Gebhard v. Royce Aluminum Corporation

• Citation: 296 F.2d 17
• Decision Date: 08 November 1961
• Docket Number: No. 5855.,5855.
• Parties: Paul C. GEBHARD, Plaintiff, Appellant, v. ROYCE ALUMINUM CORPORATION, Defendant, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

296 F.2d 17 (1961)

Paul C. GEBHARD, Plaintiff, Appellant, v. ROYCE ALUMINUM CORPORATION, Defendant, Appellee.

No. 5855.

United States Court of Appeals First Circuit.

Heard October 5, 1961.

Decided November 8, 1961.

Rehearing Denied December 15, 1961.

Phillip Cowin, Boston, Mass., with whom Fox, Orlov & Cowin, Boston, Mass., was on brief, for appellant.

Thomas D. Burns, Boston, Mass., with whom William H. Clancy and Burns & Levinson, Boston, Mass., were on brief, for appellee.

Before WOODBURY, Chief Judge, and HARTIGAN and ALDRICH, Circuit Judges.

ALDRICH, Circuit Judge.

This diversity action by a salesman for commissions contains a saga of alleged overreaching, much of which we need not detail. The question is, who did what, and to whom. The trial court felt that the plaintiff was the significant offender, disagreeing with the jury, and directed a verdict for the defendant under Rule 50(b), Fed.Rules Civ.Proc. 28 U.S.C.A. Plaintiff appeals.

On April 9, 1956, plaintiff wrote a letter to Royce Aluminum Corporation, defendant-appellee, purporting to "recap" the oral agreement they had reached on April 3 under which plaintiff was to be defendant's exclusive sales representative in Metropolitan New York City. One of the provisions recited was that plaintiff was to receive "5% of the gross amount of all invoices to all accounts obtained or serviced by me." Written acknowledgment was requested. Defendant made no written reply until April 27, when it wrote, making no mention of much that was in plaintiff's letter, referring to a later conference, and confirming that it had been agreed that plaintiff was to have the "Manhattan-Long Island area exclusively" and to receive a 3% commission until the defendant was on a three-shift basis, and then 5%. This last was subsequently changed by a letter from the defendant, under date of May 10, to include 4% on two shifts. It was stipulated at the trial that the relationship was terminable at the will or "pleasure" of either party. According to the complaint, it was terminated by the defendant "abruptly and in bad faith" in April 1960, after which plaintiff brought this action.

Pausing here, it is difficult to see how an agreement at will can be terminated in bad faith, other than with respect to non-payment of commissions or other matters already accrued. See Brooks v. Gregory, 1934, 285 Mass. 197, 205, 189 N.E. 195; cf. McDonald v. Fitch, 1933, 281 Mass. 528, 183 N.E. 848. Plaintiff overstated his case still further by complaining that "arbitrarily, in breach of the agreement," defendant in April 1960 sought to change plaintiff to a non-exclusive salesman, at a lower rate of commission. It must be clear that when employment is at will the employer is free to terminate and make a new proposal at any time. See Norton v. Brookline, 1902, 181 Mass. 360, 361, 63 N.E. 930. This elementary misconception permeates the entire case. On the other hand, its correction does not solve all of our problems.

It was apparently acknowledged that if the original agreement should be interpreted to cover all sales in the area, including those not obtained or serviced by the plaintiff, and was never modified in any respect, plaintiff was owed some $32,000. Defendant contends that the agreement was modified from time to time and that plaintiff accepted the changes and cannot now recover. The court, by its action, ruled that defendant had fully established this defense by cross-examination of the plaintiff (the only witness) and by the written exhibits.

We can dispose shortly of many of plaintiff's points. Plaintiff's brief states that he had "an express agreement * * * to pay * * * commissions on all sales and deliveries in the specified area," meaning, whether he had any connection with them or not.¹ The express mention of what commissions were to be paid upon is in plaintiff's "recap" letter of April 9. It states the reverse: accounts "obtained or serviced by me." While defendant's subsequent letters never specifically confirmed that portion of the letter of April 9, they did not refer to many other matters stated therein which quite apparently were accepted and were part of the agreement. On the entire record we think that the letter of April 9 must be found to state the initial contract as to matters expressly changed by the defendant's letters of April 27 and May 10, 1956. These made no change in this respect. Plaintiff is not entitled to commissions on accounts he neither obtained nor serviced.

Throughout the trial plaintiff took the position that whenever defendant proposed a different commission rate, whether before accepting some particular order or, generally, as to all future orders, it acted arbitrarily and without right. After agreeing that the employment was at will, he was asked, "XQ. * * * you knew the rate of commission was something that was subject to agreement from time to time? A. No, it was not * * *. No reductions, no." Plaintiff's explanation of defendant's letter stating that if he did not like the changed condition he need not continue to work (which he continued to do) was that thereafter "he accepted the checks because he had to," but that he never agreed to any change, and hence the original agreement remained in full force. It is difficult to think that even a layman could believe this. Since defendant could discharge plaintiff at any time, it could equally initiate modifications at any time, other than as to accrued matters. Plaintiff's only alternatives were to accept the new conditions, or quit. Flint v. Youngstown Sheet & Tube Co., 2 Cir., 1944, 143 F.2d 923, 925; Swalley v. Addressograph Multigraph Corp., 7 Cir., 1946, 158 F.2d 51, 54, certiorari denied 330 U.S. 845, 67 S.Ct. 1086, 91 L.Ed. 1290. By continuing to work, plaintiff, knowing the newly proposed terms, accepted them as a matter of law.

This disposes of the major part of plaintiff's claim. There are two matters, however, which the defendant seems not to have refuted. According to plaintiff the two- and three-shift increases were not even purported to be cancelled until January 1, 1958. It appears that in a few instances prior thereto plaintiff may not...