Fortune v. National Cash Register Co.

• Decision Date: 23 June 1976
• Citation: 349 N.E.2d 350,4 Mass.App.Ct. 386
• Parties: Orville E. FORTUNE v. The NATIONAL CASH REGISTER COMPANY.
• Court: Appeals Court of Massachusetts

Page 350

349 N.E.2d 350

4 Mass.App.Ct. 386

Orville E. FORTUNE

v. The NATIONAL CASH REGISTER COMPANY.

Appeals Court of Massachusetts, Norfolk.

Argued Jan. 16, 1976.

Decided June 23, 1976.

Andrew F. Lane, Boston, for defendant.

David H. Locke, Wellesley (A. Arnold Lundwall, Wellesley, with him), for plaintiff.

Before HALE, C.J., and GOODMAN, GRANT, and ARMSTRONG, JJ.

ARMSTRONG, Justice.

By the first two counts of the plaintiff's amended declaration, he seeks recovery of certain bonuses claimed to be due him under a written contract with the defendant, his former employer. By count three he seeks recovery in the same amount on a quantum meruit for the fair value of services which allegedly gave rise to the bonuses. The defendant appeals from a judgment for the plaintiff in the amount of $45,649.62.

The only question we find it necessary to reach is whether the defendant's motion for a directed verdict was properly denied. ¹ We summarize the evidence most favorable to the plaintiff. H. P. Hood & Sons, Inc. v. Ford Motor Co., --- Mass. ---, ---, ^a 345 N.E.2d 683 (1976), and cases cited.

The plaintiff was employed by the defendant as a salesman under a written contract terminable at will, without cause, by either party. The contract, apparently used generally by the defendant, assigned to a salesman a 'territory', consisting not of a geographical area but of certain enumerated customer accounts. The contract provided that the salesman was to be paid a weekly salary in a fixed amount plus 'bonus credits' measured by sales in the 'territory' (i.e. to the accounts) assigned to him, whether such sales were made by him or someone else. Bonus credits were computed as a percentage of the price of products sold (with different percentages for different products), subject to adjustments not now material. The salesman was to be paid a percentage of the bonuses thus computed: seventy-five percent if the territory was assigned to him at the date of the order, twenty-five percent if the territory was assigned to him at the date of delivery and installation, and one hundred percent if the territory was assigned to him at both times; provided that the salesman's 'bonus interest in any order shall terminate . . . (i)f (with exceptions not material) shipment of the order is not made within eighteen months from the date of the order unless the (t)erritory is assigned to . . . (him) at the date of delivery and installation.' ²

In 1968 the plaintiff's 'territory' consisted of certain named chain stores in New England, including First National Stores, Inc. (First National). Around type of cash register. The plaintiff arranged that time the defendant introduced a new type of cash register. The plaintiff arranged to executives of First National in October, 1968. On November 29 First National placed an order for 2,008 of the machines, with deliveries and payments to be spread over a period of four years. While the plaintiff did not personally negotiate the order, he was credited with it by reason of the 'bonus credit' provisions of his contract.

In early 1969 the plaintiff was notified that his contract was terminated, effective December 2, 1968. He was permitted to remain in the defendant's employ thereafter in a 'sales supportive' capacity at his previous weekly salary, but without a written contract and without an assigned territory. During the eighteen-month period following the order of November 29, 1968, 774 of the ordered machines were delivered to First National. The plaintiff received seventy-five percent of the bonus credit applicable to the machines so delivered, but the remaining twenty-five percent was denied him because he was no longer assigned as salesman to the First National account when the deliveries were made. In June, 1970, the plaintiff was discharged from the defendant's employ altogether. After that date an additional 729 cash registers were delivered to First National pursuant to the order of November 29, 1968, but the plaintiff received no bonus payments on them because they had not been delivered within eighteen months of the order.

The defendant moved for a directed verdict at the close of the plaintiff's case and rested. Contrast Martin v. Hall, --- Mass. ---, --- - ---, ^b 343 N.E.2d 841 (1976). Counsel for the defendant argued to the trial judge that the plaintiff could not recover under the first two counts because there was no evidence of any breach of the plaintiff's contract and that the existence of the contract precluded recovery on a quantum meruit under count three. In denying the motion the judge ruled that there was sufficient evidence to present a jury question as to whether the defendant had terminated the contract and later fired the plaintiff in bad faith, and that a finding of bad faith would entitle the plaintiff to recover. ³ By agreement of counsel (the defendant, however, preserving its right to claim error in the denial of its motion for a directed verdict), the judge presented the case to the jury in the form of two questions (Mass.R.Civ.P. 49(a), 365 Mass. --- (1974)): '1. Did the Defendant act in bad faith . . . when it decided to terminate the Plaintiff's contract as a salesman by letter dated December 2, 1968, delivered on January 6, 1969?' and '2. Did the Defendant act in bad faith . . . when the Defendant let the Plaintiff go on June 5, 1970?' ⁴ The jury returned affirmative answers to both questions, and the judgment was entered. Of the $45,649.62 adjudged due the plaintiff, $9,272.52 represented the twenty-five percent of the bonus credit denied the plaintiff for the 774 machines delivered to First National within eighteen months after the order had been placed, and the remainder represented one hundred percent of the credit payable for the 729 machines delivered thereafter.

It is clear that the plaintiff's contract of employment as a salesman explicitly gave the defendant a power to terminate that employment at will, and that the plaintiff has been paid all the commissions to which the literal provisions of the contract entitled him. The plaintiff relies, however, on a line of cases ⁵ which hold that a broker engaged to find a buyer for real estate or merchandise may be entitled to his commission if the seller, prior to completion of all conditions which would entitle the broker to a commission, discharges the broker in bad faith in order to avoid paying him the commission for his services. For purposes of decision we assume that there was evidence to support the jury's finding, by its answer to the first question put ⁶, that the defendant terminated the plaintiff's contract as a salesman for the purpose of avoiding the incurring of further liability to the plaintiff under the contract for bonus credits applicable to the First National order. The question for decision is whether a termination for that purpose left the plaintiff entitled to the commissions he would otherwise have earned from the order. ⁷

At the outset we note two distinctions which lead us to question generally the applicability to the present case of the brokers' commission cases relied on by the plaintiff. The first is that those cases seem to involve unilateral contracts, and to arise from an offeror's attempted revocation of his offer to pay a commission for a specified result as the broker is nearing accomplishment of the result. ⁸ The rule applicable to unilateral contracts is that, until the offeree--in this context, the broker--accepts such an offer by tendering performance in accordance with its terms, no contract comes into existence. DesRivieres v. Sullivan, 247 Mass. 443, 446, 142 N.E. 111 (1924). Belliott v. Kazajian, 255 Mass. 459, 461--462, 152 N.E. 351 (1926). John T. Burns & Sons, Inc. v. Hands, 283 Mass. 420, 422, 186 N.E. 547 (1933). Maher v. Haycock, 301 Mass. 594, 596, 18 N.E.2d 348 (1938). Eastern Paper & Box Co. Inc. v. Herz Mfg. Corp. 323 Mass. 138, 140, 80 N.E.2d 484 (1948). Bartlett v. Keith, 325 Mass. 265, 268, 90 N.E.2d 308 (1950). Dragone v. Dell'Isola, 332 Mass. 11, 12--13, 122 N.E.2d 892 (1954). Lattuca v. Cusolito, 343 Mass. 747, 751--752, 180 N.E.2d 658 (1962). The line of cases on which the plaintiff relies is an exception to that rule, formulated to avoid inequities which would result if the offeror were permitted to take advantage of the rule by discharging the broker and closing the negotiations himself in order to avoid liability to the broker for a commission. The principle of those cases is discussed by leading commentators as an aspect of the law of unilateral contracts. See Corbin, Contracts, § 50, pp. 202--211 (1963); Williston, Contracts, §§ 60, 60A, pp. 185--193 (3d ed. 1957). The employment contract in the case before us, however, was bilateral from its inception, binding both parties in accordance with terms mutually agreed upon. It is questionable whether the line of cases upon which the plaintiff relies has any application in the context of bilateral contracts, where the question is not whether the defendant wrongfully prevented a contract from coming into existence, but whether the defendant's actions constituted a breach of a contract in being. Compare Elliott v. Kazajian, 255 Mass. at 462, 152 N.E. 351; Eastern Paper & Box Co. Inc. v. Herz Mfg. Corp. 323 Mass. at 140--141, 80 N.E.2d 484; Coan v. Holbrook, 327 Mass. 221, 223, n. 1, 97 N.E.2d 649 (1951); John T. Burns & Sons, Inc. v. Brasco, 327 Mass. 261, 263, 98 N.E.2d 262 (1951).

The second factual distinction is that the plaintiff's line of cases is grounded on the concept that the principal should not be permitted to enjoy the product of the broker's efforts without paying the broker the compensation promised. ⁹ 'An agent to whom the principal has made a revocable offer of compensation if he accomplishes a specified result is entitled to the promised amount if the principal, in order to avoid payment of it, revokes the offer and thereafter the result is accomplished as the result...