Gill v. Computer Equipment Corp.

• Decision Date: 30 June 1972
• Docket Number: No. 384,384
• Citation: 292 A.2d 54,266 Md. 170
• Parties: Earl F. GILL v. COMPUTER EQUIPMENT CORPORATION.
• Court: Maryland Court of Appeals

Page 170

266 Md. 170

292 A.2d 54

Earl F. GILL v. COMPUTER EQUIPMENT CORPORATION.

No. 384.

Court of Appeals of Maryland.

June 30, 1972.

Courtland K. Townsend, Jr., Silver Spring (Clark & Cromwell, Silver Spring, on the brief), for appellant.

Robert L. Burchett, Rockville (Miller, Miller & Canby, Rockville, on the brief), for appellee.

Argued before BARNES, McWILLIAMS, SINGLEY, SMITH, DIGGES and IRVING A. LEVINE (spec. assigned), JJ.

SMITH, Judge.

Appellant, Earl F. Gill (Gill), sued appellee, Computer Equipment Corporation (Computer), for breach of contract in allegedly failing to honor an employment contract. A jury returned a verdict in favor of Gill in the amount of $20,000, which was set aside when the trial court entered judgment n. o. v. in favor of Computer, the defendant, upon its seasonably filed motion. The second count of Gill's declaration asked for a declaratory judgment that a convenant not to compete was void. The trial court ruled against Gill upon that count also. Gill has filed appeals from both actions of the trial court. We shall affirm

Gill and B. J. Fadden had been partners in a manufacturers' representative business known as Eastronics. They later incorporated under the name of Eastronics, Inc. In 1969 conversations took place between the executive vice-president of Computer and Messrs. Gill and Fadden culminating in a contract under which shares of Eastronics stock were exchanged for shares of Computer, Gill and Fadden were employed by Computer, provision was made for bonuses to them based upon the earnings of a new division to be known as 'Peripheral Systems Division of Computer Equipment' set up to take over the business of Eastronics, an annual salary of $25,000 each was agreed upon as to Gill and Fadden, and each stockholder agreed that 'should he leave the employment of Computer for any reason, he (would) not compete with Computer for a period of two (2) years following such termination of employment.'

The relationship between the parties terminated when Computer sent Gill a telegram on July 8, 1970, advising that sales were not developing satisfactorily, that Gill's employment was terminated that date 'with salary including vacation paid thru end of July,' and that his

'rights to any future CEC shares earned under terms purchase agreement between CEC and shareholders of Eastronics (would) of course be protected for the term of the agreement.' This suit followed on September 2, 1970.

JUDGMENT N.O.V.

The jury returned a verdict in the amount of $20,000 in favor of Gill. Gill had sought to prove that the true intent of the agreement between him and Computer was to employ him for a definite term of three years, commencing on May 28, 1969, when the agreement was executed. The trial judge permitted the introduction of testimony of prior discussions between Gill and Computer's representative because he felt that the written agreement was rendered ambiguous by an apparent conflict between two paragraphs. On the motion for judgment n. o. v. the court reversed itself, holding that it had erred in permitting admission of this testimony, that the contract was not ambiguous. It further observed:

'However, assuming this evidence had been properly admitted, we think the jury's verdict was wrong because it was against the clear weight of the evidence.'

We consider this case bearing in mind the oft quoted rule that on appellate review of a motion for judgment n. o. v. the evidence and the reasonable inferences to be drawn from it must be considered in the manner most favorable to the party opposing the motion, in this instance, Gill. Lusby v. First Nat'l Bank, 263 Md. 492, 499, 283 A.2d 570 (1971).

Section 11.01 of the contract provided that '(e)ffective immediately upon Closing Computer agree(d) to employ each of the Stockholders at an annual salary of $25,000.00, and the Stockholders agree(d) to accept such employment and devote their full time and best efforts thereto.' It was silent as to the period of employment. The bonus provision provided for additional shares for The two sections originally regarded as conflicting were § 13.04 and § 13.06 which read:

Gill and Fadden in Computer[292 A.2d 56] based upon the earnings of Peripheral Systems Division 'for the calendar years 1969, 1970, and 1971.'

'13.04 Entire Agreement. This Agreement contains the entire agreement between the parties hereto and supersedes any and all prior agreements, arrangements or understandings between the parties relating to the acquisition of Eastronics by Computer. No oral understandings, statements, promises or inducements contrary to the terms of this Agreement exist. No representations, warranties, covenants or conditions, express or implied, whether by statute or otherwise, other than as set forth herein, have been made by either Stockholders or by Computer. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition, or of any other term, provision or condition of this Argeement. This Agreement cannot be changed or terminated orally.'

'13.06 Survival of Representations, Etc. All representations, warranties and covenants made by Stockholders and by Computer (as the case may be) in this Agreement or pursuant hereto, shall be deemed joint and several (except as otherwise expressly stated) and made for the purpose of inducing Computer or the Stockholders (as the case may be) to enter into this Agreement, and shall survive the Closing and remain operative and in full force and effect regardless of any investigations at any time made by or on behalf of the party or parties to whom such representations or warranties are On direct examination of Gill there was but a single reference to the term of the employment contract. The record is:

made, and shall not be deemed merged in any document or instrument executed or delivered at the Closing.'

'Q. Were there any specifics discussed between you and Mr. Fadden on the one hand and Mr. Gundy and Mr. Moore on the other hand with respect to the term of your employment? A. Yes, we talked. They illustrated to us the method of remuneration. They proposed a salary of $25,000.00 and illustrated how in the first year and second year and third year the bonus plans would operate.

'Then there was some discussion as to the exact number of shares that we were to receive for Eastronics.

'At the conclusion of it when we agreed on the number of shares everybody jumped up and I remember very plainly we all shook hands and Mr. Gundy said, 'We are glad to have you aboard. We will send you a written contract which will obligate you to us for three years, but we hope you will stay longer than that.'

'Then the meeting was over.

'Q. That was said by Mr. Gundy? A. That was said by Mr. Gundy to Mr. Fadden and I at the meeting.

'Q. And the bonus contingent shares and so on you are relating are the same as set forth in the agreement? A. Yes.'

On cross-examination of Gill the record is in part as follows:

'Q. Let's back up a minute.

'I believe you testified that you first met Mr 'Q. Now, you say that you came to a meeting of the minds of this merger in New York? A. Yes.

                Gundy sometime in 1968; is that correct?   A.  Yes
                

'Q. How was that meeting of the minds consummated, if you understand what I mean?

'How did you know that they knew you had an agreement? A. Well, we agreed on their number of stock for the exchange of Eastronics and everybody got up and shook hands and Phil said, 'Welcome aboard. We will be sending you the contract.'

'Q. Was there anything in that agreement reduced to writing at that time? A. No.

'Q. Had it been reduced to writing prior thereto? A. No.

'Q. I believe you testified Mr. Gundy shook your hand and said, 'Welcome aboard. You are committed to CEC for three years.'? A. He said, 'We will be sending you a written contract which obligates you to CEC for a three-year period, but we hope you will stay longer.'

'Q. Before you said that you had a meeting of the minds? A. Yes, he had been discussing the three-year period, at least three years, of which there was to be remuneration based upon sales and upon bonuses and shares of stock and so forth. This seemed to be the culmination of everything.

'Q. You say he was discussing remuneration? A. He very carefully outlined how remuneration was to take place and how to get the shares (in) the first, second and third year.

'Q. That deals with the pay-out and compensation for the purchase of Eastronics? A. Oh, no. That has nothing to do with that.

'The purchase of Eastronics was incidental 'Q. Prior to Mr. Gundy making this alleged statement and the handshake, was there any specific discussion between you and Mr. Gundy as to the period of your employment with CEC? A. No, we assumed when we were talking and he talked about three years it was three years. We were talking about employment and salaries and bonuses we could earn and we assumed we were going to be there to earn them.

to the whole thing. It was us he wanted. This was a method of acquiring us since we had a business.

'Q. Was it your assumption prior to that handshake you were being employed for three years? A. Yes, really, in fact, we had expectations of making more money without CEC at that time and if it hadn't been for the fact we were going to be employed for three years, that we had some degree of security built in at that point of time, we weren't about to take less salary.

'Q. You say that with all this discussion in this hotel room about this three-year period and it was your assumption that related to the terms of employment? A. Yes, it wasn't all that discussion, it was in the discussion.

'Q. When he mentioned the obligation for three years with the handshake was that the first you heard of the three-year employment? A. No, we had been discussing the employment and the...