Tahir Erk v. Glenn L. Martin Co.

• Decision Date: 20 April 1940
• Docket Number: No. 242.,242.
• Citation: 32 F. Supp. 722
• Parties: TAHIR ERK v. GLENN L. MARTIN CO.
• Court: U.S. District Court — District of Maryland

32 F. Supp. 722

TAHIR ERK v. GLENN L. MARTIN CO.

No. 242.

District Court, D. Maryland.

April 20, 1940.

Helen Sherry, of Baltimore, Md., for plaintiff.

Semmes, Bowen & Semmes, of Baltimore, Md. (William D. Macmillan and W. Randall Compton, both of Baltimore, Md., of counsel), for defendant.

WILLIAM C. COLEMAN, District Judge.

The plaintiff has sued the defendant for breach of a contract whereby defendant engaged the services of the plaintiff as its representative in Turkey, for the purpose of assisting it in selling military aircraft to the Turkish Government.

The statutory requirements, incident to the right to invoke this Court's jurisdiction, are satisfied.

The suit is now before the Court on defendant's motion to dismiss it, on the ground that the complaint fails to state a claim upon which relief can be granted. So, for present purposes, the facts as alleged in the complaint are to be treated as true.

The contract is embodied in three letters, annexed to the complaint, and in others referred to therein, which disclose the salient features of the agreement to be as follows: By letter dated August 22, 1930, and sent from Baltimore, defendant offered to appoint a Turkish company known as Erdogan Limited, of Constantinople, its exclusive agent in connection with contemplated sales of aircraft to the Turkish Government, the appointment to be for an indeterminate period of time, and cancellable by either party upon sixty days written notice. Commissions to the agent were to be at the rate of 5% on "business secured" by the agent for the defendant, due and payable when defendant was fully paid for completed and delivered orders; and in the event defendant cancelled the contract according to its terms, these commissions were payable to the agent upon any "business" which it might have "instigated prior to date of said cancellation, providing said business is closed by us within six months" after such cancellation. Right was reserved by the defendant to carry on, at any time, negotiations direct with the Turkish Government, "if in our opinion our mutual interests can be better served by our doing so;" but in the event such direct dealings took place while the agreement was still in force, defendant obligated itself to furnish the agent with copies of all relevant correspondence.

The agency appointment was accepted upon the stipulated terms by Erdogan Limited, by letter dated October 4th, 1930, sent from Istanbul, and with an additional proviso, which was accepted by the defendant in its reply dated October 25, 1930, namely, that so long as the agreement was in force, defendant obligated itself not to enter into any agreement with any other firm in Turkey, for the purpose of carrying on negotiations looking towards the procurement of aircraft manufactured by defendant.

Summarizing the other allegations of fact in the complaint, for about a year and a half after the agreement above was entered into, Erdogan negotiated with various officials of the Republic of Turkey for the purchase of military aircraft from the defendant. But no contract was ever executed during this period, and in April, 1932, Erdogan Limited went into liquidation and discontinued business; and the plaintiff, who had been a co-owner of this company, succeeded to and carried on its business, and as such successor was recognized and accepted by the defendant with respect to all the rights and obligations of Erdogan Limited, under the agreement just explained.

Thereafter, plaintiff continued to act as defendant's agent and pursued negotiations with the Turkish Government, until in July, 1933, defendant gave plaintiff written notice of cancellation of the agency agreement, stating as its reason that it had entered into an agreement with the United States Government not to export, or to enter into negotiations for the sale of military aircraft to any foreign country, and to keep secret all specifications relating to such aircraft, until permitted by the United States Government to do otherwise. However, as the result of further correspondence and plaintiff's request that defendant withdraw its notice of cancellation, defendant did so, and it was understood that plaintiff should, and did continue to act as defendant's agent until June 14, 1935, when defendant cabled plaintiff, cancelling the agency appointment. It appears that at the time of this cancellation, plaintiff was engaged in active sales negotiations with officials of the Turkish Republic which was prepared to purchase military aircraft from defendant as soon as defendant was willing and able to sell. About a year later, that is, in June, 1936, the United States Government removed the restriction that it had placed upon the defendant against selling aircraft to the Turkish Government, whereupon defendant advised that Government that it was now in a position to sell to it, and, as a result, in December, 1936, the defendant received an order in excess of $2,000,000 for military aircraft, which was completely filled and full payment was received by the defendant prior to the institution of the present suit, although it is not disclosed how long it was, after receipt of the order, before the entire matter was completely consummated.

It will be seen that, by the terms of the contract, upon notice of termination being given, the agency was to continue for sixty days thereafter, and commissions were to be payable upon any business "instigated prior to date of said cancellation, providing said business is closed by us within six months" after such cancellation. That is to say, there was a total additional period of eight months allowed to the plaintiff during which his right to commissions might vest. The word "closed" is to be taken as having been used in the contract in its generally accepted business sense, namely, as describing a situation in which the parties had reached an agreement; that is, where the parties had actually contracted with each other, the one to sell and the other to buy. It is obviously not used in reference to "completion" as opposed to "execution" of a sales contract. The agency agreement between the plaintiff and the defendant, has, as we have seen, an additional clause providing that such commissions as plaintiff may be entitled to shall be due and payable when defendant has been "fully paid for completed and delivered orders." Obviously, a sales contract of the sort contemplated would be "closed," that is, executed, long prior to the actual completion and delivery of the airplanes covered by the contract.

Summarized, the specific basis of defendant's motion to dismiss the action because the complaint fails to state a claim upon which relief can be granted, is that the contract between the parties contains no promise, express or implied, on the part of the defendant (1) to compensate plaintiff for his services unless the defendant actually executed a sales contract or contracts with the Turkish Government; or (2) to execute any such contract; and that, therefore, since the defendant had the right to revoke, and did revoke the contract before it executed any such contract, defendant owes plaintiff nothing. In other words, defendant claims that it had the right to sell or not to sell to Turkey as it saw fit; and that since it did not agree to sell until December, 1936, about sixteen months after its notice of cancellation to the plaintiff became effective, and about ten months after the additional six months period provided for in the contract had expired, there has been no breach of the contract either in giving the notice or in refusing to pay commissions to plaintiff, because none have been earned under the contract.

The reply of the plaintiff to defendant's contention is twofold, and may be summarized as follows: (1) Plaintiff is in the position of an agent to whom his principal has made a revocable offer of compensation upon the accomplishment of a specified result by reason of the agent's efforts, and the latter is entitled to such compensation where the principal, in order to avoid payment, revokes the offer and thereafter the specified result is accomplished, the agent's efforts being the effective cause of such accomplishment; and (2) the ban or embargo by the United States Government against shipment of airplanes to Turkey operated to suspend the entire agency agreement between the parties, resulting in the suspension of the cancellation right therein reserved to the defendant; and that, therefore, the extra eight months' period allowed the plaintiff after the defendant's exercise of the cancellation right, did not begin to run until the ban was removed.

The contract between plaintiff and defendant is controlled by the law of Maryland, since it was made in Maryland when defendant mailed its letter of final acceptance of October 25, 1930.

An examination of the Maryland decisions—although there appears to be none involving facts parallel with those in the present case—supports the position taken by the defendant, namely, that there has been no breach of the contract by the defendant and that, therefore, plaintiff is entitled to no relief. The closest analogy in the reported Maryland decisions is that involving agreements with real estate brokers. The Maryland law governing agreements of this kind, as well as agreements with other types of brokers, is clearly stated in Cleaves v. Sharp & Dohme, Inc., 166 Md. 546, 171 A. 374. There, a broker sued a corporation and its president and controlling stockholder who had requested the broker to develop and furnish details of a plan proposed by him for the consolidation of the corporation with another company. The defendants approved the plan, directed the broker to proceed with his efforts to effect the consolidation and encouraged and accepted his services and efforts. The Court held, however, that the broker was not entitled to recover because he had not been a party to procuring the result for which he...