Renner Plumbing, Heating and Air Conditioning, Inc. v. Renner, 801592

• Decision Date: 17 June 1983
• Docket Number: No. 801592,801592
• Citation: 225 Va. 508,303 S.E.2d 894
• Court: Virginia Supreme Court
• Parties: RENNER PLUMBING, HEATING AND AIR CONDITIONING, INC., et al. v. Connie I. RENNER. Record

Page 894

303 S.E.2d 894

225 Va. 508

RENNER PLUMBING, HEATING AND AIR CONDITIONING, INC., et al. v. Connie I. RENNER.

Record No. 801592.

Supreme Court of Virginia.

June 17, 1983.

David J. Andre, Winchester (Oscar J. Andre, Larrick, White, Andre & Rabun, Winchester, on briefs), for appellants.

Thomas A. Schultz, Jr., Winchester (William A. Johnston, Harrison & Johnston, Winchester, on brief), for appellee.

Before CARRICO, C.J., and COCHRAN, POFF, COMPTON, STEPHENSON and RUSSELL, JJ.

COMPTON, Justice.

In this action brought on a written contract, the dispositive question is whether parol evidence properly was admitted at the trial.

In a second amended motion for judgment in this suit filed almost nine years ago, appellee Connie I. Renner, the plaintiff below, sought approximately $57,000 damages, for breach of a contract dated June 28, 1968, from appellants Renner Plumbing, Heating and Air Conditioning, Inc., Hugh T. Campbell, and Lloyd R. Renner, defendants below. After a protracted period of pleading, during which a counterclaim was filed, and after extensive discovery proceedings, the case was tried to a jury in June 1980. The trial court struck the defendants' evidence on the counterclaim. The jury rendered a verdict in favor of the plaintiff for $25,351.90, with interest, and we awarded defendants this appeal to the July 1980 judgment order entered on the verdict. ^*

The facts leading up to preparation of the contract in question are not in dispute. Connie Renner, with the aid of his wife, operated a plumbing business in the Winchester area beginning in 1937. He worked as a sole proprietor until 1961 when he incorporated and formed Renner Plumbing, Heating and Air Conditioning, Inc. Initially, Connie and his wife owned all the stock of the corporation. Later, a few shares were transferred to employees Lloyd Renner, who was Connie's nephew, and Hugh Campbell, a trusted friend.

In 1968, Connie, desiring "to get out of this rat race," decided to sell the business to Lloyd and Campbell, who had no independent income with which to finance the purchase. Connie asked the corporate attorney, Joseph W. White, deceased at the time of trial, to prepare the necessary documents for completion of the sale. White also represented Connie personally.

White drew two contracts that were executed on June 28, 1968. One contract, not in dispute, was between Connie and his wife, on the one hand, and Lloyd, Campbell, and Commercial Savings Bank, trustee, on the other. That agreement, amended about six months later, provided for sale of the Renners' stock to the corporation for $50,000 payable in monthly installments of $555.20, including interest, with the entire purchase price to be paid by July 1, 1978. That contract has been fully performed.

The other agreement, the focus of this dispute, provides in pertinent part as follows:

"AGREEMENT made this 28th day of June, 1968, between Connie I. Renner, hereinafter called Renner, Renner Plumbing, Heating & Air Conditioning, Inc., a Virginia Corporation, hereinafter called the Corporation and Hugh T. Campbell and Lloyd R. Renner, hereinafter called Campbell and Renner

"IN CONSIDERATION of the services which Renner has heretofore rendered to the Corporation, and in consideration of services to be rendered by him, the Corporation agrees to employ Renner as an advisor under the following terms and conditions:

"(1) Until May 29, 1975 [Connie's 65th birthday], the Corporation will pay Renner a salary of One Hundred and Twenty-five Dollars ($125.00) per week. If the annual net profit of the Corporation shall exceed Five Thousand Dollars ($5,000.00), the Corporation will also pay to Renner ten per centum (10%) of its annual net profit. The annual net profit of the Corporation shall be its operating profit, as computed by its accountants, before accruals for income tax liabilities, bonuses or contributions to profit sharing or pension plans, but after the normal reasonable allowances for depreciation for tax purposes, to exclude additional first year allowances for depreciation allowed by Section 179 of the Internal Revenue Code.

"(2) Renner's salary shall be increased or decreased to cover the effects of inflation or recession after the first year following the execution of this agreement. In computing the amount of any increase or decrease the Consumer Price Index prepared by the U.S. Department of Labor shall be used.

"(3) After May 29, 1975, the Corporation will pay to Renner for life the maximum sum which could be earned by him without invading his right to receive full Social Security benefits, not to exceed Two Thousand Dollars ($2,000.00) annually.

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"(5) The Corporation agrees that it will pay no bonuses, commissions, contributions to retirement plans or dividends on any common stock of the Corporation, during any year in which the annual net profits of the Corporation are less than Five Thousand Dollars ($5,000.00). This provision shall not be construed to prohibit the payment of dividends on the Corporation's preferred stock in any event.

"(6) The Corporation will furnish Renner either a Ford, Chevrolet or Pontiac automobile for his use until May 29, 1975.

"Campbell and Renner, in consideration of the premises, join in this Agreement for the purpose of ratifying and confirming the action of the Corporation, and Agree to be individually bound to perform the obligations of the Corporation set forth herein."

After the contracts were executed, Connie continued for a short period as President of the corporation and thereafter was Treasurer. He was provided office space on the business premises and reported to the office fairly regularly for several years. During the period, his interest in the business affairs diminished and there was a feeling on Connie's part that he was not treated with proper respect by some of the employees. He also had the impression that Campbell and Lloyd did not desire his participation.

On October 27, 1971, Connie suffered a stroke which severely restricted his activities. After that event, he no longer participated in the operation of the business.

From the time the employment agreement was executed through August 5, 1974, Connie was paid his weekly salary by the corporation pursuant to paragraph (1) of the contract. He filed the present action on July 19, 1974. The corporation terminated payments to plaintiff on the advice of counsel because of the "litigation."

In the second amended motion for judgment, plaintiff recited the employment contract, emphasizing the portion of paragraph (1) dealing with payment of the ten percent share of annual net profit. Connie alleged that when the agreement was executed the salaries of Campbell and Lloyd were $139 per week each. He asserted it was the intent of the parties that the net-profit computation for the purpose of determining the ten percent share due him under paragraph (1) would be made without deducting from profits any sums paid as salary or bonus to Campbell and Lloyd in excess of $139 per week each. He alleged that for the fiscal years 1969 through 1975 the defendants each received more than $139 per week. Consequently, he asserted, the deductions for salaries paid them were excessive in determining net profits within the meaning of paragraph (1). Admitting that he was paid bonuses for some of the years during the period, plaintiff alleged that, because of the excessive deductions, he was underpaid during such years and failed to receive any payments during other years when they were due.

In addition, plaintiff sought recovery for unpaid weekly salary from August 5, 1974 to May 29, 1975, the date of his 65th birthday. Also, Connie claimed nonpayment of the $2,000 sums provided in paragraph (3) of the agreement. Asserting defendants had advised that no such payments would be made, plaintiff alleged defendants had been guilty of an anticipatory breach of that paragraph.

At trial, Connie did not testify in person. His de bene esse deposition, taken four years before trial and about four and one-half years after his stroke, was read in its entirety to the jury. Over defendants' objections, the jury was permitted to hear Connie's testimony: that the total purchase price of the business was not $50,000 but $80,000, with a $50,000 value placed on the merchandise, equipment, and accounts receivable; that business goodwill was valued at $30,000; that the employment agreement was drawn to enable him to receive the $30,000 payment for sale of the goodwill; that he was to perform no specific duties under the contract in order to be entitled to the payments provided in paragraph (1); and that Campbell and Lloyd were not authorized under the contract to increase their own salaries without prior approval of the plaintiff.

Defendants contend the trial court should have excluded this testimony because it altered, varied, and...