Griswold v. Heat Inc.

Citation108 N.H. 119,229 A.2d 183
Decision Date28 April 1967
CourtSupreme Court of New Hampshire

McLane, Carleton, Graf, Greene & Brown and James R. Muirhead, Manchester, for plaintiff.

Sullivan, Gregg & Horton, Nashua, for defendants.

LAMPRON, Justice.

When Heat was incorporated in New Hampshire in 1956 its stockholders and directors were Kretschmar, Harris and the defendant Illig, each holding 500 shares. Its business, the distribution of heating equipment and boilers, was based in Nashua and operated by Kretschmar, as Harris and Illig had businesses of their own, the former in Portland Maine, the latter in Fitchburg, Massachusetts.

Plaintiff Griswold, a certified public accountant, was associated with Heat from its beginning. He installed its accounting system, kept the stock book records, the records of meetings of the directors and the stockholders, counseled and advised on bookkeeping and accounting procedures, and on the financial operation of the company. The Trial Court found that Griswold is a seventy-eight year old man with a life expectancy in excess of the remainder of the contract in dispute, who is somewhat deaf, has sciatica, but is alert, moves briskly and he presently is still active in his profession as a certified accountant as a member of a large Portland firm of accountants.

When Kretschmar died in May 1957, the corporation bought his 500 shares of stock. The remaining stockholders, Harris and Illig, because of their own full time interests, agreed to continue Heat only if a manager could be obtained and if Griswold agreed to continue to serve the corporation as he had in the past. This was arranged and thereafter Griswold, who became the holder of one share of stock, served as director, assistant treasurer, clerk, and continued as financial advisor to the corporation. For these services Griswold received $300 per month, which was reduced to $100 per month in 1960, when Heat had financial reverses, and continued at that rate until January 1, 1964.

Prior to December 2, 1963, Harris notified Illig that he was interested in disposing of his stock in Heat to him. On that date Harris transferred his shares to Illig who became owner of 998 of the 1000 shares outstanding, Mrs. Illig owning one share and Griswold the other. Illig testified that in connection with this purchase he was desirous that Griswold continue to serve Heat in the same manner as he had in the past and that Griswold agreed to do so for $200 per month which Illig agreed to pay. Both Harris and Griswold, who with Illig then constituted the board of directors of Heat, testified that was the agreement between Illig and Griswold.

Although Illig admitted that the above was an agreement he sought and obtained, he denied that the agreement was in writing, stating that it rested on his 'verbal agreement.' However the Trial Court properly found as a fact that the contract on which plaintiff relies appears in the corporate records of the December 2, 1963 special meeting of Heat's board of directors.

The Corporate minutes relating thereto read as follows:

'Voted: That Heat Incorporated, a New Hampshire corporation or its successor or successors, if any, by this vote of the directors of the corporation here assembled, does contract to pay monthly to Ernest H. Griswold not less than two hundred dollars beginning January 1, 1964 for such services as he, in his sole discretion may render, the term of the contract to be not less than five years from January 1, 1964 unless terminated earlier by the death of Ernest H. Griswold. A copy of this vote attested by a majority or all of the directors of this corporation shall constitute the written contract to be delivered forthwith to the said Ernest H. Griswold.'

The Trial Court properly found that copies of the above vote were signed on that day by all the three directors of Heat, including defendant Illig, and constituted a written contract, copies of which were retained by the plaintiff.

The Court further found as follows: 'The plaintiff during the year 1964 performed approximately the same services as he had previously performed and was paid by the corporation for the entire twelve months of 1964. On December 8, 1964 the defendant, Ernest E. Illig, notified the plaintiff, who was then in Florida, of his intention to have the corporation terminate any further payments to the plaintiff as of January 1, 1965, and further stating that in the event of any other employment of the plaintiff by the corporation it would be on a fee basis. There was a substantial acrimonious exchange of letters and telegrams between the plaintiff and the defendant during this period, and the defendant called a Special Meeting of the Directors on December 29, 1964 at his home, at which two of the then three Directors (the Director replacing Harris being Mrs. Illig), terminated the employment of the plaintiff by vote, and the plaintiff has not been asked to do any duties since then, nor has he received any compensation since then.'

The Trial Court in transferring without ruling plaintiff's right to recover on the contract found 'specifically that the only question in which the Court has not found for the plaintiff on the contract is whether or not the language 'for such services as he', (the plaintiff) 'in his sole discretion may render', renders this contract voidable.'

If plaintiff is entitled to recover on this contract, the Trial Court found 'that at the present time there would be due on the contract $2200.00, and that * * * he is entitled to $2200.00, puls the value as of the present date of the right to receive $200.00 per month for 37 months more forthwith, plus interest on the $2200.00 to date.'

Defendants take the position that Griswold's promise by its terms gives the plaintiff such an option in regard to the performance required of him as to render his promise illusory and insufficient to constitute consideration for a bilateral contract between the parties. See Towle v. Wood, 60 N.H. 434, 436.

Their contention is based on a well established legal principle. 1 Williston, Contract, s. 105A, pp. 424, 425 (3rd ed., Jaeger). However, it is equally well recognized that, if the exercise of the option by its holder involves a detriment to him or a benefit to the promisee, his promise constitutes sufficient consideration for the promise of the other party and a binding contract results between them. Flannagan v. Kilcome, 58 N.H. 443; H. P. Hood & Sons v. Heins, 124 Vt. 331, 337, 205 A.2d 561; 1 Williston, Contracts, s. 104, p. 399 (3rd ed., Jaeger). Therefore the issue with which we are concerned stated succinctly, is the following: Does Griswold's promise or obligation 'for such services as he, in his sole discretion, may render' constitute sufficient consideration for Heat's promise to pay him $200 per month for 5 years in accordance with the terms of their agreement.

It has long been the rule in this state that 'the proper interpretation of a contract is that which will make it speak the intention of the parties at the time it was made.' Salmon Falls Mfg. Co. v. Portsmouth Co., 46 N.H. 249, 255; McDonald v. Texcraft Products Company, 91 N.H. 411, 412, 20 A.2d 638. It follows that in construing the written agreement of these parties, all of its provisions, its subject matter, the situation of the parties at the time, and the object intended to be effected will be considered in arriving at the sense of the words they used. A Williston Contracts, s. 629, pp. 916-918 (3rd ed., Jaeger). This is especially true, where, as in this case, there is a dispute between the parties as to what was intended by the particular words used in describing Griswold's promise. Lefebvre v. Waldstein, 101 N.H. 451, 456, 146 A.2d 270; River College v. St. Paul Fire Ins. Co., 104 N.H. 398, 402, 187 A.2d 799.

There was evidence that the nature of the services rendered by Griswold to Heat from its origin in 1956 to December 2, 1963, the date of the agreement, were well known to both Griswold and Illig. The latter testified that on the above date when he purchased Harris' interest he wanted Griswold to continue to serve the corporation as 'he had over the years.' He asked Griswold if he was willing to continue in 'this fashion,' at $200 a month and Griswold said he would. The latter testified that Illig agreed to pay him $200 per month for his 'usual services' the nature of which was known to Illig. This insight of the...

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