Vinson v. E.W. Buschman Co., 68707
| Decision Date | 18 September 1984 |
| Docket Number | No. 68707,68707 |
| Citation | 323 S.E.2d 204,172 Ga.App. 306 |
| Parties | VINSON v. E.W. BUSCHMAN COMPANY. |
| Court | Georgia Court of Appeals |
Charles W. Smegal, Atlanta, for appellant.
Robert M. Travis, Robert L. Connelly, Jr., Teresa E. Peisner, David J. Llewelyn, Atlanta, for appellee.
Appellant Leonard Vinson formerly worked for a local manufacturer's representative firm, selling conveyors and related items produced by several manufacturers, including appellee E.W. Buschman Company (Buschman), a Cincinnati-based firm with a nationwide clientele. When the owner of the local firm died, leaving no one to take over operation of the business, appellant and two fellow sales representatives approached Buschman officers regarding the possibility of Buschman's subsidizing the establishment of a new manufacturer's representative firm through which Vinson and his compeers would continue to sell Buschman products on the same basis as they had done formerly; that is, as independent contractors compensated by a draw against commissions. Buschman proposed instead to open a district sales office in Atlanta, to be operated on the same basis as the firm's other district offices elsewhere in the country, with Vinson and the others as full-time Buschman employees, selling Buschman products exclusively, and with Vinson as district manager.
Vinson and his associates accepted this offer, and in late 1969 Buschman rented warehouse and office space, purchased appropriate furniture and equipment, hired secretarial and warehouse personnel, and established a petty cash account. Vinson and his associates 1 were paid a draw against commissions, with any discrepancy resolved at year's end; office and warehouse personnel were paid a salary or an hourly wage. All employees, including Vinson, participated in Buschman's retirement and profit-sharing plan, and income and social security taxes were withheld from the paychecks of each employee. Salaried and hourly personnel also received a paid vacation, while commissioned personnel did not. Vinson was authorized to supervise the day-to-day operations of the district office; hiring of permanent or full-time personnel and certain other major decisions had to be cleared with Cincinnati, however. Vinson initially received permission to sell, in addition to Buschman products, a certain line of rack (an item which Buschman did not manufacture) which he had sold in his former job; permission was revoked after the first few years of the district office's operation, however. Personnel from the main office made brief visits to each district office, including Atlanta, approximately three times a year.
Shortly after the Atlanta district office was opened (not later than 1971), Vinson and McDonald, one of the two who had originally approached Buschman with Vinson, formed a business called Vinson-McDonald Conveyor Service, which operated out of the Buschman office and warehouse and used the Buschman secretary and warehouseman, the Buschman telephone and other supplies and equipment, and other Buschman-provided facilities. According to the evidence of record, Vinson-McDonald operated in direct competition with Buschman, selling not only Buschman equipment but that of competing manufacturers. Vinson-McDonald records were kept in a locked file cabinet to which only Vinson had a key; the secretary had to go to him whenever she needed stationery or forms bearing the Vinson-McDonald letterhead for processing Vinson-McDonald orders. Vinson-McDonald records were maintained by Vinson, with necessary typing done by the secretary. Buschman neither knew nor, apparently, had reason to know of the existence of the competing enterprise.
Buschman became increasingly concerned with the Atlanta office's failure to expand its sales at the same rate as other district offices, particularly in the high-profit area of conveyor systems, as distinguished from single conveyors and parts. In response to home office queries, Vinson attributed the low volume of "system sales" to peculiar characteristics of the Atlanta market. In 1979 a salesman from the main office was transferred to Atlanta with special responsibility for system sales. He observed a certain tension in the atmosphere and reported to the home office that he had been expressly forbidden to enter Vinson's office, where, according to the testimony of other witnesses, the locked file cabinet had been moved shortly before the new salesman's arrival.
Prior to this incident, visiting personnel had noticed certain things which in retrospect seemed strange: Vinson, whose annual compensation from Buschman was about $35,000, was driving a new luxury automobile and living in an expensive house; and on an unannounced visit a company officer observed a competitor's conveyor sitting in the warehouse--a situation which Vinson explained by stating that he was merely holding it temporarily as an accommodation to a customer. What finally alerted Buschman to the real situation, however, occurred in mid-1979, when an Atlanta-area customer who had recently purchased the formerly permitted rack needed an additional quantity and called the Cincinnati office, which he understood to be the shipping point, rather than the district office. Top Buschman personnel immediately came to Atlanta, found the secret records and other evidence of the competing operation, and suspended Vinson and certain other employees; one was subsequently allowed to resign and the others, including Vinson and McDonald, were discharged. Buschman brought suit against Vinson and the others, alleging intentional, wilful, and malicious conduct involving bad faith and fraud in a number of tortious acts; and alleging especially that Vinson caused the others to conspire in an unlawful design to divert Buschman's business for their own benefit.
Buschman sought an injunction preventing the defendants from doing business with customers obtained while in the employ of Buschman and an accounting of all Vinson-McDonald transactions, together with records thereof, during the defendants' period of employment. Buschman also sought compensatory damages of $750,000; punitive damages of $500,000; and expenses of litigation, including attorney fees, for "bad faith in respect to the unlawful acts alleged."
There was evidence that Vinson and McDonald had artificially inflated their commissions; that they had authorized personnel from the Atlanta office and warehouse to work on Vinson-McDonald installations and other jobs while indicating on their time-cards and expense reports that they were engaged in Buschman work; had padded orders by writing up unneeded parts and selling these to other customers; had kept a double set of orders and invoices on jobs involving Buschman products; and had otherwise affirmatively availed themselves of Buschman-provided business opportunities and facilities and concealed the same from Buschman. Vinson and others admitted engaging in such practices but insisted that, for various reasons, they were justified in doing so and that, moreover, they had done so in only some of their transactions rather than all.
McDonald died during the course of the proceedings, and the action against him was dismissed without prejudice. A jury found for Buschman and awarded the sum of $362,916.96, an amount equal to the sum of all proven Vinson-McDonald profits payable to Vinson during the years 1976-79 plus all commissions paid to Vinson during 1971-1979--the period of the existence of the competing enterprise. The verdict did not specify whether this...
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