Davidson v. Robie

• Decision Date: 16 January 1963
• Parties: James M. DAVIDSON v. Richard S. ROBIE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 371

187 N.E.2d 371

345 Mass. 333

James M. DAVIDSON v. Richard S. ROBIE.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Dec. 3, 1962.

Decided Jan. 16, 1963.

John M. Bashaw, Boston, for plaintiff.

James D. St. Clair, Boston, for defendant.

Before WILKINS, C. J., and WHITTEMORE, CUTTER, KIRK and SPIEGEL, JJ.

CUTTER, Justice.

The declaration in substance alleges an express contract in that Davidson, at Robie's request, rendered service in connection with selling stock of Boston Storage Warehouse Company (Storage), that Robie agreed to pay Davidson 'ten per cent * * * of any profit realized by * * * [Robie] from the transaction, and * * * with regard to any sales of stock received by * * * [Robie] in connection with * * * [the] transaction,' and that Robie received such a profit but did not account to Davidson. Robie filed a general denial and pleaded the six year statute of limitations. See G.L. c. 260, § 2 (as amended through St. 1948, c. 274, § 1). There was a verdict for Davidson of $9,050 taken under leave reserved. Robie saved exceptions to the denial of his motions for a directed verdict and for entry of a verdict under leave reserved. A motion for a new trial was denied upon condition that Davidson remit $750 of the verdict, which he did. To the denial of this motion, also, an exception was saved. The evidence is stated in its aspect most favorable to Davidson.

About 1951 Robie caused Davidson to be employed for six months by a company controlled by Robie. Davidson's salary was $10,000. Robie asked Davidson 'to keep his eyes open for deals on the outside. Robie was interested in them and told Davidson he would take care of him.'

Robie 'became interested in the stock of * * * Storage * * * as a result of * * * [Davidson's] mentioning it to him six or seven months after' Davidson had been employed by Robie's company. Robie then owned no stock in Storage. Subsequently Davidson called Robie's attention to other deals, including one relating to Taunton Pearl Works. Robie 'had an agreement with * * * [Davidson] to pay him a commission with respect to the Taunton Pearl Works * * * but [claimed that] he had no such agreement' as to Storage. The Taunton Pearl Works deal was put in writing (see fn. 1, infra) at Robie's suggestion. There was 'no written agreement * * * [about] the stock of * * * Storage * * * and Robie did not suggest' one.

In 1951, Davidson told Robie that one Babson owned 20% of the stock of Storage and that two other groups could not obtain control because of Babson's interest. Robie, in Davidson's presence, called one Nordblom (who was in one of these groups) and thereafter told Davidson that 'Nordblom had agreed to sell his 40% control to Robie. Robie told Davidson that he would make the same deal with him as he had on Taunton Pearl Works.' Davidson's recollection was that Robie then proposed as compensation 'ten percent of the profit when * * * Robie finally made a profit.' ¹ Compare the testimony described in fn. 3, infra.

Davidson was aware that 'Robie intended to buy all' the stock of Storage. 'Davidson was able to have Babson agree to sell' his stock but 'had nothing to do with the acquisition of the Nordblom stock.' Davidson knew also that Robie was undertaking to purchase all the stock of Storage, that he had made a deposit of $80,000, and that he intended to borrow the balance of the total purchase price of 'about a million dollars.' Davidson did not assist Robie in getting financing.

'The deal that Davidson was trying to put through * * * was * * * [one] in which Robie could own 100% of the stock of' the then existing Storage corporation (the old company). The deal actually made was one in which Robie became owner of 20% of the stock of a new company. Robie found that he 'could not borrow * * * the money necessary to complete the purchase. Rather than lose his deposit he employed * * * [one] Harber to help him find a purchaser for all the shares.' Harber 'introduced Robie to Messrs. Berdon and Levine,' who formed a new corporation (the new company) in May, 1952, to acquire the stock of the old company. The new company 'made a tender to all shareholders of the old company to purchase their stock' and eventually acquired all the stock of the old company which was then dissolved. Robie transferred to the new company all his rights to purchase stock in the old company and received back $55,000 of his $80,000 deposit and a 20% stock interest in the new company.

Except for the $25,000 (not returned from the $80,000 deposit) 'Berdon and Levine * * * put up all of the money (for the old company stock) * * * approximately $975,000.' Davidson 'did not bring Berdon and Levine to Robie' and 'never talked to * * * Harber.' He did talk 'with Berdon and Levine before they put money in and explained the warehouse to them and its future possibilities.'

Robie caused Davidson to be employed by the new company at an annual salary of $15,000. In 1957, Robie sold his 20% interest in the new company to Berdon and Levine for $103,750. ²

Davidson left the employ of the new company in 1953. He received no compensation from Babson with respect to the sale of Babson's stock. When Berdon and Levine came into the deal and 'the original deal * * * was changed over,' Davidson did not make any claim to Robie for 10% of the profits or for a commission. He first made such claim in 1957 or 1958 'after he found out that Robie had sold his 20% interest in the new company. ³

1. Robie contends that there was no evidence of any valid contract or of the terms of such a contract. See George W. Wilcox, Inc. v. Shell Eastern Petroleum Products, Inc., 283 Mass. 383, 388, 186 N.E. 562; Hurwitz v. Parkway Country Club, Inc., 343 Mass. 661, 665, 180 N.E.2d 94; Jacoby v. Koufman, Mass., 183 N.E.2d 878; ^a Kelley v. Hansen, 254 F.2d 99, 104 (1st Cir.). ⁴ Cf. Noble v. Mead-Morrison Mfg. Co., 237 Mass. 5, 18-19, 129 N.E. 669; Simons v. American Dry Ginger Ale Co., Inc., 335 Mass. 521, 523-526, 140 N.E.2d 649. Davidson testified to an arrangement that was not the usual agreement for a broker's commission. Cf. Bloomberg v. Greylock Broadcasting Co., 342 Mass. 542, 546-547, 174 N.E.2d 438. Cf. also Smith v. Plant, 216 Mass. 91, 98, 103 N.E. 58. There was no written contract except as the terms of the Taunton Pearl Works deal (see fn. 1, supra) were referred to in the oral arrangements described by Davidson. It is not clear whether, or to what extent, Davidson was required to perform any specified services in carrying out any deal. He does not appear to have been a broker (see Restatement 2d: Agency, § 2, comment b; § 445 et seq.) in the sense of being employed to negotiate for Robie, or to introduce the parties to each other, or to be the effective cause of arranging a particular transaction. His own testimony suggests that he did only three things, viz. (a) he rocognized that the old company presented a business opportunity, knew who its shareholders were, and discovered that Babson was willing to sell his shares; (b) he reported the circumstances to Robie; and (c) he 'talked with Berdon and Levine before they put money in and explained the * * * possibilities.' ⁵ The indefinite arrangement discussed in the testimony called at most for preliminary investigation by Davidson of possible business ventures, and a disclosure of them to Robie which, if profitable, would give rise to compensation in the nature of a commission, or, perhaps what is sometimes called a 'finder's fee,' to be paid 'to one who brings to [the promisor] a deal out of which he makes money.' See Cray, McFawn & Co. v. Hegarty, Conroy & Co., Inc., 27 F.Supp. 93, 97, fn. 1 (S.D.N.Y.) ⁶ affd. per cur. 109 F.2d 443 (2d Cir.)

The evidence about the content of the alleged contract comes only to this. Davidson was asked 'to keep his eyes open for' interesting deals. Robie 'told Davidson he would take care of him' and later 'that he would make the same deal with him as he had on the Taunton Pearl Works,' which was 'ten percent of the profit when * * * Robie finally made a profit.' This was slightly inconsistent (see fn. 3, supra) with another part of Davidson's testimony in which he asserted that Robie had also promised him 10% 'of the operating profits of the company.' There was written evidence about the Taunton Pearl Works arrangement (see fn. 1, supra).

Even upon this imprecise and scanty evidence (and the evidence of Robie's subsequent conduct), we think the jury were warranted in concluding, at least by reference to the Taunton Pearl Works letter, (1) that Robie asked Davidson to put 'deals' before him for consideration and gave Davidson the reasonable expectation that he would be paid for doing so (see Williston, Contracts [3d ed.] § 36); (2) that, when the Storage deal was mentioned to Robie, he agreed to pay Davidson 'ten percent of the profit' from sale of the interest which Robie might acquire in Storage (see fn. 1), to be measured by the 'difference between the sale price and the purchase price plus all expenses'; (3) that Robie indicated by his conduct that he expected to carry on negotiations himself (see Bloomberg v. Greylock Broadcasting Co., 342 Mass. 542, 546-547, 174 N.E.2d 438; see also Kuffler v. List, 144 F.Supp. 776, 778-779 [S.D.N.Y.]) and required no further services from Davidson by way of negotiation or otherwise; and (4) that the compensation was to be payable with respect to any profitable sale transaction reasonably and proximately growing out of the Storage proposal brought to Robie by Davidson. See Corleto v. Prudential Ins. Co., 320 Mass. 612, 616-617, 70 N.E.2d 702, 169 A.L.R. 375; Morad v. Haddad, 329 Mass. 730, 734-735, 110 N.E.2d 364; Seckendorff v. Halsey, Stuart & Co., 259 N.Y. 353, 356-357, 182 N.E. 14. See also Bloomberg v. Greylock Broadcasting Co., 342 Mass. 542, 547-548, 550, 174 N.E.2d 438.

Various circumstances had bearing upon whether it was reasonable upon the evidence (and permissible...