Kaltsas v. Duralite Co., Inc.

• Decision Date: 23 November 1976
• Citation: 4 Mass.App.Ct. 634,357 N.E.2d 22
• Parties: Paul KALTSAS v. DURALITE COMPANY, INC. (and a companion case 1 ).
• Court: Appeals Court of Massachusetts

Page 22

357 N.E.2d 22

4 Mass.App.Ct. 634

Paul KALTSAS

v. DURALITE COMPANY, INC. (and a companion case ¹).

Appeals Court of Massachusetts, Suffolk.

Argued Oct. 14, 1976.

Decided Nov. 23, 1976.

Douglas G. Moxham, Boston, for defendant.

Burton Chandler, Worcester, for Paul Kaltsas.

Mel L. Greenberg, Worcester, for James Kaltsas.

Before HALE, C.J., and GRANT and BROWN, JJ.

HALE, Chief Justice.

On February 10, 1970, James Kaltsas and Paul Kaltsas instituted separate actions against Prest-Wheel, Inc. (Prest-Wheel), seeking damages for breaches of employment contracts. During the pendency of this litigation, Prest-Wheel merged with a corporation known as Duralite Company, Inc. (Duralite), and Duralite was substituted as defendant in each case. The actions were consolidated for trial and referred to an auditor, ² whose findings of fact were not to be final. The auditor filed a report reciting findings of breaches by the defendant and damages in the amount of $99,2263.89 in favor of Paul Kaltsas and $127,263.89 in favor of James Kaltsas. The cases were thereafter tried before a jury, which returned verdicts for each of the plaintiffs in amounts identical to those found by the auditor. Judgments were entered on the verdicts on March 27, 1975. Following the denial of a motion for a new trial in each case, the defendant appealed.

The facts do not appear to be in dispute. Prior to August, 1968, James and Paul Kaltsas and their brother George owned all the capital stock of Prest-Wheel, a manufacturer of lawn furniture in Massachusetts. After extensive negotiations, James, Paul, and George Kaltsas entered into a written agreement, dated September 4, 1968, by which they transferred all their shares of stock in Prest-Wheel to Giffen Industries in exchange for shares of stock in Giffen. At the same time the brothers executed the written employment agreements with Prest-Wheel which are the subjects of these actions. Each contract was for a term of five years, with compensation at the rate of $35,000 a year. Each contract also recited that during its term the brother was not to engage in any other business activity, except that it permitted him to devote not more than twenty hours a month to other noncompeting businesses in which he had been engaged prior to the date of the contract. The contract also specifically prohibited him from participating in competing businesses during its term.

James, George and Paul Kaltsas worked for Prest-Wheel from the time of signing the contracts until December 19, 1969, when they were discharged and their contracts were terminated by Prest-Wheel. None of the brothers thereafter received any compensation from the company. ³ Additional findings of the auditor and other evidence at trial are discussed in more detail in the course of this opinion.

The defendant contends that the judge erred in giving certain instructions, in failing to give others, and in excluding certain evidence. We deal with each contention separately.

1. The defendant argues that the judge erred in giving the following jury instruction: '. . . salaries or other income earned by the plaintiffs from family businesses which they have been accustomed to earning prior to the termination of their employment contract(s) and for which they performed minimal services, cannot be considered in mitigating or diminishing damages.'

It was found by the auditor that both James and Paul had, both before and during the term of their employment with Prest-Wheel, performed services for several family businesses on a part-time or occasional basis. The auditor also found that neither James nor Paul had spent more time in these activities after termination than he had at any previous time, either before or during the term of his contract. Each plaintiff's income prior to discharge included the $35,000 salary provided for by his contract, as well as earnings from the other businesses. The record before us does not indicate that amount of those earnings after the termination. The defendant contends that the instruction given was an incorrect statement of the law and misled the jury into concluding that they could not consider in mitigation of damages any income which James or Paul Kaltsas earned or could have earned from a family business after termination of their contracts. But we construe this charge as properly instructing the jurors that they were not to deduct from the damages otherwise recoverable the earnings from family businesses which had been permitted the plaintiffs by the contracts and which they continued to earn after termination. See Dixon v. Volunteer Co-op. Bank, 213 Mass. 345, 100 N.E. 655 (1913); Galveston v. Ducie, 91 Tex. 665, 670--671, 45 S.W. 798 (1898); Smith v. Pallay, 130 Or. 282, 291--293, 279 P. 279 (1929); Atholwood Dev. Co. v. Houston, 179 Md. 441, 447, 19 A.2d 706 (1941); Martin v. Board of Educ. of Lincoln County, 120 W.Va. 621, 624, 199 S.E. 887 (1938). Williston, Contracts, § 1359, p. 310 (3d ed. 1968). This portion of the charge was given immediately after a detailed instruction on the plaintiffs' duty to mitigate damages and, when read in context, could not have misled the jury.

2. The defendant claims that the judge erred in not instructing the jury in language adapted from Maynard v. Royal Worcester Corset Co., 200 Mass. 1, 7--8, 85 N.E. 877 (1908). The requested instruction was: 'From all the evidence you consider credible, as well as from the employee's own manner in testifying and other inferences, which you may draw from the appearance of the witness, you may determine whether prompt, reasonable and bona fide efforts to obtain other employment would have been successful, or that by the use of his time in private business he would have gained much value as to reduce materially the amount which he might otherwise receive from the employer. As jurors you may, if you desire, use your own knowledge of practical affairs or apply your common sense to the consideration of a matter of such common occurrence as securing employment. You may also consider such opinion evidence as you consider credible and helpful. In making your judgment you may consider the value of the employee's services, based upon his appearance, the character of the work he had done and was competent to do and the wages he had received.' The defendant claims that the refusal to give this instruction removed from the jury's consideration the question whether the brothers could have devoted more time and effort to one or more of the family businesses, thereby earning additional compensation which could be offset against the damages owed by the defendant.

Refusal to give the requested instruction was not error. Although an accurate paraphrase of the law stated in the cited portion of Maynard, the...