Sasmor v. Vivaudou, Inc.

• Citation: 200 Misc. 1020
• Parties: Louis Sasmor, Plaintiff,<BR>v.<BR>V. Vivaudou, Inc., et al., Defendants.
• Decision Date: 20 March 1951
• Court: United States State Supreme Court (New York)

200 Misc. 1020

Louis Sasmor, Plaintiff,

v.V. Vivaudou, Inc., et al., Defendants.

March 20, 1951.

William Walter Frankel, Robert James Frankel and Jacob Markowitz for plaintiff.

Jack M. Goddard for defendants.

MATTHEW M. LEVY, J.

This action at law was tried before the court without a jury. Formal findings of fact and conclusions of law were waived by stipulation. I shall undertake to state the facts which I deem essential (Mason v. Lory Dress Co., 277 App. Div. 660; Steel Co. of Southern California v. Associated Metals & Minerals Corp., 277 App. Div. 687).

The plaintiff Louis Sasmor and the defendant V. Vivaudou, Inc. (hereinafter referred to as Vivaudou) entered into a written agreement, under seal, dated January 22, 1947, whereby Vivaudou employed plaintiff as its director and manager of sales at a fixed salary of $12,000 per year plus 5% of Vivaudou's net profits for the year (before provision for Federal income taxes). The length of employment under the contract was fixed as follows: "The term of this agreement and the period of Louis Sasmor's employment hereunder shall be for two years beginning January 1, 1947, and ending December 31, 1948. Unless notice to the contrary is given by either party to the other in writing on or before October 1, 1948, this agreement shall be automatically renewed for a like term from January 1, 1949."

In his complaint the plaintiff alleges that he neither gave nor received written notice of termination on or before October 1, 1948, and that the term of his employment was therefore automatically renewed to December 31, 1950, pursuant to the provisions of the contract. The plaintiff further alleges that on or about February 23, 1949, during the claimed extended term of the written contract of employment he was discharged, and he sues to recover $30,000 in damages because of the alleged breach.

Upon the trial, there was no proof of any profits by Vivaudou, and there was some proof of other employment by plaintiff, reducing the ad damnum to $14,000.

Vivaudou is not the only defendant. The plaintiff has also sued Universal Laboratories, Inc. (hereinafter referred to as Universal). The plaintiff's theory in joining Universal as a defendant in the action is that the contract provided that the plaintiff's duties were "subject to the control and supervision of the principal officers of Universal Laboratories, Inc., and its Board of Directors"; that Vivaudou is one of several wholly owned subsidiaries of Universal; that the officers and directors of each corporation are the same; that on or about March 6, 1947, Universal's board of directors approved and adopted the agreement; and that Vivaudou is merely a department or instrumentality of Universal, its parent company; and that therefore Universal is responsible at law for the contract made by Vivaudou.

On the first phase of the case, the defendants deny that the plaintiff was not given due written notice of termination. Accordingly, one of the basic factual issues in this case is whether written notice of the refusal of the employer to renew the contract was given plaintiff on or before October 1, 1948.

The defendants assert that on September 29, 1948, a letter was mailed by them to the plaintiff at his usual residence, advising him that his employment would be terminated at the end of the year. Under normal mailing processes, he should have received the letter on or before October 1, 1948. The plaintiff denies that he received it. The defendants produced what purported to be a carbon copy of it, which copy the plaintiff claims is spurious.

The plaintiff argues that notice is "given" when it is "received", not when it is "mailed", and that, since the contract requires that notice be "given by either party to the other in writing on or before October 1, 1948," proof of mailing on September 29, 1948, is insufficient, in the face of his denial of receipt.

There is no doubt, as argued by the plaintiff, that, in negotiations pending the making of a contract, the offeror may dictate the way in which an acceptance must be transmitted, and whether it must in fact be received, before there is a binding agreement (1 Williston on Contracts, § 88). Nor is there any question, as urged by the defendant, that where there is no such condition, the mailing of the offeree's acceptance in response to a mailed offer is decisive of the point at which the contract is entered into (Shubert Theat. Co. v. Rath, 271 F. 827, 834).

I do not consider either line of cases helpful. In the situation at bar, the issue is not the making of the contract but rather its meaning after it has already been made. A contract, once entered into, may provide that notices therein specified are effective if mailed, or that they must be received and not merely sent (Vassar v. Camp, 11 N.Y. 441). While there is no clear specific provision in that regard spelled out in the present contract, I am inclined to construe the requirement of "given" to mean "delivered" (Peabody v. Satterlee, 166 N.Y. 174). The defendant has cited no authorities in point to support a contrary view.

Section 160 of the Negotiable Instruments Law provides that notice of dishonor must be "given" an indorser, lest he be discharged, and the defendant relies upon a court decision that the mailing of such notice is sufficient, although it never reaches the indorser (Bank of United States v. Lunenfeld, 165 Misc. 654). Aside from the possible difference in meaning between the statutory and contractual use of the word, I conceive that, perhaps, the necessities of business in relation to the utilization of commercial paper have influenced the law merchant. Nor do the facts in this case justify the defendant's construction. In the case at bar, the contract was not entered into by use of the mails (McCurdy Co. v. Wegner, 129 Misc. 230). Nor were there several thousand persons to whom notices were required to be sent (Kantrowitz v. Dairymen's League Co-op. Assn., 272 App. Div. 470).

Construing, as I do, this contract in plaintiff's favor, I require receipt of the notice of nonrenewal, not merely the mailing of it. But the plaintiff is in error in contending that his denial of receipt disposes of the issue (McCoy v. Mayor, 46 Hun 268). It still remains a question of fact on all the evidence. The facts clearly demonstrate that the plaintiff did receive the notice in question on or before its due date. And in so holding, I do not rely alone upon the well-recognized presumption, arising from mailing, that the notice reached its destination (News Syndicate Co. v. Gatti Paper Stock Corp., 256 N.Y. 211; cf. Trusts & Guar. Co. v. Barnhardt, 270 N.Y. 350).

During the course of the trial, considerable testimony was offered on the issues as to whether the defendants mailed the notice and whether the plaintiff received it. It will be easier to unfold the story and thus to understand the contentions of the parties if we consider now the evidence adduced on behalf of the defendants, both in direct and in cross-examination. This I do without purporting to narrate all of the evidentiary facts which have persuaded me to find, as I do, that such notice was duly given, and that the plaintiff's continued employment beyond December 31, 1948, was not on the basis of a renewal of the written contract for the specific term therein specified, but rather on a monthly arrangement in order to aid in the disposition of the merchandise and to facilitate the liquidation of Vivaudou's depreciating business.

Universal is a corporation having about $1,800,000 in total assets. It is listed on the New York Stock Exchange. Morris H. Gotthilf, the chairman of its board of directors, owns a substantial, although not a majority, portion of its outstanding stock. Vivaudou is one of Universal's corporate subsidiaries.

On a number of occasions before September, 1948, Morris Gotthilf conferred with the plaintiff, as Vivaudou's director and manager of sales, on the need for liquidating Vivaudou because of its very bad financial showing. Plaintiff was made completely aware of Vivaudou's precarious position. At a meeting in September, 1948, immediately following a conference called for the purpose of boosting Christmas sales of Vivaudou products, and thereby reducing a large inventory, Morris Gotthilf advised the plaintiff that because of substantial losses incurred by Vivaudou, this company would have to be liquidated and that plaintiff should seek other employment.

Minutes of a meeting of the executive committee of the corporation held on September 29, 1948, substantiate the defendants' oral testimony that Vivaudou had under consideration the necessity of liquidating its business and terminating such of its contracts as expired beyond December 31, 1948. Minutes of a meeting of the corporation's board of directors held on September 30, 1948, state that the minutes of the meeting of the executive committee, held on the day before, were read and approved, and also disclose the intention of Vivaudou to liquidate its business. The minutes of the executive committee and of the board of directors were prepared by the defendants' attorney, an officer of the corporations, who testified before me as to their genuineness and chronological authenticity.

On September 29, 1948, Morris Gotthilf dictated a letter to his secretary, addressed to the plaintiff, advising him that his employment would be terminated at the end of the year. On the same day, Gotthilf told his secretary to have the controller of the corporations issue a check to plaintiff covering his salary to date, and to have the letter and check mailed together that very day. Morris Gotthilf's secretary, Edith Keims, testified that she typed the letter dictated by Gotthilf, that he signed it, and that upon being called, the controller came into Gotthilf's office.

Ernst Hoefer, the controller and head bookkeeper, testified that he went into Gotthilf's office and was given the letter, which already had been...