Opinion
No. 27845.
June 20, 1950.
APPEAL FROM THE ST. LOUIS CIRCUIT COURT, WILLIAM K. KOERNER, J.
Francis R. Stout, St. Louis, for appellants.
Vincent M. Flynn, and Thomas Rowe Schwarz, St. Louis, for respondent.
This action was instituted as a suit in equity seeking an accounting from the defendants who were doing business as partners under the name of Perma Stone Company. The petition alleged that the partners were indebted to the plaintiff for commissions due on contracts that he had obtained for them as a salesman and sales manager and that by reason of this he had an interest in the income of the partnership from those contracts, but that the income was being diverted to other business enterprises and that proper books were not kept by the defendants. In addition to a prayer for an accounting for his share of the gross receipts the plaintiff also prayed that the defendants be enjoined from the commingling of funds or the diversion of funds from the Perma Stone Company. The defendants denied that they were indebted to the plaintiff and set up a counterclaim in which they averred that the plaintiff had by reason of certain fraudulent acts damaged them in the sum of five thousand dollars.
The court, after hearing some evidence, held that the case involved a lengthy accounting and directed that a reference be had. The appointed referee, after hearing the evidence, made a finding of facts and recommended to the court that the plaintiff be awarded a judgment against the defendants in the sum of $1,903.56 and that the defendants recover nothing on their counterclaim. The defendants filed exceptions to the report of the referee and the exceptions were overruled by the court which approved the referee's report and entered a judgment in accordance with the recommendations made.
The evidence disclosed that Dee. F. Durbin and his wife were partners in the business of applying to the exterior of buildings a concrete mixture molded in the shape of stones. The product applied was known as Perma Stone and was intended to give the building upon which it was used the appearance of a stone structure. Dee. F. Durbin, who apparently managed the business, employed McKinley, the plaintiff, as their sales manager on March 10, 1946, and up to that time the defendants had done very little work with Perma Stone. It was agreed in writing that McKinley should be paid 15 per cent commission on all sales made by him and 5 per cent commission on all sales made by other salesmen. The other salesmen were to receive 10 per cent commission, half of which was paid when the contracting customer had paid 10 per cent of his contract to the Perma Stone Company and the remainder of the commission was paid when 50 per cent of the sum due under the contract sold had been collected by the company. The work of McKinley entailed the hiring of salesmen, selling and figuring contract prices on prospective work.
The plaintiff worked for the defendants until March 22, 1947, at which time a dispute arose between the plaintiff and Durbin over orders Durbin had given to one of the salesmen, and by agreement of the parties the contract of employment was terminated. Plaintiff stated that it was understood that he was to be permitted for a period of thirty days after March 22 to close some contracts for which he had been negotiating. During the whole period of plaintiff's employment and shortly thereafter there were forty-five contracts closed. On some of them the plaintiff was entitled to full commission, some of the contracts had been canceled, and some had been renegotiated and adjusted. They totaled in gross $274, 676.30, and the plaintiff claimed that there was still due him $3,901.76 in earned commissions.
In testifying, Dee F. Durbin did not deny that commissions had not been paid to the plaintiff on seven of the contracts obtained. He stated, however, that he lost money on several jobs plaintiff turned in and one of these was on a building known as The Truth Center. This contract had been signed by McKinley after the termination of his own contract of employment.
A salesman named Swindle testified that he had figured the Truth Center job at a price of $9500, excluding one wall, but that price was not acceptable to the customer, and McKinley refigured the job at $8500 and included the wall that had been first excluded. Durbin knew that McKinley had reduced the original bid but said he did not know how much it had been reduced and that he made no profit on the job when he should have made $2,168.75.
There was testimony that McKinley underestimated several jobs and that $668 on one job could not be collected because in selling it the plaintiff had falsely represented that the product was waterproof. McKinley testified that when properly applied Perma Stone was waterproof. The testimony was detailed as to each account filling some six hundred pages of transcript, but the above is the general tenor of the evidence which will be more fully set out in considering the points raised.
The findings and recommendations of the referee are as follows:
"1. That the contract of employment between defendant and plaintiff was terminated by the agreement of the parties thereto on March 22, 1947.
"2. That, with respect to contracts for the installation of Perma Stone which were not performed and were canceled, McKinley is not entitled to any commission.
"3. That with respect to contracts for the installation of Perma Stone, dated after March 22, 1947, McKinley is not entitled to any commission. (There was no showing that any of the prospects as to which Durbin agreed to pay commissions to McKinley if sold after March 22, 1947 were in fact sold.)
"4. That, with respect to contracts for the installation of Perma Stone sold prior to March 23, 1947 on which the work was done after that date or payments made after that date, McKinley is entitled to commissions.
"5. That, with respect to contracts with Perma Stone Company of St. Louis involving construction work, McKinley is entitled to commission.
"6. That, with respect to contracts on which McKinley was originally entitled to commissions which were thereafter adjusted or renegotiated, McKinley is entitled to commissions on the renegotiated or adjusted amount.
"7. That, with respect to contracts for the installation of Perma Stone in the State of Illinois which were sold through Perma Stone Company of St. Louis, McKinley is entitled to commission.
"In accordance with the foregoing, the Referee finds that plaintiff is entitled to commissions as follows on the contracts listed:
"Balance due McKinley "Contracts which were renegotiated or adjusted:
"H. J. Williams $203.70 "G. Favazza 52.23 "Walter Lieberman 95.00
"Contracts obtained prior to March 23, 1947 on some of which work was done or payment made after that date, and on some of which work was in Illinois:
"A. E. Jones 75.00 "Harry W. Mueller 50.08 "William Fedorchak 109.75 "Frank J. Schmidt 92.15 "Harry Shapiro, Jr. 49.85 "R. H. Hessenflew 82.50 "D. E. Colborn 107.50
"Contracts on which no defense was offered as to liability for commissions:
"John J. Gruhala 18.00 "Thomas Vohsen 3.00 "Williard L. Cunningham 76.25 "George W. Bacon 18.10 "John W. Schmermund 117.00 "Frank A. Malone 63.75 "James J. Bodner 10.20
"Miscellaneous other contracts on which McKinley is entitled to be paid:
"Theodore Rischbieter. Durbin specifically agreed to pay full commission on this contract. 144.50
"Jesse Kitchen. Only defense offered was that this contract involved construction work. 181.10
"Sansone. Durbin contended that he obtained this contract. The Referee finds that this party was in fact a prospect of McKinley's on which McKinley is entitled to full 15% commission 303.90
"Andrew Pizone. Construction contract for $1000, on which commission has not been paid. Commission on contract for $2675 paid in final settlement. 50.00
"On the following contracts, it is found that McKinley is not entitled to commissions for the reasons noted:
"a. Contracts canceled "Lou Showers "W. U. Parker "Paul Kraichely "Thurman Corey "John J. Globan, Jr. "Ernest A. Lorenz "Charles W. Bransonn "Louis E. Patterson "R. F. Culbertson "Herman Dohrman
"b. Contracts sold after March 22, 1947, the date of termination of McKinley's employment "Oliver J. Pellom "Truth Center Church "Frank Zykan "Hrin "Russell A. Sisler "Paul Kraichely
"c. Miscellaneous "Mrazek Moving and Storage Co. Balance due McKinley was paid in settlement check of April 7, 1947.
"Cora Dieckmeyer. One contract was a construction contract with Ideal Improvement Co. Balance of commission on other contract in amount of $13.75 paid in settlement check of April 7, 1947.
"Albert and Louise Baroni. Only $1244 paid on this contract. McKinley has received full commission due him.
"Raymond C. Harris. While the testimony on this contract is very confusing, it appears that McKinley was paid $72 commission on this contract in January, 1947 and was credited with an additional $72 in the final settlement. Thus, any balance due McKinley was paid in final settlement check of April 7, 1947.
"Clarence Kroenlein. McKinley's commission paid during the time of his employment.
"lra Graham. Job still pending. Not cancelled. Not performed.
"W. C. Todd. No work done. No record of contract.
"Walter W. Wachter. No evidence that McKinley was entitled to any commission on this contract.
"With respect to defendants' counterclaim against the plaintiff, the Referee finds that the plaintiff was not guilty of wrongful and fraudulent action to the injury and damage of the defendants as alleged in the defendants' counterclaim.
"Wherefore, pursuant to the foregoing, the Referee respectfully recommends to the court that judgment herein be entered in favor of the plaintiff and against the defendants on plaintiff's petition in the amount of $1903.56, and for the costs of this action.
"The Referee further recommends that with respect to defendants' counterclaim judgment be entered for the plaintiff."
As their first assignment of error the defendants contended that the court was without jurisdiction to enter a judgment on a legal issue in the absence of a finding that some equitable right of the plaintiff had also been violated. It is true that one may not by the simple device of pleading for equitable relief have equity decide that which is properly on the law side of the court in the absence of equity in the case. If such were not the law a defendant might be improperly deprived of a right of trial by jury. In the case of Krummenacher v. Western Auto Supply Co., 358 Mo. 757, 217 S.W.2d 473, Id., Mo.App., 206 S.W.2d 991, it was held that in a suit to abate a nuisance by injunction, equity was without jurisdiction to enter a judgment for damages after it had found that no nuisance existed and the case was remanded for a jury trial on the question of damages.
The difference, however, between that situation and the one presented here is that this is an action for an accounting and it was referred because it required the examination of a long account. If the procedure employed by the court deprived the defendants of any rights at law then their complaint is well taken. Equity jurisdiction over cases requiring accounting does not depend upon the length and involvement of the account but usually upon some trust or fiduciary relationship between the parties. State ex rel. Cockrum v. Southern, 229 Mo.App. 749, 83 S.W.2d 162; Bennett v. Crane, 220 Mo.App. 607, 289 S.W. 26; American Button Co. v. Weishaar, Mo.App., 170 S.W.2d 147. The relationship of employer and employee on the facts here presented do not create such a relationship but where there is a long and involved account requiring a reference under Section 1142, Mo.R.S. 1939, Mo.R.S.A. § 1142, the distinction between legal and equitable jurisdiction has about disappeared.
A brief examination of the evidence and the report of the referee will disclose the account was too long and much too involved for a jury to properly consider; so if no equitable relief had been sought a reference would have been necessary. This is true even though the defendants by way of counterclaim pleaded for damages caused by alleged wrongful acts of plaintiff. Such a claim states an action ex delicto, not of itself subject to compulsory reference, but as it is here pleaded it is incident to the account sued on and in such a case it is the petition which determines the character of the action. Ittner v. St. Louis Exposition Music Hall Ass'n, 97 Mo. 561, loc. cit. 568, 11 S.W. 58; Reed v. Young, 248 Mo. 606, 154 S.W. 766.
It follows that no right to which the defendants were entitled in the trial of the case has been lost or abridged in any way because the case was called a suit in equity since it was tried in the same manner as a suit at law for accounting. Neither has the scope of appellate review been lessened for the former rule that appellate courts were limited in reviewing the findings of a referee to the same extent that they are limited in reviewing a jury verdict no longer prevails. We now review the law and the evidence. As stated in Baerveldt Honig Construction Co. v. Dye Candy Co., 357 Mo. 1072, 212 S.W.2d 65, loc. cit. 67: "There is no sound reason why the same procedure cannot be followed in law cases tried by the court or a referee as in equity cases, that is, have the appellate court review the case de novo and if it be found that the trial court erred enter such a judgment as ought to be entered and not remand the case for retrial."
It must be held under the facts presented that the court did not err in entering the money judgment after giving no equitable relief. If this were not true then this court would be in the rather absurd position of remanding a case with directions to do that which has once been properly done.
The second assignment is that the court erred in not finding for the defendants on their counterclaim in the sum of $3,686.75. It is contended that their claim was supported by the preponderance of the evidence and that if a money judgment can be entered in this case the defendants should prevail on their claim. The major portion of the damages claimed is $2,168.75 on the Truth Center job. This contract was entered into by McKinley and a salesman named Swindle and the defendants knew before they engaged upon the work that the price had been reduced from the original bid. Durbin stated that they lost money on the job, but he explained this conclusion by saying that he did not make his normal 20 per cent profit. The failure to make a profit is not a loss. If the cost of completing the Truth Center job was more than the contract price then the difference between these two figures would have been a loss to the defendants. But on this point there is no proof and consequently no loss was shown.
There is another contract called Favazza job involved in the counterclaim and on this one there is an unpaid balance of $668 which Favazza will not pay. He contends that Perma Stone was represented by McKinley to be waterproof and a thirteen-inch brick wall to which it was applied is damp. Favazzo's daughter testified that the wall was dry before the Perma Stone was put on but that it has been damp since.
A similar claim is made on the contract sold to a Mr. Bold. McKinley told Bold that the Perma Stone was waterproof, but the only evidence offered was that $400 remains unpaid on the contract. In discussing the two contracts mentioned above, plaintiff stated that when properly applied Perma Stone was waterproof. He also testified that a formerly dry brick wall would not be rendered damp by the outside application of Perma Stone and that such assertion was ridiculous since the wall was not in any way penetrated by the application.
Two other items totaling $450 are claimed because the job was not figured properly according to defendants' witnesses. There is nothing in the record to indicate that the jobs were willfully misfigured or that the plaintiff wrongfully did anything in connection with the work. There is nothing to indicate that if mistakes were made they were other than those which might normally be expected in the course of defendants' business.
The counterclaim is predicated on the theory that plaintiff as an agent of the defendants is chargeable with loss due to his negligence. There appears to be little need of discussing this point for there is no evidence of negligence or proof of wrongful acts or disloyalty for which the plaintiff should be chargeable in damages to his former employers. In fact all of the evidence shows that plaintiff brought about a tremendous increase in the volume of defendant's business. If we take Durbin's estimate of 20 per cent as the normal profit made on Perma Stone the defendants must have netted over $50,000 on the sales made by the plaintiff even if they suffered the losses they claim, and the judgment appears to be for the right party on all of the issues submitted.
Finding no error in the trial below, it is the recommendation of the Commissioner that the judgment be affirmed.
The foregoing opinion of WOLFE, C, is adopted as the opinion of the court.
The judgment of the circuit court is accordingly affirmed.
ANDERSON, P. J., and HUGHES and McCULLEN, JJ., concur.