Hague v. De Long

• Court: Michigan Supreme Court
• Writing for the Court: POTTER
• Citation: Hague v. De Long, 292 Mich. 262, 290 N.W. 403 (Mich. 1940)
• Decision Date: 14 February 1940
• Docket Number: No. 75.,75.
• Parties: HAGUE et al. v. DE LONG et al.

292 Mich. 262

290 N.W. 403

HAGUE et al.

v.DE LONG et al.

No. 75.

Supreme Court of Michigan.

Feb 14, 1940.

Suit by Samuel Hague and others, copartners, doing business under the firm name and style of Smith, Hague & Company, against David A. De Long and others, individually and as trustees for E. J. Lapointe and others, to recover commissions. From a judgment for defendants, plaintiffs appeal.

Affirmed.

Appeal from Circuit Court, Washtenaw County; George W. sample, judge.

Argued before the Entire Bench.

Beaumont, Smith & Harris, of Detroit (Hal H. Smith, of Detroit, Frank B. De Vine, of Ann Arbor, and Lewis S. Robinson, of Detroit, of counsel), for plaintiffs and appellants.

Burke & Burke, of Ann Arbor, for defendants and appellees David A. DeLong, Francis J. Lapointe and Ada Cox Lapointe, trustees.

Raymond A. Fox, of Detroit, for defendants and appellees Francis J. Lapointe and Ada Cox Lapointe.

POTTER, Justice.

This is a suit at law in which plaintiffs, a brokerage firm and copartnership formerly doing business under the name of Whitlock, Smith & Company, seek to recover from defendants certain commissions claimed to be due them for arranging the sale of all of the capital stock of the American Broach & Machine Company, of Ann Arbor, Michigan, to the Sundstrand Machine Tool Company, of Rockford, Illinois. Suit was begun August 10, 1936, but was dismissed in May, 1937, on the ground plaintiffs were violating the statute of frauds by seeking to recover a commission on a parol contract involving the sale of an interest in land. Upon appeal to this court, the case was reversed and remitted to the circuit court. Hague v. DeLong, 282 Mich. 330, 276 N.W. 467. Thereafter the case was tried without a jury and from judgment for defendants, plaintiffs have appealed.

Plaintiffs' declaration contains three counts: First, against appellee Francis J. Lapointe alone, upon an express contract; second, against all of the former stockholders of the American Company, upon such express contract; and, third, upon the common counts for recovery upon an implied contract for a reasonable commission. Plaintiffs' right to recover is founded upon negotiations carried on between R. Harold Hyde, an employee of plaintiffs since 1933, and Francis J. Lapointe, the controlling owner and president of the American Company. Mr. Hyde first became interested in the sale of the American Company in 1930 when he was offered one-half of a 10 per cent commission to be paid Apple-Cole Company by defendant Francis J. Lapointe for the sale of the stock of the American Company. After the termination of the Apple-Cole contract in April, 1930. Hyde was approached by Lapointe who asked him to find a purchaser of the American Company. From April, 1930, until August, 1935, Hyde unsuccessfully tried to arrange a sale of the American Company. During this time he frequently corresponded with Lapointe who upon three occasions called upon Hyde to discuss matters relative to the proposed sale.

August 29, 1935, Hyde visited Lapointe at Ann Arbor. Hyde testified that it was there agreed that he was to devote his time to finding a purchaser of the capital stock of the American Company, that Whitlock, Smith & Company ‘would charge him a commission of 10% payable if, as and when,’ the sale to be ‘on a basis of net worth, as determined by an audit and appraisal, plus 10% for patents and goodwill, and patent licenses and good-will.’ Lapointe denied any such agreement. He said Hyde called upon him at his office August 29, 1935, but that all he did was ask about Kearney & Treacker Company, a manufacturing company in Milwaukee, Wisconsin, and ask for a letter of introduction to Mr. Edwards, its vice-president. The following day, August 30, 1935, Hyde is purported to have written a letter to Lapointe which in effect confirmed the agreement made in Ann Arbor the day before. Defendants denied receiving this letter although counsel for defendants admitted it was written and the record unquestionably shows it was stamped and mailed. September 5, 1935, Hyde sent a letter to the Sundstrand Company stating that Whitlock, Smith & Company were authorized to offer for sale ‘all of the capital stock’ of an unnamed broaching company. September 6, Sundstrand Company, through Mr. Hugo Olson, president and general manager, replied that it was sufficiently interested to desire more information. Following an exchange of correspondence between Hyde and Olson a meeting was arranged at Ann Arbor November 8 between the Sundstrand officials and Mr. Lapointe. At this conference Lapointe explained that he was tired of running the whole business and that it was his desire to sell the entire business including the capital stock, the real estate, and the patents and become associated with the purchasing company in a capacity where he could devote his time to development and invention. In reply to Lapointe's statement that he desired to sell the real estate the Sundstrand officials stated their company did not wish to acquire additional real estate and suggested that Lapointe lease the real estate.

Following an exchange of letters in which Hyde intimated that Lapointe might be willing to drop the sale of the real estate a second conference was held, this time at Chicago on December 7. Although no agreement was reached as to the real estate, it was clearly apparent that Sundstrand was seriously considering buying the American Company. Arrangements were made to send auditors from the Sundstrand Company to Ann Arbor to audit the books of the American Company, the purpose of the audit being to establish the net worth of the American Company. The conference was adjourned at noon and Hyde and Lapointe took the 12:30 train for Ann Arbor. Lapointe testified that it was on the train he had the first intimation that Hyde was expecting to be paid a 10 per cent commission. He testified: ‘On that trip back from Chicago, the last part of the trip, Mr. Hyde was making some pencil figures on a paper which I didn't pay much attention to until he spoke to me. After totalling these up he advised that he figured that their cash amount for him would be $40,000.00, or more, and that rather startled me because I couldn't see where the deal was going to develop to any point where there would be that much involved for his services, because I had not entered into any contract at that time with him. He had been asking me continually to let him keep trying to interest someone, and when he had them, I intended to enter into a contract with him, which I tried to do a little later, and I didn't say much more that day but got to thinking about it and I knew, with the expense that was going to be involved and the net amount I would receive after paying taxes and buying the other stock, it looked to me as if the figures he set for his services was certainly out of reason.’

Lapointe visited the Sundstrand plant at Rockford December 12, and on the 14th called at Whitlock, Smith & Company to see Hyde. At this point, the testimony again becomes sharply conflicting. Hyde testified that at this time Lapointe told him that ‘while he liked the thought of the deal with the Sundstrand Machine Tool Company that he did not feel he could go ahead with the deal unless we would be willing to accept half of the commission, or 5% from him and try to collect the other 5% from Sundstrand.’ Lapointe said he called upon Hyde because he thought the Sundstrand people were actually interested in buying the business and he was anxious to make an agreement as to the amount of commission to be paid Hyde. He testified: ‘I had no agreement up to that time with him. He just had been previously asking me to let him continue to see if he could find someone he could interest in it, and I had never taken any of these seriously. * * * I made a suggestion there that if the deal ran up to $100,000.00, that I considered, $3,000.00 whould be a good reimbursement for his services. If it went over tha, that $4,000.00 would be a good amount for him to receive, and if it was over $200,000.00, that I figured $5,000.00 would be a very good amount for his services in making the contract. * * * When I made this proposition Mr. Hyde said nothing definite other than he wanted to consider it and study it over, and then the matter reverted back to the conversation that it might be possible to get them to consider the buildings and land, and so forth.’

December 23, the American Company declared a dividend payable in real estate and buildings, thus segregating from the assets remaining in the company all real estate. Four days later, December 27, Lapointe again came to the offices of Whitlock, Smith & Company where Hyde again demanded a 10 per cent commission and Lapointe again offered to pay a smaller amount. After trying without success by telephone on December 31, 1935, and January 2, 1936, to agree as to amounts payable on commissions, Lapointe, February 4, 1936, signed a contract under which the Sundstrand Company acquired the American Company.

Under the terms of this contract, Sundstrand purchased all of the outstanding stock (297 shares) of the American Company. Of this amount, 175 shares were owned by Mr. and Mrs. Lapointe as joint tenants; 114 shares by Mr. and Mrs. Lapointe in trust for their three children; and 8 shares by Mr. DeLong. Sundstrand also purchased the services of Mr. Lapointe for five years; certain patents, patent applications and inventions owned by Lapointe individually; certain patents, patent applications and inventions owned by Metal Cutting Tool Service, Inc., an Ohio corporation, entirely owned by Lapointe; a five-year lease from Mr. and Mrs. Lapointe of the land and buildings; and an option to purchase the land and buildings within three years at an appraised value of $148,000. Under the terms of the contract, Sundstrand gave Lapointe, as consideration for what it had purchased, 29,145 shares of Sundstrand stock at a value of $10 a...