Marnon v. Vaughan Motor Co., Inc.

• Decision Date: 08 June 1948
• Citation: 194 P.2d 992,184 Or. 103
• Parties: MARNON <I>v.</I> VAUGHAN MOTOR CO., INC.
• Court: Oregon Supreme Court

184 Or. 103

194 P.2d 992

MARNONv.

VAUGHAN MOTOR CO., INC.

Supreme Court of Oregon.

Argued November 14, 1947.

Reversed and Remanded June 8, 1948.

Petition for Rehearing Denied September 15, 1948.

Contracts — Knowledge — Defendant's secretary — Plaintiff's representations

1. Evidence relating to knowledge of defendant corporation's secretary of plaintiff's financial resources and relating to circumstances leading up to execution of contract granting plaintiff exclusive right to sell lift trucks manufactured by defendant established that defendant was not induced to execute contract by plaintiff's representations as to his financial resources.

Contracts — Uncertainty — Meaning

2. Any uncertainty in meaning of contract with plaintiff prepared by defendant's attorney would be resolved in favor of plaintiff.

Contracts — Idea — Consideration

3. Plaintiff's idea with respect to construction of a lift truck constituted consideration for contract under which defendant was to manufacture trucks and plaintiff was to have exclusive selling rights with provision for commission on sales made by defendant under certain conditions.

Contracts — Past consideration — Subsequent executory promise

4. When past consideration consists of a material pecuniary benefit which, although not moved by a previous request, was conferred upon promisor in such circumstances as to create moral obligation, and has not been exhausted by furnishing the consideration for another legal obligation, it will support a subsequent executory promise.

Contracts — Past consideration — Benefit on Promisor

5. To render applicable doctrine of past consideration it must appear that the service or other consideration conferred a benefit on promisor and not merely that it resulted in detriment to promisee, that promisee expected to be compensated, that circumstances created a moral obligation on part of promisor and that benefit received did not constitute consideration for another promise.

Contracts — Modification of written contract

6. Where defendant by written contract gave plaintiff exclusive right to sell lift trucks manufactured by defendant lacked necessary financial resources to set up a selling organization, subsequent oral arrangement whereby dealers were established to whom machines were to be sold at a discount and under which plaintiff

was to receive eight per cent of purchase price on machines sold constituted a modification of the written contract.

Estoppel — Written contract — Modified — Estoppel

7. Where defendant claimed that written contract giving plaintiff exclusive right to sell lift trucks manufactured by defendant had been modified, plaintiff could not enforce his claims under written contract on ground that defendant was aware of plaintiff's claims under contract and accepted benefits of their relationship, in view of plaintiffs knowledge that defendant denied that plaintiff had rights under written contract.

Contracts — Consideration — Modification

8. A consideration is required for modification of written contract.

Contracts — Consideration — Modification

9. Where defendant by written contract granted plaintiff exclusive right to sell defendant's lift trucks, but plaintiff lacked financial resources to set up necessary sales organization, defendant's subsequent promise to finance plaintiff and defray advertising costs and defendant's assumption of burden in connection with sales of trucks constituted consideration for modification of contract under which plaintiff was to receive eight per cent of sales price.

Contracts — Modification — Temporary arrangement

10. Where written contract under which defendant granted plaintiff exclusive right to sell lift trucks provided that a selling price would be fixed giving plaintiff a reasonable margin of profit, but plaintiff lacked financial resources required to set up a sales organization, modification of contract under which defendant assumed financial responsibility for promoting sales and plaintiff was to receive eight per cent of sales price was a temporary arrangement and did not wipe out completely provisions of contract contemplating that plaintiff should receive a reasonable profit.

Contracts — Parol modification — Clear — Convincing — Conclusive

11. Evidence of parol modification of a contract must be clear, convincing and conclusive.

Contracts — Changes — New agreement

12. An agreement when changed by mutual consent becomes a new agreement and consists of new terms and as much of old agreement as parties have agreed should remain unchanged, and supersedes the first to extent that the two would be unable to stand together.

Contracts — Modification — Meeting of minds

13. The minds of the parties must have met upon an asserted modification of contract.

Contracts — Profit — Sales

14. Under contract giving plaintiff exclusive right to sell lift trucks manufactured by defendant providing that defendant should set a cost price including a reasonable margin of profit and that parties would then fix a list price providing a reasonable margin of profit for plaintiff, plaintiff's profit could be derived only from sales and he was not entitled to share in the manufacturer's profit.

Contracts — Prices fixed — Sales made — Contract not too indefinite

15. A provision of contract under which plaintiff was given exclusive right to sell lift trucks manufactured by defendant that the parties would fix a reasonable list price, having in mind a reasonable margin of profit, was not too indefinite as constituting an agreement to make an agreement in the future, where prices had been fixed and sales made.

Contracts — Reasonable margin of profit — Not too indefinite

16. A provision of contract giving plaintiff exclusive right to sell lift trucks manufactured by defendant that parties should establish a reasonable list price, having in mind a reasonable margin of profit, was not too indefinite for enforcement because of use of term "reasonable margin of profit", particularly where plaintiff has rendered valuable services which redounded to benefit of defendant.

Contracts — Court — Effect to contracts — Good faith

17. Court should give effect of contracts entered into by parties in good faith and pursuant to which they have acted if it can be done reasonably and without violating settled legal principles.

Contracts — "Exigencies of the business demand" — Not too indefinite

18. A contract giving plaintiff exclusive right to sell lift trucks manufactured by defendant and providing that parties would fix a reasonable list price having in mind the "exigencies of the business demand" was not subject to objection as too indefinite because of inclusion of quoted phrase.

Principal and agent — Advantage — Agency — Principal

19. A person who undertakes to act for another shall not act for himself in the same matter, and all profits made and advantage gained by agent in execution of agency belong to the principal.

Principal and agent — Violation of duty — Secret transactions — Adverse — Principal

20. An agent violates his duty by secretly entering into relations or transactions concerning subject matter of agency in which he has interest adverse to those of his principal.

Principal and agent — Improper action

21. The plaintiff while acting as defendant's agent in sale of lift trucks acted improperly in making agreement with another of defendant's agents whereby such agent was to pay plaintiff 50

per cent of his commission, and plaintiff was under duty to account to defendant for all profits derived from the agreement.

Principal and agent — Equitable counterclaim — Accounting — Illegal profits

22. Although plaintiff's suit for an accounting of profits derived from sale of lift trucks for defendant was limited to a two year period, defendant's claim set forth in separate answer for an accounting of plaintiff's profits under secret agreement with another of defendant's agents in sale of trucks constituted an equitable counterclaim under which defendant was entitled to an accounting of all of the illegal profits and not just for two year period for which plaintiff sought an accounting. O.C.L.A. § 9-114.

Principal and agent — Improper action — Valuable services — Not forfeiture of all rights

23. Where plaintiff as defendant's agent in sale of lift trucks had rendered valuable service to defendant, secret agreement entered into by plaintiff with another of defendant's agents for division of such agent's commissions in violation of plaintiff's duty as an agent did not require forfeiture of all right to recover for services rendered defendant.

Joint adventures — Principal and agent — Agent — Joint adventurer

24. Where plaintiff was not entitled to share in profits of manufacture of lift trucks by defendant, but was receiving an agreed compensation of eight per cent of sales whether there were profits or not, plaintiff was an "agent" and not a "joint adventurer" with defendant.

See Words and Phrases, Permanent Edition, for all other definitions of "Agent" and "Joint Adventurer".

Principal and agent — Independent contractor — Agent — Fiduciary duties

25. Even if plaintiff in selling lift trucks for defendant was an independent contractor, he was still an agent subject to fiduciary duties of loyalty and obedience to the wishes of defendant as principal.

Principal and agent — No justification for secret agreement violating fiduciary duties.

26. The fact that plaintiff who was selling lift trucks for defendant may have been required to reimburse influential men in Washington to obtain government business was no justification for entering into secret agreement with defendant's Washington agent for division of such agent's commissions.

Principal and agent — Secret agreement not justified

27. The fact that defendant refused to pay any part of expenses of procuring government business and that plaintiff as defendant's agent for sale of lift trucks compelled defendant to provide...