Wise v. Reeve Electronics, Inc.

• Decision Date: 20 July 1960
• Citation: 6 Cal.Rptr. 587,183 Cal.App.2d 4
• Court: California Court of Appeals Court of Appeals
• Parties: WISE, Plaintiff and Respondent, v. REEVE ELECTRONICS, INC., a corporation, Defendant and Appellant. Civ. 24453.

Page 587

6 Cal.Rptr. 587

183 Cal.App.2d 4

WISE, Plaintiff and Respondent, v. REEVE ELECTRONICS, INC., a corporation, Defendant and Appellant.

Civ. 24453.

District Court of Appeal, Second District, Division 2, California.

July 20, 1960.

Rehearing Denied Aug. 15, 1960.

Hearing Denied Sept. 14, 1960.

Alfred Lubin, Hollywood, for appellant.

Robert K. Dower, Torrance, for respondent.

RICHARDS, Justice pro tem.

Defendant appeals from a judgment awarding the plaintiff $4,766.15 and interest as commissions due plaintiff after termination of her employment as manufacturer's representative of defendant, an Illinois corporation, based upon nine separate sales of defendant's products.

The court found, inter alia, that in January, 1954, the plaintiff and defendant entered into an oral agreement wherein it was agreed 'that in consideration of plaintiff performing services as sales agent of defendant's products in the States of California and Arizona, that defendant would pay to the plaintiff commissions on all products of defendant sold in said territory.'

Defendant concedes that plaintiff was appointed a sales agent on a commission basis and 'was given the exclusive territory for the greater Los Angeles area'. Three of the nine sales upon which commissions were allowed to plaintiff consisted to two sales in Northern California and one in Arizona. Defendant contends that the above finding that plaintiff's exclusive territory embraced all of California and Arizona is not sustained by the evidence. We think otherwise.

Viewing the conflicting evidence on the territorial extent of plaintiff's agency as it will support the finding, it appears that in January, 1954, plaintiff and a Mr. Guenther, president of defendant corporation, met in Los Angeles and discussed her employment as a sales representative. Plaintiff told Mr. Guenther she would not take on defendant's line unless she had the California and Arizona 'territory exclusively'. Mr. Guenther testified that only the Los Angeles area was discussed. Following this conversation, defendant wrote plaintiff that they had decided on 'a single, unified representation on the West Coast' and were releasing other representatives and would like plaintiff to be their representative 'in that area'. Contemporaneously, the defendant furnished its sales manual to plaintiff which provided among other things, 'whether a representative has a formal, signed agreement with Reeve Electronics, Inc., for exclusive representation in a territory or not, unless he has definitely been advised to the contrary, he may consider the territory to be his own, exclusively, under all normal conditions.' The evidence although conflicting is clearly sufficient to support the finding that plaintiff's 'exclusive territory' covered all of California and Arizona.

The allowance of commissions to plaintiff on the two Northern California sales and one Arizona sale is further attacked on the ground that each was a sale upon orders procured directly by defendant, a fact not disputed by plaintiff. Defendant contends that an agent is not entitled to commissions on merchandise sold by the principal within the agent's territory unless the agent has an 'exclusive right to sell' contract, and that plaintiff did not have such a contract, the latter contention not being disputed by plaintiff.

Harcourt v. Stockton Food Products, Inc., 113 Cal.App.2d 901, at page 905, 249 P.2d 30, 33, lays down the accepted rule that it is well established 'that generally if the agency established is an 'exclusive agency' the principal retains the right to dispose of the property by his own efforts, and if a sale is consummated pursuant to such independent efforts by the owner the agent is not entitled to a commission thereon. On the other hand if the agency established gives the agent the 'exclusive right of sale' generally the principal is liable for the agent's commission whether or not the agent's services contributed to such sale, since under the terms of such a contract the agent is the only person entitled to sell the property. [Citations.]' To the same effect: Wilck v. Herbert, 78 Cal.App.2d 392, 412-413, 178 P.2d 25; Strout Western Realty v. Gregoire, 101 Cal.App.2d 512, 514-517, 225 P.2d 585.

Although the court did not find that the oral agreement between the plaintiff and defendant provided for plaintiff's 'exclusive right to sell' defendant's products, it did find that at all times since prior to the negotiations of employment between the plaintiff and defendant there was a trade custom and usage among out-of-state electronics manufacturers selling on the West Coast that in all contracts in which the representative was granted an exclusive agency, the representative so appointed receives commissions on all sales in the territory even though the order is procured by the manufacturer, and that this custom was known to the defendant and was deemed a part of the contract between the parties. If the finding of such custom and usage is sustained by the evidence, then it becomes immaterial whether plaintiff had an 'exclusive agency' or 'an exclusive right to sell contract'.

Usage and custom may be used to imply terms where no contrary intent appears from the other terms of the contract. King v. Stanley, 32 Cal.2d 584, 589, 197 P.2d 321; Ermolieff v. RKO Pictures, 19 Cal.2d 543, 550, 122 P.2d 3. For a custom to be operative, absent express assent thereto, it must be generally known to the parties. Miller v. Stults, 143 Cal.App.2d 592, 603, 300 P.2d 312. Knowledge of the custom may be inferred from the fact that a party is engaged in the trade in which it is common. Watson Land Co. v. Rio Grande Oil Co., 61 Cal.App.2d 269, 272, 142 P.2d 950. Over defendant's objection, plaintiff's evidence of such custom and usage came from two witnesses, each engineers for an aircraft company. Each was asked in substance if he had an opinion as to the existence of a custom with respect to payment of commissions to a sales agent on an exclusive basis, and each answered in substance that in their opinion the representative would be entitled to a commission regardless of the manner in which the order was obtained. Custom or usage must be established as a matter of fact and not of opinion, hence, witnesses must testify to its existence as a fact. Dutcher v. City of Santa Rosa Sch. Dist., 156 Cal.App.2d 256, 263, 319 P.2d 14. The only evidence of custom or usage herein being an expression of opinion and not testimony as to the existence of the fact of such custom or usage, the finding of custom and usage is totally without evidentiary support.

Although plaintiff had only an 'exclusive agency' contract, which we have concluded embraced all of California and Arizona, and although we have further concluded that the finding of usage and custom to imply a term in her contract that she was entitled to commissions on sales in her territory made directly by defendant is without support in the evidence, nevertheless we conclude that her recovery of commissions on the sales in question must be sustained.

The court found that the 'plaintiff, through or by means of her active efforts in the pursuit of said employment by defendant was and is the active procuring cause of sales within the said exclusive territory of California and Arizona of the various products of said defendant as hereinafter specifically found'. Thereafter are set forth in the findings the nine sales and the commissions earned on each.

The plaintiff's evidence respecting her participation in the sales to the University of California Radiation Laboratory, a government facility, at Livermore, California, which the trial court evidently believed, showed that the plaintiff went to the Berkeley office of the laboratory and met a Mr. Weiss in the purchasing department. He had never before heard of the defendant's products but took literature given by the plaintiff and noted prices as to some items. He told the plaintiff that the laboratory bought on price and that all requests for bids would go directly to the manufacturer. He further said that they would put the defendant on their list and give it an opportunity to bid. Thereafter, the laboratory did request bids from the defendant, and when no orders resulted, plaintiff, at defendant's request, went to the laboratory to determine why no orders had been received and was advised that the defendant's prices...