contract with a general manager, as well as his election to the board of directors.

The evidence is uncontradicted that at that meeting on December 1, 1971, the proposed contracts were submitted, read and discussed, but the officers and directors refused to accept the contract for Canaras' employment. Hufham stated that he 'wanted to consult his attorney' to have him inspect the Canaras proposal, and his attorney advised against execution of the contract; Szumlanski was 'concerned about the cost', the 'financial burden' to be assumed by Lift Truck under such a contract. The officers and directors at that meeting advised Canaras that the documents were not acceptable and they would not sign them. Not to be thwarted, however, by such lack of enthusiasm on the part of the principals for his employment Canaras-apparently by his persistence-resubmitted the contract proposals at meetings of the board held on December 9, 1971, April 12, and May 4, 1972, at each of which, after similar discussions, the board equally rejected their execution. Within the interval David Monoker, the accountant for Lift Truck, who was also an attorney, reviewed the Canaras proposal and similarly advised the board not to execute it.

At a meeting of the stockholders and of the board on May 18, 1972, each of the principals was present as were Applegate, Monoker and Canaras. At that meeting Applegate's contract as general manager was executed even though he had been serving in that capacity since December 1971. He testified that he never requested such a contract, did not believe that he needed a written contract of employment, that the subject matter had been initiated by Canaras and that he had executed the contract 'at the request of the directors.' While Applegate's contract was being discussed Canaras requested that he leave the meeting; Monoker left as well. The Canaras contract which had been drafted on his initiative and which was originally presented by him at the meeting of December 1, 1971-and had been regularly thereafter rejected-came to be executed. The evidence was undisputed that no signing of either of the contracts, nor of the minutes-although dated December 1, 1971-occurred until May 18, 1972.

Messrs. Gent, Szumlanski and Hufham-all called as witnesses by Canaras-each testified that they had no intention of executing Canaras' employment contract, had no recollection of having so executed it, intended only to execute Applegate's contract and the minutes of the meeting; that all the papers had been submitted together and could only explain the execution of the Canaras contract by concluding that it was 'part of the bunch of papers' submitted to them for signature by Canaras whom they trusted as their attorney.

Notwithstanding these protestations, Gent, the president, acknowledged the authenticity of his signature on the Canaras contract, as did Hufham, a witness to both signatures; all identified their signatures to the stockholders' minutes and Hufham acknowledged the genuineness of his signature to the minutes of the board of directors meeting.

At lunch time, on June 13, 1972, Canaras visited the office of Lift Truck; he advised the bookkeeper-office manager that he was then 'on the pay roll'-although she had received no information from anyone placing him in that status-and he directed that she prepare a check for him in the net amount of $200.00. ³ The check was hand carried to Gent and Hufham who were at work in the service area of the shop and was jointly signed by them. When the matter was discussed that very afternoon with the principals she was instructed by Applegate to transfer the Canaras payment from the pay roll account and record it as 'payment for legal services.' On July 6, 1972, Canaras had turned over a check from a collection matter and simultaneously had received his $170.00 percentage fee for such work. After several unsuccessful attempts to locate Canaras he was advised by Monoker, on or about August 1, 1972, that his services were no longer required; his request for a salary check for July was not honored and he was formally thereafter requested to return all books and records.

The trial court, although finding that there was a confidential attorney-client relationship between Canaras and Lift Truck, found no evidence of fraud. The court further found that the principals, whom he described as 'high grade mechanics' and who impressed him as being 'extraordinarily obtuse', could not be allowed to repudiate the execution of the Canaras contract by merely stating 'We don't remember signing it, and as far as we are concerned, we didn't sign it.' Having found in fact that the contract was executed on May 18, 1972, the court concluded that 'at the time it was signed the automatic renewal provision contained in Paragraph Ninth was completely nugatory since it could not, under any circumstances, be complied with.'

Although Canaras claimed damages for an 11 year interval by concluding that the contract twice renewed itself for two additional five-year periods since Lift Truck 'did not give him written notice of its election not to renew (the) contract at lease nine full months prior to November 1, 1972,' he was awarded damages at $2,200.00 (for 11 months) for the breach of a one-year contract beginning May 18, 1972.

The appellant here argues that the trial court impermissibly rewrote his employment contract by holding that Paragraph Ninth was 'nugatory', that by the execution of the contract on May 18, 1972, Lift Truck thereby waived the provision providing it the option not to renew the contract. As a subordinate argument he contends that the denial by the principals of Lift Truck of the execution...