Garlock v. Motz Tire & Rubber Co.

159 N.W. 344, 192 Mich. 665, 1916 Mich. LEXIS 831

• Court: Michigan Supreme Court
• Decided: September 26, 1916
• Docket: Docket No. 47
• Status: Published

Opinions

Ostrander, J.

(after stating the facts). It is unnecessary to cite authority to support the proposition that promises may be a good consideration for promises, and that a contract evidenced by mutual promises may be valid. And acceptance by the agent of a proposal made by the principal may be shown by performance by the agent to the knowledge of the principal of the things which the proposal exacts. A promise to do what it is proposed shall be done may be implied from acceptance of the proposal. Mueller v. Spring Co., 88 Mich. 390 (50 N. W. 319); Emerson v. Packing Co., 96 Minn. 1 (104 N. W. 573, 1 L. R. A. [N. S.] 445, 113 Am. St. Rep. 603, 6 Am. & Eng. Ann. Cas. 973); Kaufman Bros. & Co. v. Manufacturing Co., 78 Iowa, 679 (43 N. W. 612, 16 Am. St. Rep. 462). But mutuality is essential. 1 Page on Contracts, p. 452; 1 Parsons on Contracts (9th Ed.), p. 486, note.

A contract of agency which leaves the agent free to terminate relations with his principal at will ought to be construed so as to leave the principal free to discharge the agent at will, even though the agent has entered upon performance of the contract. And the general rule is that the principal may do this without resulting liability to the agent. Fuchs v. Thermometer Co., 178 Mich. 37 (144 N. W. 484).

“The principal has a right to determine or revoke the authority given to his agent at his own mere pleasure; for, since the authority is conferred by his mere will, and is to be executed for his own benefit and his own purposes, the agent cannot insist upon acting when the principal has withdrawn his confidence and no longer desires his aid.” Story on Agency (9th Ed.), §§ 462, 463.

The mere fact that a contract, even a contract of agency, does not provide for a definite period of duration is not always controlling if some period of duration is necessarily implied, and especially if an independent consideration, other than a promise, moves to the promiser, or it is terminable upon expressed conditions.

In Newhall v. Printing Co., 105 Minn. 44 (117 N. W. 228, 20 L. R. A. [N. S.] 899), one of a line of cases relied upon by plaintiff, the headnotes do not intimate a fact, stated in the opinion, which was that plaintiff paid $135 for the exclusive right to sell defendant’s publication in a specified territory upon certain terms and conditions, the right of the defendant to terminate the contract being limited to the causes, or reasons, dishonesty, incompetence, negligence, inattention, or irresponsibility of the plaintiff. The opinion, however, recognizes the general rule and cites, among other cases, Carnig v. Carr, 167 Mass. 544 (46 N. E. 117, 35 L. R. A. 512, 57 Am. St. Rep. 488), in which case there was an independent, executed consideration moving from the employee. See, also, Hobbs v. Light Co., 75 Mich. 550 (42 N. W. 985); Stearns v. Railway Co., 112 Mich. 651 (71 N. W. 148); Raymond v. White, 119 Mich. 438 (78 N. W. 469); Alderton v. Williams, 139 Mich. 296 (102 N. W. 753). See a review of authorities in Sullivan v. Railway, 135 Mich. 661 (98 N. W. 756, 64 L. R. A. 673, 106 Am. St. Rep. 403).

In Fuchs v. Thermometer Co., supra, it is stated in the opinion that plaintiffs counsel disclaimed an employment for any definite time.

In Kaufman Bros. & Co. v. Manufacturing Co., supra, it appeared that plaintiffs were wholesale dealers in cigars in the city of New York and defendant a corporation of Dubuque, Iowa, selling cigars in territory tributary to that city. Plaintiffs agreed to give to defendant the exclusive right to sell in Dubuque and country tributary thereto a certain brand of cigars, which plaintiffs had the exclusive right to manufacture. In consideration the defendant was to employ men to travel and sell the cigars and establish a trade for them in the said territory, and did so employ men, who expended time and money in building up a trade for the cigars. Plaintiffs were to ship cigars when ordered and as long as defendant desired to deal in the cigars and pushed them, or so long as trade continued. The agreement was observed for a time, and then plaintiffs refused to furnish defendant cigars for the trade, and sued for the value of a quantity already furnished. The questions determined arose upon cross-claims of defendant. The court found the contract not indefinite as to its duration, and, necessarily, that plaintiffs could not terminate it at will.

In Willcox & Gibbs Sewing Mach. Co. v. Ewing, 141 U. S. 627 (12 Sup. Ct. 94), the court considered an agreement of the parties, by the terms of which Ewing was appointed exclusive vendor of the other’s sewing machines and attachments and parts in specified territory. There were various conditions, with an agreement that if at any time the connection ceased, first party would buy back such of its goods sold to second party as first party might select. Second party agreed to purchase not less than $20,000 worth, net, of machines and parts in a year, an equal amount each month. “Violation of the spirit of this agreement shall be sufficient cause for its abrogation” was one of the clauses in the contract. In discontinuing the relation Ewing was notified that the company would take off his hands the store he occupied and purchase the fixtures therein if he desired to sell and all stock Ewing had on hand obtained from it. Ewing denied the right to cancel the agreement,'claiming that it was for life or the continuance of the company in business, provided he did his duty. The court, Justice Harlan writing the opinion, said this position was untenable, there being no condition to the effect that so long as he devoted his time, attention, and abilities to the company’s business, he should retain his' position as exclusive vendor within the territory specified, without regard to its wishes. Of the clause of the agreement above quoted, it was said that it was not equivalent to a specific provision declaring, affirmatively, that the contract should continue in force for a given number of years', or without limit as to' time, unless abrogated for cause. “It was inserted by way of caution. * * *” And it is added that of course revocation by the principal of the agent’s authority could not injuriously affect existing contracts made by the latter under the power originally conferred upon him. The court affirms the doctrine that if Ewing had the privilege, upon reasonable notice, of severing the connection, a like privilege could not be denied the company.

In McKell v. Railway Co., 175 Fed. 321 (99 C. C. A. 109, 20 Am. & Eng. Ann. Cas. 1097), the contract, considered was one to purchase the production of coal mines. The owner of coal lands made a contract with the railroad company, by the terms of which the landowner agreed to develop mines on the land to a stated capacity, and the company agreed to build a branch line to the mines and to purchase the coal produced at the ruling price of a certain other coal. There was no provision for the duration of the contract. It was held that the agreement was not terminable at the will of one party, but was permanent so long as the stipulated production' was maintained, unless terminated by consent of both parties. The opinion contains an interesting citation and review of authorities, including Franklin Telegraph Co. v. Harrison, 145 U. S. 459 (12 Sup. Ct. 900); Western Union Telegraph Co. v. Pennsylvania Co., 129 Fed. 849 (64 C. C. A. 285, 68 L. R. A. 968); Mississippi Logging Co. v. Robson, 69 Fed. 773 (16 C. C. A. 400); Great Northern R. Co. v. Railway Co., 5 De Gex & Sm. 138; Llanery Railway, etc., Co. v. Railway Co., L. R. 8 Ch. App. 942 (7 H. of L. 550). The court makes this distinction:

“The case before us is to be differentiated from those which relate to contracts for personal service and special confidence, where there is an implication that the parties intended that it should not be prolonged if either of the parties should become dissatisfied.”

Plaintiff, citing Hollweg v. Brokerage Co., 197 Fed. 689 (117 C. C. A. 83), says that:

“The services rendered by plaintiff under the first contract and the working up of a market and sale of thousands of dollars of defendant’s product forms a sufficient consideration for defendant’s promises in the second contract, where under the second contract large quantities of tires were sold by plaintiff.”

But the case cited and the one at bar are wholly dissimilar, as a reference to the opinion cited will disclose.

Stipulations in the contract before us are pointed out by plaintiff’s counsel, and the argument, in part, proceeds as if they were relied upon as independent considerations for defendant’s undertaking. The placing of a salesman in Baltimore and the opening up of a salesroom, a man to travel in Maryland, and the carrying of a stock of tires to be paid for at a specified time after invoice are all referred to. These things were, however, rather incidents of the agency than separate considerations for the agreement. Unless, therefore, there is in the contract a period fixed for its duration, definite or indefinite, with reference to which provision of the contract it may be assumed that both parties made the agreement, the defendant and the plaintiff had the right to terminate it at will. The only reference to duration is:

“It is understood and agreed we are to allot you this territory as long as you remain active and produce results, with the understanding that we are at liberty to abrogate this agreement if at any time we become dissatisfied with the results being obtained, or with the manner in which the business is handled.”

This provision must be read with the remainder of the contract and with reference to what was desired and sought to be accomplished. In Carnig v. Carr, supra, it was said:

“To ascertain what the parties intended by ‘permanent employment,’ it is necessary to consider the circumstances surrounding the making of . the contract, its subject, the situation and relation of the parties, and the sense in which, taking these things into account, the words would be commonly understood.”

So here the language I have quoted indicates some period of duration of the proposed contract relations; its real meaning to be determined.

Assuming, as I think we must, that the contract of November 13, 1912, was the only contract between these parties, is an agency contract, provides for some period of duration, and that its terms are controlling of the rights of the parties in so far as it has been executed, the question remains: What period of duration was agreed upon? Clearly, no definite period is fixed. It is absurd to say that the contract was not terminable at the will of plaintiff and also say it was by agreement terminable only when he chose to become inactive and not produce results. The contract belongs to the class referred to in Isbell v. Carriage Co., 170 Mich. 304, 313 (136 N. W. 457, 460), in this language :

“It was an agency in the nature of employment to render services involving something more than the operative fitness or mechanical utility of a tangible thing. It involved personal efficiency, energy, initiative, business experience, and ability to formulate methods and make them successful, as well as co-operation and confidential relations with defendant of such a character as to lead to the conclusion that the parties contemplated, and provided for, the right of defendant to terminate the relationship when, according to his own fancy and judgment, the work done and methods pursued were not satisfactory.”

In that case the duration of the contract relation was fixed at a period of five years. Here it is fixed for a period only so long as defendant is satisfied. There is no definition of activity or estimate of results to be produced which shall be deemed satisfactory to defendant. Defendant does not engage itself to be satisfied with any manner of handling the business. The provision for cancellation — allotment of territory — is open to the construction placed upon it by the learned trial judge, namely, that the defendant was at liberty to instal a branch house and sell direct to customers when it became satisfied that was the better method of conducting, its business in that territory.

It remains to be considered whether in this view of the contract relations plaintiff may recover for any disbursements made in executing the contract, or on account of any contracts he may have entered into in performing it so far as it was performed. It is to be observed in this connection that in whatever plaintiff did in performing the contract there was an expected mutual profit. The more tires he sold, the greater was his income. There is no legal basis for computing any loss he may have sustained on account of having employed salesmen or rented a building. Suppose he had made a lease for ten years or more, and was unable to dispose of it. How much of the rental ought defendant to pay?

There is a single item of alleged loss which, in my opinion, may be held to have been contemplated by the contracting parties. The plaintiff was required to carry a stock of tires, how large a stock is not stated. Having bought them, plaintiff was at liberty to sell them again, during or after the period of the agency; if after, of course, in competition with defendant. If he had bought and was carrying, when the contract was abrogated, only a stock of reasonable size, with reference to the business he was doing, it represented a direct outlay of money, all of which defendant received, plaintiff’s profit depending upon a resale. If they were disposed of reasonably at less than defendant received for them, defendant should bear the loss.

Defendant will recover costs of this court as upon an affirmance of the judgment, which, however, is reversed and a new trial granted upon the single issue suggested.

Stone, C. J., and Bird, Steere, and Person, JJ., concurred with Ostrander, J. .