The opinion of the court was delivered by: KALODNER
This is an action ex contractu in which the plaintiff, in addition to damages for breach of contract, seeks an accounting. The defendant has set up a counterclaim also seeking recovery of damages for breach of the same contracts by plaintiff.
The cause was tried before the Court without a jury. The facts are as follows:
Plaintiff Albright, of Chicago, Illinois, and the defendant Kalbitzer, of Paoli, Pennsylvania, entered into a contract on May 6, 1943, whereby the plaintiff was, inter alia, to sell certain poultry and egg processing and handling equipment, and poultry eviscerating equipment to be manufactured by the defendant; the agreement was to continue effective for one year. On May 7, 1943, the parties executed a supplementary agreement extending the prior contract to include certain patented poultry picking equipment for which plaintiff held a license; this agreement was to continue as long as the plaintiff held the license. Both contracts are set out in full in an appendix.
The plaintiff has charged the defendant with failure to perform practically all the provisions of the agreements, and on this basis seeks the recovery of damages. The prayer for an accounting is founded upon the thesis that the contracts accorded to the plaintiff an exclusive right to sell, which the defendant is alleged to have violated by making sales over the plaintiff's head without payment of commissions to the plaintiff. The defendant admits an exclusive agency, but denies that under the terms of the contract he himself was precluded from making sales.
The defendant also asserts that the plaintiff failed to meet the minimum requirements as to sales set forth in Paragraph 2(f) of the contract of May 6, 1943, and for this reason he wrote to the plaintiff on November 10, 1943, terminating that agreement.
It also appears from the record that the plaintiff's license to manufacture the poultry picking machines, subject to the second agreement, terminated about November 9, 1943, at about which time the defendant acquired a similar license.
A preliminary question may be resolved at the outset. The defendant attacks the jurisdiction of this Court, on the ground that the jurisdictional amount, necessary in diversity of citizenship cases, is lacking here. However, this issue was determined against the defendant on his motion to dismiss by my brother Ganey, J., on August 11, 1944. I may add that the pleadings do not disclose the legal impossibility of a judgment for the plaintiff in excess of the jurisdictional amount. See Hiltz v. Atlantic Refining Co., 1944, 57 F.Supp. 308, decided by this Court.
Coming to the merits of the controversy, the plaintiff seeks to recover commissions on sales alleged to have been made by him between May 6, 1943, the date of the first contract, and November 10, 1943, the date of the defendant's letter of termination.
It is hardly necessary to discuss in detail all the business done by the parties during this controversial period. Admittedly on the Ebbs & Son order of July 13, 1943, the commission was paid. On the Chicago Foods Products order of April 20, 1943, referred to at the trial as the Horwitz transaction, plaintiff did receive a commission, but he is not entitled to commission under the contract since the sale was made prior to the execution of the contract.
Concerning the Dorset Foods order, Albright testified, and I credit his testimony, that he made the contact with Dorset in Long Island, New York, that he measured the building and helped prepare the blueprints for the layout, and that he then called Kalbitzer asking him to go to Dorset because the firm was ready to place its order. Kalbitzer took the order, and the unit was installed sometime in October, 1943. While this transaction may come within the plaintiff's contention that he had an exclusive right to sell, I think he is entitled to the agreed commission on the ground that he was at least the efficient cause of the sale, particularly since there was no break in the negotiations. See Restatement, Agency, Section 448, and the Pennsylvania Annotations thereto.
As to purchases by the plaintiff, while they may be counted under Paragraph 2(f) of the agreement of May 6th, plaintiff is not entitled to commissions where he himself was the purchaser at cost.
Thus, plaintiff proved an order dated September 25, 1943, which was never shipped. Defendant's counsel, in his brief, states that it was established no such order was received, but admits he could find no such testimony in the record. Neither can I, and I must therefore accept the plaintiff's proof. Also plaintiff proved an order for two machines dated June 22, 1943; this order was to be applied to a prior order for five machines dated May 19, 1943. This order was not shipped. Since these orders were purchases by the plaintiff for his own account, no commissions become due. While he may be entitled to damages for defendant's failure to ship, he has not offered proof thereof.
The defense to this claim is that the term 'sales' requires a delivery and passing of title; therefore, since no deliveries were made, no commissions became due.
Considering the admission, I think this view is too narrow. Ordinarily, where, as here, the contract is silent, it is sufficient if an enforceable contract of sale is executed. See Restatement, Agency, Section 445 Comment (e); 2 Amer.Juris.,Agency, Sections 302, 303. In any event, since the defendant was bound to fill all orders, and failed to do so, plaintiff is entitled to damages in the amount he would have realized if the order had been filled. Johnson v. Hoosier Drill Co., 1881, 99 Pa. 216; see Penn Anthracite Collieries Co. v. Coleman & Co., Inc., 1945, 53 Pa.Dist. & Co.R. 420. Here, such damages constitute plaintiff's commissions, in the absence of mitigating evidence. See 1 Sutherland, Damages, 3rd Ed. (1903) p. 215.
One transaction to which this conclusion is particularly applicable is that referred to during the trial as the Rabinowitz order of May 21, 1943. Although the defendant accepted the order procured by the plaintiff, and the contract with Rabinowitz, calling for equipment valued in excess of $ 6,000, was legally enforceable, the defendant released the purchaser for $ 750, considerably less than the plaintiff's commission. On the view I have taken, the plaintiff is entitled to the agreed commission for making this sale. See Lieberman v. Colahan, 1920, 267 Pa. 102, 105, 110 A. 246; Blau v. Kettling, 1928, 94 Pa.Super. 411; cf. Cooper v. Midland Metal Co., 1914, 56 Pa.Super. 485.
Another transaction in this group was the order obtained by the plaintiff from the Charles Keeshin Poultry Co., on or about October 6, 1943. To the claim for compensation on this order, it seems to me there is a valid defense. Admittedly Albright never furnished a priority rating, and clearly, unless he was led to believe otherwise by the defendant, he could not have expected this order to be filled in view of Paragraph 2(g) of the contract of May 6th. That the defendant showed a willingness to fill the order without a priority rating does not help the plaintiff, for any such action would have been illegal and plaintiff could not recover his commission as a matter of public policy: The Court will not further an illegal arrangement. See Pollock v. MacElree, D.C.E.D. Pa. 1944, 56 F.Supp. 961. Moreover, the inference that in accepting the order the defendant intended to obtain the priority himself, waiving the plaintiff's obligation under Paragraph 2(g) of the contract, is rebutted by the fact that the order form discloses on its face that the priority was to follow. Plaintiff, accordingly, is not entitled to any compensation on this transaction.
Concerning the order of the R. H. Macy Co., dated August 19, 1943, the defendant testified that at that time he was engaged in government work which carried a higher priority and which prevented his filling the Macy order. If this were so, certainly under the terms of the contract, which required the plaintiff to furnish a high enough priority to enable the defendant to fill orders, defendant could have properly rejected the order. Perhaps even if he accepted the order, this defense would still be valid. The difficulty is that not only did defendant accept the Macy order and begin production, but he never stated to the plaintiff that a higher priority would be necessary. In fact, in his letter to the plaintiff dated August 31, 1943, the defendant stated, 'Concerning the Macy pickers; motors have been shipped and as soon as we receive same we will ship the pickers. We understood that the Macy display only lasted during the New York show, that is why we did not ship the machine without motor.' With this in mind, I cannot credit the defendant's statement that the government contract interfered with his completion of the Macy order. Moreover, the priority extended for this order was otherwise sufficient. Therefore the plaintiff, having made a sale, is entitled to his commission.
The defendant also refused to pay the plaintiff a commission on an alleged sale to the Berger Kleifgen Co., on about June 23, 1943. This sale involved a Whistler Universal picker which was subject to the supplemental agreement of May 7, 1943. Under paragraph 1 of that contract the defendant agreed to manufacture this machine and under paragraph 2 the plaintiff agreed to sell it at a price of $ 435.00. The plaintiff extended an AA3 MRO priority, which, under CMP Regulation 5 (CCH War Law Service, Priorities 1, Sec. 33,228) was sufficiently high to enable filling of the order.
The defendant testified, however, that he had never made a Universal machine, and that plaintiff had agreed to obtain for him plans for its construction or a sample machine, which, admittedly, was never done. Plaintiff, on the other hand, testified that the defendant did not tell him he could not make the machine until after he had obtained the Kleifgen order. Since the defendant agreed to manufacture the Universal machine and to accept orders for it, the burden rests upon him, as a matter of defense, to show that the plaintiff was under a duty to supply him with information for construction. Aside from the contradictory testimony of the parties, the only other pertinent evidence is a letter from the plaintiff to defendant dated June 17, 1943, in which the plaintiff stated that he had an order for a Universal Machine (the order dated June 23rd). While this letter indicates a recognition on the part of the plaintiff that the defendant required a sample before he could manufacture the machine, and shows that he undertook to secure such a sample for the defendant, nevertheless it leaves it to the defendant to secure the sample. The letter does not help in placing a duty on the plaintiff, and therefore, it is my opinion that the defendant failed to prove the duty. He is left, then, with the obligation to accept orders for and manufacture the Universal picker
Plaintiff also seeks to recover as damages loss of profits, i.e., commissions, on uncompleted sales by reason of the defendant's termination of the contractual arrangement by letter dated November 10, 1942.
Clearly, if the defendant were justified in terminating the agreement, Albright is not entitled to additional damages on orders taken but not communicated to the defendant. The immediate question, therefore, is whether the termination was based upon cause. On this determination, also depends the outcome of the defendant's counterclaim.
The reason assigned for the termination is that Albright failed to meet the minimum purchase and sales requirement contained in Paragraph 2(f) of the contract of May 6, 1943; to wit, he did not 'buy or sell for Company, an average of two complete eviscerating units each month, or a cumulative average total of seven thousand dollars per month of all merchandise based on the selling price to the purchaser thereof, commencing from the date of the completed installation of the first unit shipped by Company.'
It is the defendant's contention that between the 6th of May and the 10th of November, 1943, plaintiff did not meet this requirement. Aside from the truth of this contention, I think it obvious that, since the term of the contract was for one year, the 'average' referred to is the average over a period beginning with the date of the completed installation of the first unit and ending with the last day of the contract. The average most certainly is not over a period the length of which is determined by the defendant. Since the defendant does not take the position that to have waited until the end of the contract year would have been in vain, whatever aid that argument might have afforded him in view of the evidence that plaintiff did all he could in furtherance of the agreements, I am of the opinion that his termination of the contract was premature and unjustified.
Accordingly, defendant's repudiation constituted an anticipatory breach, and plaintiff is entitled to recover damages therefore. Commonwealth Trust Co. of Pittsburgh v. Hachmeister Lind Co., 1935, 320 Pa. 233, 181 A. 787. The party so injured is entitled to recover such amount as will place him in the position he would be in had the contract been fully performed, that is, the value of the performance of the contract. Macan v. Scandinavia Belting Co., 1919, 264 Pa. 384, 392, 107 A. 750, 5 A.L.R. 1502; Keller v. Gomery-Schwartz Motor Car Co., 1916, 253 Pa. 507, 98 A. 690; Jaeger Machine Co. v. L. B. Smith, Inc., 1941, 144 Pa.Super. 488, 19 A.2d 750; Restatement, Contracts, Sections 331-333; 5 Williston, Contracts (1937) Sections 1338, 1339 and 1346A.
'If the agent at the time of the revocation of his authority, had agreements for sales which he could have consummated but for the wrongful act of his principal he is entitled to his commissions, if it is clear they would have been made.'
The defendant here was bound to accept all orders, and this order carried a priority rating sufficiently high to enable him to manufacture the equipment. Plaintiff therefore lost a commission he would have made but for defendant's act. See Wilson v. Wernwag, 1907, 217 Pa. 82, 66 A. 242, 10 Ann.Cas. 649; Restatement, Contracts, Section 331.
The remaining two orders were received by the plaintiff within a short time after November 10, 1943, when his authority under the contract was terminated. As to these, the evidence is that negotiations were begun, both as to the Farmers Produce Co. and the Lansboro Produce and Hatchery Co., as early as June 9, 1943 or thereabout. The measure of damages, as I have stated, for the repudiation by defendant, is the value of the contract right, and the plaintiff may show what gains he could have made or the profits he lost. Macan v. Scandinavia Belting Co., supra; Restatement, Contracts, Sections 329 and 331, and note comment (e) thereto. Plaintiff seeks to recover the commissions on these orders as gains prevented by the defendant's breach. Since all the work to obtain these orders had been done before the repudiation, and it appears that these orders were received as a result of such work, it ...