Gishen v. Dura Corp.

• Decision Date: 20 June 1972
• Parties: Edward F. GISHEN v. DURA CORPORATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 117

285 N.E.2d 117

362 Mass. 177

Edward F. GISHEN v. DURA CORPORATION.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued April 5, 1972.

Decided June 20, 1972.

Allan van Gestel, Boston (Kenneth A. Cohen, Boston, with him), for defendant.

John D. Dwyer, Boston, for plaintiff.

Before TAURO, C.J., and SPIEGEL, REARDON, BRAUCHER and HENNESSEY, JJ.

BRAUCHER, Justice.

The plaintiff Gishen brought this action of contract to recover his commission on a $708,000 sale to Radio Corporation of America (RCA) of 100 'Mach 10' type computer terminals designed for use in the program of the division of employment security of the Commonwealth. There was a jury verdict for Gishen in the sum of $82,458.84. The case is here on the defendant's exceptions to the judge's rulings on evidence and to his instructions to the jury and his refusal to give requested instructions. Other exceptions were not argued and are therefore waived. Our task has been made more difficult by the defendant's confusing and repetitive presentation, which the plaintiff followed while protesting that he 'would have preferred . . . a different--and perhaps more logical--order.'

The evidence consisted in large part of documents, the authenticity of which was not in issue, supplemented by the testimony of Gishen, admissions and answers to interrogatories by the defendant Dura Corporation (Dura), and the deposition of Surface, the general manager of Dura's business machines division from August, 1965, to April, 1967. We summarize that part of the evidence which is not in substantial dispute.

Gishen was a seasoned salesman. From February, 1964, until May, 1965, he was president and seventy-five per cent owner of Dura Business Machines of New England, Inc. (DBMNE), a corporation which sold Dura products under an agency agreement. In the spring of 1965, DBMNE could not meet its payroll or pay its bills, and in May, 1965, Gishen became the manager of Dura's Boston branch. The assets of DBMNE were transferred to Dura, and DBMNE became a shell. During July and August, Gishen as an officer of DBMNE signed two notes for a total of $34,472.25 representing DBMNE's debt to Dura. He refused to sign the notes in his individual capacity.

Gishen's employment as branch manager was the subject of a contract consisting of two parts, a printed part dated June 15, 1965, which was Dura's standard branch manager's contract, and a handwritten amendment dated June 25, 1965. The two were executed together in August, 1965. That contract terminated on or about February 28, 1966, except for certain provisions relating to the RCA order, and on or about March 1, 1966, a new employment agreement with Gishen became effective. A 'payroll notice' dated March 1, 1966, set out new rates of compensation, but provided, 'NOTE: MASS. STATE ORDER TO BE HANDLED ACCORDING TO ORIGINAL AGREEMENT.'

The RCA order was dated April 7, 1966. On May 2, 1966, Surface wrote to Gishen that commissions on the RCA order to the Boston office, based on $1,330.50 per unit, would amount to more than $137,000, and would 'give you approximately $10,000.00 extra in personal income.' Gishen wrote back stating that he realized that the commission figures 'are based on a net sales figure after engineering costs and discounts are applied.' He then set out a computation based on Surface's $137,000 figure and showing a '(f)inal (n)et' over $52,000, and asked for clarification.

Surface's figures were not in fact based on 'a net sales figure.' They were instead based on a 'list price,' and a price reduction to RCA and engineering and other costs were subtracted directly from a 'base commission' computed at thirty-five per cent of 'list price.' If the commission per unit had been computed at thirty-five per cent of the 'net sales figure,' it would have come to more than $2,200 instead of $1,330.50. Pursuant to the standard branch manager's contract, the books of the Boston branch, including the records from which commissions were calculated, were kept at the Dura plant in Detroit. No copy of the RCA order was made available to Gishen.

On May 16, 1966, in response to Gishen's request for clarification, Dura's controller wrote him 'to detail the commission arithmetic' on the RCA order. He did not correct Gishen's erroneous assumption that the commission figures were based on 'a net sales figure,' but set out deductions from the '(f)inal (n)et' computed by Gishen to arrive at a cash 'total to manager' of $10,919. This figure included 'service income' which Surface later testified was only due if Gishen remained in Dura's employ until the equipment was installed. Gishen replied that the breakdown was 'appreciated and accepted.' In August, 1966, Dura lent Gishen $5,000 to be repaid out of the RCA commission or any other commission he might receive.

On December 28, 1966, Gishen was fired. At that time he requested payment of Dura's outstanding obligation to him. Dura's general manager promised payment within a week, but none was made. The machines were not finally delivered and billed for until February 29, 1968. The jury determined, for interest purposes, that the date of the breach of Dura's contract with Gishen was March 30, 1968. No commission payments due to the plaintiff on the order were ever made.

Gishen contended that the RCA order was to be handled according to the 'original agreement,' meaning the printed terms of the standard branch manager's contract dated June 15, 1965, and that the May, 1966, correspondence showed the proper method of computation of the amount of commission except for items not disclosed to him and except for certain corrections. Dura contended that the handwritten terms of the August, 1965, contract were applicable, and that under these terms Gishen was not entitled to any commission. Alternatively, Dura relied on testimony by Surface, contradicted by Gishen, that before the RCA order was obtained Gishen agreed to offset against his commission any price reduction given RCA from a quoted price and all special engineering costs, and agreed that 'service commissions' would go to the Boston office rather than to Gishen personally. Dura also contended that the correspondence of May, 1966, bound Gishen to the commission figure computed by Dura. Gishen contended that any agreement made in the May correspondence could be avoided because Dura failed to disclose material facts, or because the agreement was conditioned on his employment by Dura until the machines were installed, as otherwise he would not be entitled to the 'service income' included in the amount due him by Dura's letter of May 16. These issues, and others described below, were submitted to the jury.

1. Gishen testified that after he was fired and had demanded payment of his commission, he was referred to Bennett, 'the new Walter Kidde general manager who was taking over all the activities of Dura,' and that Bennett said,' 'We will get this right out for you.' When nothing was received, Gishen testified, he called again and Bennett 'flatly told me that they were not going to pay it and they didn't become a billion dollar corporation by paying people.' No objection or motion to strike was made by Dura at the time of admission of this evidence, but the next morning Dura made a motion to strike. The motion was untimely. S.J.C. Rule 2:43, 351 Mass. 767. Clark-Rice Corp. v. Waltham Bleachery & Dye Works, 267 Mass. 402, 411, 166 N.E. 867; Leonardi v. Peabody, 351 Mass. 706, 222 N.E.2d 686, and cases cited; GRANT V. GOLDEN, MASS., 274 N.E.2D 453.^A We do not pass on Gishen's contentions that Dura's reason for refusing payment was relevant to several issues in the case and that the judge's charge guarded against unfair use of this evidence.

2. Dura argues that it was error to allow Gishen to testify to what he thought the phrase 'original agreement' in the payroll notice of March 1, 1966, referred. Dura concedes that such testimony could be admissible for the limited purpose of explaining the contract's meaning, but maintains that the testimony, as admitted, constituted an improper opinion by Gishen as to a matter of law contrary to the rule in S. D. Shaw & Sons, Inc. v. Joseph Rugo, Inc., 343 Mass. 635, 639, 180 N.E.2d 446. There was no error. The payroll notice embodied an admitted modification of the August, 1965, contract. The notice emanated from Dura, it was not an integrated agreement, and it was entirely ambiguous in its reference to the 'original agreement.' Gishen testified that on the basis of a conversation with Dura's sales manager he understood that he was to get the thirty-five per cent commission on the RCA order. The thirty-five per cent commission was provided for in the printed agreement dated June 15, 1965, but was negated by the handwritten addition of June 25, 1965. Gishen's testimony amounted to no more than an attempt to reconstruct the substance of his conversation with Dura's sales manager, and was admissible to give meaning to Dura's ambiguous communication. Globe Ticket Co. of New England v. Boston Retail Grocers' Assn., 290 Mass. 235, 238, 195 N.E. 309; IMPER REALTY CORP. V. RISS, MASS., 265 N.E.2D 594;^B Bridgewater Washed Sand & Stone Co. Inc. v. Bridgewater Materials, Inc., Mass., 282 N.E.2d 912 (1972). See Restatement 2d: Contracts (Tent.Draft No. 5, March 31, 1970), §§ 227, 232.

Dura makes a similar argument with respect to testimony by Gishen that the Boston branch was 'entitled' to a commission on the RCA order, with respect to deposition testimony of Surface on cross- examination that Gishen was 'entitled' to his commission, and with respect to Surface's deposition testimony as to the details of proper calculation of the commission. This testimony was useful in enabling the judge and jury to apply the agreement to its subject matter and 'to understand the subject matter of the agreement as it lay in the minds of the parties.' Rizzo v. Cunningham, 303 Mass. 16, 21, 20 N.E.2d 471, 474. W...