Davis v. Wells

• Decision Date: 30 November 1925
• Citation: 254 Mass. 118
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: ROBERT D. DAVIS & another v. FRANK O. WELLS.

254 Mass. 118

ROBERT D. DAVIS & another v. FRANK O. WELLS.

Supreme Judicial Court of Massachusetts, Franklin.

November 30, 1925

September 16, 1925.

Present: RUGG, C.

J., BRALEY, CROSBY CARROLL, & SANDERSON, JJ.

Guaranty. Contract Under seal, Construction, Performance and breach, Alteration.

A salesman made with a corporation an agreement in writing under which the corporation agreed, among other things, to supply the salesman with sufficient samples, stocks of merchandise and catalogues, and the salesman agreed in clause 1 of section 2 of the contract to obtain accepted business in a defined territory to the amount of $20,000 in twelve months, and deposited $1,000 with the company to be retained as liquidated damages in case of his failure to do so. One, who was the president and a director and active in the management and familiar with the business of the corporation, executed a bond in which he guaranteed payment of the $1,000 deposited by the salesman should the salesman

"comply with all the requirements in clause 1, section 2 of said agreement, and all other stipulations of said agreement." Held that the words of the bond, properly construed, meant that if the plaintiff secured orders to the amount of $20,000, or, being ready, willing and able to perform this part of the contract, was prevented from doing so by the company, the "requirements" are complied with.

Where, at the trial of an action by the salesman against the guarantor upon the bond above described, the jury found on evidence warranting the finding that the corporation failed "to perform its contract in such a way as to prevent the plaintiff's fulfilling his contract according to its terms," a further finding for the plaintiff was warranted.

A further provision of the contract between the plaintiff and the corporation above described was that the salesman should secure stocks consigned to him by furnishing the corporation with a surety or other acceptable bond in the amount of $1,000. There was evidence that no goods were consigned to the plaintiff, and that the manager of the company had told the plaintiff, in substance, that the matter of giving a bond could be allowed to go until such time as stock was shipped on consignment, which time, it could have been found, never arrived. Held, that

(1) Such evidence warranted a finding by the jury that the parties modified the contract so far as it related to the giving of a surety bond;

(2) In view of the defendant's intimate knowledge of the business of the corporation and his participation therein, it could have been found that he knew of the modification of the contract and assented to it;

(3) The plaintiff's failure to procure the bond above described did not as a matter of law bar recovery on the defendant's bond.

At the trial above described, it appeared that additional territory was added by the parties for the plaintiff's activities after the defendant had signed his bond, and the defendant contended that there had been a material alteration of the original agreement which he was guaranteeing and that he thereby was discharged as a guarantor. Under appropriate instructions, the judge submitted to the jury a special question as to whether the plaintiff and the company without the defendant's knowledge and consent materially altered the terms of the contract by enlarging the territory in which the plaintiff was to operate; and further instructed them, in substance, that, if the agreement giving the additional territory was not made a part of the original contract, but was made independently of it, it was immaterial; but that, if it resulted in a material change in the agreement as originally made, the defendant was released from liability unless he had knowledge of it and consented thereto. The jury in answer to a question found that the agreement giving the plaintiff additional territory was not made a part of the original contract. Held, that it could not be said that the jury's finding was unwarranted: the plaintiff therefore was not precluded from recovery.

CONTRACT upon the bond described in the opinion. Writ dated August 8, 1922.

In the Superior Court, the action was tried before Whiting, J. Material evidence, special questions submitted to the jury and their answers thereto are described in the opinion. At the close of the evidence, the defendant asked for the following rulings, among others:

"1.

Upon all the evidence the plaintiffs are not entitled to recover. "2. Upon all the evidence the plaintiffs have failed to comply with section 2, clause 1, of their contract with the Wells-Holmes Company, Inc., in that they have not sold $20,000 worth of goods within the time specified in the contract, that requirement is a condition precedent to their recovery against the defendant in this case and the verdict should be for the defendant.

"3. Upon all the evidence there has been a material alteration in the original contract between the plaintiffs and the Wells-Holmes Company without the knowledge or consent of the defendant Wells, and therefore the plaintiffs are not entitled to recover.

"4. Upon all the evidence, there being no seal on the bond signed by the defendant, there is no evidence of any consideration for the bond, and the plaintiff cannot recover.

"5. Upon all the evidence the plaintiffs failed to comply with section 2, clause 2, of their contract with the Wells-Holmes Company, namely, `To secure the stock consigned to you by furnishing us with a surety bond or other acceptable bond in the sum of $1000;' and this failure was not known by or consented to by the defendant and therefore excuses the defendant from his obligation upon the bond, and the plaintiffs cannot recover."

"8. If the plaintiffs and Wells-Holmes Company after the execution of the bond, and without the knowledge and consent of the defendant Wells, agreed to include under the contract in the territory of the plaintiffs the remainder of the state of Connecticut, or a portion of New York State, it is a material alteration of the contract for which the defendant is surety, and he is not liable to the plaintiff."

"11. If the jury find upon all the evidence that the plaintiffs failed to furnish a bond or security in compliance with clause two of section two of the contract of the plaintiffs with the Wells-Holmes Company, then the defendant F.O. Wells was released from liability upon his bond at the time of the failure so to do."

The requests were refused. There was a verdict for the plaintiffs in the sum of $1,058. The defendant alleged exceptions.

The case was submitted on briefs. T.R. Hickey, for the defendant.

F.J. Lawler, for the plaintiffs.

CROSBY, J. This is an action of contract upon a written instrument in which the defendant guaranteed, upon certain conditions, the payment of $1,000 by the Wells-Holmes Company to the plaintiff. The plaintiff is described in the writ as a corporation, but by amendment the names of Robert D. Davis and Edgar B. [P.] Hill, copartners doing business under the firm name of Davis-Hill Company, were substituted as parties plaintiff.

The Wells-Holmes Company, a corporation which acted as selling agent for several manufacturers of taps, dies, tools and similar articles, entered into a contract in writing with the plaintiffs under which the plaintiffs were to represent these several manufacturers in the sale of their products in a certain territory in the southwestern part of the State of Connecticut, particularly described in the agreement. The agreement recited that the plaintiffs agreed among other things: "1. To deposit with us the sum of one thousand dollars in consideration of the business now established in the territory as listed; said $1000. to be returned to you without interest when your total sales have amounted to $20,000. However, should you fail to secure accepted business in this amount within 12 months from date of this agreement you agree that said $1000 shall belong to us as liquidated damages, it being impossible to otherwise determine the amount of damages which we would suffer should you fail to perform. 2. To secure the stocks consigned to you by furnishing us with a surety or other acceptable bond in the amount of $1000." And the Wells-Holmes Company agreed, in part: "1. To supply you with samples and such stocks of merchandise as in our judgment will be necessary to the proper conduct of a general distribution point. 2. To make payment of commissions the tenth of the month following shipment of merchandise, or acceptance of your order. 3. To supply you with catalogues, instructions, past customers and enquiries. 4. To give you full credit for sales accepted from prospects called upon, whether going to the factory or to any other source for the period of thirty days following notification of said call to our office in New York. . . . 7. To inform you at least fifteen days in advance of any change in the net list prices." By its terms the contract was to be in force for a period of one year from June 11, 1921.

The guaranty on which the plaintiffs seek to recover from the defendant is as follows:

"BOND. "KNOW ALL MEN BY THESE PRESENTS, THAT I, Frank O. Wells of Greenfield, Mass., do hereby guarantee payment of ($1,000) One Thousand Dollars deposited with the Wells-Holmes Company as possible liquidated damages under the contract attached hereto to Davis-Hill Company should said Davis-Hill Co. comply with all the requirements in clause (1) one, section (2) two of said agreement, and all other stipulations of said agreement.

"However, should said Davis-Hill Co. fail to comply with each and every requirement in said contract, said Frank O. Wells shall be released from any and all obligations under this bond.

Frank O. Wells (seal) ...