Gubernik v. Han-Dee Pak, HAN-DEE

• Decision Date: 07 February 1984
• Docket Number: Nos. 46789,HAN-DEE,46811,s. 46789
• Citation: 668 S.W.2d 574
• Parties: Sandy GUBERNIK, Plaintiff, v.PAK, a corporation, Defendant.
• Court: Missouri Court of Appeals

Page 574

668 S.W.2d 574

Sandy GUBERNIK, Plaintiff, v. HAN-DEE PAK, a corporation, Defendant.

Nos. 46789, 46811.

Missouri Court of Appeals,

Eastern District,

Division Four.

Feb. 7, 1984.

Motion For Rehearing and/or Transfer to

Supreme Court Denied March 29, 1984.

Application to Transfer Denied

May 15, 1984.

Burton H. Shostak, St. Louis, for plaintiff.

Mark T. Keaney, St. Louis, for defendant.

SMITH, Judge.

The trial court ordered an accounting by defendant on commissions due to plaintiff. Following a trial on the accounting the court entered judgment for plaintiff in the amount of $19,700.87. Defendant appeals from the action of the trial court in ordering an accounting; plaintiff appeals from the award made. Our review is that mandated by Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976) and we review the facts most favorably to the findings and judgment of the trial court.

In 1976, plaintiff was engaged in the business of manufacturing and selling packaged premoistened applicators bearing the trade name of TowelWets. This business was conducted through his solely owned corporation, Portion Control Corp. In mid-1976 plaintiff was in financial difficulty and in danger of losing the machinery used to produce TowelWets. He entered into negotiations with defendant, a manufacturer and seller of pre-packaged condiments such as those used by airlines and fast food restaurants. These negotiations resulted in a letter from defendant to plaintiff which is set out in full in the margin. ¹ The letter was never signed by plaintiff, but the three machines referred to in paragraph 1 were picked up in St. Louis by defendant and moved to its plant in Atlanta. No "formal documents" were thereafter prepared. From the date of the letter until the end of 1977, defendant paid commissions to Gubernik as provided by the letter. In 1978 defendant ceased paying commissions to Gubernik. The machines were never returned to plaintiff nor was he paid anything for them. In 1981 defendant ceased manufacturing TowelWets because of unprofitability.

The trial court found that the July 22, 1976, letter constituted a contract between the parties and that plaintiff was entitled to an accounting thereunder. Defendant appeals from that determination contending that Gubernik never accepted the contract and that no meeting of the minds occurred between the parties. ² We find no merit to these contentions.

It is important to note the nature of the transaction between the parties. Gubernik transferred to Han-Dee Pak his manufacturing equipment and the right to make and sell his product bearing his trade name. In return for that he was to receive commissions on all TowelWets sold. Those commissions were to be computed on two different bases. For customers which were not originally Gubernik's he would receive a straight 4% commission. For customers originally his or subsequently obtained by him, he was to receive the difference between the defendant's "bottom line" cost of goods and the price for which the product was sold. This "bottom line" figure included a 10% profit to defendant. Gubernik was authorized to establish the price to be charged to customers. Gubernik, however, undertook no obligation under the letter to engage in any sales activities. He had an incentive for so doing in the commissions he would receive for customers generated by him and the possibility of termination of the agreement if defendant did not feel Gubernik was generating sufficient business to justify the equipment. In the latter event Han-Dee Pak was to return the equipment. That never happened.

The parties operated in accordance with the letter agreement for a year and one-half. Gubernik transferred the machines to defendant which then began making the payments thereon, referred to in paragraph (1) of the letter. Han-Dee Pak purchased from plaintiff the items referred to in paragraphs (4) and (5). Customers of Gubernik's were invoiced directly by Han-Dee Pak and commissions as provided in paragraphs (7), (8) and (9) were paid until 1978 when Han-Dee Pak unilaterally ceased paying them. Han-Dee Pak, which undertook in the letter to prepare the "formal documents," never did so nor did it prepare the "exclusive loyalty and non-compete clause" provided for in paragraph (12). Gubernik testified he did not compete and loyally sought to have his customers place their business with Han-Dee Pak. While the letter asked Gubernik to sign, it did not request return of a signed copy nor state that signature was required to accept the terms of the letter. The letter is admittedly poorly drafted but Gubernik testified he agreed with the terms therein in principle while believing certain of the provisions should have been clarified or explained. He believed this would be done in the "formal documents" which Han-Dee Pak said it would prepare but did not. We find no error in the trial court's finding that the letter was accepted by Gubernik and constituted the agreement between the parties. See Durasteel Co. v. Great Lakes Steel Corp., 205 F.2d 438 (8th Cir.1953) [7, 8]; Hunt v. Dallmeyer, 517 S.W.2d 720 (Mo.App.1974) [9, 10].

We must also reject defendant's contention that the agreement constituted an arrangement terminable at will and therefore subject to no commissions after Gubernik ceased generating business. The agreement contemplated that Gubernik would receive commissions on all sales of TowelWets so long as defendant continued in that business. This was true whether Gubernik performed additional services or not. Gubernik substantially performed the agreement when he transferred his machinery to Han-Dee Pak and allowed it to produce and sell TowelWets. Defendant could not thereafter terminate its obligations under the agreement except in accord with the terms of that agreement, which it did not do. The parties functioned under the agreement for approximately eighteen months and it was never terminated pursuant to its terms. We therefore find no error in the finding of the trial court that Gubernik was entitled to an accounting under the contract. See Durasteel Co. v. Great Lakes Steel Corp., supra; Bethell v. Porter, 595 S.W.2d 369 (Mo.App.1980) [8, 9].

We turn to plaintiff's appeal of the amount of the judgment entered on the accounting. Plaintiff first contends that the procedure followed in the accounting whereby plaintiff was the first to present evidence was erroneous and requires a remand. Whatever the merits of plaintiff's argument concerning the order of proof, the procedure followed was agreed to by plaintiff at trial. ³ In view of that and our findings on the merits of the accounting we can perceive no prejudicial error.

Plaintiff next challenges the method used by the defendant in accounting. That method consisted of allowing plaintiff 4% commission on sales to all customers of Han-Dee Pak not claimed to have been produced by Gubernik. In addition, on all sales to customers conceded to be Gubernik's, defendant allowed Gubernik a commission consisting of the difference between 95% of defendant's "bottom line" figure on each sale, as computed by the accounting expert, and the amount of that sale. This is in accord with the requirements of paragraph (8) of the agreement. ⁴

As to disputed customers the defendant, in its accounting, made two different computations, one treating them as Han-Dee Pak customers subject to the 4% commission and the other treating them as Gubernik customers subject to the "bottom line" computation. The trial court, on conflicting testimony, awarded all disputed customers to Gubernik. That determination is supported by the evidence. The formula used by defendant, and adopted by the trial court, is the same as the formula utilized by plaintiff in his objections to the original accounting filed by defendant. It is a method agreed to as the proper one by both parties at some time in the litigation.

Plaintiff contends, however, that the application of the formula is faulty for two reasons. First, it adjusts the "bottom line" figure for each sale rather than applying the original "bottom line" figure submitted with the July 22 letter, which figure was not updated as provided in paragraph (7) of the July 22 letter. Secondly, because Gubernik did not set the price to the customers the determination of what commissions Gubernik would be entitled to should be based upon an analysis of what price, based on his past history and the market conditions, he would have set if paragraph (6) of the agreement had been adhered to. The contentions are interrelated and some discussion of Gubernik's conduct after the agreement is required.

We agree with plaintiff that the purpose of these provisions was to allow Gubernik an incentive to sell defendant's product. His commission was to be based on the amount above the "bottom line" he could persuade a customer to pay. Updating of the "bottom line" figure served to advise him of the price necessary for him to seek to obtain an adequate commission. However, in his deposition which was introduced into evidence by defendant, Gubernik made it clear that his intention when entering into the contract and thereafter was to remove himself from active participation in the business of manufacturing and selling TowelWets. He considered his function to be the introduction of his customers to Han-Dee Pak, leaving the follow-up generation of sales to that company. This approach to the agreement is summarized by the following question and answer:

"Q. Well, you are involved in the sense that you can participate, as you understood it, in percents of the sales or whatever, but I gather what you are telling me is your understanding of the agreement was you were kind of turning over the whole business to Han-Dee Pak and that after you facilitated an orderly transfer of customers, your active participation in terms of generating sales and generating new customers was nothing?

"A. That was Herb's [Han-Dee Pak President] and my...