Gillian v. Consolidated Foods Corp.

• Decision Date: 14 March 1967
• Parties: David GILLIAN v. CONSOLIDATED FOODS CORP., Appellant.
• Court: Pennsylvania Supreme Court

Page 858

227 A.2d 858

424 Pa. 407

David GILLIAN v. CONSOLIDATED FOODS CORP., Appellant.

Supreme Court of Pennsylvania.

March 14, 1967.

Rehearing Denied April 10, 1967.

Charles M. Solomon, Franklin A. Wurman, Nochem S. Winnet, Philadelphia, for appellant, Fox, Rothschild, O'Brien & Frankel, Philadelphia, of counsel.

Murray C. Goldman, Philadelphia, for appellee.

Before BELL, C.J., and MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

OPINION

JONES, Justice.

David Gillian (Gillian), the sole owner of a business concern engaged in the sale of detergents under the name of 'Uni-Clean Products' (Uni-Clean), on January 3, 1964, entered the employment of Consolidated Foods Corporation, (Consolidated), pursuant to an oral agreement which he had negotiated with James R. Tyson (Tyson), Vice-President and General Manager of Consolidated. This oral agreement provided that Consolidated would purchase Uni-Clean's inventory for $2,500, assume certain of Uni-Clean's outstanding obligations and employ Gillian in a supervisory capacity in the L. H. Parke Division of Consolidated at a salary of $15,000 per year plus $3,000 expenses and 3% Commissions on certain sales and certain fringe benefits.

After entering upon such employment, Gillian became concerned that he did not have a fixed term of employment, it being his desire to secure a five-year term of employment. On February 17, 1964, Gillian entered into an agreement in writing with Consolidated, this agreement being signed by Tyson on behalf of Consolidated. This agreement recited that in consideration of 'annual remuneration * * * in the amount of $15,000 salary and $3,000 expenses plus a 3% Commission of all Uni-Clean detergent sales', Gillian would cease any activity in the name of Uni-Clean and give to Consolidated unlimited use of the brand name 'Uni-Clean'. The agreement contained no mention of any fixed term of employment. Gillian bases his claim on this written agreement as well as an oral agreement with Tyson.

On September 11, 1964, Consolidated, acting through Tyson, discharged Gillian from its employment assigning as the reason therefor the necessity of reducing business operation costs.

Gillian then instituted an equity action in the Court of Common Pleas of Philadelphia County against Consolidated seeking (a) restraint of Consolidated from using the name 'Uni-Clean', (b) an accounting by Consolidated of all profits arising from its use of the name 'Uni-Clean' and a direction that Consolidated pay over to Gillian any amount found to be due, (c) that Consolidated pay over $7,615.30 with interest to Gillian and (d) such other relief as might be deemed proper. Upon issue joined, the matter was heard by Judge James T. McDermott. After hearing, the chancellor found (1) that Gillian was employed, under an oral and written contract, for one year commencing February 17, 1964, (2) that Gillian was wrongfully discharged on September 11, 1964, and (3) that Gillian sought to mitigate the damages but such efforts were unsuccessful. Upon such findings, the chancellor awarded Gillian damages from September 11, 1964 to February 17, 1965 in the amount of salary Gillian would have received during such period plus interest--$6,863.77--and directed Consolidated to account to Gillian for all sales under the written contract during the period from February 17, 1964 to February 17, 1965. Exceptions to the chancellor's adjudication having been dismissed by the court en banc and a final decree entered, an appeal was taken to the Superior Court which certified the appeal to this Court.

Consolidated presents six questions on this appeal: (a) whether Gillian has shown Tyson's authority to bind Consolidated to the alleged contract of employment? (b) whether there was any credible evidence to warrant a finding of a one-year employment contract? (c) whether there was any credible evidence to warrant a finding of a one-year employment contract commencing on February 17, 1964? (d) whether there was a sufficient evidentiary basis for the chancellor's finding that, prior to his employment by Consolidated, Gillian had been engaged in a profitable business? (e) where, on his own account, Gillian, subsequent to his discharge, made sales, should not the amount of any profit from such sales be taken into consideration in mitigation of damages? (f) in urging a settlement in an amount exceeding Consolidated's liability did the chancellor err?

The burden of proving the authority of Tyson to act for Consolidated was upon Gillian: Shay v. Schrink, 335 Pa. 94, 97, 6 A.2d 552 (1939); Mallisee v. Hawkins, 322 Pa. 58, 59, 185 A. 230 (1936) and authorities therein cited. While the question of the extent of an agent's authority is for the court to determine where the fact of agency depends on a written agreement (Singer Mfg. Co. v. Christian, 211 Pa. 534, 540, 60 A. 1087 (1905), yet where the 'authority is to be implied from the conduct of the parties, or where the agency is to be established by witnesses, the fact (of agency) and scope of the agency are for the (trier of facts)': Singer Mfg. Co. v. Christian, supra, p. 540, 60 A., p. 1088; Exner v. Gangewere, 397 Pa. 58, 61, 152 A.2d 458 (1959) and authorities therein cited.

Tyson was not only a vice-president but the general manager of the Parke division of Consolidated. 'The term 'manager', as applied to an officer of a corporation, conveys the idea that the management of the affairs of the company has been committed to the one thus named, and one dealing with a person so held out may assume his acts are authorized So long as they pertain to the ordinary business of the company': Bush v. Atlas Auto Finance Corp., 129 Pa.Super. 459, 465, 195 A. 757 (1937). (Emphasis supplied) In Kelly, Murray, Inc. v. Lansdowne Bank & Trust Co., 299 Pa. 236, 242, 149 A. 190 (1930), we quoted with approval the following statement in 14A, C.J., 359, 360: 'The fact that he occupies the position of general or managing agent implies, without further proof, his authority to do anything that the corporation itself may do so long as the act done Pertains to the ordinary business of the corporation'. See: Restatement, Agency 2d § 73; Faiola v. Calderone, 275 Pa. 303, 306, 119 A. 539 (1923).

'The powers of an agent are particularly broad in the case of one acting as a general agent or manager; such a position presupposes a degree of confidence reposed and investiture with liberal powers for the exercise of judgment and discretion in transactions and concerns which are incidental or appurtenant to the business entrusted to his care and management. In the absence of an agreement to the contrary, a managing agent may enter into any contracts that he deems reasonably necessary or requisite for the protection of the interests of his principal entrusted to his management. He may engage and supervise such employees as may be required and he may direct the ordinary operations of the business * * *': 3 Am.Jur.2d Agency, § 86, p. 489. ¹

Tyson testified: ² '* * * I told Mr. Gillian that we don't give contracts in our corporation, that I have no contract, and we are not going to give him a contract * * *.

Q. When you say 'contract', what do you have in mind? What type of contract?

A. An employment contract such as would spell our the terms, conditions, requirements and limitations and those things that are accepted of a contract of an employment nature.'

By virtue of his title and corporate position, Tyson had, at least, the apparent authority to enter into a one-year contract of employment. That he had the authority to employ and discharge the personnel in his division of Consolidated is uncontradicted; in fact, it was he who discharged Gillian from employment and his authority to do so is unquestioned. That Tyson had the authority to purchase a business and its assets and to assume liability for its outstanding obligations is undisputed. True it is that Tyson disclaimed the authority to enter into a contract of employment of a year's duration; however, the credibility of Tyson was for the fact finder, i.e., the chancellor in this instance, (Girsh's Trust, 410 Pa. 455, 471, 189 A.2d 852 (1963) and cases therein cited) and the chancellor, having seen and heard Tyson, characterized his testimony as 'most unsatisfactory' and his 'manner and demeanor evasive'.

From this record, we are satisfied that Gillian has shown, under the circumstances, that Tyson had authority to make a one-year contract of employment. The employment and discharge of personnel certainly falls within the ordinary and commonplace business of a corporation and within the normal and natural competency of a general manager. Particularly is this so when the general manager, concededly, has the authority to purchase other businesses, assume their liabilities and employ their personnel as well as fixing the remuneration of even top level personnel. Our review of this record reveals evidence sufficient in nature to justify a finding of authority in Tyson to employ Gillian for one year. Leonard v. American Stores Co., 131 Pa.Super. 14, 198 A. 524 (1938) and DeForest v. Northwest Townsite Co., 241 Pa. 78, 88 A. 293 (1913), upon which Consolidated relies, are factually inapposite to the instant case.

We next consider whether the contract of employment was for a year commencing on February 17, 1964. Consolidated bases its contention upon the hornbook rule that, absent contrary facts and circumstances, a...