Weitzel v. Brown-Neil Corporation

• Decision Date: 19 June 1957
• Citation: 152 F. Supp. 540
• Court: U.S. District Court — Northern District of West Virginia
• Parties: Lemuel Lester WEITZEL, Plaintiff, v. BROWN-NEIL CORPORATION, Defendant.

152 F. Supp. 540

Lemuel Lester WEITZEL, Plaintiff, v. BROWN-NEIL CORPORATION, Defendant.

Civ. A. 463-F.

United States District Court N. D. West Virginia, Clarksburg Division.

June 19, 1957.

W. G. Stathers and Mary Frances Brown (Stathers & Cantrall), Clarksburg, W. Va., for plaintiff.

Oscar J. Andre, George W. McQuain, and Willis O. Shay (Steptoe & Johnson), Clarksburg, W. Va., for defendant.

HARRY E. WATKINS, Chief Judge.

Plaintiff is engaged in the business of a manufacturers' representative, i. e., a salesman of specially manufactured machinery and equipment, and is a citizen of the Commonwealth of Pennsylvania. Defendant is a West Virginia corporation, organized in 1951 for the purpose of acting as a prime contractor in the performance of defense contracts. In this action, plaintiff seeks to recover commissions on two large contracts for the fabrication and installation of two decontamination booths for the Atomic Energy Commission, which contracts were entered into by defendant in 1953 and the work concluded in 1955. Defendant was paid a total of $1,834,820.66 for its work on these two contracts, and plaintiff here seeks, on the basis of an implied contract, a commission of three per cent of that figure, or $55,044.62.

Defendant first denies the existence of any such implied contract, and secondly states that if such a contract did exist, it is unenforceable due to the covenant against contingent commissions which is included in all Government contracts, including the two contracts involved here. The issue, then, is simply whether there was a valid, enforceable implied contract between these parties. Upon the evidence presented to this Court, sitting without a jury, I find that there was not, and defendant must prevail.

Findings of Fact

The defendant was formed, as indicated by a "History and Facility Record" introduced in evidence, to act as a prime contractor for defense contracts. The corporation was organized to pool the facilities and manpower of four small corporations in Clarksburg, West Virginia, with each participating company owning one-fourth of the capital stock. The operating heads of the four corporations served as officers and directors of the defendant.

Since 1949, plaintiff has been exclusively engaged as a manufacturers' representative for two firms, Forney's, Inc., of New Castle, Pennsylvania, and Hinkle Brothers, Inc., of Clarksburg, West Virginia. Hinkle Brothers was one of the four owners of defendant, but Forney's was not one of the four owners. In 1953, on behalf of Forney's, plaintiff contacted a firm of design engineers in Detroit, Michigan, who were at that time designing two decontamination booths for the Atomic Energy Commission. This firm furnished Forney's some drawings of certain component parts for the booths, called templates, dollies, and tracks, and asked Forney's to submit a bid on the fabrication of those parts. Plaintiff, for Forney's, quoted some prices on these parts but due to a change in plans, it developed that the Detroit firm was not going to do the purchasing for the projects, but rather these component parts would be included in overall Government prime contracts. Plaintiff was then instrumental in having Forney's considered as a bidder on the prime contracts. Forney's obtained a set of drawings and specifications for the booths, but upon scrutiny of these papers the management of Forney's decided that they did not care to bid on the entire project as Forney's did not possess the capital or physical plant to undertake the prime contracts.

Plaintiff then obtained permission from Forney's to contact the other firm he represented, Hinkle Brothers, Inc., to see if either Hinkle Brothers or defendant corporation were interested in bidding on these AEC contracts. Through a telephone call to Leslie A. Hinkle, president and managing officer of Hinkle Brothers and a director of defendant, plaintiff ascertained that defendant was interested in bidding on the contracts. That was plaintiff's first contact with defendant.

On October 6, 1953, Hinkle and Moffatt B. Tolley, the production manager of defendant, drove from Clarksburg to New Castle to look at the drawings and specifications. Plaintiff was not in New Castle on that day, but other personnel of Forney's showed Hinkle and Tolley the papers. Tolley decided that defendant was capable of undertaking the entire project and was interested in submitting a bid. During that visit to New Castle by Hinkle and Tolley, Forney's indicated that if defendant were the successful bidder on the overall project, then Forney's would like to produce, through a subcontract, the templates and dollies on which they had previously been negotiating with the Detroit design firm. In determining defendant's capacity to handle the entire job, Tolley states that he took into consideration the facilities of the four participating companies which owned defendant, and realized that while some work could be subcontracted to outsiders, a large part of the work would be done by Hinkle Brothers. Ultimately, some 60% of the labor was performed by Hinkle Brothers. The interest of Forney's and Hinkle Brothers in subcontracts at the time of this trip to New Castle is consistent with Tolley's testimony that he felt that work later performed by plaintiff was being performed for these two firms and not for defendant.

On October 13, 1953, plaintiff, Hinkle and Tolley went to Oak Ridge, Tennessee, and obtained a set of drawings and specifications for the overall project. On that occasion, plaintiff met Tolley for the first time and was introduced by Hinkle as "sales manager for Forney's"—a position which plaintiff held in addition to being Forney's manufacturer's representative. Letters dated October 23, 1953, and January 18, 1954, addressed to defendant, signed by plaintiff as "Sales Manager" on Forney's stationery, with one of the letters marked to the attention of "Mr. Moffitt Tollie," indicate that Forney's was interested as a subcontractor on this project. These letters substantiate Tolley's testimony that he dealt with plaintiff as a representative of Forney's and Hinkle Brothers on this trip to Oak Ridge and in subsequent dealings.

Returning to Clarksburg with the drawings and specifications, Tolley and other engineers studied the papers and obtained bids upon portions of the work, including bids from the four owner companies of defendant, and bids from Forney's. Then on October 20, 1953, plaintiff, Hinkle and Tolley again went to Oak Ridge, to attend a conference of all parties interested in bidding on this project. A list of persons attending this conference prepared by representatives of the AEC was admitted into evidence and plaintiff's counsel stress the fact that plaintiff is listed, along with Hinkle and Tolley, as a representative of defendant. However, that is not a controlling factor in determining plaintiff's position at this meeting, as there are other persons listed who were representing prospective subcontractors. Furthermore, Hinkle testified that although listed at this meeting as a representative of the defendant, Hinkle was in fact acting for Hinkle Brothers throughout the obtaining of these contracts because the bulk of the work would go to his firm, Hinkle Brothers, if defendant were the successful bidder.

On November 29, 1953, plaintiff, Hinkle and Tolley went to Oak Ridge a third time. During the evening and night, in one of their hotel rooms in Knoxville, Tennessee, the three men reviewed the figures used in arriving at a final bid, and prepared the bid form to be taken to a stenographer the next morning. The various expenses of the job were discussed and compiled, such as insurance, counsel fees, etc., but nothing was said by any of the three men about including a sum to cover plaintiff's compensation, and no allowance was made for such an expense. Plaintiff did not see the breakdown of expenses, inasmuch as that was a matter with which Hinkle and Tolley were more concerned, but the omission from the bid of any sum to cover payment to plaintiff is significant to indicate that Tolley and Hinkle must have considered plaintiff to be working for the two interested subcontractors.

At the time of submitting the bid, no profit was planned for defendant. It was anticipated that any profits on the contracts would be made by the various subcontractors, and defendant would only supervise the administration of the contracts. It was planned at the time of the bidding that Forney's and Hinkle Brothers would do most of the purchasing of materials, with Hinkle Brothers given a 20% mark-up on materials for handling their part of the purchasing. It later developed that defendant had to do the purchasing, so defendant did make a profit of $87,957.52 (before Federal Income taxes), largely from the 20% mark-up originally planned for Hinkle Brothers. In the computation of the bid figure, then, not only was there no specific expense figure included to pay plaintiff, but there was no profit figure or any other sum from which plaintiff could be paid.

The final bid was to be submitted on a form provided by the AEC, which contained the following paragraph:

"The undersigned represents (check appropriate boxes): (1) that the aggregate number of employees of the bidder and its affiliates is _____ 500 or more, x less than 500; (2) (a) that he _____ has, x has not, employed or retained any company or person (other than a full-time bona fide employee working solely for the bidder) to solicit or secure this contract; and (b) that he _____ has, x has not, paid or agreed to pay to any company or person (other than a full-time bona fide employee working solely for the bidder) any fee, commission, percentage or brokerage fee, contingent upon or resulting from the award of this contract for the construction of Spray Booth Equipment in Decontamination Building No. K-1420, and/or this subcontract for the construction of Spray Booth Equipment in

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