Terry v. Yancey

• Decision Date: 29 April 1965
• Docket Number: No. 9834.,9834.
• Citation: 344 F.2d 789
• Parties: Laverne TERRY, Appellant, v. Rob Holmes YANCEY, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

344 F.2d 789 (1965)

Laverne TERRY, Appellant, v. Rob Holmes YANCEY, Appellee.

No. 9834.

United States Court of Appeals Fourth Circuit.

Argued April 7, 1965.

Decided April 29, 1965.

Armistead L. Boothe, Alexandria, Va., (Boothe, Dudley, Koontz, Blankingship & Stump, Alexandria, Va., and George H. Gossman, Seymour, Ind., and Floyd E. Wadsworth, Shoals, Ind., on brief), for appellant.

Darryl L. Wyland, Washington, D. C. (Robert E. Anderson, Washington, D. C., on brief), for appellee.

Before HAYNSWORTH, Chief Judge, BELL, Circuit Judge, and STANLEY, District Judge.

EDWIN M. STANLEY, District Judge:

The plaintiff, Laverne Terry, a resident of Indiana, brought this action against the defendant, Rob Holmes Yancey, a resident of Virginia, in the United States District Court for the Eastern District of Virginia, to recover damages for personal injuries sustained in an automobile collision on July 11, 1962. The accident occurred in Fairfax County, Virginia, and jurisdiction is based on diversity of citizenship and the amount in controversy.¹ The jury found for the plaintiff and awarded him damages in the sum of $5,100.00. Being dissatisfied with the amount of the award because of the exclusion of certain testimony relating to the cost of employing a substitute salesman, plaintiff appealed. The narrow question presented by the appeal is the correctness of the ruling of the District Judge in excluding this testimony.

The plaintiff has been connected with a Ford automobile agency in Martin County, Indiana, for many years. At some undisclosed time, but before any date material to this controversy, the business was incorporated under the corporate name of Laverne Terry, Incorporated. At the time of the accident in July of 1962, the plaintiff owned 57 per cent of the stock in the corporation, and the remaining 43 per cent was owned by a Mr. Deckert. In January of 1963, the plaintiff purchased Mr. Deckert's stock, and since that time has been the sole stockholder of the corporation. The plaintiff testified that before his injury he devoted most of his time to selling automobiles, and was responsible for about 75 per cent of the sales. He claims that because of the injuries sustained in the accident, his sales ability has been impaired to the point that he can now do only about one-fourth as much selling as before the accident. As a consequence, it is contended that it was necessary to hire an additional salesman, at an expense of about $6,000.00 a year, to make the sales formerly made by the plaintiff.

Plaintiff attempted to introduce evidence concerning his capacity to sell automobiles before and after his injury, and the compensation, in the form of a commission, paid to the substitute salesman. This evidence was excluded by the trial judge, but counsel was permitted to make a proffer of proof in the absence of the jury. On this appeal, the plaintiff states that the only question involved is whether "the owner and top salesman of an automobile agency is entitled to prove the cost of hiring another salesman to do the work he did before the accident but cannot do after the accident because of the injuries." The question, in the form stated, is misleading, however, to the extent that it indicates, either directly or by inference, that the plaintiff personally employed or paid compensation to a substitute salesman, since the record discloses that anything he did in this regard was done as an officer of the corporation, and not as an individual. A possible explanation of the inaccuracy is the apparent failure of the plaintiff to make any distinction between a corporation on the one hand and a proprietorship or partnership on the other. Time and again, both at the trial and in his brief, the plaintiff referred to the substitute salesman he had to employ, and to the commission he had to pay. A corporation is, of course, an entity separate and apart from its officers and stockholders, and where an individual creates a corporation as a means of carrying out his business purposes he may not ignore the existence of the corporation in order to avoid its disadvantages. Commissioner of Internal Revenue v. Schaefer, 2 Cir., 240 F.2d 381 (1957); Schenley Distillers Corp. v. United States, 326 U.S. 432, 66 S.Ct. 247, 90 L. Ed. 181 (1946)...