St. Regis Paper Co. v. Stuart

• Citation: 214 F.2d 762
• Decision Date: 18 August 1954
• Docket Number: No. 4803,4804.,4803
• Parties: ST. REGIS PAPER CO. v. STUART. STUART v. ST. REGIS PAPER CO.
• Court: U.S. Court of Appeals — First Circuit

214 F.2d 762 (1954)

ST. REGIS PAPER CO. v. STUART.

STUART v. ST. REGIS PAPER CO.

Nos. 4803, 4804.

United States Court of Appeals, First Circuit.

July 26, 1954.

Rehearing Denied August 18, 1954.

Bailey Aldrich, Boston, Mass. (Horace R. Lamb, New York City, Choate, Hall & Stewart, Boston, Mass., and LeBoeuf, Lamb & Leiby, New York City, on the brief), for St. Regis Paper Co.

James D. St. Clair, Boston, Mass. (Hale & Dorr, Boston, Mass., on the brief), for George A. Stuart.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

WOODBURY, Circuit Judge.

These are cross-appeals from a judgment entered on the verdict of a jury for the plaintiff in an action by a salesman to recover commissions under a letter contract reproduced in full in the margin.¹

The plaintiff, George A. Stuart, was graduated from the University of Maine in 1910 and for the next 25 years he worked in various agricultural capacities, at first for the United States and later for the Commonwealth of Pennsylvania, where he eventually became the Director of the Bureau of Markets. In 1935 he lost that position due to a change of administration. Up to that time he had no experience in selling. He had, however, done research in the field of paper manufacturing, and he had been active in developing and encouraging the use in Pennsylvania of paper bags for the packaging of flour and potatoes. In the course of these latter activities he developed a large acquaintance among Pennsylvania millers (indeed he was elected in effect the secretary of the Pennsylvania Millers Association although his wife held the title) and others in the business of producing and marketing foods, and allied occupations. Included in the latter group was the Albert B. Carey mentioned in the letter contract, who was a paper bag salesman for Taggart Brothers Company, Inc., now dissolved, a former subsidiary of Taggart Corporation, which before suit merged with the defendant, St. Regis Paper Company.²

Carey, believing that Stuart might be of assistance in selling paper bags, approached the latter at about the time he lost his position, and finding Stuart interested, took up the matter of his employment by Taggart Brothers Company, Inc., with A. T. Plunkett, then vice-president of the company. After one or two preliminary discussions, all three met in the company's office in New York City and the letter agreement reproduced above, which had already been prepared, was signed on the day of its date.³

Thereafter Carey and Stuart for the most part, although not invariably, traveled and worked together, Carey teaching Stuart salesmanship and Stuart introducing Carey to prospective customers among his friends and acquaintances in Pennsylvania. This arrangement, however, did not work out to the satisfaction of anyone and it came to an end in March, 1937, following a conference between Plunkett, Carey and Stuart in New York. There is a dispute as to what was said at that meeting. Plunkett testified that he told Carey and Stuart that they had frequently expressed dissatisfaction with their salaries and with their failure to earn any commissions, and that in consequence he terminated the previous arrangement altogether and raised their salaries $500 per year apiece. Stuart agreed that he had expressed dissatisfaction with his salary and his failure to earn commissions, and admitted that his salary was raised $500 per year, but he denied that the letter agreement was terminated so far as commissions were concerned. At any rate, after March, 1937, Carey and Stuart worked separately and thereafter saw each other infrequently, usually only at company sales meetings. From 1937 on, Stuart concentrated on selling potato bags in Maine, and in 1943 moved to Springfield, Massachusetts, where he has since resided, in order to be nearer his field of activity. Carey never went to Maine but continued to sell flour and potato bags in Pennsylvania, later spending much of his time selling cement and other multi-wall bags of types not covered by the agreement.

Over the years following 1937, Stuart's salary was increased from time to time until in 1948 he was receiving $475 per month. He was never paid any commissions and he never asked for or received any full accounting of the deliveries made on the orders he booked, although he testified that he thought he might be able to claim commissions under his letter contract for every year since 1943 and was reasonably sure he could do so for every year after 1946. He was discharged at the age of 63 in July, 1949, two years before he was due for retirement. He made his first demand on the defendant for commissions in March, 1951, and he brought the instant action in October of that year in the Superior Court of the Commonwealth of Massachusetts from which it was removed to the court below, there being the requisite diversity of citizenship and amount in controversy for federal jurisdiction under Title 28 U.S.C. § 1332(a)(1).

Upon removal the defendant moved to dismiss the action for failure to join an indispensable party, to wit, Carey. The District Court denied the motion without prejudice and the case went to trial by jury. During the trial the defendant protected its rights by motions for a directed verdict, which were denied, and after verdict for the plaintiff, for judgment notwithstanding the verdict and in the alternative for a new trial, which was also denied.

The District Court, in denying the defendant's motion to dismiss for failure to join Carey as an indispensable party, by necessary implication ruled that the letter agreement might legally be construed to constitute an obligation to pay commissions to Stuart and Carey severally, and that so construed the extent of the defendant's obligation to Stuart alone was capable of rational ascertainment. By denying the defendant's subsequent motions for judgment, and for judgment notwithstanding the verdict, the court repeated the above rulings, and ruled in addition, first, that there was substantial evidence to permit findings by the jury in accordance therewith, and second, that on the evidence the jury could in reason find that the agreement as to commissions remained in full force and effect in spite of the fact that its other specific provisions had admittedly been departed from or abandoned many years before. In accordance with its rulings the court submitted the following three specific questions to the jury. It asked, first, whether the agreement so far as commissions were concerned was made with Stuart and Carey (a) severally, (b) jointly, or (c) with no one; second, if question one were answered either (a) or (b), (the jury answered it (a)), whether, if a commission contract had originally been made, it was later at any time, formally or informally, altered so that thereafter Stuart either explicitly or impliedly agreed to be paid on the basis of a salary and expenses without commissions (i e., whether there had occurred a termination, abandonment or rescission of the commission feature of the agreement,) which the jury answered "No", and, third, the extent of damages, which the jury answered by giving the plaintiff $38,190.75 principal and $7,890.98 interest, or a total of $46,081.73.

The preceding brief statement of the case provides enough background for consideration of the defendant-appellant's basic contentions on its appeal. These are, (1) that on its face the letter agreement was unambiguously joint as to the obligation to pay commissions, (2) that unless the agreement is so interpreted it is too indefinite to be enforceable, (3) that since Stuart and Carey had, or have, a joint interest in any commissions which might be payable under the contract, Stuart's action must be dismissed under Rule 19(a) F.R.C.P. 128 U.S.C., for failure to join Carey as an indispensable party plaintiff, and (4) that on the record the conduct of the parties was such as to work a termination or abandonment of the entire agreement as a matter of law.

The first three contentions hinge on the question whether the jury could properly find that the defendant's obligation to pay commissions under the agreement ran to the obligees jointly, or ran to each one of them severally. And this question is to be determined under the law of New York for that is the jurisdiction to which the Massachusetts courts would refer because the contract was made in New York and its performance was not contemplated in any other particular jurisdiction but in several eastern states from Maryland to Maine. See Autographic Register Co. v. Philip Hano Co., 1 Cir., 1952, 198 F.2d 208, 212; Wetherell Bros. Co. v. United States Steel Co., 1 Cir., 1952, 200 F.2d 761, 763 and the Massachusetts cases cited therein.

It is the law of New York, and the general rule of the Common Law, that when two or more persons undertake a contractual obligation there arises a presumption of law that they undertake jointly and that words...