Opinion
When an agreement is obscure and so ambiguous that it is susceptible of two constructions, one of which makes it fair and reasonable, while the other makes it unusual and unreasonable, the interpretation which renders it rational and reasonable is to be preferred. The plaintiff and defendant entered into an oral agreement by which, as compensation for services to be rendered by the plaintiff in connection with the acquisition by the defendant of a controlling interest in the stock of certain utility companies, he should receive a percentage on the purchase price of such stock. One of the companies was acquired, the plaintiff rendering services in connection therewith, at the request of the defendant, and the plaintiff was paid such percentage on the purchase price. Thereafter the defendant purchased a controlling interest in another of the companies, the D Co., and paid another person, B, for services rendered therein, but did not request nor utilize the services of the plaintiff. The plaintiff claimed that the rendition of services pertaining to the acquisition of the stock of any one of the companies mentioned in the agreement was sufficient to entitle him to compensation based on the D Co. purchase, irrespective of whether he performed any such services with reference to that company. Held: 1. That the construction claimed by the plaintiff would render the contract not only decidedly unusual, but so improvident on the defendant's part as to be regarded as irrational and most improbable. 2. That the finding of the trial court that the terms of the contract between the parties rendered request by the defendants for the performance of services by the plaintiff in aid of acquisition of the D Co. and the performance by him of such services, a prerequisite to recovery of compensation based upon the purchase price thereof, had adequate support in evidence as to the conversations by which it was arrived at, reinforced by the circumstances and conduct of the parties and other considerations. 3. That the finding that the plaintiff was at no time requested to, and did not, provide any information or perform any services in furtherance of this purchase, was correct, as was the resulting conclusion that he was entitled to no compensation therefor. 4. That the relations between the parties did not constitute a joint adventure, but the contract was one of employment, contemplating, not a division of profits accruing from a common enterprise, but compensation for services rendered.
Argued October 25th, 1929
Decided January 31st, 1930.
ACTION for damages for the breach of an alleged contract to pay for services, and for the reasonable value of services rendered, brought to the Superior Court in Fairfield County and tried to the court, John Richards Booth, J.; judgment for the defendant and appeal by the plaintiff. No error.
The plaintiff is a broker in stocks and bonds, and for several years past has been engaged in bringing about and assisting in the purchase and sale, in Connecticut and New York, of public utility securities. The defendant's business included buying, selling, exchanging and dealing in the properties, stocks, bonds and securities of public utility companies. In May, 1925, the plaintiff suggested to C. Loomis Allen, president of the defendant company, the desirability of the company's endeavoring to acquire a controlling stock interest in some of the following companies: The Bridgeport Gas Company, The New Haven Gas Company, The Derby Gas Electric Company, The Waterbury Gas Company, The New Britain Gas Company, The Hartford City Gas Company, The Middletown Gas Company, The Wallingford Gas Company, The Torrington Gas Electric Company, The Winsted Gas Company, and The Clinton Electric Light Company. Later, the plaintiff submitted to Allen certain figures and statements concerning those companies, copied from manuals which were equally available to the defendant. The plaintiff and the defendant, acting by Allen, then entered into an oral agreement by which, as compensation for certain services to be rendered by the plaintiff in connection with the acquisition by the defendant of a controlling interest in the stock of any of the above-mentioned companies, he should receive a sum equal to two and one half per cent of the purchase price of such stock, the services which were to be rendered consisting of providing the necessary information, as might be requested of him, from time to time, and the calling upon officers, directors and bankers or others who might be influential in assisting the purchase.
During the summer and fall of 1925 the defendant requested the plaintiff to concentrate his efforts on the purchase of stock in the Wallingford Gas Light Company and the New Haven Gas Light Company, and during that period the plaintiff, at the request of the defendant, made many calls on and had many interviews with the officers, directors and stockholders of those two companies and submitted to them various offers for their stock. In addition, the plaintiff, during this period, also carried on investigation and negotiations for the stock in other companies included in the agreement, not including, however, the Derby Gas Electric Company.
In August, 1925, the defendant purchased five thousand shares of the capital stock of the Wallingford Gas Light Company for a total price of $275,000, and thereafter paid to the plaintiff $6987, being the compensation due him at the agreed rate for having assisted the defendant in the purchase of stock in that company.
The defendant desired, if possible, to acquire a controlling stock interest in both the Derby Gas Electric Company and the New Haven Gas Light Company but it desired to negotiate first for the stock of the New Haven company; and ascertain if it was possible to acquire that stock before taking up negotiations for the acquisition of stock in the Derby company. Between July, 1925, and February, 1926, the plaintiff frequently discussed with Allen the desirability of permitting him to investigate and negotiate for the acquisition of the stock of the Derby company, and urged that he be permitted to do so, but Allen declined, informing the plaintiff that those negotiations would be taken up after the proposed New Haven Gas Light Company purchase had been considered.
On or about January 1st, 1926, the plaintiff received information that the Derby company stock was on the market, immediately notified Allen to that effect, and again urged that he be permitted to open negotiations with officers and stockholders of that company for purchase of the same, but Allen declined to permit him to do so and again advised him that those negotiations would be taken up when the defendant had finished its negotiations for the purchase of the stock of the New Haven company.
In November, 1925, Selwyn N. Blake called upon Allen in relation to the acquisition of stock in public utility companies in Connecticut by the defendant and on January 23d 1926, Allen authorized Blake to obtain information for him concerning the financial condition of the Derby company. At that time the defendant was actively engaged with the plaintiff in negotiating for the purchase of the stock of the New Haven company. Blake interviewed the president of the Derby company, obtained the 1925 figures, and delivered them to Allen. Subsequently Blake, with Allen, interviewed the president of the Derby company, the defendant made an offer for the stock of the company which was accepted by practically all of the stockholders, and on or about March 9th, 1926, the defendant entered into a contract for the purchase of not less than eighty thousand shares of the capital stock of the Derby company stock at $76 per share. The contract was consummated on August 5th, 1926, by the delivery of ninety-nine thousand nine hundred and seventy-six shares of stock, the total price paid being $7,597,760. Blake was paid by the defendant $50,000 for the services rendered by him.
On February 11th, 1926, the day after he had received the 1925 figures of the Derby company, Allen informed the plaintiff that he was "out of Derby." This was the first knowledge that the plaintiff had that Blake was working on this transaction, and it was the first time that he had been informed that he would not be paid compensation in the event of the purchase of the stock of the Derby company by the defendant, and he thereupon informed Allen that, in the event that the Derby company stock was purchased by the defendant, he would claim his compensation. Thereafter, he several times notified the defendant to the same effect. The defendant refused to pay the plaintiff.
Throughout the early part of 1926 the defendant continued to be desirous of acquiring the stock in the New Haven company, authorized the plaintiff to investigate and negotiate for it, and on March 23d, after the disagreement as to the plaintiff's right to compensation on the purchase of the stock of the Derby company, the defendant wrote to the plaintiff a letter making a special agreement as to compensation if the New Haven purchase was consummated.
The plaintiff's efforts in assisting the defendant in the acquisition of stock continued throughout the early part of 1926 and included active negotiations and investigations in connection with proposed purchases of the stock of the Hartford, New Haven, and Bridgeport companies, and included offers for the stocks in the Hartford and New Haven companies.
The defendant never acquired any stock in the New Haven company, but continued to negotiate for it as late as August, 1926.
At no time was the plaintiff requested by the defendant to provide any information or to call upon officers or others in relation to the purchase of the stock of the Derby company, nor did he in fact call upon any such officers or provide any information except the figures from the manuals furnished before the agreement was made.
Further facts found and the conclusions reached by the trial court are stated hereafter.
Homer S. Cummings and Raymond E. Hackett, for the appellant (plaintiff).
C. Milton Fessenden and Eugene S. Bibb, of New York City, with whom, on the brief, were Matthew H. Kenealy and Daniel E. Ryan, for the appellee (defendant).
The crucial question is whether, as the trial court found and held, the terms of the contract between the parties, relating to the acquisition of stock of the Derby Gas Electric Company, were such as to render request by the defendant for the performance of services by the plaintiff in aid of such acquisition and the rendering of such requested services by the plaintiff, a prerequisite to recovery of compensation at the specified rate, or, as the plaintiff contends, the rendition of such services pertaining to acquisition of the stock of any one or more of the several companies mentioned is sufficient to entitle the plaintiff to compensation based on the Derby purchase, irrespective of whether he performed any such services with reference to the acquisition of the Derby company.
The only persons having knowledge of the intention and terms of the verbal agreement relied on are the parties directly concerned in the making of it — the plaintiff, and Allen representing the defendant corporation. The testimony of these witnesses would hardly support a finding of a contract sufficiently definite to enable the court to fix an exact meaning upon it, and therefore render it enforceable. 1 Williston on Contracts, § 37. However, the additional light afforded by the conduct of the parties, with the application of accepted rules of construction, enables us to discover the meaning of the contract in this respect.
When an agreement is obscure and so ambiguous that it is susceptible of two constructions, one of which makes it fair and reasonable while the other makes it unusual and unreasonable, the interpretation which renders it rational and reasonable is to be preferred. North Providence v. Aetna Indemnity Co., 90 Conn. 226, 231, 96 A. 926. That the parties intended that services rendered by the plaintiff in furtherance of the acquirement of stock in one company, however comparatively small in capitalization, should entitle him to compensation based, not upon the acquirement and purchase price of that company, but a percentage of the purchase price, however large, of any of the other companies the stock of which might be acquired, would be not only decidedly unusual, but so improvident on the defendant's part as to be regarded as irrational and most improbable.
The course of the pleadings is not without significance. The original complaint, dated August 16th, 1926, sought recovery for services rendered by the plaintiff in the acquisition, by the defendant, of stock in the Derby company, under a contract by the defendant employing the plaintiff to assist in bringing about such acquisition. Manifestly it did not count upon, or have reference to, employment relating to the purchase of stock in any other company or services rendered to that end. It was not until the plaintiff's evidence had been completed on the trial (November 15th, 1927) and disclosed no substantial services rendered by the plaintiff, at defendant's request, toward acquirement of the Derby stock, that the plaintiff filed a substituted first count alleging a contract covering all the companies together and allowing as compensation for services rendered as to any of them, whether purchased or not, a percentage on the price of any one of them which eventually was purchased.
Allen testified that the first discussion as to how and from whom the plaintiff was to receive compensation did not occur until June 15th, 1925, when the negotiations for the purchase of the Wallingford company were advancing, that Hodgman "naturally wanted to know what he was going to get out of it" and "I told him that in the event that the purchase was consummated a cash commission of 2 1/2% on the purchase price would be paid him." It is clear from Hodgman's own version of the talk as to compensation that his reason for seeking it from the defendant, although the purchaser, was that it would be impossible for him to obtain a commission from the seller, so that any compensation which he obtained would have to come from the defendant. The inference is legitimate that what both parties contemplated at that time was that the plaintiff's pay for services as to any one company was to be contingent upon a purchase, by the defendant, of the stock of that company, and that the amount was to depend upon the purchase price thereof. The plaintiff rendered services in the acquisition of the Wallingford stock and was paid 2 1/2% of the purchase price.
Material assistance is given by the correspondence between the parties. In March, 1926, after the disagreement arose as to the plaintiff's right to compensation on the Derby purchase, the defendant wrote a letter to the plaintiff, stated to be in confirmation of a verbal understanding, naming a specified sum, instead of the percentage agreement, previously in effect, which plaintiff was to receive as compensation for all services rendered in connection with the purchase of the stock of the New Haven Gas Company, if such purchase be made. This special agreement is not denied by the plaintiff.
Also, on March 15th, 1926, the plaintiff wrote to Allen requesting written confirmation of their verbal agreements and understandings with reference to compensation and in response received from the defendant, on April 23d, six letters, identical in form (except that each referred to a different company) as follows: "Our Company hereby agrees that if we purchase not less than 80% of the capital stock or all of the capital stock of the [Hartford City Gas Light Company] you are to receive as compensation for all services rendered heretofore or hereafter rendered in connection with the said purchase, 2 1/2% on the purchase price. Payments will be made to you at the same time that payments are made for the purchase of the [Hartford City Gas Light Company] and will be made proportionately. Your services that are to be rendered to this Company in relation to the purchase of the capital stock will consist of providing the necessary information, as may be requested of you, from time to time, and the calling upon officers, directors and bankers or others that may be influential in assisting in consummating the purchase." So far as appears, these letters were acquiesced in by the plaintiff as an accurate and satisfactory statement of the agreement of the parties on the subject of the services to be rendered by him and his compensation therefor. Indeed, in the plaintiff's brief it is recognized that they reflected the terms of the original agreement. If they be so accepted they decisively indicate that the plaintiff was to realize compensation for his services as to the purchase of each company only if that purchase was consummated, and based upon the purchase price of the stock of that particular corporation. There is nothing unusual, peculiar, or inherently unjust in such an arrangement — it is common and customary in real-estate brokerage and other similar transactions. Since the defendant's letters purported to state the original agreement, so far as concerned companies purchases of which were still in contemplation, they are also to be taken as expressing the original agreement as it related to the Derby company.
The finding as to the terms and effect of the oral agreement between the parties has adequate support in evidence as to the conversations by which it was arrived at, reinforced by the circumstances and conduct of the parties and other considerations, to some of which we have adverted. We cannot substitute for it the statement of the agreement set forth in the plaintiff's draft-finding, to the effect that the plaintiff was entitled to commission, at the specified rate, upon the price of any one of the companies purchased, irrespective of whether he was requested to render or did perform any services pertaining to the purchase of that company. The finding supports and justifies the conclusion that the plaintiff could recover, in this action, only by showing that he had, at the defendant's request, furnished services and rendered assistance in connection with the acquisition of the stock in the Derby company. The finding that the agreement did not constitute the plaintiff the exclusive agent of the defendant in acquiring stock in the companies is clearly correct.
The finding must also stand that the plaintiff was at no time requested to, and did not, provide any information or perform any services in furtherance of the purchase of the stock of the Derby company, as must the resulting conclusion that, not having rendered such services, he is not entitled to compensation on account of such purchase. Had he been requested to render, and performed, such services, his compensation, at the percentage specified by the contract would have amounted to $189,944.90.
The appellant contends, also, that the relations of the parties, under the contract, constituted a joint adventure, with all the attributes pertaining thereto including the duty of each party engaged therein to observe the utmost good faith with the other, and that there was a breach of such duty by the defendant in employing Blake in the Derby transaction to the exclusion of the plaintiff. The situation here lacks, however, that essential element characteristic of a joint adventure — a contemplated division of profits, as such, upon an equal or other agreed basis, akin, in this respect, to a partnership. Dolan v. Dolan, 107 Conn. 342, 349, 140 A. 745; 33 Corpus Juris, p. 841 et seq.; 2 Words Phrases (2d Series) p. 1232. The contract between the plaintiff and the defendant was, manifestly, one of employment, contemplating, not a division of profits accruing from a common enterprise, but compensation for services rendered, contingent upon a successful consummation of the results of the services to be compensated for, and dependent, as to amount, not upon the profits from the purchase but a commission based upon a percentage on the purchase price. The issues do not require us to pass judgment, as to its good faith, or otherwise, upon the defendant's acts in supplanting the plaintiff as to rendition of services in the Derby transaction through the employment of Blake, nor are we called upon to determine whether those acts constituted a breach by the defendant of its contract with the plaintiff entitling him to recovery in an action founded upon such an alleged breach, instead of the present action, upon the contract, for services rendered thereunder. Howard v. Daly, 61 N.Y. 362, 369; Hostettler v. Mushrush, 194 Ill. App.? 58, 61; 3 Williston on Contracts, §§ 1318, 1337; 6 R. C. L., Contracts, § 389.