Isaac v. Gerretson Co.

• Decision Date: 27 December 1922
• Citation: 179 Wis. 417,191 N.W. 55
• Parties: ISAAC v. GERRETSON CO.
• Court: Wisconsin Supreme Court

179 Wis. 417

191 N.W. 55

ISAAC

v.GERRETSON CO.^a1

Supreme Court of Wisconsin.

Dec. 5, 1922.

Dissenting Opinion, Dec. 27, 1922.

Appeal from Circuit Court, Fond du Lac County; Chester A. Fowler, Judge.

Action by Albert E. Isaac against the Gerretson Company. From a judgment for plaintiff, defendant appeals. Affirmed.

The complaint alleges a cause of action on a verbal contract, in that the plaintiff was to act as manager and salesman for the defendantin a store for the sale of women's ready-to-wear goods at Fond du Lac, and was to receive for his services $50 a week and 25 per cent. of the net profits of the business; that the plaintiff entered the service of defendant in August, 1918, and continued until the 1st of March, 1920; that plaintiff was paid $50 per week, but had received nothing for his commissions; that the commissions or profits of 1918 had been satisfactorily adjusted, and plaintiff made claim for profits or commissions for 1919 of $6,112.

The defendant answered, admitting the employment, payment of salary, denying adjustment of commissions or profits for 1918, denying any amount due, and counterclaiming to the effect that it was the duty of the plaintiff to keep the goods, furniture, and fixtures of said store insured, and that he had failed to do so; that a fire on January 21, 1920, destroyed such stock of goods, furniture, and fixtures, and that by reason of the failure of the plaintiff to insure the defendant had suffered loss to the extent of $6,899.30. Plaintiff replied, in substance denying the allegations of the counterclaim.

The case was tried before the court without a jury. The court found:

(1) That the defendant, a Wisconsin corporation, with its principal office in Milwaukee, had for many years engaged in conducting a merchandising business in women's ready-to-wear garments at Milwaukee, and that plaintiff had for many years conducted a similar business at Fond du Lac.

(2) That the parties entered into an oral agreement in the summer of 1918, whereby the plaintiff was to act as manager for the defendant and receive a salary of $200 per month and a commission of 25 per cent. of the net profits, and that otherwise said agreement was wholly indefinite.

(3) That the store opened October 1, 1918, for business, and that thereafter it was considered by the parties that the opening expenses had been so heavy that no profits had been made, and it was mutually agreed that the accounting period should begin January 1, 1919.

(4) That the profits of 1919 were $17,353.76, including the proportion of the general overhead expense of the defendant in conducting its two stores, and a handling charge on goods sent from the Milwaukee store to the Fond du Lac store of 5 per cent., and a similar charge on goods returned from the Fond du Lac store to the Milwaukee store; a charge of $388.67 for expense in the taking of inventories; a charge of $110 made by the company to the Fond du Lac store to pay for membership of one of the Gerretsons in the Fond du Lac Town & Country Club; and that the plaintiff made no demand for payment of his share of the profits for 1919 until about February 1, 1920.

(5) That the profits of said business from January 1, 1920, to January 21, 1920, were $1,565.95.

(6) That plaintiff had been paid no commission or profits.

(7) That inventories were taken of the business as of January 1, 1919, July 1, 1919, and January 1, 1920, and at the conclusion of the 1920 inventory, defendant entered upon its books an item in substance as follows: “Reserve for commissions, $4,662.85”--which sum was 25 per cent. of the net profits of said business as shown by its books, and which referred to and was intended to cover the commissions of plaintiff.

(8) That a fire destroyed the business on January 21, 1920, to the extent of $27,048.14, and thereby rendered it impossible to continue the business in the building, or to renew business elsewhere for a period of several months; that plaintiff continued with the defendant until after the fire sale, and then refused to continue his services after March 1, 1920, and thereafter opened up a store of his own in Fond du Lac.

These first eight findings of the court are accepted by both parties as being substantially correct. The court further found:

(9) That the defendant instructed the plaintiff in general terms to keep insurance on the contents of its store, and all insurance carried was procured by plaintiff. All policies were forwarded to Milwaukee and there retained. The premiums were paid by the defendant from the Milwaukee office, where the defendant kept an insurance register. The policies and register were in the direct charge of the principal officers of the defendant. Defendant also kept at its Milwaukee office books based upon daily reports from the Fond du Lac store, showing all goods received and sales made. That such data was incomplete at times because of delays in reporting, and because of garments kept for alteration and repairs, but that the principal managing officer of the defendant frequently visited Fond du Lac, and was informed concerning all the operations of the store. That in the fall of 1919 plaintiff was instructed to take out additional insurance, but was not told how much, and that he did take out $4,500 additional, and forwarded the policies to the Milwaukee office; $1,000 was taken out on plate glass, but through inadvertence the policy was not sent to Milwaukee. That in the summer of 1919 defendant had all of its Fond du Lac policies made uniform, inserting therein the standard 90 per cent. coinsurance clause. That this change was made by the principal officer of the defendant having the insurance in charge, and the plaintiff had no knowledge of the existence of said coinsurance clause or its legal effect. That at the time of the fire the amount of insurance required to cover the property was $44,299.75; whereas only $33,000 was covered by the policies in force, and under the terms of the policies the defendant became coinsurer to the amount of $11,299.75, making a net loss by failure to fully insure of $6,899.30. That defendant had ample time to direct and procure additional insurance after additions to its stock, if it desired to do so, and plaintiff understood that defendant would demand more insurance when necessary. That plaintiff did not understand that he was required to keep insurance in force to the amount of 90 per cent. of the property, or that he was solely responsible for carrying adequate insurance.

As conclusions of law the court found, under practical construction, that it was the intent of the parties to make annual periods of accounting, that the plaintiff was not liable for not procuring adequate insurance, and that he was entitled to judgment for $4,338.44, with interest from February 1, 1920. To which findings of fact and conclusions of law defendant assigns as errors: The failure to find that the plaintiff was required to keep full insurance; the finding that the plaintiff did not understand that he was to keep the business insured to 90 per cent. of the property carried; the conclusion of law as to the intent of the parties to the contract; and the conclusion that the plaintiff is entitled to recover.

Doerfler, Jones, and Eschweiler, JJ., dissenting.

Robert N. McMynn, of Milwaukee, for appellant.

Duffy & McGalloway, of Fond du Lac, for respondent.

CROWNHART, J. (after stating the facts as above).

This case presents questions of fact, very largely, rather than questions of law. The court found the facts favorable to the plaintiff, and his findings must be sustained, unless we can say that such findings are against the great weight or fair preponderance of the evidence.

[1][2] The first question is to determine the intent of the parties in making the contract. The contract was oral and quite indefinite. It must be interpreted to some extent from the surrounding facts and circumstances. Prior to making the contract both parties had been in the same line of business, the plaintiff at Fond du Lac and the defendant at Milwaukee. It is clear that the plaintiff had an established good will in and around Fond du Lac, and that the defendant was desirous of securing, not only his services as manager, but the good will that he would bring to the company. The direct salary of $50 per week was very modest, and evidently intended to take care of his immediate necessities, while the percentage of profits was intended to secure from the plaintiff his best efforts in producing profits for the company. The profits were intended to enhance the plaintiff's income. It seems to have been the contemplation of the parties that the relationship thus established would continue for a long time, and it is only fair to infer that the plaintiff expected and would need his profits from year to year in his personal affairs, and it is also fair to presume that the company would follow the usual custom of making yearly inventories and balances, and declare dividends. It follows that it might well have been intended that the yearly period of inventory and accounting would be followed by a distribution of plaintiff's share of the profits. The contention of the plaintiff is supported by the fact that the parties did talk over the matter of profits for the year 1918, and that it was agreed that, owing to the heavy expense of establishing the business, no profits should be considered for that year. The testimony of the plaintiff and defendant do not agree as to what actually occurred, but the fact is plain that they did talk the matter over, and one of the Gerretsons said, “What is the use of talking about profits; there are no profits.” He did not say, and did not contend, that the period of accounting was not at hand; but he did contend that there were no profits to be divided. The inventories were not completed and balances struck for the year 1919 until about January 15. At that time the defendant entered upon its books...