Vincent v. Palmer

• Decision Date: 09 April 1941
• Docket Number: 22.
• Parties: VINCENT v. PALMER.
• Court: Maryland Court of Appeals

19 A.2d 183

179 Md. 365

VINCENT v. PALMER.

No. 22.

Court of Appeals of Maryland

April 9, 1941

Appeal from Circuit Court of Baltimore City; Eugene O'Dunne Judge.

Suit in equity by William Palmer against Paul J. Vincent, trading as Paul J. Vincent Company, for an accounting. From a decree for complainant and an order affirming it, respondent appeals.

Affirmed.

Harry E. Goertz and Joseph Loeffler, both of Baltimore (Bernard J Medairy, of Baltimore, on the brief), for appellant.

Max Sokol, of Baltimore (Dickerson, Nice & Sokol and M. William Adelson, all of Baltimore, on the brief), for appellee.

Argued before SLOAN, JOHNSON, DELAPLAINE, and COLLINS, JJ.

DELAPLAINE, Judge.

Paul J Vincent, a mechanical engineer and contractor, trading as Paul J. Vincent Company, is disputing the right of the Circuit Court of Baltimore City to order him to account to William Palmer, an employee, for 10 per cent of the net profits on contract business from July 1, 1932, to May 5 1939.

The appellant employed Palmer in January, 1932, as a pipe fitter for heating and refrigerating plants at wages per hour. On July 18, 1932, the appellant made him the following additional offer, which he accepted, applicable to all contract work started after July 1, 1932:

'In consideration of services rendered and to be rendered we hereby agree to give you 10% of the Net Profits on Contract Business done by this organization. This agreement to remain in force as long as you remain in the services of this organization.

'It is further understood that in the event we do not have sufficient work, which will enable us to pay a fair living wage, you will be at liberty to work for other organizations, but we to have the first call on your services.

'In making this agreement we have in mind the future possibility of you becoming a vital factor and shareholder in this organization.'

The appellant, however, testified that someone in his office had given Palmer the following notice on August 25, 1933: 'We are cancelling all agreements made with our erecting force, applying to profit sharing and continuous employment, this is made necessary due to the uncertainty of business, and we want you to feel free, to accept employment elsewhere, if necessary.'

Palmer denied that he was given the alleged notice in any way. He declared that when he received from the appellant a letter dated November 30, 1939, enclosing a copy of the alleged notice, he replied: 'I am shocked to receive such a communication from you when you know very well that you sent no letter to me on August 25, 1933, relative to cancellation, and that you never even spoke to me about cancellation at any time whatsoever. * * * The agreement of July 18, 1932, is in full force and effect.' Palmer also testified that he had requested his share of the net profits on several occasions, and each time his employer had promised to figure it up and settle later on.

The Chancellor decreed on October 17, 1940, that the employer should account to the employee, and thereupon referred the case to an auditor. Additional testimony was subsequently introduced, but on November 13, 1940, the Chancellor affirmed the decree. The appeal is from the decree and the order affirming it.

Justice Story declared in his Commentaries that courts of equity have jurisdiction in all cases 'where there are mutual accounts, * * * and also where the accounts are on one side, but a discovery is sought, and is material to the relief.' 1 Story, Equity Jurisprudence, sec. 459. In accordance with this view, a court of equity has the undoubted right to require an employer to make an accounting for the purpose of enforcing a binding agreement to pay an employee a portion of the profits of the business. Legum v. Campbell, 149 Md. 148, 131 A. 147; Zalis v. Orman, 175 Md. 100, 199 A. 877.

The first question presented in this case is whether the profit-sharing agreement is a mere gratuity or a contract with a valuable consideration. Of course, a distinction is recognized between a promise of a gift to an employee for doing what he was already obligated to do, and an offer of a reward to an employee for doing what he was not already obligated to do. In Georgia, for example, where an employer had promised an employee during his employment some indefinite share of profits provided that he rendered satisfactory service, but the promise did not necessitate any change in the nature of the employment, it was held that the agreement was nudum pactum. Duncan v. E. H. Cone, Inc., 16 Ga.App. 253, 85 S.E. 203. But where an employer promises a bonus to an employee on condition that he shall work continuously for a specified period of time, or until certain work is completed, and the employee complies with the condition, then the offer and the acceptance thereof constitute a binding contract supplementary to the original contract of employment. Roberts v. Mays Mills, 184 N.C. 406, 114 S.E. 530, 28 A.L.R. 338; Scott v. J. F. Duthie & Co., 125 Wash. 470, 216 P. 853, 28 A.L.R. 328. Accordingly the Supreme Court of Wisconsin has said: 'To allow the employer in such a case to repudiate liability on the ground stated would come perilously near conniving at the perpetration of a fraud. * * * A binding and enforceable contract to pay a reward rests, on one side, upon a valid offer, and, on the other side, upon an acceptance of such offer * * *. Until acceptance by performance of the services, it is merely a proposition; but when accepted by performance it becomes a binding contract, subject to the laws governing contracts generally.' Zwolanck v. Baker Mfg. Co., 150 Wis. 517, 137 N.W. 769, 772, 44 L.R.A.,N.S., 1214, Ann.Cas.1914A, Cas.1914A, 793. In the present case the employee was under no obligation during the first six months of his employment to give any priority in his services to the appellant. But when the appellant offered him a share in the profits of the business, he relied on the promise and agreed to give 'the first call' on his services. This preferential right constitutes a valuable consideration.

The next question to be decided is whether the agreement is sufficiently definite to be enforceable. The law does not favor, but leans against, the annulment of contracts on the ground of uncertainty. If the intent of the parties can be ascertained from the express terms of the contract or by fair implication, the contract should be sustained by the Court. Middendorf, Williams & Co. v. Alexander Milburn Co., 134 Md. 385, 107 A. 7; Spicer v. Hincks, 113 Conn. 366, 155 A. 508, 76 A.L.R. 1519, 1523. This is especially true of an employer's agreement to pay an employee a share of the profits of the business in addition to his salary, for such agreements tend to create a better understanding between employers and employees and should be sustained by the Courts whenever possible. Williams v. Maryland Glass Corporation, 134 Md. 320, 106 A. 755. It is true that a hiring at will can be terminated at the pleasure of either party. Washington, B. & A. R. Co. v. Moss, 127 Md. 12, 21, 96 A. 273, 276. But after an employee has rendered services under an express or implied contract, he is entitled to recover for the services he has rendered. Bull v. Schuberth, 2 Md. 38; Given v. Charron, 15 Md. 502. After a contract has been actually carried out with the acquiescence of all parties concerned, the Court should not allow it to be repudiated. Holloway v. Ogden School-District No. 9, 62 Mich. 153, 28 N.W. 764. If Palmer relied upon the inducement of his employer, and complied substantially with the terms of the agreement, he is entitled to recover for his services. The appellant suggested that the agreement might be considered ambiguous because his own promise to pay a share of the net profits might be held to apply only to those jobs on which Palmer worked. The Court is unable to read such a limitation into the agreement, for the appellant agreed to base the percentage on all contract business 'done by this organization.'

The third question before us is whether or not the parties had rescinded their agreement. To rescind is not merely to terminate, but to abrogate ab initio. At common law the parties to a written contract have the right to rescind it by mutual consent, even though there is no provision in the contract permitting them to do so. The parties to a contract may, either in writing or orally, release themselves from its obligations, so far as they remain executory, since the release of one party is sufficient consideration for the release of the other. Denler & Denler Land Co. v. Eby, 277 Mich. 360, 269 N.W. 203; Aetna Life Insurance Co. v. Dodd, 8 Cir., 103 F.2d 793; Savage Arms Corporation v. United States, 266 U.S. 217, 45 S.Ct. 30, 69 L.Ed. 253. However, when a contract has been entered into between competent parties, it is not within the power of either party to rescind it without an option to do so or without the consent of the other party, in the absence of fraud, duress, or undue influence, or unless either party is estopped by his own conduct, or the equities of his position are otherwise such that he should not be permitted to enforce it. Loughran v. Ramsburg, 174 Md. 181, 186, 197 A. 804, 807; Pitcairn v. American Refrigerator Transit Co., 8 Cir., 101 F.2d .29, Chicago, B. & Q. R. Co. v. State of Nebrasks, 170 U.S. 57, 18 S.Ct. 513, 42 L.Ed. 948. A meeting of the minds is required not only to make a contract, but also to abrogate or modify it after it has been made. Whiteside v. United States, 93 U.S. 247, 23 L.Ed. 882; Utley v. Donaldson, 94 U.S. 29, 24 L.Ed. 54. Even repeated requests, however annoying, to terminate a contract, do not of themselves constitute ground for rescission. The ground on which the appellant sought to cancel the...