Mackey v. Rootes Motors Inc.

• Decision Date: 05 February 1965
• Citation: Mackey v. Rootes Motors Inc., 204 N.E.2d 436, 348 Mass. 464 (Mass. 1965)
• Parties: John MACKEY v. ROOTES MOTORS INCORPORATED et al.
• Court: Supreme Judicial Court of Massachusetts

Page 436

204 N.E.2d 436

348 Mass. 464

John MACKEY v. ROOTES MOTORS INCORPORATED et al.

Supreme Judicial Court of Massachusetts, Norfolk.

Argued Jan. 6, 1965.

Decided Feb. 5, 1965.

Louis Karp, Boston (Morris R. Spelfogel, Boston, with him) for plaintiff.

J. Owen Todd, Boston, for defendants.

Before WILKINS, C. J., and SPALDING, WHITTEMORE, CUTTER and SPIEGEL, JJ.

SPIEGEL, Justice.

This is a bill in equity to reach and apply certain motor vehicles owned by Rootes Motors Incorporated (defendant), ¹ in satisfaction of a debt for services rendered in 1962 by the plaintiff according to an account annexed. The defendant in its answer denied the debt and filed a counterclaim alleging that it was overcharged by the plaintiff for certain services and seeking recovery from the plaintiff of the amount of the overcharge. The suit was referred to a master, who concluded that the plaintiff owes $4,342 to the defendant and that the defendant owes $3,589.43 to the plaintiff, and ultimately found for the defendant in the amount of $752.57. The trial judge entered an interlocutory decree overruling the plaintiff's exceptions to the master's report and confirming the report. A final decree was entered for the defendant and the plaintiff appeals.

A summary of the pertinent facts follows. In March, 1955, one Kenneth G. Lewis was employed by the defendant as its 'full time' New England regional manager in charge of sales and warehousing. In 1956, the parties 'entered into a contractual arrangement for the storage and the making of certain repairs to vehicles owned by the defendant.' The defendant consulted with Lewis and relied on his advice and recommendations regarding the location for the warehousing of its vehicles. While thus employed as regional manager for the defendant, Lewis obtained business accounts for the plaintiff. From March, 1959, through April, 1962, Lewis received checks from the plaintiff as 'commissions for the storage of motor vehicles belonging to the defendant' and other firms. The defendant was never notified of these payments to Lewis. Lewis 'recommended the continued use' of the plaintiff's facilities 'for the storage and warehousing of the defendant's vehicles.' Under this scheme, Lewis received a total of $4,342 from the plaintiff as secret profits or commissions in connection with the storage of the defendant's vehicles in 1959 and 1960 before his employment with the defendant terminated.

'[T]here was no price increase in the contractual arrangement between the * * * [parties] during the period * * * from 1958 until the contractual arrangement terminated in 1962. * * * [I]n 1959 there was a price reduction in * * * [this] arrangement.' '[T]he services rendered by the plaintiff to the defendant * * * were satisfactory during the * * * period of * * * [Lewis's employment with the defendant].' The plaintiff never charged the defendant 'as a result of any commission, or sum of money paid by the plaintiff's to Lewis during this period. The charges for services set forth in the plaintiff's account annexed cover a period during which Lewis was no longer employed by the defendant. The plaintiff made no payment to Lewis during this period.

The plaintiff objected to the master's conclusion that 'the plaintiff is indebted to * * * [the defendant] in the amount of $4,342' on the ground that the facts do not support that conclusion as a matter of law. On the same ground, the plaintiff objected to the general finding 'for the defendant * * * in the amount of $752.57.'

1. The plaintiff vaguely raises some doubt regarding the propriety of the defendant's counterclaim. In this connection, we note that Rule 32 of the Superior Court (1954) provides that in equity cases the answer may set up any counterclaim of a legal nature, against any one or more of the parties, arising out of the transaction that is the subject matter of the suit. Inasmuch as recovery on the counterclaim is based on a form of tort (as it is evident from our discussion, infra) it is 'of a legal nature.' See G.L. c. 231, § 1. 'The word 'transaction' in * * * [Rule 32] should be construed in a sense 'to effectuate the settlement in one proceeding of controversies so closely connected as appropriately to be combined in one trial in order to prevent duplication of testimony, to avoid unnecessary expense to the parties and to the public, and to expedite the adjudication of suits. * * *' Potier v. A. W. Perry, Inc., 286 Mass. 602, 608, 190 N.E. 822, 824.' Davis & O'Connor Co. v. Shell Oil Co., Inc., 311 Mass. 401, 405, 41 N.E.2d 287, 290; Stubbert v. Sergio, 335 Mass. 91, 93, 138 N.E.2d 592. But, in any event, since no answer based on the ground of want of equity was filed to the counterclaim pursuant to Rule 26 of the Superior Court (1954), we are of opinion that the plaintiff has waived any objection thereto based on that ground. Potier v. A. W. Perry, Inc., 286 Mass. 602, 609, 190 N.E. 822; Davis & O'Connor Co. v. Shell Oil Co., Inc., 311 Mass. 401, 405, 41 N.E.2d 287.

2. The defendant contends that the plaintiff's violation of G.L. c. 271, § 39, ² by paying commissions to Lewis precludes the plaintiff from any recovery. It presumably bases its contention on the maxim that equity will not grant relief to one who is guilty of illegal conduct in a matter concerning which he seeks relief. New York, N. H. & H. R. R. Co. v. Pierce Coach Lines, Inc., 281 Mass. 479, 482, 183 N.E. 836. See Walsh v. Atlantic Research Associates, Inc., 321 Mass. 57, 65-66, 71 N.E.2d 580. However, the illegal conduct of the plaintiff to which the defendant refers does not involve the same matters concerning which the plaintiff seeks relief, namely, services rendered by him in 1962. The services involved in the defendant's averment of illegality were separate and occurred in 1959 and 1960. Therefore, we need not pass on the question whether the plaintiff acted in violation of the criminal statute.

3. The facts show a breach by Lewis of his fiduciary duties to his principal, the defendant. 'Unless otherwise agreed, an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency.' Restatement 2d: Agency, § 387, See Restatement 2d: Agency, §§ 389, 391; J. C. Penney Co. v. Schulte Real Estate Co., 292 Mass. 42, 197 N.E. 458; Production Mach. Co. v. Howe, 327 Mass. 372, 377-378, 99 N.E.2d 32. The principal's basis of recovery against the agent where the agent makes a profit in connection with transactions conducted by him on behalf of the principal is the agent's 'duty to give such profit to the principal.' Restatement 2d: Agency, § 388. Cf. Raymond v. Davies, 293 Mass. 117, 119 N.E. 321, 102 A.L.R. 1112.

However, the basis of recovery by the defendant against the plaintiff is quite different. 'A person who, without being privileged to do so, intentionally causes or assists an agent to violate a duty to his principal is subject to liability to the principal.' Restatement 2d: Agency, § 312. Cf. Moran v. Dunphy, 177 Mass. 485, 59 N.E. 125, 52 L.R.A. 115; H. C. Girard Co. v. Lamoureux, 227 Mass. 277, 116 N.E. 542. So also, '[a] person who, knowing that the other party to a transaction has employed an agent to conduct a transaction for him, employs the agent on his own account in...