Cole v. Industrial Fibre Co., Inc.

• Decision Date: 25 March 1931
• Docket Number: 469.
• Citation: 157 S.E. 857,200 N.C. 484
• Parties: COLE et al. v. INDUSTRIAL FIBRE CO., Inc., et al.
• Court: North Carolina Supreme Court

157 S.E. 857

200 N.C. 484

COLE et al. v. INDUSTRIAL FIBRE CO., Inc., et al.

No. 469.

Supreme Court of North Carolina

March 25, 1931

Appeal from Superior Court, Mecklenburg County; Sink, Special Judge.

Action by J. R. Cole and another, partners, trading as Glenn Commission Company, against the Industrial Fibre Company Inc., and another. From the judgment, both parties appeal.

New trial.

Submission of contract for sale of goods on commission to jury to ascertain intention of parties who had construed and applied it in practical operation of business held error.

Civil action to recover (1) commissions alleged to be due under exclusive representative's sales agreement, and (2) damages for the breach of said agreement.

The first disputed cause of action is for commissions on orders accepted and booked, but later canceled or upon which deliveries were never made.

By the terms of the contract between the parties, dated June 30 1926, the plaintiffs were "appointed exclusive representatives" for the sale of products of the Industrial Fibre Company (and its successor, Industrial Rayon Corporation), manufacturers of rayon yarns, in six Southern states, Virginia, North Carolina, South Carolina, Georgia Alabama, and Tennessee, for a period of eighteen months, with the privilege of renewal from year to year. The right to refuse any or all orders was expressly reserved in the contract, with the proviso that, in case orders exceeded capacity of output, proportionate shipments would be allotted to said territory, and equal co-operation given at all times "in sales and deliveries," in the same manner and under the same terms as proportional allotments are made to other territories and other agents.

"In consideration of the above and as compensation for their services, the Industrial Fibre Company will pay to the Glenn Commission Co. a commission on all net sales accepted by the Industrial Fibre Company, Inc., which come within the territory mentioned, at the rate of 1 1/2%."

This agreement was modified by supplement, February 23, 1927 which cut down the territory of the plaintiffs to the states of Virginia, North Carolina, and Tennessee.

In consideration of this reduction of territory, the Industrial Fibre Company agreed to change the rate of commission of 1 1/2 per cent. "on such sales," allowed the plaintiffs under the original contract, to "a new rate of commission, as follows: On orders which we accept priced under $1.00 per pound 0 1/2%. On orders which we accept priced from $1.00 to $1.14 per pound 1%. On orders which we accept at $1.15 per pound or more 2%. It is understood between the parties that all other terms in the original contract dated June 30, 1926 by and between the parties, excepting those above mentioned, shall remain the same in full force and effect until the termination of said agreement."

The contract was terminated on August 22, 1927. Its unexpired term, therefore, was a little more than four months. The second cause of action is to recover damages for its alleged breach.

In the first cause of action, plaintiffs sue for commissions on orders sent in and accepted by the defendants during the amicable period of the agreement, but which were canceled before they were or could be filled; also for commissions on certain shipments made to the Hillcrest Silk Mills, with plants in New Jersey and North Carolina, because said shipments were made into plaintiffs' territory, though they had nothing to do with securing orders for said shipments, which came through a New York agency.

Plaintiffs concede that commissions under the contract "on all net sales" were paid monthly--accompanied by itemized statements--and that they never made any claim for commissions on cancellations prior to bringing the present suit. There is no contest over commissions for sales completed and deliveries actually made.

The trial court held that the original agreement was ambiguous and submitted to the jury the question as to whether the parties intended thereby to contract for commissions on cancellations; and held further, as a matter of law, that commissions on cancellations were recoverable under the supplemental agreement, from and after its execution, February 23, 1927.

The jury returned the following verdict:

"1. What commissions, if any, is the plaintiff entitled to recover upon orders which the defendants accepted and booked prior to August 22, 1927, but upon which deliveries were not made or completed? Answer: $2,800.00.

"2. What commissions, if any, is the plaintiff entitled to recover upon sales made to the Hillcrest Silk Mills prior to August 22nd, 1927? Answer: $5,606.04.

"3. Did the defendant Industrial Fibre Company breach its contract with the plaintiff as alleged in the complaint? Answer: Yes.

"4. If so, what damages, if any, is the plaintiff entitled to recover of the defendant by reason of such breach? Answer: $14,000.00."

On the coming in of the verdict, the plaintiffs tendered judgment, including therein interest on the amounts awarded. No interest was allowed on the sums awarded by the jury prior to the rendition of the judgment, from which ruling the plaintiffs appeal.

Judgment on the verdict for plaintiffs, from which the defendants appeal, assigning numerous errors.

Cansler & Cansler and John M. Robinson, all of Charlotte, for plaintiffs.

MacLean & Rodman, of Washington, N. C., Beckerman & Felsman, of Cleveland, Ohio, and P. C. Whitlock, of Charlotte, for defendants.

STACY, C.J. (after stating the case).

It was error to submit the original contract to the jury to ascertain the intention of the parties, and to hold that the supplemental agreement, from and after its execution, February 23, 1927, covered commissions on cancellations. Mining Co. v. Smelting Co., 122 N.C. 542, 29 S.E. 940. The parties themselves, during the peaceful life of the contract, construed it otherwise and so applied it in the practical operation of their business.

The general rule is that, where, from the language employed in a contract a question of doubtful meaning arises, and it appears that the parties themselves have interpreted their contract, practically or otherwise, the courts will ordinarily follow such interpretation, for it is to be presumed that the parties to a contract know best what was meant by its terms, and are least liable to be mistaken as to its purpose and intent. Greene County v. Nat. Bank, 193, N.C. 524, 137 S.E. 593; Wearn v. R. Co., 191 N.C. 575, 132 S.E. 576; Lewis v. Nunn, 180 N.C. 159 104 S.E. 470; Guy v. Bullard, 178 N.C. 228, 100 S.E. 328; Plumbing Co. v. Hall, 136 N.C. 530, 48 S.E. 810; 2 Williston on Contracts, § 623; 13 C.J. 546. "Parties are far less liable to have been mistaken as to the meaning of their contract during the period while harmonious and practical construction reflects that intention, than they are when subsequent differences have impelled them to resort to law, and one of them then seeks a...