Benjamin v. Bruce & Cook

39 A. 810, 87 Md. 240, 1898 Md. LEXIS 127

• Court: Court of Appeals of Maryland
• Decided: March 3, 1898
• Status: Published

Opinion

McSherry, C. J.,

delivered the opinion of the Court.

The questions presented on the record now before us arise out of the following facts: Henry Evans, Jr., was a manufacturer of tinware in Baltimore, and George P. Benjamin, of New York, was a general agent for the sale of various kinds of merchandise. In December, eighteen hundred and eighty-five, these two parties entered into an agreement which is embodied in a letter from Benjamin to Evans, and which, in substance, provided (first), that all goods manufactured by Evans were to be sold through Benjamin, except such as Evans might himself sell in Baltimore City or might deliver to a designated customer in New Orleans ; (secondly), that all goods were to be shipped upon Benjamin’s orders and were to be billed to him at bottom prices on sixty days time, such bills to be subject to a commission of five per cent., and to certain additional discounts for cash ; (thirdly), that all orders and inquiries as to prices from parties outside of Baltimore were to be referred to Benjamin, and that all acknowledgements of orders, replies and quotations were to be made by him. It was further provided that the agreement could be terminated at any time by either party on giving three months notice. This arrangement continued in force until September, eighteen hundred and ninety-four, when it was modified. By the modified agreement Evans stipulated to allow Benjamin on all of Benjamin’s orders for Evans’ goods a commission of five per cent. “ below the lowest price and terms at which I will sell any other parties, excepting C. A. Conklin Manufacturing Company of Atlanta, Georgia, and Butler Brothers of New York and Chicago.” And Evans further agreed that the prices and terms to these two parties (Conklin and Butler) should not in any case net lower than the prices to Benjamin with the commissions off. This arrangement was to continue for one year and to be terminable thereafter upon three months’ notice. Under the original and the modified agreements, which remained in force until April the twenty-sixth, eighteen hundred and ninety-six, a large number of transactions and dealings occurred that have all been adjusted and closed. In the latter part of May, eighteen hundred and ninety-six, Evans becoming embarrassed financially, executed a deed of trust for the benefit of his creditors, appropriating all his assets to the payment of all the "debts” due and owing by him. Benjamin claims to be a creditor of Evans and the accounts which he has filed are designated “ merchandise ” account and “ commission ” account. In the merchandise account he demands, under the agreement of September, eighteen hundred and ninety-four, on purchases made by him in 1895 and in 1896, the several sums paid by him in excess of the prices charged by Evans, during the same period, to C. A. Conklin for similar merchandise. The account is made up by deducting from the aggregate of the prices as invoiced to Benjamin and as diminished by the allowance of commissions, discounts and freight charges, the amount which would have been chargeable had the same discounts and deductions been allowed to Benjamin that were given to Conklin during the same period, and the difference, after being lessened by a credit, is the sum of three thousand and five hundred dollars and fifty-one cents ; and this is claimed as due on the merchandise account. The commissions account consists of a demand for nine thousand two hundred and sixty dollars and ninety-six cents for commissions on sales made by Evans himself within the territory in which Benjamin insists that he alone had a right, under the original and modified agreements, to make sale of Evans’ goods. Other creditors of Evans filed objections to the allowance of these two claims preferred by Benjamin ; and after testimony had been taken and the objections had been heard and considered by Circuit Court No. 2, both claims were disallowed and rejected. Thereupon Benjamin brought the record by appeal into this Court for a review of that decision.

"The objections interposed by the contesting creditors are ten in number, but it is not deemed necessary to set them forth with particularity. They assail the validity of the agreements of 1885 and 1894, as unilateral and without mutuality, and as in general restraint of trade; and they insist that there is no ascertained definite sum due thereunder which constitutes a debt in the sense that the term is used in the deed of trust, and they maintain that whatever may be claimed, if anything, must be in the form of unliquidated damages for a breach of the agreements; and that there has been no ascertainment of these damages and no evidence adduced to establish the amount or extent thereof.

It must be borne in mind throughout this discussion that the appellant’s claims are not for compensation for labor or services actually performed—they do not represent the fruits of an executed contract, where nothing remains to be done but to pay money as a consideration for what has been performed by the other party—but the charges in the commission account are charges of commissions on sales Benjamin did not make; and they are claimed, not .because they are appropriate or stipulated compensation for work really performed by him, but because Evans violated an agreement not to make sales of his own manufactured articles, except through the appellant, in the territory where these sales were effected. A mere glance at the contract of 1885—the substance of which we have already stated—at once reveals the fact that the obligations which it creates and the duties which it imposes are to be performed wholly by one of the parties to it. There is no reciprocal obligation or duty whatever on the other party. Benjamin did not purchase the entire or any portion of the out-put of Evans’ factory; nor did he bind himself to sell or even - to attempt to sell the wares and merchandise made by Evans. He literally undertook to do nothing on his part at all asjy respects the purchase or sale of Evans’ commodities. Had he made no sales or sent no orders to Evans there would have been no breach of the contract by him, because he had made no stipulation to do either; and had he been sued for a failure to send in orders or to make sales, a defence that he was under no obligation to do the one or the other would have been perfect, unanswerable and complete. Obviously,- if this be so, the contract, except in so far as it has been executed and performed by Benjamin, is not binding on Evans, because it lacks the element of mutuality, which is a constituent essential to the validity of an agreement respecting such a subject as the parties purported to deal with. It is essential to the validity of every contract of this character that there should be a mutuality of obligation. A contract is not binding on one of the parties, unless it is binding on the other. B. & O. R. R. Co. v. Potomac Coal Co., 51 Md. 343; 1 Chitty Con. (11 Am. ed.) 20, 21. Precisely the same want of mutuality affects in the same way the modification made of the original contract in September, eighteen hundred and ninety-four.

If the claim here made were for work actually done by Benjamin, Evans could not escape making payment, by setting up the defence that the contract was not enforceable. As said by this Court in Equitable En. Ass. v. Fisher, 71 Md. 430, “ If one should say to a laborer, ‘ if you will work in my fields for a month I will pay you twenty dollars,’ and the laborer should accordingly work that length of time, it would be impossible to say that he had not earned the money. And it could make no possible difference whether the offer of employment were in writing or by word of mouth. It would not be a contract until accepted and agreed to by the laborer ; but doing the work in pursuance of the proposal is as unequivocal an assent to it as could be imagined.” In the case just cited the performance of the work was an acceptance of the proposal and whilst the mere-proposal alone created no obligation to pay the money, the doing of the work constituted a clear acceptance of the proposal and fixed the liability of the party offering the proposal, to make the payment when the work waá actually performed. But in the case at bar the claim is for commissions on sales not made, for work not done—and not even contracted to be made or done, and which the appellant was under neither an express nor an implied obligation to-make or to do. It differs widely from the case of Balto, Breweries Co. v. Callahan, 82 Md. 106, in this, that there a definite employment of the appellee as a salesman at a fixed salary for a specified term existed, and though there were no formal words imposing the obligation to discharge the duties of a salesman, the necessary implication to that effect arose, and this, furnished a valid consideration for the correlative promise to pay the salary. But in the case at bar there was no employment of Benjamin as a salesman—he was simply given a privilege in return for which he assumed, neither expressly nor by implication, any corresponding obligation himself. The payment of a salary imports an obligation to perform the duties for the due discharge of which the salary is stipulated to be paid; and though there be no express agreement to render the services their performance as a consideration for the payment of the salary is necessarily involved and implied.

But even if there were or could be any doubt that the contract "of 1885 and the modification of 1894 were invalid for the want of mutuality, except in so far as they have been executed ; it is perfectly clear that, as respects the claim forj commissions, it is a claim, not for a subsisting debt that is I due, but for unliquidated and unascertained damages for the breach of a contract on Evans’ part not to sell within a certain defined territory. Evans bound himself not to sell his own goods in a designated territory. He further agreed that all goods sold in that territory should be shipped upon the order of Benjamin and should be billed to him at bottom' prices, “ such bills to be subject to a commission of five per cent” Now, the commissions claimed under the original agreement, are not commissions upon any order given or upon any sale made by Benjamin, but are commissions on sales made by Evans himself in violation of his agreement not to sell at all within that territory. Under the modification of the original agreement Evans stipulated to allow Benjamin “ on your orders for my goods a commission of five per cent below the lowest price and terms at which I will sell ■ any other parties excepting ” Conklin, &c. Here, again, the ■ commissions are not upon orders given by Benjamin, but upon sales alleged to have been made ^ by Evans in contravention of his agreement not to sell within the prescribed territory Neither the agreement nor the modification stipulated to give Benjamin five per cent, commission on all sales made in the territory assigned to Benjamin, but only on sales made therein by Benjamin himself; and though there is a prohibition against Evans selling at . all in that territory, there is no term of the contract that allows to Benjamin a five per cent, commission upon sales that Evans might make in violation of the contract. There • is, consequently, under the agreement of the parties, no ■definite, fixed and ascertained sum prescribed to be paid by Evans to Benjamin, either as commissions upon or as compensation for sales wrongfully made by Evans, and as a result, if Benjamin has been injured by such wrong and if • the contract is a valid one, he would have redress by an . action for a breach of the contract. The damages récover- ■ able in such an action would not necessarily be the five per cent, now claimed ; but they would be such only as Benjamin might be able to show he sustained. Whether he sustained any or not the record does not disclose. If the :sales made by Evans were sales that Benjamin could not or would not have made, then he may not have been damnified by Evans having made them. But as the facts are nów presented, to assume that he has been injuriously affected would be simply to substitute conjecture for proof. Commissions as such are not recoverable because they are not stipulated in the contract to be paid on sales not made by Benjamin. If any sum be recoverable at all it wmuld be such an amount as Benjamin has been injured by Evans’ breach of contract in selling where he had agreed not to sell; and there is no evidence whatever showing that he has sustained substantial damages, and far less is there any tending to indicate the amount that he might recover. The whole ■claim for commissions under the contract is a claim for which the contract makes no provision. Without considering the other objections to the commissions account those which we have just been discussing are quite sufficient to exclude that account from participation in the distribution of Evans’ assets.

But little need be said in regard to the merchandise account. That account is founded on the modified agreement of September, eighteen hundred and ninety-four. There is nothing in the letter of September the twenty-fifth—and it is that letter which contains the terms of the modification—to justify the inference that Benjamin was to have, as a discount or as a commission, five per cent, off of the price of the goods sold by Evans to Conklin ; nor does Evans agree to pay to Benjamin the difference between the prices at which he might sell to Conklin and those which he might charge Benjamin. He merely contracted with ^ Benjamin that the prices and terms to Conklin and to Butler should not, in any case, net lower than the prices to Benjamin with the commission off. In other words, he stipulated not to sell to Conklin or to Butler at less than he would sell to Benjamin. He violated that agreement, so the appellant alleges. Assuming that he did, does that fact give Benjamin a right to be refunded the sums that the sales to Conklin did net lower than the prices to Benjamin ? Or, does it give Benjamin a cause of action wherein he may recover the damages he may have sustained by Evans’ breach of the contract ? Evans’ agreement was simply that he would not sell to other parties at a less or lower price than he charged Benjamin. This was not an agreement to sell the goods to Benjamin for the same price at which Evans would sell similar merchandise to any one else.' Such a contract, if in other respects valid, would have entitled Benjamin to purchase from Evans at the same prices that Evans charged others, and an overcharge would have given Benjamin the right to claim a rebate to the extent of the excess wrongfully exacted from him. Holtz v. Schmidt, 59 N. Y. 255. The contract itself would then have furnished precisely the measure of the sum that Benjamin could have claimed to be repaid by Evans. But the contract actually made had no relation, in the provision now being considered, to the prices to be charged Benjamin for the goods purchased by him; but it simply placed a restriction on Evans by which he was prohibited from selling to others at a less rate than he might quote to Benjamin. This was a stipulation affecting in no way the price chargeable to Benjamin for goods bought by him; but it was designed to protect him against the consequences of an under-selling by Evans to other customers. A breach of that stipulation could not possibly, under the contract, change or lessen the prices which Benjamin agreed to pay; but it would, if the contract itself were binding, undoubtedly subject Evans to a liability for any injury occasioned to Benjamin by its non-observance. The breach, however, would not create a definite, ascertained debt. If the violation of the contract caused Benjamin no loss, there is nothing in the agreement that obliges Evans to refund to Benjamin the sum he charged the latter in excess of the prices he charged Conklin ; because there is no term of the contract that binds Evans to sell to Benjamin at the same prices he might sell similar goods to Conklin, but only a restriction on Evans not to sell to Conklin at less than he might charge Benjamin. There is no evidence tending to show that Benjamin sustained any loss by Evans’ alleged breach of agreement.

(Decided March 3rd, 1898).

Both claims are for unliquidated damages that have not been reduced to a certain ascertained amount, and neither of them, in their present form, evidences a debt provable against the assets of Evans in the hands of his trustees.

As we agree to the result reached by the Court below, we shall, for the reasons we have assigned, affirm the order appealed from.

Order affirmed with costs above and belotu.