Thomas v. Columbia Phonograph Co.

• Decision Date: 10 January 1911
• Citation: 129 N.W. 522,144 Wis. 470
• Parties: THOMAS v. COLUMBIA PHONOGRAPH CO.
• Court: Wisconsin Supreme Court

144 Wis. 470

129 N.W. 522

THOMAS

v.COLUMBIA PHONOGRAPH CO.

Supreme Court of Wisconsin.

Jan. 10, 1911.

Appeal from Circuit Court, Milwaukee County; Orren T. Williams, Judge.

Action by Alfred E. Thomas against the Columbia Phonograph Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded, with directions to dismiss.

Among other references upon the part of the appellant were the following: Nilson v. Morse, 52 Wis. 240, 9 N. W. 1;Janesville C. M. Co. v. Ford, 82 Wis. 416, 52 N. W. 764, 17 L. R. A. 564;Jones v. Thomas, 120 Wis. 274, 97 N. W. 950;Galusha v. Sherman, 105 Wis. 263, 81 N. W. 495, 47 L. R. A. 417;Rosenberg v. McKinney, 138 Wis. 381, 120 N. W. 230.

Among references cited by the respondent were the following: Braun v. Wis. Cent. R. Co., 92 Wis. 245, 66 N. W. 196;Gibbons v. Grinsel, 79 Wis. 365, 48 N. W. 255;Weidner v. Standard, etc., Co., 130 Wis. 10, 110 N. W. 246;Kercheval v. Doty, 31 Wis. 476;Zimmer v. Becker, 66 Wis. 527, 29 N. W. 228.Winkler, Flanders, Bottum & Fawsett and Chas. E. Monroe, for appellant.

Paul D. Durant and H. W. Friedrich, for respondent.

TIMLIN, J.

The parties hereto entered into a contract as follows: “May 7, 1904. Confirming my personal interview of this date with you, you are hereby appointed manager of our Milwaukee office to take effect May 1st, 1904, at a salary of $25.00 per week with a commission of one-half (1/2) of one per cent. (1%) on the cash receipts of your office from sales and ten per cent. (10%) of the net profits of the office up to a total profit of $2,000 per month; and thereafter on the basis of five per cent. (5%) of such profits; the profits in question to be determined at and by our executive office, and notice thereof to be duly sent you by such office as determined by them.” The plaintiff entered upon performance on May 1, 1904, and continued until early in the year 1908. His salary of $25 per week was regularly paid. Each month he sent a report to the executive office of the cash receipts during the month from sales at the Milwaukee office, and received from the executive office a statement showing the receipts of the office, certain deductions therefrom, and the net profits for the month on which his commission was to be based. He claims that, selecting two months in which there were net profits and rejecting three months in which there were losses, and not deducting worthless accounts, commissions are due and in arrears to the amount of $152.90, and for this sum he had verdict and judgment.

The construction of this contract was for the court. It is a contract of employment during the pleasure of either party, with three kinds of compensation: The wages which are fixed in rate measured by time; the percentage on cash receipts fixed in rate and easily measured by receipts; and the percentage on net profits fixed in rates, but measured by net profits, which is a more uncertain base of computation. “Net profits” is a term often employed in contracts and business transactions and has quite a definite legal signification, and its meaning cannot be left to the varying judgments of different juries. Like other phrases its meaning may be modified or affected by the context, by associated words, or by the subject-matter of the contract. Park v. Locomotive Works, 40 N. J. Eq. 114, 3 Atl. 162;Welsh v. Canfield, 60 Md. 469;Wallace v. Beebe, 12 Allen, 354. Under exceptional circumstances showing an intended distinction there might be a difference in the meaning of the words “net profits” and that of the word “profits,” but usually they mean the same thing. Hentz v. Pennsylvania Co., 134 Pa. 343, 19 Atl. 685;Eyster v. Centennial Board, etc., 94 U. S. 500, 24 L. Ed. 188;Hubbard v. Brainard, 35 Conn. 563;Jones v. Davidson, 34 Tenn. 447. When the words “net profits” are applied to a course of dealing involving several successive transactions the idea of time is inseparably involved in the expression. For receipts and disbursements, gains and losses, in such case are never simultaneous, and some period is always meant at the end of which net profits may be ascertained. The words “net profits” unqualified by custom, usage, or by other words in the contract, would naturally refer to the termination of the adventure. They may also refer to the expiration of a year or other fiscal period, at the end of which profits are to be computed, but which is a fraction of and within the period of adventure. But in this latter case if the business continues and covers several of such fiscal periods, and the period is for the purpose of computation only, and not for the purpose of terminating the adventure, losses and gains arising out of matters covered by an earlier fiscal period but occurring after ascertainment of the profits for that period, are carried into and increase or diminish the net profits in the next or some succeeding fiscal period. It does not necessarily alter this that the parties are at liberty at the end of any fiscal period to draw out the profits, or a fraction of the profits thus...