Moran v. Standard Oil Co. of New York

• Decision Date: 21 April 1914
• Citation: 105 N.E. 217,211 N.Y. 187
• Parties: MORAN v. STANDARD OIL CO. OF NEW YORK.
• Court: New York Court of Appeals Court of Appeals

211 N.Y. 187

105 N.E. 217

MORAN

v.STANDARD OIL CO. OF NEW YORK.

Court of Appeals of New York.

April 21, 1914.

Cross-Appeals from Supreme Court, Appellate Division, First Department.

Action by John J. Moran against the Standard Oil Company of New York. From a judgment of the Appellate Division (153 App. Div. 894,137 N. Y. Supp. 1130) affirming a judgment of the trail term for plaintiff as to the first cause of action, and dismissing the complaint as to the second cause of action, both parties appeal. Reversed on both appeals, and new trial ordered.William C. Beecher, of New York City, for plaintiff.

Charles P. Howland, of New York City, for defendant.

CARDOZO, J.

The plaintiff's first cause of action is for commissions earned as the defendant's salesman. His second cause of action is for damages because of the breach of the contract under which he was employed. He has recovered a judgment for the commissions, but his claim for damages has been dismissed. The case comes here on cross-appeals. The defendant is aggrieved because the plaintiff has recovered anything; the plaintiff, because he has not recovered more.

In 1901, when his dealings with the defendant began, the plaintiff was engaged, on his own account, in the sale of paints and painters' supplies. The defendant had for some time manufactured paint for its own use exclusively, but in 1901 it determined to enter the general market. It sought an introduction to that market through the mediumship of the plaintiff. The plaintiff was to stop buying his paint from other manufacturers and to buy solely from the defendant. In return he was to have the privilege of handling its entire output. There was to be no relation of agency between them. The plaintiff was to buy the paint and the defendant was to sell it. Upon this basis, in May, 1901, their dealings began. The plaintiffbroke off all connection with other manufacturers, and allied himself with the defendant exclusively, and between May, 1901, and April, 1903, his purchases amounted to $125,000. Many of his customers complained of the quality of the paint which he supplied to them from the defendant's factory, and he carried these complaints to the defendant's superintendent. He said that he was losing his trade; that his customers were leaving him; and that those who remained with him were exacting allowances because of the defects. Again and again, so he tells us, the defendant's superintendent assured him that, if he would keep track of the bad goods and try to reclaim the trade, the defendant would make it right with him, and repay him for any loss. When this settlement was to be made his testimony does not enlighten us. The time for the adjustment was as indefinite as the items to be adjusted. But in varying forms, if vaguely, the plaintiff, according to his own narrative, was made to understand that in return for his co-operation in developing this new branch of the defendant's business his losses due to the defendant's defective goods, whether resulting in the concession of allowances to customers or in diverted trade, would, at some time, when settling day arrived, be made good from the defendant's coffers. The defendant's superintendent denies though at times somewhere feebly, that anything was ever said to give reason for that belief.

In April, 1903, the dealings between the plaintiff and the defendant had continued for nearly two years, and there was then due from the plaintiff, according to the defendant's books, a balance of $27,650.79. A change was then made in the relation between them. The plaintiff ceased to buy paint from the defendant, and became its agent under a contract to serve it for a commission. Before the contract was made he had, so he claims, and understanding that the entire balance of $27,650.79, with the exception of an amount vaguely stated as about $5,200 or $5,300, would be canceled to compensate him for the loss which he had suffered. An indebtedness of nearly $23,000 was thus wiped out, as he asserts, without a scratch of a pen. His statement is that in March, 1903, he told the defendant's superintendent that he had figured his losses; that the value of the lost trade was approximately $14,000; that the allowances to customers and some other items came to about $9,000; and that there was $5,200 or $5,300 due, which he would pay in installments. To this announcement, he says that the superintendent made no answer. There was, even if the plaintiff's narrative be accepted, no word of approval. ‘And then I said, ‘What are you going to do about?’ And not a word out of him.' The plaintiff made a claim of loss, and the defendant listened to it in silence.

The contract of employment on a commission basis was made about a fortnight later. It is described, in its opening words, as an ‘agreement made and entered into this first day of April, A. D. 1903, by and between John J. Moran, party of the first part, and the Standard Oil Company of New York, by its agent, James G. Newcomb, party of the second part.’ The plaintiff ‘agrees to sell for the term of five years from the date hereof, for and on account of the party of the second part, certain paints, oils, varnishes, etc., a list of which is hereto attaches and made part of this agreement.’ The defendant ‘agrees to pay the party of the first part commissions on sales of said goods to be made, as follows'; and this is succeeded by a schedule of varying rates of commission on enumerated classes of wares. ‘In consideration of the commissions hereinbefore provided to be paid by the party of the second part, the party of the first part agrees to guarantee the payment of all sales of goods made by him.’ Every 90 days there is to be an adjustment of the commissions, to make them conform to the prescribed rates, which, in some instances, vary with market prices. The contract is signed by both parties. According to the defendant's witness, the plaintiff was informed before its execution that any commissions due to him under it would be held back and applied in reduction of his indebtedness for the goods which he had bought. This the plaintiff denies, and no such privilege is reserved to the defendant in the written contract. The plaintiff had to pay his own rent, the wages of his own employés, and other expenses. The commissions were to be his sole reward; and, if these were to be withheld until the debt of over $27,000 was wiped out, the plaintiff would have to work a long time before a dollar would be coming to him. By the middle of July, 1903, he had paid to the defendant on account of the old debt the sum of $5,249.58. If his testimony can be accepted, this is all that he then owned; the rest of the debt having been canceled in satisfaction of his losses. He had earned in commissions by that time about$4,000. He says that he then asked for the commissions, and was told that the defendant was applying them in reduction of the residue of his debt. The plaintiff protested, so he says, that the debt had been extinguished. By September 1, 1903, the commissions amounted to $6,477.19. Again the defendant refused to pay them, and, according to the plaintiff, refused to give him any orders. The plaintiff then stopped work, and this action was begun. The trial judge dismissed the cause of action for damages upon the ground that the contract of April 1, 1903, though imposing on the plaintiff a duty to serve for five years, did not impose on the defendant a duty to employ him for a like period. The cause of action for commissions was submitted to the jury, who found a verdict for the plaintiff.

[1] The defendant's appeal will be the first to be considered. It is urged, and, we think, correctly, that incompetent evidence was received to prove the extent of the plaintiff's losses because of diverted trade. In the latter part of 1903, while this action was pending, the plaintiff and his bookkeeper made up a schedule intended to represent the loss of profits because of the alienation of customersup to September, 1903. In the first column they placed the name of the customer, in the next the date when the last transaction with the customer occurred, and in the final column the amount of profit which the plaintiff estimated he would have made on September 1, 1903, if the customer had continued to deal with him. Upon the plaintiff's statement that this schedule correctly showed his loss of trade, and without other authentication, it was received in evidence. There was no proof of the extent of number of the sales which the plaintiff had made to any of the customers in the list. There was nothing beyond the fact that he had dealt with them, that the dealings had ceased, and that they tole him that his unsatisfactory paint was the cause of their defection. Upon this he was permitted, through the introduction of a schedule, to testify to his conclusion that, if they had continued to deal with him up to September 1st at the same rate, he would have made in profits $14,624. The evidence was incompetent. The plaintiff did not place before the jury the volume of his business with each customer, and the circumstances tending to show the reason for the breaking off of their dealings. If that had been done, it may be that the jury from such premises might have reached a conclusion as to the resulting loss of profits. Instead of following that course, the plaintiff followed the reverse one. He should have proved the premises, and let the jury draw the conclusion. He proved the conclusion, and withheld the premises. In effect, he stated his opinion as to the loss of profits resulting from diverted trade. That was the very question which the jury was to pass upon. Roberts v. N. Y. Elev. R. R. Co., 128 N. Y. 455, 28 N. E. 486,13 L. R. A. 499;Morehouse v. Mathews, 2 N. Y. 514.

The plaintiff's counsel, if we correctly understand his argument, concedes that this schedule is not competent to prove that the plaintiff did, in fact, lose the profits...