Martin Co. v. Commercial Chemists, Inc., 744

• Decision Date: 23 July 1968
• Docket Number: No. 744,744
• Citation: 213 So.2d 477
• Parties: The MARTIN COMPANY, a Maryland corporation authorized to do business in the State of Florida, and Walter I. Dobar, Appellants, v. COMMERCIAL CHEMISTS, INC., a Florida corporation, Appellee.
• Court: Florida District Court of Appeals

Page 477

213 So.2d 477

The MARTIN COMPANY, a Maryland corporation authorized to do business in the State of Florida, and Walter I. Dobar, Appellants, v. COMMERCIAL CHEMISTS, INC., a Florida corporation, Appellee.

No. 744.

District Court of Appeal of Florida, Fourth District.

July 23, 1968.

Rehearing Denied Sept. 11, 1968.

John V. A. Holmes and George T. Eidson, Jr., of Akerman, Senterfitt, Eidson, Mesmer & Robbinson, Orlando, for appellant, The Martin Co.

J. Russell Hornsby, of Law Office of J. Russell Hornsby, Orlando, for appellant, Dobar.

Arthur L. Steed, of Steed, Urban & Collins, Orlando, for appellee.

REED, Judge.

This was a suit in equity by The Martin Company as plaintiff (hereafter referred to as 'Martin') against Walter I. Dobar (hereafter referred to as 'Dobar') and Commercial Chemists, Inc. (hereafter referred to as 'Commercial Chemists') as defendants to recover secret profits allegedly made by Dobar during 1957, 1958 and 1959 while in the employ of Martin. Commercial Chemists was joined in the suit on the ground that it conspired with Dobar in a scheme contrived by Dobar to make the secret profits on contracts between Commercial Chemists and Martin. The defendants' answers substantially denied the allegations of the complaint, and Commercial Chemists asserted a counterclaim against Martin for $7,700 for services rendered in the form of chemical analyses of water and material.

The evidence indicated that Dobar was employed by Martin as a chemist sometime in the year 1956. One of his duties was to survey independent chemical laboratories throughout the State of Florida and to report to his employer on their capabilities to perform certain chemical and physical tests which Martin would require. Prior to his employment with Martin, Dobar had been an employee of Commercial Chemists which operated a commercial chemical laboratory based in Jacksonville, Florida. In the course of his survey of the independent laboratories in the state Dobar contacted Commercial Chemists and advised its officers that Martin would require certain chemical and physical tests. This led to contacts between officers of Commercial Chemists and personnel of Martin and, ultimately, to a blanket contract between Martin and Commercial Chemists whereby a price scale was set to establish the cost of the testing. No actual work was apparently done under this contract, but work was thereafter performed by Commercial Chemists for Martin on the basis of specific purchase orders issued by Martin for individual pieces of work required.

During the early part of the relationship between Martin and Commercial Chemists, the latter performed the required work in Jacksonville with its own personnel and equipment or subcontracted the work.

In late 1957 Dobar worked out an arrangement with Commercial Chemists whereby Dobar secured chemists in Orange County, Florida, where Martin is located to perform the tests required by Martin's purchase orders to Commercial Chemists. Thereafter, as Martin issued purchase orders to Commercial Chemists, Dobar would take the samples to chemists in Orange County who performed the actual tests. Reports of the tests were prepared on forms supplied by Commercial Chemists and bearing their letterhead. Commercial Chemists would review the reports and bill Martin for the work done in Orange County by the chemists secured by Dobar. Upon receiving payment from Martin, Commercial Chemists would retain 20% And pass on 80% To Dobar. Dobar would then pay the local chemists and retain the balance which apparently amounted to a sizeable profit.

When this arrangement between Commercial Chemists and Dobar commenced, officers of Commercial Chemists expressly inquired of Dobar as to his authority to handle the work of his employer in the fashion outlined above. Each of such officers stated that Dobar said that he had received authority to so handle Martin's work from the legal department of Martin. The officers of Commercial Chemists testified that they thought their contribution to the work and the consideration for their 20% Share of the billings was their efforts in reviewing the reports and their responsibility to Martin.

The trial court found and the record supports a conclusion that during the period from the start of this arrangement in 1957 between Dobar and Commercial Chemists to its conclusion in 1959 Dobar received from Commerial Chemists $61,661.70 and incurred, during the same period in connection with the work, total expenses of $20,466.98. Thus, it appears from the record that Dobar netted $41,194.72 in profits from work done under purchase orders from his employer, Martin, to Commercial Chemists.

The record also contains testimony to support the conclusion of the trial court that Martin was in fact unaware of Dobar's participation in Martin's contracts with Commercial Chemists.

It was stipulated by Martin and Commercial Chemists that during the latter part of 1959, shortly before Martin acquired knowledge of Dobar's dealings, that Commercial Chemists had submitted to Martin three invoices totalling $7,700. It was further stipulated that the work covered by these invoices was done in a workmanlike manner, that the charges were reasonable and unpaid, and the work was done in Orange County by a chemist secured by Dobar. Consequently, the record compels the conclusion that the work which gave rise to the invoices was performed under the aforesaid arrangement between Dobar and Commercial Chemists.

The trial court in a very detailed opinion found that Dobar, during his employment with Martin, bore a fiduciary relationship to his employer and that during the course of this employment he had secured secret profits from the...