Counterclaim No. 2.
On September 27, 1961, following an angry telephone conversation between R. A. Young and P. C. McBeth, Sr., Seneca terminated the machine tool franchise for western Pennsylvania (defendants' Ex. 2).
On the same day, Seneca advised Ernest C. Hawkins that it would turn over its line to his new company (defendants' Ex. 3).
Shortly thereafter, Hawkins terminated his oral contract of employment with McBeth, formed a new company called Controlamatic Company, and took the lines of Snyder Machine Company and Esko Company with him (T., p. 163).
On October 1, 1961, Seneca terminated the electronic machine portion of the franchise, and later turned it over to Controlamatic Company (T., p. 98; defendants' Ex. 4).
Prior to September 27th, Hawkins had determined to terminate his employment with McBeth, and P. C. McBeth, Sr. had heard a rumor to that effect. Although the circumstances are suspicious, the evidence was insufficient to find that Seneca induced Hawkins or Snyder Machine Company, through Pomeroy, to terminate their contractual relation with McBeth. There was no evidence that Seneca had wrongfully used confidential information which Hawkins had obtained from McBeth.
We find that the termination by Seneca and Snyder of their respective franchise agreements with McBeth, the transfer of the Seneca and Snyder lines to Hawkins' Controlamatic Company, and the termination by Hawkins of his employment contract with McBeth were in the exercise of legal rights and privileges. While these actions occurred in an atmosphere of acrimony, they were not wrongful acts done pursuant to any conspiracy, wrongful inducement or tortious interference.
Proof of conspiracy must be made by full, clear and satisfactory evidence. Proof that Hawkins, Snyder Machine Company and Seneca exercised their independent rights at about the same time will not support a finding of actionable conspiracy. Fife v. Great Atlantic & Pacific Tea Co., 356 Pa. 265, 52 A.2d 24 (1947). Thus we find that the conspiracy as alleged in Counterclaim No. 2 was not established.
In this counterclaim, McBeth complains that Hawkins' Controlamatic Company made "a sale or sales" of Seneca's machinery "to a customer or customers developed while an employee of McBeth."
At the pretrial conference, counsel for McBeth stated that it had sold to Westinghouse Electric Corporation a $15,000 Seneca machine on which the commission was $1,500. This commission was claimed as an item of specific damage, and, in addition, exemplary damages were claimed. Although the counterclaim did not specifically sue for the $1,500 commission, McBeth's claim therefor and the related claim for punitive damages were raised at the pretrial conference without objection,
and were litigated at the trial as part of Counterclaim No. 2.
It is our opinion that McBeth is entitled to the full 10% commission. The subject of the sale it made to Westinghouse was an electronic machine priced at $15,000; the sale was made prior to the termination of the electronic machine portion of the franchise on October 1, 1961; the Westinghouse order was dated September 28, 1961 (defendants' Ex. 6);
and the place of delivery was in McBeth's exclusive territory in western Pennsylvania. The order was duly accepted by Seneca.
On January 22, 1962, this order was cancelled by Westinghouse, at the instigation of Seneca, and turned over to Controlamatic Company (defendants' Exs. 4, 5). In due course the machine as modified was delivered to Westinghouse who paid the purchase price to Seneca. One-half the commission on this sale was paid to Controlamatic Company.
Seneca never acknowledged that $750 or one-half the commission on the $15,000 sale was payable to McBeth until trial (T., pp. 6, 19-20).
We think Seneca's contention that McBeth is entitled to only one-half the commission because it did not "service" the machinery is untenable.
First, there was no evidence that the machinery purchased by Westinghouse needed to be or ever was "serviced" by Controlamatic or any other agent.
Second, there was no custom or any express or implied provision in the franchise agreement that the commission for an electronic machine sold by an agent in his exclusive territory should be split with a successor agent, when the machine was delivered and paid for by the customer more than 30 days after Seneca terminated the franchise. Seneca's alleged "policy" that the commission should be split is irrelevant.
As exemplified in its Complaint involving the sale of an electronic tracer after it had terminated the franchise, Seneca definitely recognized that it was obligated to pay the full commission on the price of the machine delivered to a customer in the agent's exclusive territory, without regard to the termination or any supposed obligation on the part of the agent to service the electronic machine.
Third, after termination of the franchise, Seneca accepted the benefits of the sale made prior thereto by McBeth. Seneca's acts in paying one-half the commission to Controlamatic, and, until trial, apparently claiming the other half for itself, were acts in bad faith. We think McBeth is entitled to the full commission as if there had been no termination.
Judgment should be entered in favor of McBeth for the sum of $1,500 with interest from March 1, 1962.
However, in our opinion McBeth is not entitled to recover punitive damages.
In the first place, there was no evidence that McBeth, as seller, contracted to sell the machine to Westinghouse.
On the contrary, the seller was Seneca, the order for this machine having been procured from the purchaser, Westinghouse, by McBeth in its capacity as agent. Seneca was contractually obligated to McBeth for the agent's commission of $1,500, but no contractual relationship existed between McBeth and Westinghouse. It does not appear that it was ever asserted that Westinghouse breached a contract with McBeth. Thus, Seneca did not cause the cancellation of any contract between Westinghouse and McBeth. Seneca simply breached its own contract with McBeth by failing to pay the commission McBeth had earned as agent.
It is the general rule that punitive damages cannot be recovered for breach of one's own contract.
We think McBeth's reliance on Skeels v. Universal C.I.T. Credit Corporation, 335 F.2d 846 (3d Cir. 1964) for recovering punitive damages is misplaced. Skeels did not involve a breach of contract. In that case the plaintiff proved that willful tortious conduct on the part of the defendant's employees destroyed his business. The resulting judgment for punitive damages was eliminated for the reason that under the law of Pennsylvania punitive damages may be assessed against a corporation only for wanton, malicious and clearly outrageous behavior on the part of its employees. Skeels v. Universal C.I.T. Credit Corporation, supra; Gerlach v. Pgh. Railways Co., 94 Pa.Super. 121, 133-135 (1928). In our opinion the actions of Seneca's employees surrounding its failure to pay the 10% commission earned by McBeth, albeit in bad faith, did not approach that degree of reprehensible conduct. And this is so even if we attribute substance to McBeth's contention
that Seneca's employees tortiously, and without privilege to do so, interfered with some contractual relationship (past or prospective) between McBeth and Westinghouse.
This opinion shall be deemed to embody findings of fact and conclusions of law required by Rule 52, Fed.R.Civ.P., 28 U.S.C.
Appropriate orders will be entered.