Flaherty v. Bookhultz

• Decision Date: 31 May 1956
• Parties: Lawrence H. FLAHERTY, Respondent, v. Donald BOOKHULTZ and Albert W. Riley, copartners, d/b/a Geo. E. Zweifel and Co., Appellants.
• Court: Oregon Supreme Court

Page 856

297 P.2d 856

207 Or. 462

Lawrence H. FLAHERTY, Respondent, v. Donald BOOKHULTZ and Albert W. Riley, copartners, d/b/a Geo E. Zweifel and Co., Appellants.

Supreme Court of Oregon.

Argued and Submitted April 18, 1956.

Decided May 31, 1956.

L. V. Weiser, Portland, for appellants. On the briefs were Weiser & Bowles, Portland.

Fred B. Duffy, Portland, for respondent. On the brief were William J. Crawford and Parker & Duffy, Portland.

Before WARNER, C. J., and TOOZE, ROSSMAN, LUSK, BRAND and PERRY, JJ.

PER CURIAM.

Defendants' petition for a rehearing was allowed, and the cause was reargued on April 18, 1956. Our original opinion was handed down December 7, 1955: Flaherty v. Bookhultz, Or., 291 P.2d 221. In their petition and on oral argument defendants, in part, contended that we erred in our original opinion in the following respects:

'I.

'The court erred in finding that the pleadings did not allege matters of equitable cognizance in the following respects:

'(a) That an accounting was sought by the respondent involving transactions of an extensive and complex nature.

'(b) That a discovery was sought by the plaintiff and ordered by the court.

'(c) That a fiduciary relationship is shown from the pleading of the fact that the appellants had funds in their possession belonging to the respondent and that the records pertaining thereto were in the sole care and custody of the appellants.

'(d) That the prayer of the respondent's complaint asked for an accounting and for such other and further relief as to the court seemed meet and equitable.

'(e) That the accounting involved mutual demands.

'II.

'The court erred in failing to find that in matters pertaining to an accounting that there is concurrent jurisdiction by courts of law and courts of equity.

* * *

* * *

'IV.

'The court erred in failing to find that any defects in the pleadings and objections to the jurisdiction of a court of equity were waived by the parties.'

It is unnecessary for us to discuss in detail the several contentions made by defendants. It is frankly conceded that in our original opinion we erred in failing to recognize the fact that the subject matter alleged in the third amended complaint was not clearly beyond the pale of equitable cognizance, nor was it beyond the inherent power of equity to grant the relief demanded. The case was tried as a suit in equity and was so appealed to this court. Upon the trial there was an accounting and also a discovery. All records pertaining to commissions collected by defendants were in their possession, and an accounting was necessary. It is true that plaintiff might have proceeded at law by an action for money had and received, and in such action could have had an accounting and a discovery, but in the absence of a demurrer or other objection by defendants to the jurisdiction of equity on the ground that plaintiff had a plain, speedy, and adequate remedy at law, defendants must be deemed to have waived their objections to equitable jurisdiction. However, we do not wish to be understood as saying that parties may confer jurisdiction in equity upon agreement between themselves, either expressly or impliedly. That is not the situation in this case. We note in passing that on the original hearing in this court neither party, in his brief or an oral argument, advanced the theory that equity did not have jurisdiction in this matter. The theory erroneously advanced in our original opinion, and upon which we based our decision, was our own, and not that of the parties. This case must be tried de novo in this court as a suit in equity. The facts bring it squarely within the principles announced in the following decisions: Nelson v. Hampton, Or., 294 P.2d 329; Barnes v. Eastern & Western Lumber Co., Or., 287 P.2d 929; Barber v. Henry, 197 Or. 172, 252 P.2d 802; Walker v. Mackey, 197 Or. 197, 251 P.2d 118, 253 P.2d 280; Powell v. Sheets, 196 Or. 682, 251 P.2d 108; Yellow Mfg. Acceptance Corp. v. Bristol, 193 Or. 24, 236 P.2d 939; Ward v. Town Tavern, 191 Or. 1, 228 P.2d 216, 42 A.L.R.2d 662; Pedro v. Vey, 150 Or. 415, 39 P.2d 963, 46 P.2d 582; Hansen v. Bogan, 127 Or. 399, 272 P. 668; Elliott v. Murphy Timber Co., 117 Or. 387, 244 P. 91, 48 A.L.R. 1043.

During the time involved in this litigation defendants Donald Bookhultz and Albert W. Riley were copartners doing business under the assumed name of 'George E. Zweifel and Company,' with their place of business located in Portland, Multnomah county, Oregon. Defendants' business consisted chiefly of the solicitation of orders for the sale and purchase of heavy machinery and equipment, upon which sales they were paid commissions by the selling manufacturers. They also took orders for and sold machinery and equipment parts.

On January 15, 1950, the plaintiff Lawrence H. Flaherty was employed by defendants as a salesman under an oral contract of employment for an indefinite term. For his services plaintiff was to be paid on a commission basis. According to plaintiff, the oral agreement of employment provided that he was to receive and defendants agreed to pay for his services 50 per cent of all commissions received by defendants from the factory or manufacturers for the sales and purchases of machinery and equipment, except sawmill machinery and equipment, the amounts due plaintiff to be paid him when such machinery and equipment so sold were delivered to and paid for by the ultimate purchasers and when the commissions on such sales had been received by defendants; that upon the sales of sawmill machinery and equipment, plaintiff was to be paid commissions only on sales which he himself promoted; that plaintiff was to have a drawing account of $300 per month to be charged against commissions earned by him; that plaintiff was to be reimbursed by defendants for monies expended for gas and oil in the operation of his automobile in connection with the business and other out-of-pocket expenses incurred as the result of his employment, and also three cents per mile mileage for the use of his car for business purposes.

Defendants denied that the employment agreement provided for the reimbursement of plaintiff for automobile expenses, but on this appeal those matters are not in issue. Defendants' version of the contract is expressed in the testimony of defendant Bookhultz as follows:

'Q. Now, do you recall any discussions at that time regarding the conditions of his employment with your company? A. Yes, yes.

'Q. Who was present at that time, at the time that that was discussed? A. Mr. Riley and Mr. Flaherty and myself.

'Q. When was that--about? A. Very close to January 15th, within a day or two.

'Q. Were there a series of discussions over a series of days or was it a short single discussion? A. Well, it was a single discussion.

'Q. Will you tell the Court--relate to the Court the discussion had at that time? A. We had just taken over the company--Mr. Riley and myself, and Zweifel, that we needed someone in Flaherty's capacity, also, to be in our organization and we made an offer to him to come with us.

'Q. What was that offer? A. Well, we wanted him to handle sales and service, and actual collections on certain specified accounts that we would direct as the occasion arose.

'Q. And did you discuss the extent of the subjects he was to sell, or anything such as that? A. Well, fundamentally, his work was to be limited to machine tools sales and service.

'Q. What further direction was there at that time? A. Well, we--we were all in agreement on the fact that we would pay him 50% of the gross commission or profit on a given sale, where it was determined it was his job.

'Q. Where it was 'determined it was his job,' you say? What do you mean by that? A. Well, if we mentioned--as we mentioned before, at the end of each month, our numerical sales record was discussed, either by Mr. Flaherty and myself or Mr. Flaherty and Mr. Riley; at the end of each month we marked these records so our bookkeeper would know that the particular invoices and its profits would be divided between Flaherty and ourselves.

'Q. Now, how did you make that determination as to whether or not it would be Flaherty's--how were you to do that? A. We just sat down and did it at the end of the month.

'Q. How did you decide that Flaherty's account was A account or B account? A. Dependent on the work done, who took the account.

'Q. Did he accede to that method of handling it? A. We did it every month and we didn't have any complaint on it.

'Q. What discussion, if any, regarding the contract with him as to payment, service, and such things as that, that is, when would it be paid? A. We naturally couldn't pay him until after the customer had paid us and an invoice or a factory commission were paid us.

'Q. Was he doing anything else in connection with the sales that he was making? A. Well, he had to provide his own automobile.

'Q. And what was--was there any discussion at that time as to how the automobile expense should be handled? A. The automobile expense was entirely to be his because of the rate of commission being paid it wasn't possible for us to furnish a car or allow him anything on the use of his car. However, we did agree at that time that he should use a credit card and that when his monthly bill came to him, and we would pay it for him and charge his commission against it. With that item, and, I believe, at a later date we also paid the invoices for some tires which he purchased and, also, I believe, one case, or perhaps there would be more, that we paid invoices rendered against repair on his automobile and those are all to the best of my knowledge charged against his account.

'Q. Then, what was the agreement with respect to compensation for the use of his car? A. Well, there was no compensation.

'Q. No compensation. Was there at that time mileage discussed? A. No.

'Q. Was it discussed at any other time? A. No, not to my knowledge.

'Q. Was there any discussion regarding servicing or...