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COLONELL v. GOODMAN

February 26, 1948

COLONELL
v.
GOODMAN et al.



The opinion of the court was delivered by: KIRKPATRICK

The plaintiff brought this action upon a contract by which, as he alleges, he was promised, for services in connection with the sale of the business of Parkway Oil Company, one of the defendants, a commission of five per cent upon the sale price.

The case was tried to the Court with a jury. The verdict was for the plaintiff and against all the defendants except David Pleet. The other defendants have filed a motion for judgment under Federal Rules of Civil Procedure; Rule 50(b), 28 U.S.C.A.following section 723(c), and also in alternative motion for a new trial.

 From 1937 until 1945 he was in the employe of American Oil Company as sales manager in charge of sales for Pennsylvania and six other states.

 In 1939 and 1940 Parkway Oil Company, which operated a number of service stations in Philadelphia, was under contract with American to buy all its oil and gasoline from the latter. It was not, however, an exclusive distributor.

 The plaintiff, beginning in the early part of 1939, in pursuance of his duties as sales manager for American, had numerous contacts and interviews with Goodman, the president of Parkway, in the course of which he made a number of suggestions for the improvement of its business and gave advice and assistance. During 1939 and the early part of 1940, the possibility of the plaintiff's leaving American and becoming interested in Parkway, either as a part owner or as an employee, was discussed. There never was any definite agreement but the plaintiff had some reason to think that the talk would lead to one.

 In February or March, 1940, the plaintiff told Goodman that if he was to become financially interested in Parkway he would want it to have an exclusive distributorship and suggested that the Texas Company, a competitor of American, was the logical concern to negotiate with, adding that he was acquainted with a number of the Texas Company officials. Goodman agreed and authorized him to see the Texas Company with a view to obtaining an exclusive distributorship from it.

 The plaintiff went to New York where he interviewed one of the Texas vice-presidents and learned from him that Texas would not give an exclusive distributorship. However, in view of what was said at the interview, he came to the conclusion that Texas might be interested in purchasing Parkway and, on his return to Philadelphia, so advised Goodman. He, however, pointed out to Goodman that if Texas should buy Parkway there would be no possibility of his obtaining an interest in or employment with Parkway, whereupon Goodman promised him that if a sale to Texas should be consummated he would receive a commission of five per cent. At the same time Goodman told the plaintiff that he, Goodman, would handle all future negotiations with the Texas Company.

 Thereafter from time to time over a period of more than a year, Goodman told the plaintiff that he was in contact with Texas and, although the plaintiff did not himself have any further direct dealings with Texas, he assisted Goodman in preparing data of various kinds to submit to Texas, showing the value of the Parkway properties and its financial position, and also advised Goodman as to the proper method of approach and what steps to take in the conduct of the negotiations.

 At the end of 1941, the war caused a suspension of all further efforts to sell until the latter part of 1944, at which time Goodman told the plaintiff that Texas was again interested. Goodman reiterated his promise to pay the five per cent commission and the plaintiff resumed his activities in connection with the negotiations which consisted, as before, of advice and assistance to Goodman without any direct dealing on the plaintiff's part with Texas.

 In June, 1945, the plaintiff learned through a third party that Parkway had been sold to Texas and went to see Goodman who confirmed the news and also told the plaintiff that he would not get any commission.

 The foregoing facts, which represent the evidence in its most favorable light to the plaintiff, present the case of an important official of a corporation, entrusted particularly with the promotion and maintenance of sales, who, without his employer's knowledge, sets about detaching one of his employer's largest customers and endeavoring to give its business to one of his employer's competitors, his purpose being to improve the business position of the customer with which he hopes (though without any definite assurance) to associate himself. When it appears that the competitor may be interested in purchasing the customer's business outright, he informs the customer of that fact, makes a contract with the customer to receive a commission on the sale and thereafter continues to advise and consult with the customer in the negotiations until the sale is consummated.

 As to the nature of the cause of action; the plaintiff, in his complaint and consistently throughout the trial, maintained that the action was by an agent to recover a commission, under an express contract by which it was agreed that if a sale of the property was effected the commission would be paid in consideration of the agent's having brought the purchaser to his principal, the understanding being that the plaintiff's right to his commission would accrue when the sale was made, without regard to how or by whom the result was finally accomplished. In view of the large amount of the commission claimed and the comparatively small amount of work done by the plaintiff, as well as of the fact that the work had been done when the promise was made, the Court in the course of the trial, in conference with counsel, suggested that the plaintiff might be basing his action not on a claim for commission as such but on a promise of compensation in return for his failure to receive an interest in Parkway. This theory was expressly repudiated by plaintiff's counsel and submitted to the jury on the sole theory that the plaintiff was claiming an agent's commission on a sale.

 The plaintiff, as a managing official or executive of a corporation, owed it a fiduciary as well as a contractual duty. 'An agent is a fiduciary with respect to matters within the scope ...


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