Industries, Investments and Agencies (Bahamas), Ltd. v. Panelfab Intern. Corp.

• Decision Date: 08 April 1976
• Docket Number: No. 74--3747,74--3747
• Citation: 529 F.2d 1203
• Parties: INDUSTRIES, INVESTMENTS & AGENCIES (BAHAMAS) LTD., a Bahamian Corporation, Plaintiff-Appellant Cross Appellee, v. PANELFAB INTERNATIONAL CORPORATION, a Florida Corporation, Defendant-Third Party Plaintiff Appellee-Cross Appellant, v. Manfred LEHMANN, Third Party Defendant-Appellee. Summary Calendar. *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1203

529 F.2d 1203

INDUSTRIES, INVESTMENTS & AGENCIES (BAHAMAS) LTD., a Bahamian Corporation, Plaintiff-Appellant Cross Appellee, v. PANELFAB INTERNATIONAL CORPORATION, a Florida Corporation, Defendant-Third Party Plaintiff Appellee-Cross Appellant, v. Manfred LEHMANN, Third Party Defendant-Appellee.

No. 74--3747 Summary Calendar. ^*

United States Court of Appeals Fifth Circuit.

April 8, 1976.

Rehearing Denied June 17, 1976.

Michael J. Cappucio, Herbert L. Nadeau, Faunce, Fink & Forman, Miami, Fla., for Industries, Investments, etc., & M. Lehmann.

Pettigrew & Bailey, Eugene E. Stearns, Miami, Fla., for Panelfab Intern. Corp.

Appeals from the United States District Court for the Southern District of Florida.

Before BROWN, Chief Judge, CLARK and GEE, Circuit Judges.

JOHN R. BROWN, Chief Judge:

Plaintiff Industries, Investments & Agencies (Bahamas) Ltd. (IIA) brought this diversity action on a contract of agency seeking unpaid commissions from defendant Panelfab International Corporation (Panelfab), a Florida corporation. Panelfab counterclaimed to recover commissions it had already paid to IIA. A jury returned a special verdict consisting of answers to written interrogatories, F.R.Civ.P. 49(a), followed by what appears to be a general verdict ¹ finding for defendant Panelfab in the main action and for counterdefendant IIA on the counterclaim. Plaintiff IIA and counterplaintiff Panelfab both appeal. We affirm.

The Agency Arrangement

The pre-trial stipulation of facts provides an overview of the series of agreements and transactions which gave rise to this dispute. Panelfab builds and markets pre-manufactured housing, schools, hospitals and the like. In February 1971 Bernard Moskovits visited the officers of Panelfab in Miami on behalf of IIA, a Bahamian corporation, to discuss the possibility of IIA soliciting contracts for educational and health facilities for Panelfab in the Bahamas, where conventional building methods are costly and often unavailable. An agreement was reached, as expressed in a letter of March 9, 1971, which gave IIA authority for a period of six months to negotiate sales transactions for Panelfab in the Bahamas for educational facilities, and which provided that Panelfab would reserve for IIA a commission of 11 1/2% of the net sales price, payable upon receipt of payment from the customer.

During the ensuing months, Panelfab officials with the assistance of Moskovits conducted negotiations with the Bahamian government for a major school construction project, and Panelfab obtained a preliminary commitment from the Export-Import Bank of the United States (Eximbank) for a loan in excess of $8 million to finance the project. On October 27, 1971 Panelfab and IIA entered into a second letter agreement, which Panelfab and IIA negotiated another letter agreement on January 3, 1972 to allow IIA to earn commissions on future school construction contracts. ² This agreement authorized IIA to solicit contracts for school buildings until December 31, 1973, on the conditions that (i) the initial school contract be concluded by March 9, 1972 and that (ii) Panelfab continue to maintain a resident agent in Nassau who would participate in the negotiation of the initial school contract and would facilitate its performance and completion.

amended the manner of payment of commissions. It provided that 35% of the commission would be paid by Panelfab upon receipt of a down payment from the Bahamian government, after which the remainder of the commission would be paid at various intervals of the transaction. On November 12, 1971 Panelfab extended the March 9, 1971 agreement for 6 months until May 12, 1972.

On February 7, 1972 Panelfab and the Bahamian government signed an $11 million contract for the initial school project, contingent upon final approval of financing by Eximbank, and in early May, 1972 the Bahamian government sent Panelfab a downpayment of $1,266,123.00. As previously agreed, Panelfab then paid IIA $458,850.00 on May 10, 1972, the first installment on its commission. Relying on instructions from Moskovits and Zolten Weinmann, at that time president of IIA, Panelfab gave two checks to Moskovits, one payable to IIA for $220,248.00 and the other payable to Gemini Financial Corporation (Gemini) for $238,602.00.

In June, 1972, however, Eximbank declined to finance the project. About the same time a dispute developed between Moskovits and Manfred Lehmann of IIA over who actually controlled IIA, and Lehmann accused Moskovits of embezzling the commission moneys paid to Gemini. In August, 1972 Lehmann hired S. A. Morris, who was soon thereafter appointed to the Bahamian Senate, to replace Moskovits as IIA's resident agent for the school project.

Panelfab and the Bahamian government made another application to Eximbank for financing, and on May 3, 1973 Eximbank approved the project and loan agreement were signed.

A Bahamian Brouhaha

In its complaint, IIA alleged that in spite of the Bahamian government's downpayment, Panelfab paid it only $220,248.00 of the total initial installment due. The complaint asserted that this constituted a breach of the agency contract by anticipatory repudiation and Panelfab answered that it received subsequent instructions from Weinmann and Moskovits in letters of May 8 and 9, 1972 to pay 48% of the commission then due to IIA and 52% to Gemini, and that it made the full initial commission payment in good faith pursuant to these instructions.

entitled IIA to its full commission of 11 1/2% of the net sales price minus the $220,248.00 already paid, equaling $1,092,528.90. IIA's position was based on its view that in paying part of the first installment to Gemini, Panelfab disregarded instructions in a letter of December 20, 1971 from Weinmann, its then president, to pay all commissions to a Canadian bank in Nassau. IIA further prayed for a declaration that its agency contract with Panelfab continued to be valid and binding.

Panelfab also answered that the contract of agency with IIA was unenforceable and void, thus freeing it from making any further commission payments to IIA. Panelfab asserted that the various letter agreements were only partial expressions of a single agency agreement, which was composed of numerous written and oral agreements between IIA and Panelfab. Panelfab contended that the oral consideration for the October 27, 1971 agreement was the maintenance in the Bahamas of a full-time resident agent by IIA and that the January 3, 1972 letter agreement--with its written expression of the resident agent requirement--was intended by the parties to be a condition precedent to the payment of commissions for the initial school contract as well as all future school contracts. Panelfab claimed that from May, 1972, when the dispute arose between Moskovits and Lehmann, IIA failed to maintain a resident agent in the Bahamas and did not help facilitate the performance of the school contract, thus breaking its agency contract. ³

In addition to asserting IIA's breach, Panelfab answered alternatively and cumulatively that the agency contract was no longer valid because of IIA's impossibility of performance and because the contract was illegal and contrary to public policy. The claim of impossibility was based on alleged quarrelling between Moskovits and Lehmann, conflicting instructions from them to Panelfab, IIA's simultaneous representation of Panelfab's competitors, and derogatory statements made by Lehmann in the Bahamas about Panelfab. The basis of Panelfab's claim of illegality was that unknown to Panelfab (i) Lehmann was an official of the Bahamian government--his corporation, Intergovernmental Philatelic Corporation, was the philatelic agent for the Bahamas--and through IIA Lehmann was selling his official influence, and (ii) the employment of Bahamian Senator Morris as IIA's resident agent was also an illegal attempt to exploit the Senator's influence and political position.

Finally, on the basis of the same theory of illegality, Panelfab counterclaimed, seeking recision of the contract and recovery of the initial installment of $458,850.00 it had paid on IIA's commission.

The Jury Speaks

Because of the complexity of the case and the numerous theories of recovery relied on by both parties, the District Court wisely submitted written interrogatories to the jury to accompany its general verdict. F.R.Civ.P. 49(b). ⁴ The jury found that Panelfab's payment to Gemini was a proper payment under the agreement. ⁵ Int. No. 8. The jury further found that the January 3,

1972 agreement did apply to the initial school project, that IIA was under a duty to maintain a resident agent in the Bahamas and to assist Panelfab in the smooth implementation of the school contract in order to recover any commissions, and that IIA breached its contract in both respects. Ints. Nos. 1, 3 & 4. Cumulatively, the jury found that continued performance by IIA as originally contemplated by the parties was impossible. Int. No. 9. However, the jury was not persuaded that the performance of the agency contract by IIA was illegal or contrary to public policy, Int. No. 6, thus finding against Panelfab's counterclaim for recision. After answering the written interrogatories, the jury returned what looks like a general verdict ⁶ for Panelfab as defendant and formally in favor of Panelfab as counterplaintiff but assessed Panelfab's damages on the counterclaim as none.

IIA's Attack

Appellant IIA raises several issues on appeal. It contends that (i) the District Court erred in admitting parole evidence on the intent of the parties in entering into the written letter agreements, (ii) the evidence was not sufficient to sustain the jury's finding that IIA was under a duty to maintain a resident agent in the Bahamas or to sustain the jury's finding that IIA had not satisfied any resident agent requirement, (iii) the District Court erred in not asking the jury in writing whether...