Plaskitt v. Black Diamond Trailer Co.

• Decision Date: 06 December 1968
• Citation: 164 S.E.2d 645,209 Va. 460
• Parties: James M. PLASKITT, Sr., et al. v. BLACK DIAMOND TRAILER COMPANY, Incorporated, et al.
• Court: Virginia Supreme Court

Page 645

164 S.E.2d 645

209 Va. 460

James M. PLASKITT, Sr., et al. v. BLACK DIAMOND TRAILER COMPANY, Incorporated, et al.

Supreme Court of Appeals of Virginia.

Dec. 6, 1968.

Jackson S. White, Jr., Abingdon (Penn, Stuart & Miller, Abingdon, on brief), for plaintiffs in error.

Bradley Roberts, Bristol (Stant & Roberts, Bristol, on brief), for defendants in error.

Before EGGLESTON, C.J., and BUCHANAN, SNEAD, I'ANSON, CARRICO, GORDON and HARRISON, JJ.

HARRISON, Justice.

James M. Plaskitt, Sr., James M. Plaskitt, Jr. and James M. Plaskitt and Son, Incorporated, instituted their action against Black Diamond Trailer Company, Incorporated and Enterprise-Black Diamond Corporation, on September 17, 1965. They alleged the breach without cause of a contract made in September, 1960, by the said parties, and a loss thereby to the Plaskitts of money they reasonably could have expected to receive as commissions on purchases of Black Diamond trailers by the railroad industry. The trial court sustained demurrers filed by Black Diamond to the original and amended motions for judgment of the Plaskitts and dismissed the amended motion. We granted a writ of error to this final judgment of the court.

The Plaskitts, who represent themselves as experienced in selling to and dealing with the railroad industry, with business offices in Washington, D.C., and Upperville, Virginia, allege that on September 23, 1960, they entered into an agreement with Black Diamond whereby they were appointed "exclusive railway sales agents for Black Diamond Trailers" and were to receive a 2% Commission on all sales.

Filed with the pleadings are copies of a letter dated September 23, 1960, written on behalf of Black Diamond, to eleven railroad companies, announcing the appointment of the Plaskitts as such exclusive railway sales agents. The letter stated that the Plaskitts had considerable experience in railway sales, and they would welcome the opportunity to work with the railroads on their truck-trailer requirements.

On the same day, Black Diamond also wrote the Plaskitts a letter, advising them that it would start writing the purchasing officers of the companies whose names were given it by the Plaskitts. In the letter, Black Diamond expressed pleasure at having the Plaskitts represent them "with our railway sales" and confirmed "our understanding that we will quote these trailers at the best possible price, and in each instance add 2 percent commission for" the Plaskitts.

These letters are the only written evidence of the agreement between the parties. The contract was precipitated by the advent of "piggy-back" trailers as a means of conveying goods by railroad, and Black Diamond was interested in selling this type trailer to the railroad industry.

The Plaskitts allege in their pleadings that they agreed to attempt to develop markets and to promote and obtain sales of Black Diamond trailers as "piggy-back" carriers for goods on railroads; and that as a result of their efforts, the Company built up a large and profitable business in the manufacture of "piggy-back" trailers for the railroad industry. They also allege that they sought and received assurances that the Company would honor the agreement, pay the commissions on all railway sales, and otherwise protect the Plaskitts as its sales agents.

On September 27, 1962, the Company gave the Plaskitts written notice that, effective December 31, 1962, the Company's railway sales activities would be conducted by its own sales personnel, and that the Plaskitts thereafter would receive no further commissions on such sales. The new sales arrangement was announced to the railroad industry at the same time.

It is admitted that the agreement between the Plaskitts and Black Diamond did not provide a specific time for its duration. The position of Black Diamond is that either party was entitled to terminate the agreement at will, provided reasonable notice of termination was given, and that three months constituted such notice. In their brief the Plaskitts say that their complaint "* * * is that their agreement was terminated by Black Diamond before they had an opportunity to recover the reasonable value of their services and their out-of-pocket expenses, or had a reasonable opportunity to profit from the contract." Thus the issue is framed for our consideration.

Black Diamond contends that the decision here is controlled by Stonega Coal and Coke Co. v. Louisville & N.R. Co., 106 Va. 223, 55 S.E. 551, 9 L.R.A., N.S., 1184 (1906). The Plaskitts say that in the half century which has elapsed since Stonega was decided, the "rule of reasonable time" has been enunciated and developed by the courts, and that we should adopt it. They cite Allied Equipment Company v. Weber Engineered Prods., Inc., 237 F.2d 879 (4th Cir. 1956), and other cases and authorities, including IV Williston, Contracts, (rev. ed.) § 1027A at pp. 2848--2852. In Allied Equipment, a statement of this rule was made by Judge Prettyman, who said:

"It is well settled that, where an employed agent, in reliance upon the agency and with the knowledge of his principal, expends funds in the interest of the agency and of the principal, the principal is committed to the agency for a reasonable period of time, so that the agent may thus recoup his expenditures. As Professor Williston says, 'It is the settled law of agency that if the agent or employee furnishes a consideration in addition to his mere services, he is deemed to have purchased the employment for at least a reasonable period where the duration of the employment is not otherwise defined.' " 237 F.2d at p. 882.

That case involved a manufacturer which gave a wholesaler an exclusive distributorship for its products in eighty-five counties of Virginia. As a result of the contract, the wholesaler established an extensive system of dealerships for the manufacturer's products, leased a new building in reliance upon representations that were made by the manufacturer, increased the number of its dealers and otherwise incurred expenses and changed its position by virtue of the contract.

Jack's Cookie Co. v. Brooks, 227 F.2d 935 (4th Cir. 1955), cited by counsel for the Plaskitts, involved a wholesale distributorship for an indefinite period wherein Brooks, for a commission of 5% On sales, set up a distributive system, agreed to pay his own expenses, employed additional personnel, and paid one-half the salery of an experienced man to accompany and assist route salesmen. There the court held that the case should have been submitted to the jury on the issue of breach of contract because in its opinion:

"* * * the evidence, taken in the light most favorable to the agent, indicated something more than a contract in which the agent is appointed merely to sell the goods of a manufacturer on commission, and there is no promise on either side to continue the relationship for a definite period. In such event each sale constitutes the acceptance of an offer in a series of independent transactions and the manufacturer fulfills his agreement by paying the stipulated commission and is ordinarily at liberty to terminate the arrangment at will without breach of contract." 227 F.2d at p. 938.

Hammond v. C.I.T. Financial Corp., 203 F.2d 705 (2d Cir. 1953), involved a real estate commission claimed by the plaintiff who was given the exclusive right to sell a wholly owned subsidiary corporation of the defendant with no duration of the agency specified. The defendant made his own sale of the property without payment of a commission to plaintiff. A recovery was permitted. However, in that case there was a finding of fact that there had been no termination of plaintiff's contract prior to a sale of the property by the defendant.

General Tire & Rubber Co. v. Distributors, Inc., 253 N.C. 459, 117 S.E.2d 479 (1960), dealt with a distributor's contract, and the court said:

"Where the duration of a distributor contract is indefinite and distributor has expended substantial sums in establishing and promoting the distributorship and such expenditures were within the contemplation of the parties, the contract may be terminated after the lapse of a reasonable time. * * *" 253 N.C. at p. 472, 117 S.E.2d at p. 489.

In Erskine v. Chevrolet Motors Co., 185 N.C. 479, 117 S.E. 706, 32 A.L.R. 196 (1923), Erskine, whose agency agreement was cancelled by Chevrolet, was permitted to recover for loss of future profits. However, it was established there that the plaintiff leased a building, purchased equipment, contracted for advertisement and incurred other expenses.

The cases upon which the Plaskitts rely have arisen from dealerships and distributorships and from arrangements more in the nature of a brokerage or a sales agency. The agent, in addition to making sales, furnished additional consideration.

We are not confronted here with a dealership, a distributorship, a consignee of goods or a sales agency. In the instant case, the Plaskitts were individual salesmen. Their sole responsibility and commitment to Black Diamond was to solicit orders for trailers which the Company could accept or reject. If accepted, they, as salesmen, were to receive a 2% Commission on the gross price. The Plaskitts were not required to establish facilities, take a trailer on consignment, carry spare parts, or do anything other than contact a number of railroads, and persuade them to buy Black Diamond "piggy-back" trailers.

The only thing the Plaskitts had to provide was their personal services. Of necessity, they incurred some expenses in writing, telephoning or making personal calls on representatives of the railroad companies. This was an incident of selling, and in the performance of the personal service of selling--far different from the commitments, arrangements and obligations assumed and performed by the agents involved in the cases discussed in counsel's brief. The allegations of what the Plaskitts did in reliance upon their...