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 of his agency.', Restatement, Agency, Sec. 13.
' * * * any bargain that tends to induce a violation of a fiduciary's duty as such, is illegal except when effectively consented to by the beneficiary or principal * * * ', Restatement, Contracts, Sec. 570. Broad considerations of public policy condemn such contracts.
It can hardly be asserted, nor could a jury find, that a promise by a third party to compensate a sales manager of a corporation for his services in taking a large customer away from his employer is not one that tends to induce a violation of his duty. A bargain which, it seems to me, was less clearly against the employer's interest and not so great a deviation from the employee's duty as that in the present case put the plaintiff out of court in Polloek v. MacElree, D.C., 56 F.Supp. 961, 963, Judge Kalodner observing 'Obviously the Court should not assist the plaintiff to profit in this unconscionable transaction.' Reiner v. North American Newspaper Alliance, 259 N.Y. 250, 181 N.E. 561, 564, 83 A.L.R. 23, was a bargain which committed the plaintiff to a breach of his contract with a third person, but the opinion of Judge Crane contains a statement of public policy transcending the precise situation before the Court. He said, 'Fraud, deceit, breach of trust, are general terms covering divers situations and circumstances, and seldom yield to definition or limitation; in other words, the facts differ in every case, but the principle remains the same.'
It is true that, as stated in Sec. 393(e), Restatement, Agency, that an employee who expects to terminate his employment may, before the close of his employment, make certain arrangements to establish himself in a new business, even with a view toward competing with his employer. 'He may not, however, before the termination of his employment, solicit customers for such rival business, nor may he do other similar acts in direct competition with the employer's business', Restatement, Agency, Sec. 393(e). I do not believe that the plaintiff in the present case, even during the time when he had some prospect of becoming associated with Parkway, was justified in working, without his employer's knowledge, to switch Parkway's business from his employer to a competitor. However, that question is really not in the case because when he concluded, after his first interview with the Texas people, that they would not give Parkway a distributorship and make up his mind to advise Parkway of a possible sale and to do what he could to promote the sale, he ceased to be an employee planning to terminate his employment and became an employee working for compensation against his employer's interests.
There was some rather equivocal testimony on the part of the plaintiff to the effect that American was not greatly interested in retaining Parkway as a customer.
In view of the facts that no witness was called to substantiate this testimony, that American renewed its contract with Parkway, after the plaintiff made his contract with Goodman, for a further period of three years during which period American could have cancelled on six months' notice but did not, and the further fact that the plaintiff did not advise American of what he was doing (and in fact made some effort to conceal it by directing Texas to write him at his home address), and finding could have been made that his violation of duty was 'effectively consented to by the beneficiary or principal of the fiduciary.' Restatement Contracts, Sec. 570. Beyond all this, however, it is to be remembered that the rule is a prophylactic one. 'Actual injury is not the principle the law proceeds on, in holding such transactions void.' Lum v. McEwen, 56 Minn. 278, 57 N.W. 662. " * * * the rule is not intended to be remedial of actual wrong, but preventive of the possibility of it." Everhart v. Searle, 71 Pa. 256
Out of what appeared to the Court an abundance of caution, the defendant at the close of the plaintiff's case offered an amendment to the answer, specifically raising the defense of illegality. The Court allowed the amendment but the defense could have been made just as well without it. 'Thus, although illegality is an affirmative defense, if the illegality appears on the face of the contract, or from the opening statement of plaintiff's counsel, or from plaintiff's proof, the defendant could take advantage of it by proper motion, and if necessary the court will raise the objection itself'. Moore's Federal Practice, General Rules of Pleading, Vol. 1, page 568. In Fitzsimmons v. Eagle Brewing Co., 3 Cir., 107 F.2d 712, 713, 126 A.L.R. 681, the defense of illegality was not pleaded at all. The trail court acted of its own motion in entering judgment for the defendant upon that ground, and the Circuit Court of Appeals said, ' * * * the defense of illegality was not interposed by a welsher but, as was not only proper but necessary, by the court sua sponte.'
Summing up, 'The law leaves the plaintiff to be judged by his own standards; his complaint that the defendant treated him as he treated others falls upon deaf ears; the law is silent; it has nothing to say.' Reiner v. North American Newspaper Alliance, supra.
Judgment may be entered for the defendants on this motion under Rule 50(b).
Sur Defendants' Motion for New Trial
Following the practice outlined by the Supreme Court in Montgomery Ward v. Duncan, 311 U.S. 243, 61 S. Ct. 189, 85 L. Ed. 147, this Court will rule upon the motion for a new trial, the ruling being in the alternative and effective only if there should be a reversal after the entry of judgment n.o.v.
The alternative motion for a new trial must be granted, for the reason that the verdict was directly contrary to the Court's instructions to the jury.
The Court was of the opinion that no verdict could be rendered against the defendants Benjamin Goodman and William Pleet because it seemed perfectly clear that, in making the contract, they had acted merely as agents for a disclosed principal. The Court was also of the opinion that the evidence showed that, in so doing, they had acted either for the corporation, Parkway Oil Co., or for its stockholders, Mrs. Pleet, Mrs. Goodman and David H. Pleet, as individuals, and that, under the evidence, the jury could not find that they had acted as agents for both the corporation and the stockholders. The Court, therefore, instructed the jury that if their verdict should be for the plaintiff it would have to be against either the corporation or the stockholders but not against both, and that in any event the verdict would have to be in favor of Benjamin Goodman and William Pleet.
The jury first returned with a verdict in favor of the plaintiff and against the corporation only; as between the plaintiff and the various individual defendants, no verdict was returned. The Court called the jury's attention to this and after some discussion concluded that the jury had intended to render a verdict in favor of the individual defendants, and the Court was about to take the verdict in that form when counsel for the plaintiff intervened and suggested that the jury might have in mind rendering a verdict against William Pleet, Benjamin Goodman, and also against Mrs. Pleet and Mrs. Goodman. On questioning the jury the Court felt that there was some doubt as to just what the jury intended the verdict to be and sent them back for further deliberation, reiterating the instruction that they could not find against both the corporation and the stockholders.
In spite of this, the jury returned in less than an hour with a verdict against all the defendants except David H. Pleet.
I do not think that the Court's instructions to the jury were erroneous but, right or wrong, the refusal of the jury to find in accordance with them necessitates the award of new trial. 'Nonconformity of the verdict to the judge's charge is ground for a new trial, according to the weight of authority, regardless of the showing as to whether the instructions were right or wrong. Even if erroneous, they constitute the law governing the case, and it is the duty of the jury to follow them. Any other rule, it is said, would lead to endless confusion, sanctioning disregard of the court's opinion of the law applicable to the pleadings and the evidence, and rendering its instructions impotent except where willed otherwise by the jury.' Am. Jur., New Trial, Sec. 127.
There have been exceptional cases in which verdicts in disregard of clearly erroneous instructions have been allowed to stand. Such a case was Alzier Gas Engine Co. v. Du Bois, 3 Cir., 130 F. 834, 839. The facts of that case make it clear that, as the Court said, ' * * * it would be a sacrifice of justice for no good purpose to set aside such a verdict on the ground that the jury had disregarded the instructions of the court in rendering it.' The present case is not such a one. The stockholders who were sued as defendants are not now and were not when the action was commenced stockholders of the corporation, and from the verdict it is impossible for the Court to tell against which judgment should be entered,
The motion for a new trial in the alternative is granted.