Roberge v. Cambridge Co-op. Creamery Co.

• Decision Date: 26 November 1954
• Docket Number: No. 36386,36386
• Parties: Louis ROBERGE, Respondent, v. CAMBRIDGE COOPERATIVE CREAMERY COMPANY, Appellant.
• Court: Minnesota Supreme Court

Page 400

67 N.W.2d 400

243 Minn. 230

Louis ROBERGE, Respondent, v. CAMBRIDGE COOPERATIVE CREAMERY COMPANY, Appellant.

No. 36386.

Supreme Court of Minnesota.

Nov. 26, 1954.

Syllabus by the Court.

The new Minnesota rules of civil procedure do not change the well-established rule that recovery cannot be had on the basis of Quantum meruit where the complaint alleges only an express contract. The pleadings in this case cannot be construed as raising the issue of an implied promise to pay the reasonable value of plaintiff's services or unjust enrichment of the defendant, nor can it fairly be said that these issues were impliedly litigated by consent. Held, the court, after finding that there was no express contract as alleged in the complaint, erred in awarding recovery on the basis of Quantum meruit and unjust enrichment. Substantial justice requires that the case be remanded with leave to the plaintiff to move to amend the pleadings.

Reversed and remanded with directions.

William E. MacGregor, Minneapolis, Harold Jordan, St. Paul, for appellant.

Heinrich J. Kuhlman, Minneapolis, for respondent.

DELL, Chief Justice.

This is an action to recover unpaid earnings under an alleged exclusive sales contract and damages for breach of the contract and for an injunction prohibiting defendants from using certain tradenames.

Only a brief summary of the facts elicited at the trial are necessary for the determination of the issues herein considered. Defendant is a farmers' co-operative creamery which has for many years been in operation at Cambridge, Minnesota. In the spring of 1950 defendant decided to open a plant for the sale of dairy products in Minneapolis. Plaintiff, who has had considerable experience in the sale of milk in the Twin Cities area, was contacted by defendant's plant manager, and negotiations were commenced between the two which lasted for several months. With assistance from the plaintiff, a building was procured in Minneapolis and a bottling plant established. Plaintiff contends that by virtue of a letter sent to him by defendant's manager an express agreement was consummated whereby plaintiff would act as exclusive sales agent for defendant's products on a commission basis, the agreement being cancellable on one year's notice. Defendant denies the existence of an express contract, contending that until such time as the plant was operating on a profit basis plaintiff was to be paid merely expenses. During 1951 plaintiff obtained orders for milk and defendant paid him at various intervals sums totaling $3,500, it being in dispute whether this constituted reimbursement for expenses or was to be applied upon commissions. During the year the business operated at a loss estimated at $33,000. In December 1951 defendant terminated plaintiff's services.

The trial court found that a written contract between plaintiff and defendant had been contemplated but that none was ever executed. It did find, however, that plaintiff was entitled to recover the reasonable value of the services he had performed, the unpaid balance of which was $4,061.84 (the amount alleged by plaintiff to be his unpaid commissions under the alleged contract for the first year), and that the defendant had been unjustly enriched by this amount. Defendant appeals from judgment in favor of the plaintiff in the amount of $4,596.67, which sum included interest, costs, and disbursements, and a decree forbidding use of certain tradenames by defendant.

The defendant contends that the only issue presented by the pleadings was the existence of an express contract between the parties and consequently the court erred in deciding the case on the basis of Quantum meruit and unjust enrichment. The complaint, in part, alleges that plaintiff 'earned under said contract the sum of $7,611.84.' Defendant, in its answer, after denying the express contract, further denies that the plaintiff 'earned $7,611.84 or anything whatever from defendant.' It was under these pleadings that the trial court admitted, over objection, plaintiff's testimony as to the reasonable value of his services. While the defendant went further in his answer than perhaps was necessary, we do not see how the complaint, taken alone or together with the answer, ¹ can fairly be said to spell out an implied promise to pay for the reasonable value of plaintiff's services or to allege unjust enrichment. While pleadings are to be more liberally construed under the new rules of civil procedure, they must still be framed so as to give fair notice of the claim asserted and permit the application of the doctrine of Res judicata. ² While the word 'earned' may be, as submitted by plaintiff, significant under some circumstances in alleging value of services, it is expressly qualified in this complaint by the phrase 'under said contract,' referring to the express agreement alleged in the preceding paragraph. Viewing the pleadings as a whole, we can see no merit or justification in adopting the strained construction plaintiff suggests.

Prior to the adoption of the new rules it was well settled in this state that, if the plaintiff in his complaint alleged both an express contract and an implied contract for the reasonable value of his services, he could recover on Quantum meruit if the express contract could not be proved. ³ However, if only an express contract was alleged, recovery could not be had on the basis of Quantum meruit unless the issue was litigated by consent. ⁴ While the latter rule has been criticized, ⁵ it, nevertheless, was an established principle of pleading.

Not only is there an absence of any indication in the new rules that the law in this respect was intended to be changed, but there are indications that the former law is approved. ⁶ In addition to expressly providing for alternative pleading of claims, ⁷ the rules are very liberal in permitting the pleadings to be amended. Rule 15.02 of Rules of Civil Procedure provides in part:

'* * * If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.'

Under this rule amendments are to be freely allowed to encourage the presentation of the merits of the controversy. ⁸ Where a party fails to take advantage of this procedure, he is bound by the pleadings unless the other issues are litigated by consent. Clearly relief cannot be based on issues that are neither pleaded nor voluntarily litigated. ⁹

Inasmuch as the plaintiff failed to amend the pleadings in this case, we are left with the question of whether the reasonable value of plaintiff's services or the unjust enrichment of defendant was litigated by consent. Issues litigated by either express or implied consent are treated as if they had been raised in the pleadings. ¹⁰ Consent is commonly implied either where the party fails to object to evidence outside the issues raised by the pleadings or where he puts in his own evidence relating to such issues. ¹¹ The question must, of necessity, be decided on the particular facts of each case.

An examination of the record here reveals a great deal of testimony bearing on the value of the plaintiff's services and the resulting enrichment of the defendant, much of which was not objected to as being outside the pleadings. For example, there is testimony to the effect that plaintiff installed telephones in his home to take orders; that he expended his full business time in the promotion of the business; and that he assisted the manager in union troubles. The vast majority of this testimony, however, tends with equal force to prove or disprove the existence of an express contract. It is obvious that consent to try an issue outside the pleadings cannot be implied where the evidence is pertinent to issues actually made by the pleadings. ¹²

Plaintiff points out the great variety of evidence relating to the losses the business suffered while plaintiff was associated with it, claiming this had no bearing on the express contract. One of the defendant's primary contentions, however, was that the plaintiff agreed to work merely for 'expenses' until the business was 'on a paying basis.' Consequently, evidence that the business was operating at a loss could logically be treated as bearing on defendant's denial of an express contract. Indeed, the only evidence that appears to us as tending to be sufficiently remote from the issues pleaded is that concerning the factors contributing to the losses. It is difficult to see how this evidence, some of which came in without the proper objection, ¹³ could have much relation to the existence of an express contract. Viewing the record as a whole, however, we do not think that consent to try the issues upon which the case was decided can fairly be drawn. In Briggs v. Kennedy Mayonnaise Products, Inc., 209...