Opinion
02-18-1895
DWYER v. BONITZ.
Eugene Stevenson, for complainant. Gilbert Collins, for defendant.
Bill by David Dwyer against Hermann Bonitz. Decree for complainant.
Eugene Stevenson, for complainant.
Gilbert Collins, for defendant.
PITNEY, V. C. This is an action by an employe against his employer to recover compensation for services rendered under a written agreement. The reason for bringing it in this court is that a portion of the compensation—that which remains unpaid—depends upon the amount of profits for a stated term of the business in the conduct of which the services were rendered. The agreement was entered into between the parties on the 15th day of May, 1891, and provided that the complainant should enter into the employment of the defendant "for the period of three years from this date as general manager, to take charge of, carry on, and attend to" the business in question; and, after an agreement on the part of the complainant to perform certain services mentioned, about which there is no dispute, the defendant agreed to pay him a stated compensation of $120 a month, which has been paid. Then is found this clause: "And the said Hermann Bonitz also further agrees that, in case there should be any balance of profits from said business after paying all expenses thereof and six per cent. per annum on the capital invested therein by him, and the reservation of five per cent. to cover the depreciation in the value of the real estate and wear and tear of machinery, buildings, engine, boner, light and heating plant, gearings, beltings, and fixtures, that then, in such case, one-half of said balance or profits so remaining shall be paid to the said David Dwyer as additional compensation and salary, for his said services, the same to be ascertained from the books, and paid at the end of each and every year during said employment." At the time of entering into the agreement the defendant was not engaged in the business proposed to be carried on, which was, in fact, a manufacturing business. He was himself a manufacturer of machinery fitted for use in such a business, and the complainant was skilled in the business itself. He immediately, as the employe of the defendant, attended to the purchase of land and a building, and the construction and placing therein of the proper machinery and plant for carrying on the manufacturing business, and devoted himself thereto, to the satisfaction of the defendant, without interruption, from about the date of the agreement to the latter part of December in the same year, when the plant was substantially finished, and ready for work, and work was actually commenced therein. During all that time the complainant received his stated salary of $120 a month, and substantially, on the 1st of January, 1892, the actual business of manufacturing was commenced and carried on during the year 1892, during which, as is alleged by defendant, no profits were made. The books were kept by the defendant, and show on the 1st of January, 1893, a balance to the credit of "Profit and Loss" of $151.13. Then on the 30th of June, 1893, are these entries 'n the profit and loss account, made by defendant: "By small accts., $33.24; by merchandise profits, $3,846.77." These merchandise profits were arrived at by an inventory taken by the parties, about the fairness and accuracy of which there is no dispute. On the debit side of the profit and loss account are several charges of losses, amounting to $1, 190.40; and then are found these two charges: "To David Dwyer, profit, $1,515; to Herm. Bonitz, profit, $1,515;" after deducting which there still stood $189.26 of profit, which was carried forward to a new balance for the second half of the year 1893. On the same day defendant credited Mr. Dwyer, on Dwyer's private account, with "profit, $1,515." He had previously, on the 23d of June, advanced him on account of anticipated profits, and charged to his account, the sum of $200, and that left a balance of $1,315 to his credit. He subsequently, on August 5th, paid him $100, on September 22d, $65, and on November 18th, $100; making $465, —all charged to Dwyer against the credit to him of $1,515 of profits. These payments were all in addition to his regular salary. The occasion of their being made was that Mr. Dwyer was either contemplating or actually engaged in, the building of a dwelling house for his use. It is for the recovery of the balance due upon this balance to the credit of profit and loss on June 30, 1893, that the complainant brings this suit. The answer made by defendant is that the time fixed by the written agreement in the clause thereof above recited for the ascertainment and payment of the one-half of the net profits was the end of each and every calendar year, and that the profits ascertained on the 1st of July were subject to be reduced by any losses that might occur between that and the 1st of the next January; and that, in fact, such losses did occur, showing more than enough to wipe out all the profits in the first six months of the year, and the question is whether this contention on the part of the defendant can be sustained. The argument on the part of the complainant is that his employment commenced on the 15th of May, 1891, and that, strictly speaking, he was entitled to an ascertainment of the profits at the end of one year from that date, and thereafter yearly; that such is the result of the language used in the clause before referred to, viz. "at the end of each and every year during said employment" And he says and swears, though it is denied by the defendant, that the time for ascertaining the profits was, by consent, changed from the 15th of May to the 1st of July; and in support of his contention the complainant relies upon the fact that the defendant did, of his own motion, credit the complainant with the sum of $1,515 profits on the 30th of June, 1893, which was a practical interpretation of the contract in accordance with complainant's view, and that the giving complainant credit at that time can only be accounted for on the ground that the defendant felt that it was due to him under the terms of the contract in furthersupport of his contention, complainant produces the following letter from the defendant to him, dated July 24, 1803, which it will be perceived antedated some of the payments made to him on account of profits above referred to: "Passaic, N. J., July 24, 1893. Mr. David Dwyer, Lodi—Dear Sir: In answer to your call for 500 dollars as part of the profit of the business based on the inventory of July 1/93, I deem it necessary to explain matters to you, so as to beware you of troubel & embarrassments, which you would undoubtedly have to meet, if you enter into a contract at this time either for the purchase of a property or building of a house. If the time had been running along as they did the first 4 months of this year, there would not been the least objection to your drawing at sight your share of the profits as invoiced July 1/93, but since that time the state of business turned from bad to worse, and the values of our merchandise have declined considerable, so much in fact that a new inventory taken today would not only show from 15-20 per cent. less values, but wipe out the largest part, if not all, of the profits shown July 1/93. It is impossible at present for anybody to tell how long this state of affairs will continue, and when values of Mdse. will have reached bottom. Until a change for the better is in sight, it would not be wise to enter into obligations that you cannot meet with funds on hand. I have during month of August to meet a bank loan of 3,000 dollars, and indications are now that I canot figure on a renewal, but may have to take it up. It will require every cent I can gather up to that time to pay for that, besides meeting running bills & expenses; while the small sales in June & July are pointing to very small collections. For two years I have not drawn one dollar capital out of the business, Out, besides leaving all intress stand, have added over 8,000 dollars by outside earnings & sales of bonds, so as to allow the business to run financially independent. We do not meet a panic like the present one very often, but when it does come all of us ought to be ready to carry our share of it, and learn to get along the best we can. I am sorry if I have to advise you to postpone your present plans for a few months till we see daylight again. As soon as the business shows any marked improvement from present stagnation, I will gladly offer you to draw on your credit as it appeared July 1/93. Yours, truly, Hermann Bonitz." Complainant contends that the clear result of this letter, taken as a whole, is an admission by defendant that the profits ascertained and credited to him on the 1st of July were his legal dues under the agreement. One other circumstance is shown by the books which makes in favor of the defendant, viz. that as far as appears, nothing was charged on the 30th of June for "five per cent to cover the depreciation in the value of the real estate and wear and tear of machinery, buildings, engine, boiler, light and heating plant, gearings, belting and fixtures." At the end of the year 1893, $1,532.52 were charged to profit and loss on this account. If the yearly rest to ascertain profits was to be taken on the 1st of July, then that was the proper time to charge 5 per cent. for depreciation.
One other matter requires notice. The complainant attacks the accuracy of the accounts under which the item of profits under merchandise, $3,846.77, was arrived at on the ground that the defendant, in addition to the ordinary expenses of the business, charged for his own services, keeping books, etc., $67.50 a month. Complainant contends that under the language of the clause of the agreement before cited he is not entitled to any credit for his own services. The principal question submitted is not without its difficulties. But upon the whole case I come to the conclusion that the safer course is to hold the defendant to the entries on his books and his own interpretation of the contract, and to charge him with the credit of $1,515, and with the one-half of $189.26 carried forward—$94.63; total $1,609.63; and to credit him with cash payments, $465, and with the one-quarter of $1,532.52 depreciation on the plant, etc., for the current year, which is $383.13, making $848.13; leaving a balance due complainant of $761.50.