Gass v. National Container Corporation

• Decision Date: 11 March 1959
• Docket Number: Civ. A. No. 2516.
• Citation: 171 F. Supp. 441
• Parties: William J. GASS, Plaintiff, v. NATIONAL CONTAINER CORPORATION, a Corporation, and Leonard Moore, Defendants.
• Court: U.S. District Court — Southern District of Illinois

171 F. Supp. 441

William J. GASS, Plaintiff, v. NATIONAL CONTAINER CORPORATION, a Corporation, and Leonard Moore, Defendants.

Civ. A. No. 2516.

United States District Court S. D. Illinois, S. D.

March 11, 1959.

Ensel, Martin, Jones & Blanchard, Springfield, Ill., and Bernard Susman, St. Louis, Mo., for plaintiff.

Barber & Barber, Springfield, Ill., for defendants.

POOS, District Judge.

I.

The plaintiff, William J. Gass, filed a complaint consisting of three counts against National Container Corporation and Leonard Moore, defendants.

The first count charges that the plaintiff had a written contract of employment for a period of five years from September 1, 1952 to August 31, 1957, in which the plaintiff was to perform services as a salesman and sales manager for defendant. The contract had an automatic renewal clause for an additional five years from the termination date or any renewal thereof. This contract could be cancelled by written notice of intention not to renew sent by registered mail at least six months prior to the then termination date.

The plaintiff alleges in Count I that the contract was executed in the City of New York, and to be carried out within the metropolitan St. Louis, Missouri territory, and that the contract was automatically renewed on August 31, 1957, and the obligations thereunder were performed by plaintiff until on or about September 19, 1957, at which time defendants discharged plaintiff in breach of the contract.

The further allegation is that on July 29, 1957, defendants, National Container Corporation and Leonard Moore, a Vice President thereof, desiring to cancel said contract and to dispense with the services of plaintiff, falsely and fraudulently represented to plaintiff that it was unnecessary for him to have the security of written contract to work for defendants; that plaintiff would have a job with defendants as long as plaintiff lived and wanted it, and that if he, plaintiff, would cancel and physically surrender his duplicate original of said written contract defendants would then and there simultaneously, with the surrender of the written contract, employ plaintiff, under all the terms and conditions as contained in said written contract, for as long as plaintiff shall live and for so long as defendant, Leonard Moore should be an employee of the defendant, National Container Corporation; that defendant Leonard Moore was an officer and Vice President of defendant corporation and was highly placed in the management and direction of the Corporation; that he was in charge of the entire central division which included the Madison Division where plaintiff was employed, and was the person to whom plaintiff was directly responsible; that plaintiff had a right to believe and rely on the truth of the representations so made by defendant; that plaintiff did believe and rely on the truth of said statements and representations, and so believing did on or about July 29, 1957, in the City of St. Louis, Missouri, cancel said written contract and physically surrender his duplicate original to defendants in accordance with the statements and representations so made to him; that the representations made to plaintiff were false and fraudulent and were known by defendants to be false and fraudulent at the time they were made, and were made by defendants with the intention and purpose of inducing plaintiff to cancel and surrender his written contract, which he did; that plaintiff did not know said statements were false, but believed in them and believed them to be true, and that defendants, after the surrender and on September 17, 1957, orally discharged the plaintiff; that all the statements and representations of defendants were made deliberately, wilfully, intentionally and maliciously.

The complaint prayed judgment for actual damages and punitive damages in the amount of $100,000.00 each.

II.

Count II of the Complaint alleges for cause of action breach of the contract, the pertinent provisions of which are as follows:

¶ 1 "The said employer hereby hires the said employee, who hereby accepts such employment, as a salesman within the Metropolitan St. Louis territory, of the corrugated and solid fibre paper products manufactured and dealt in by the said employer, its subsidiaries and affiliates, for the term and period of five (5) years commencing September 1, 1952, and terminating August 31, 1957."

¶ 4 "(a) For the services to be rendered by the said employee hereunder, the said employer shall pay to the said employee selling commissions calculated at the following rates upon the net amount of all sales personally effected by the said employee, the term `net sales' being defined herein as the gross amount of all invoices less appropriate deductions for freight, discounts, allowances and bad debts.

On the first $100,000.00 of net sales —

Four Per Cent (4%)

On the second $100,000.00 of net sales —

Three and One-Half Per Cent (3½%)

On the next $200,000.00 of net sales —

Three Per Cent (3%)

And on net sales in excess of $400,000.00 —

Two Per Cent (2%)

"(b) In the event that the employee shall be designated as sales manager of the converting plant as hereinbefore provided, he shall be compensated for such supervisory services at the rate of Five Cents (5¢) per thousand square feet upon all sales made by the sales staff which shall be under his supervision.

"(c) The said employee shall be entitled to a drawing account at the rate of Six Hundred Twenty Five ($625.00) Dollars per month, to be applied against the commissions earned hereunder. In addition thereto, the said Employee shall be entitled to be reimbursed for all reasonable selling expenses actually incurred by him in connection with his activities in behalf of the Employer's business and substantiated by appropriate vouchers, but in no event shall such reimbursable expenses exceed the sum of Four Thousand ($4,000.00) Dollars per annum. Promptly after the end of each month the said Employer shall furnish to the said Employee a statement in writing in reasonable detail setting forth the Employee's commission earnings and the appropriate adjustments for drawing account, and at the same time shall remit to the said Employee such amount as may be due him as indicated on such statement. The Employee shall indicate any objections to such statement promptly after receipt thereof.

"(d) At the termination of this contract or any renewal hereof, said employee shall be entitled to receive commissions, provided not then overdrawn, upon all orders personally secured by him and which were accepted by the said employer prior to the date of such termination, when the same are actually delivered by the employer, but all such orders accepted by the said employer subsequent to the date of such termination, shall be without obligation or other liability to the said employee, and the said employee shall not be entitled to any commissions or other payments with reference thereto."

¶ 7 "At the termination of this contract or any renewal hereof, the same shall automatically be renewed for additional periods of five (5) years each, unless either party hereto shall give to the other written notice of intention not to renew the same, to be sent by United States Registered mail, return receipt requested, at least six (6) months prior to the then date of termination. Nothing herein contained, however, shall be construed so as to extend this contract for any period beyond the employee's normal retirement date as such term is defined under any Retirement Plan which the Employer may then have in force and effect and which will cover the employee."

III.

The Third Count charged a breach of the oral contract to employ plaintiff for life, or for as long as Leonard Moore shall be employed by defendant Corporation.

The First Count of the complaint is in tort for fraud and deceit. The defendants move the Court to strike Count I on the grounds that fraud may not be predicated on promises made with a present intention not to perform them, or promises made without an intention of performance.

There are two lines of cases, one line of which announces the majority rule and the other line of which announces the minority rule. The minority rule is that fraud cannot be predicated upon a mere promise, even though it is accompanied by present intention not to perform it. The reasoning of the courts following the minority rule is that even under such circumstances the promise is not a misrepresentation of an existing fact, and that there is a mere unexecuted intention which does not constitute fraud, and that a mere breach of a contract does not amount to a fraud, and that neither a knowledge of inability to perform, nor an intention not to do so would make the transaction fraudulent.

This is an action brought in this court either under the law of Illinois or under the law of Missouri. The courts of Illinois, as well as the courts of Missouri, follow the minority rule. The courts of Illinois have had this question before it on several occasions. In the case of Miller v. Sutliff, 241 Ill. 521, 89 N.E. 651, 652, 24 L.R.A.,N.S., 735, the rule is announced as follows:

"In order to constitute fraud in law a representation must be an affirmance of a fact, and not a mere promise or matter of intention. While a statement of a matter in the future, if affirmed as a fact, may amount to a fraudulent misrepresentation, it must amount to an assertion of a fact and not an agreement to do something in the future. 2 Pomeroy's Eq.Jur. § 877; 14 Am. & Eng.Ency. of Law, 2d Ed. 47; Kerr on Fraud and Mistake, 88; Day v. Ft. Scott Investment & Improvement Co., 153 Ill. 293, 38 N.E. 567. If a promise is made to do something in the future and at the time it is not intended to perform the promise, that fact does not constitute a fraud in the law. Bigelow on Estoppel, 481; Gage v. Lewis, 68 Ill. 604; People ex rel. Ellis v. Healy, 128 Ill. 9, 20 N.E. 692; Kitson v. Farwell 132 Ill. 327,

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