E.H. Crump Co. of Georgia, Inc. v. Millar

• Decision Date: 14 February 1990
• Docket Number: No. A89A1839,A89A1839
• Parties: E.H. CRUMP COMPANY OF GEORGIA, INC. et al. v. MILLAR.
• Court: Georgia Court of Appeals

Page 775

391 S.E.2d 775

194 Ga.App. 687

E.H. CRUMP COMPANY OF GEORGIA, INC. et al. v. MILLAR.

No. A89A1839.

Court of Appeals of Georgia.

Feb. 14, 1990.

Rehearing Denied March 5, 1990.

Certiorari Denied April 12, 1990.

Smith, Gambrell & Russell, David A. Handley, Thomas E. McCarter, Stack & Rogers, Ronald W. Rogers, Atlanta, for appellants.

Alembik, Fine & Callner, Bruce W. Callner, Kathy L. Portnoy, Kenan G. Loomis, Atlanta, for appellee.

McMURRAY, Presiding Judge.

Plaintiff Francis R. Millar brought suit against defendants E.H. Crump Company of Georgia, Inc. ("Crump"), David D. Henritze, individually and as Crump's president, and Gary Shertenlieb, individually and as Crump's senior vice president, seeking damages for breach of contract, fraud, defamation, and tortious interference with contractual relations. With regard to the breach of contract count, plaintiff alleged that Crump was obligated to pay him the amount of $358,994.26, representing compensation earned by plaintiff as an employee of Crump during fiscal year 1987. Defendants answered the complaint, denying any liability to plaintiff. In addition, defendants counterclaimed seeking damages and a permanent injunction on the grounds that plaintiff breached his fiduciary duties and a covenant not to compete "commencing around August of 1987."

Following discovery, plaintiff moved for partial summary judgment upon the breach of contract count of the complaint, contending he was entitled to be paid the compensation earned during fiscal 1987 as a matter of law. Defendants opposed the motion, asserting plaintiff was not entitled to be compensated for his services because, beginning August 4, 1987, and continuing until October 12, 1987 (when plaintiff's employment with Crump ended), plaintiff engaged in conduct in violation of his fiduciary duties as an employee of Crump. The trial court granted plaintiff's summary judgment motion in part, ruling plaintiff was entitled to recover any compensation earned prior to August 4, 1987, whether or not he breached his fiduciary duties after that date. Defendants appeal. Held:

1. Plaintiff's motion for damages for frivolous appeal is denied.

2. OCGA § 10-6-31 provides: "An agent who shall have discharged his duty shall be entitled to his commission and all necessary expenses incurred about the business of his principal. If he shall have violated his engagement, he shall be entitled to no commission." Relying on the last sentence of this Code section, defendants take the position that plaintiff forfeited his right to receive any compensation earned during fiscal year 1987 because he breached his fiduciary duty to Crump beginning August 4, 1987. We think this interpretation of OCGA § 10-6-31 is overly broad. By its plain terms, the first sentence of the Code section provides that an agent is entitled to receive compensation when he acts on behalf of his principal. Read in conjunction with the last sentence of the Code section, it is clear that an agent is entitled to compensation during the period of time in which he acts in a fiduciary manner; and he forfeits compensation only during the period of time in which he fails to act in a fiduciary manner. See Vinson v. E.W. Buschman Co., 172 Ga.App. 306, 310(3), 311, 323 S.E.2d 204. It follows that the trial court's award of partial summary judgment to plaintiff was proper.

3. We cannot agree with the conclusion that an issue of fact exists concerning the date of plaintiff's alleged breach of duty. Defendants have not challenged the August 4, 1987, date. In its order granting plaintiff partial summary judgment, the trial court observed that defendants "specifically" alleged the breach occurred on August 4, 1987. Defendants have not asserted on appeal that the trial court erred in choosing the August 4, 1987, date. The sole contention of defendants is that plaintiff is entitled to no commissions because he breached his fiduciary duty after August 4, 1987. Thus, in effect, defendants concede that any breach by plaintiff occurred after August 4, 1987. Besides, we see no evidence whatsoever that plaintiff breached his fiduciary duties prior to that date.

Judgment affirmed.

CARLEY, C.J., DEEN and BANKE, P.JJ., and BIRDSONG, POPE and COOPER, JJ., concur.

SOGNIER and BEASLEY, JJ., dissent.

BEASLEY, Judge, dissenting.

I respectfully dissent because the record does not establish without dispute that no act of unfaithfulness, or omission of faithfulness, occurred prior to August 4, 1987, which is the day before plaintiff gave oral notice to his employer that he was terminating his employment and the day his planned new employer memorialized negotiations to that point in a letter to plaintiff. There is evidence, both in that letter and otherwise, that plaintiff planned on taking two employees of Crump with him and had tentatively agreed that their remuneration for the first year would come out of his income. One of these employees was senior marketing account manager. In addition, there is evidence that within a few days of plaintiff's departure from Crump in mid-October, several sizeable Crump accounts switched their business to plaintiff's new employer. This raises a reasonable inference that they were solicited before that date, and the date of first solicitation is not shown to have been after August 4.

Appellants did not limit their assertions in the response and brief to plaintiff's motion for summary judgment below nor in the enumeration or errors or brief in this court. Because there is evidence to support a finding of disloyalty prior to August 4, and the law allows and even considers the pleadings amended to conform to the evidence, the activities of Millar related to compensability prior to August 4 are germane to the summary judgment ruling. OCGA § 9-11-15(b); McDonough Constr. Co. v. McLendon Elec. Co., 242 Ga. 510, 514, 250 S.E.2d 424 (1978).

I do agree that the code section, OCGA § 10-6-31, is applicable. But it alone does not control.

In applying the statutory principles, the contract which governs the relationship between the employer and the employee must be examined. The principle is made a part of every contract of agency. Williams v. Moore-Gaunt Co., 3 Ga.App. 756, 759, 60 S.E. 372 (1907). But the general principles do not provide the whole answer in every given case.

The several contracts which, taken together as intended, govern the relationship between the parties during the time in question, imply if not express the same principles and add a determinative factor.

The amended compensation schedule which was to govern calendar years 1987 and 1988 provided: "In the event of the Employee's termination of employment for any reason, ... earnings and expenses and incentive compensation shall be computed as of the end of the month preceding the month in which termination took place, and employee's percentage shall be computed thereon and Employee shall be paid all amounts due under Paragraph 1 no later than seventy-five (75) days after the date of termination...."

Paragraph 1 provided for $150,000 base salary for each of the two years plus, "as incentive compensation," 30 percent of annual Net Commission Income of the Company attributable to accounts produced and serviced by Employee except that the percentage on certain named accounts would be 18 percent. Annual was designated to mean calendar year, and the compensation was to be paid by the end of February of the following year.

A separate document, the "Agreement and Covenants," contains anti-compete provisions in specific detail, for the period of plaintiff's employment and for two years thereafter. It acknowledges the employer's desire to protect its goodwill and it acknowledges the employer's time and monetary investment in the development of employee's skills in the business. For the period during his employment, employee agreed not to "use or divulge any confidential business information or trade secrets of the Company ... relating to customers or prospects ... and includes, but is not limited to, customer and account lists, methods of operation, renewal information, audits, inspection reports, coverages, order information, records of inception or expiration dates of coverages, and personnel data."

The "Employment Contract" itself provides: "Employee agrees to devote full time, attention and best efforts in the faithful discharge of such duties and in the development and furtherance of Employer's business ... Employee agrees that, as long as he is employed by Employer, he will not undertake the planning or organizing of any business activity competitive with Employer's ... business nor engage in any such activity."

Discharge for cause is specified to include: "if Employee: (i) performs any act intended to inflict damage on the Employer, (ii) violates any provision of this Agreement, ..."

It also expressly provides: "In order that the Employer shall receive and be able to maintain the...