Opinion
No. CV-02-0468370 S
July 9, 2004
MEMORANDUM OF DECISION RE WHETHER DEFENDANT'S OFFICE MANAGER HAD APPARENT AUTHORITY TO BIND CORPORATION IN BREACH OF CONTRACT ACTION
Plaintiff Southern New England Telephone Company brings this complaint in two counts. In the first count, the plaintiff alleges that pursuant to a request from defendant Fairfaxx Corporation, a/k/a Fairfaxx Personnel, it sold and published yellow pages advertising on the latter's behalf in several telephone and business to business directories. The plaintiff further alleges that the defendant owes $12,870.23 as damages in breach of contract for its failure to pay for said advertisements. In the second count of the complaint the plaintiff claims that the defendant has been unjustly enriched through the advertisements for which payment has not been made.
In its Answer the defendant denies the plaintiff's allegations, and asserts that plaintiff's claims are barred by the doctrine of unclean hands.
Respective Claims of the Parties
The Plaintiff claims that the Defendant entered into four contracts for yellow page advertising through its agent, Ms. Gilham. One contract was signed on June 29, 1999, two contracts were signed on October 24, 2000 and one contract was signed on May 10, 2001. The Plaintiff claims that Ms. Gilham had apparent authority to enter into all of the four contracts on behalf of the defendant.
The defendant claims that the terms of all four agreements were so uncertain as to amount and timing of payments as to preclude valid contract formation. As to the second count of unjust enrichment, the defendant claims that the plaintiff has failed to prove that the defendant received any benefit from the advertising published in the Plaintiff's directory. Furthermore, the Defendant claims that Ms. Gilham did not have its' authority to enter into these contracts.
In addition to its' denial of the allegations, the Defendant claimed that the Plaintiff's claim is barred under the doctrine of unclean hands. The Defendant claims that the Plaintiff's failure to complete contracts with terms clear enough to effectuate valid contract formation provides a basis for finding that the Plaintiff comes before the court with unclean hands. The Defendant further claims that the Plaintiff charged an unwarranted twenty-five dollar fee which gives further evidence that the Plaintiff comes before the court with unclean hands.
Finally, the defendant argues that damages should not be awarded to the Plaintiff because the Plaintiff failed to meet its' burden of proving damages with reasonable certainty.
Review of Documentary Evidence Exhibit One
The plaintiff introduced into evidence Exhibits 1 through 6. Exhibit One — a computer print out, dated June 21, 2002, and entitled "Write-Off Screen Print Report" was introduced to establish that the unpaid balance of the Defendant's account with the Plaintiff is twelve thousand eight hundred seventy dollars and twenty-three cents ($12,870.23). The first page of the report states in pertinent part that the Defendant's last payment for seven hundred nineteen dollars and thirty-five cents ($719.35) was made on January 17, 2001. Pages two and three of the report detail how the total fees demanded by the Plaintiff are divided by Directory category.
Exhibits Two, Three, Four and Six
Exhibits 2, 3, 4 and 6 were the signed agreements that gave rise to this cause of action. They vary with respect to the dates they were executed and the type of advertising each ordered. However, there are elements of each exhibit that are common to all the agreements. Each agreement was signed by Ms. Denise Gilham under the following text:
I, the undersigned, hereby represent that I am duly authorized to enter into this contract on behalf of the Advertiser and do approve the above advertising or other agreed to services, which I have reviewed in detail via computer display. I agree to pay the amounts shown above. I understand, that I will receive by mail, an advertising contract which I agree will be incorporated into this Advertising Contract Summary Receipt. I agree that I will notify SNET Yellow Pages if the Advertising Contract is incorrect in any regard. I VERIFY THAT I HAVE REVIEWED, UNDERSTAND AND AGREE TO BE BOUND BY THE TERMS AND CONDITIONS ON THE REVERSE SIDE OF THIS ADVERTISING CONTRACT SUMMARY RECEIPT. This contract shall continue until withdrawn or rejected as provided in said Terms Conditions.
Each agreement has a page entitled Terms and Conditions that is referred to in the above text. These terms and conditions define acceptance, term, method of payment, and method of cancellation. Those terms are relevant to this dispute and they read as follows:
2. Acceptance of Application, Integration of Terms and Conditions
(a) This Application becomes a conditional contract when accepted by the Publisher and is deemed accepted on the final Date For Changes.
3. Term
(a) Advertiser hereby applies for the Advertising to be inserted in Publisher's next Directory issue and each subsequent Issue thereof, until cancelled pursuant to these Terms and Conditions or superceded by the subsequent written agreement. Publisher may, but is not required to, publish the Advertising in subsequent Directory Issues. If no written cancellation is received prior to the subsequent Issue's Final Date For Changes and if Publisher elects to publish the Advertising, Advertiser's liability for payment shall be the undiscounted rate for the Advertising contained in this Application plus any rate increases not exceeding 10%.
5. Cancellation or Modification
(a) Advertiser may cancel this Application without penalty by written notice received by Publisher at the Publisher's Address . . .
6. Payment of Charges
(a) . . . Advertiser's obligation hereunder arises for the amounts specified (plus tax) and at the times specified on Publisher's monthly invoices, which will be sent throughout the period of service.
(d) Advertiser agrees that if it has multiple advertising contracts with Publisher, all the advertising charges may be billed in one monthly invoice.
The above-quoted terms and conditions define the terms with respect to the term of the contract, the date it becomes final, the method through which it may be canceled by the advertiser, and the manner of payment.
Fairfaxx Personnel, the Defendant is listed as the contracting party and the party to be billed in each agreement.
Exhibit Two
Exhibit 2, an agreement between the Plaintiff and Defendant, is dated June 29, 1999. The first two pages of the agreement list the advertising ordered along with extensive information about the advertisement for internal reference. The extensive information listed with each advertisement included the product code, the category of the directory where it was to be inserted and the type of directory it was to appear in. The third page, entitled Advertising Application Summary summarized all the individual advertisements appearing on the first two pages. The following information appears on the Advertising Application Summary page:
Product Name Final Date Issue Date Monthly Amount For Changes
Bridgeport-Stratford 3/19/00 8/01/00 $232.00
Norwalk 8/27/99 2/01/00 $354.50
Stamford-Greenwich 8/27/99 2/01/00 $ 87.00
Milford 3/12/99 8/01/99 $ 49.00
Under this summary, are the words "old total," "net increase" and "new total." The old monthly billing total was six hundred and fifty-one dollars ($651.00) a month. It is clear that exhibit 2 does not represent the first agreement between the Plaintiff and Defendant. The relationship between the parties had been established before the time of these agreements. In fact, those previous agreements would be in force for some time after the signing of exhibit 2 since fees are not due on any account until the date of the directory publication.
The following page is entitled Advertising Contract Summary Receipt and is signed by Ms. Gilham. The final page is the Terms and Conditions page which lists the terms common to all the agreements.
Exhibit Three
Exhibit 3, an agreement between the Plaintiff and Defendant, is dated October 24, 2000. This exhibit relates to the Defendants' advertisement in the Norwalk directory. On three pages entitled Application for Directory Advertising, handwritten amendments have been added next to crossed out computerized information. Several fee amounts have been crossed out. On the third page at the bottom, it becomes clear that the handwritten amendments serve to change the advertising type ordered. The amendments made have the effect of reducing the fees that will be charged to the Defendant for subsequent advertisements in the Norwalk Directory. The monthly amount of three hundred fifty-four dollars and fifty cents ($354.50) is given as the monthly fee for the year 2000. This figure is consistent with the figure agreed to in exhibit 2. However, the next column that states the monthly charges for the year 2001 reads two hundred forty-eight dollars ($248.00). Ms. Gilham signed the bottom of page three, under the amounts stated above. The effect of exhibit 3 was to lessen the Defendant's monthly obligation to the Defendant by one hundred and six dollars and fifty cents per month ($106.50). The issue date of the 2001 Norwalk Directory, when these fees would take effect, was February 2001. The Defendant agreed to print an advertisement of correspondingly lesser value in that directory.
Exhibit Four
Exhibit 4, an agreement between the Plaintiff and Defendant, is dated October 24, 2000. The agreement was made on the same day as exhibit 3, and it serves a similar purpose. Exhibit 4, like exhibit 3, reduces the charges on the Defendants' Stamford account. On two pages entitled Application for Directory Advertising, handwritten amendments have been added next to crossed out computerized information. The monthly fee of eighty-seven dollars ($87.00) has been crossed out. Seventy-one dollars and fifty cents ($71.50) is written beside it. At the bottom of the second page the monthly amount of ($87.00) is given as the monthly fee for the year 2000. This figure is consistent with the figure agreed to in exhibit 2. However, the next column that states the monthly charges for the year 2001 reads ($71.50). Ms. Gilham signed the bottom of page two, under the amounts stated above. The amendments made reduce that will be charged to the defendant for subsequent advertisements in the Stamford Directory. The effect of exhibit 4 was to lessen the Defendants' monthly obligation to the Plaintiff by fifteen dollars and fifty cents per month ($15.50). The issue date of the 2001 Stamford Directory, when these fees would take effect, was February 2001. The Defendant agreed to print an advertisement of correspondingly lesser value in that directory. The Defendant agreed to print an advertisement of correspondingly lesser value.
Exhibit Six
Exhibit 6, an agreement between the Plaintiff and Defendant is dated May 10, 2001. The advertisement ordered is for a 3/16 page advertisement in the Fairfield County Directory. The Fairfield County Directory serves all of Fairfield County and has a directory lifetime of one year. The monthly fee for the advertisement was given as six hundred and fifteen dollars ($615.00). The issue date was stated as August 2001 with a Final Date for Changes of June 2001. The advertisement is considerably more expensive than those previously ordered by the Defendant. This difference may be due to the fact that this directory served all of Fairfield County, rather than only one city. Ms. Gilham signed and dated the bottom of the first page where the above-stated monthly fee was given. The second page of the agreement is the Terms and Conditions page common to all the agreements. The third page of the exhibit is a sample of the advertisement ordered.
Review of Relevant Testimonial Evidence
The foregoing exhibits were introduced during the testimony of James Dauria, the plaintiff's customer service specialist. Robert Dow, a sales representative for Yellow Pages testified that plaintiff's computer records lists Denise Gilham as the contact person for yellow pages advertising. He further testified that he contacted her by telephone to arrange a meeting with her. During their meeting at the defendant's facility, he reviewed the existing contracts with her, and explained the costs for the Fairfield directory. He testified that she agreed to the terms which she acknowledged by her signature on exhibit 6. Robert Dow testified that he dealt with no one else at the defendant company, and that the defendant company never informed him not to do business though Ms. Gilham.
Justin Tomborello testified that Ms. Denise Gilham is his Office Manager and that she is in charge of accounts payable and receivable. During his testimony Justin Tomborello stated that it has always has been his practice to arrange to have a SNET representatives make a presentation for advertising in a meeting with him, his business partner, and Ms. Gilham, and that thereafter he would authorize Ms. Gilham to enter into a contract with SNET only if he approved the terms of the contract. Mr. Tomborello testified further that prior to this litigation he has never seen nor authorized the contracts set out in exhibits one through six.
Concerning the record of payments on these contracts (from October 8, 1999 through January 17, 2001), Justin Tomborello acknowledged that it was his responsibility to oversee the operations of the business during this period, however, he does not review check payments. He further testified that his accounts payable are automated, and that although he reviews matters with his accountant at six-month intervals, he does not review the actual check payments.
The Issue of Apparent Authority
The Court shall first address the plaintiff's claim that Ms. Gilham had apparent authority to contractually bind the Defendant. The issue of apparent authority is one of fact to be determined [by the court] based on two criteria. Tomlinson v. Board or Education of Bristol, 226 Conn. 704, 734 (1993), citing Hollywyle Assn, Inc. v. Hollister, 164 Conn. 389, 396, 324 A.2d 247 (1973); Quint v. O'Connell, 89 Conn. 353, 357, 94 A. 228 (1915).
First, it must appear from the principal's conduct that "the principal held the agent out as possessing sufficient authority to embrace the act in question, or knowingly permitted [the agent] to act as having such authority" . . . Second, the party dealing with the agent must have "acting in good faith, reasonably believed, under all the circumstances that the agent had the necessary authority" to bind the principal to the agent's action.
Id., 226 Conn. 704, 734 (1993).
The court finds that the defendant through its President, Justin Tomborello provided Denise Gilham with apparent authority to contractually bind the corporation to the contracts in this case by 1) holding her out as the Office Manager for the corporation; 2) allowing her to sign advertising contracts prior to the ones at issue here; 3) permitting the corporation to make payments on the contracts from October 8, 1999 through January 17, 2001; and 3) never expressly informing SNET that she was not authorized to sign contracts on behalf of the corporation.
Furthermore, Mr. Tamborello never wrote to the Plaintiff to cancel any of the advertisements contracted for on June 29, 1999 and October 24, 2000 that were still in force. If the corporation maintained that the contracts were entered into without its authority, it is unclear why the corporation would continue advertising in five city directories at a cost of almost seven hundred dollars a month without protest from its executive officers. The testimony of Rob Dow, sales representative for the Plaintiff supports the claim that the Plaintiff was acting in good faith when it met Ms. Gilham on May 10, 2001 and that Ms. Gilham was not fundamentally mistaken as to her authority. Ms. Gilham identified herself as the office manager when the Plaintiff called the office of the corporation. She made an appointment to meet with Mr. Dow to discuss advertising in the 2001 Fairfield County yellow page directory, and then signed the contract.
Defendant's Claim of Incompleteness
The Court shall now address the defendant's claim that the agreements made on June 29, 1999, October 24, 2000 and May 10, 2001 were so incomplete as to their terms that valid contract formation did not occur. Specifically, the defendant claimed that the contracts did not provide clear commencement and termination dates, and payment terms. The defendant asserts that the lack of evidence of monthly invoices submitted by the Plaintiff supports his claim that payment terms were unclear, as payment was to be demanded by invoice. The defendant cites Paragraph 6(a) of the Terms and Conditions page which states; "[s]ubject to other provisions of this Application, Advertiser's obligation hereunder arises for the amounts specified (plus tax) and at the times specified on Publisher's monthly invoices, which will be sent throughout the period of services." The Defendant's argument rests on the claim that in the absence of invoices, monthly fees did not arise and since the Plaintiff did not submit invoice copies, the court is to assume that none were mailed.
Where the terms of a contract as alleged in the Complaint are put in issue by the Defendant's denial, the burden is on the Plaintiff to prove what the terms were. Vigorito v. Allard, 143 Conn. 70, 118 A.2d 906 (1955). To form a valid and binding contract in Connecticut there must be a mutual understanding on terms that were definite and certain between the parties. Ubysz v. DiPietro, 185 Conn. 47, 440 A.2d 830 (1981).
The court finds that clear terms for commencement and termination dates of the contracts are set forth in the Terms and Conditions. Paragraph 2(a) states that the Application for Advertisement is deemed accepted by the Plaintiff on the Final Date for Changes prior to the Publication Date. Each agreement lists a Final Date For Changes. Paragraph 3(a) of the Terms and Conditions states that the "[a]dvertiser . . . applies for the Advertising to be inserted in Publisher's next Directory and each subsequent issue thereof, until cancelled pursuant to these Terms and Conditions." The term of the contract is therefore ongoing until cancelled. Valid methods of cancellation are outlined in 3(a) and 5(a). Paragraph 3(a) states: "If no written cancellation is received prior to the subsequent issue's Final Date For Changes . . . Advertiser's liability for payment shall be the undiscounted rate for the Advertising contained in this Application plus any rate increases not exceeding 10%." Paragraph 5(a) states: "[a]dvertiser may cancel this Application without penalty by written notice received by Publisher . . ." If an advertiser wishes to cancel he may do so by written notice before the Final Date for Changes for the first or any subsequent Directories. If no cancellation notice is received, the Publisher may elect to continue publishing the advertisement and charging fees for publication. These terms define commencement and termination dates with clarity sufficient to effect contract formation.
The court finds that the Defendant's claim that the payment terms were unclear is flawed. The Application for Advertising clearly states that the advertisement will incur a monthly fee and that the life of a Directory is six months. It is clear from these two facts that the liability for each advertisement will be the monthly fee quoted on the agreement multiplied by six. After six months, the Advertiser may, by written notice, request that his advertisement not be reprinted. If he does this, the advertiser will incur no further charges. If the advertiser fails to make such a request, his advertisement may be republished for subsequent six-month terms. For every six-month term that the advertisement is republished, the advertiser will incur fees of the monthly fee multiplied by six.
Not only are monthly fees clearly stated on the face of the Application, the defendants' payment of those fees on a monthly basis from October 1999 to January 2001 gives evidence that the defendant corporation is charged with knowledge of the payment terms and is further evidence of the defendants' acceptance of the contract. Part payment of a debt by a debtor constitutes as admission by the person obligated to pay, of his liability for the whole debt upon which the partial payment is made, and justifies an inference of a new promise made at that time to the portion remaining unpaid. Broadway Bank Trust Co. v. Longley et al., 116 Conn. 557, 564 (1933), citing Murdock v. Waterman, 145 N.Y. 55. Performance by the offeree of the promise requested may constitute acceptance. Lewis A. Crossett Co. v. American Polish Corp., 97 Conn. 485, CT Page 10934 117 A. 415 (1922), unless the offeree exercises reasonable diligence to notify the offeror of nonacceptance. Restatement (Second) Contracts § 53(2). The "tender or beginning of the invited performance . . . is an acceptance by performance . . . Such an acceptance operates as a promise to render complete performance. Williston on Contracts § 6:26 citing Restatement ( Second) of Contracts §§ 30, 32, 58, 60. Where the offer to a bilateral contract requests a promise of specified action, and the offeree, instead of making the promise, performs or tenders the very act . . . of which he is expected to promise within the time that would have been permitted for accepting by giving the promise, there is valid acceptance. Williston § 6:26 citing State ex. Rel. Marsh v. Lum, 95 Conn. 199, 111 A. 190 (1920) (partial performance given similar effect). Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in the manner invited or required by the offer. Restatement (Second) of Contracts § 50(1).
The court finds that the terms of the contract were sufficiently clear to effect contract formation. The fact that the plaintiff and defendant had a business relationship prior to the making of the first agreement in issue here gives further evidence that the Defendant was knowledgeable about the terms of agreements made with the Plaintiff. Furthermore, the Defendants' payment of ten thousand seven hundred fifty-five dollars and sixty cents ($10,755.60) in a fifteen-month period after the signing of the first agreement functions as further evidence of acceptance of the contract.
The court finds that the defendant has breached the contracts made with the plaintiff. The court further finds that there is no evidence to support the application of the doctrine of unclean hands in this case.
Damages
The court finds that defendant Fairfaxx Corporation is indebted to plaintiff SNET in the amount of $12,820.23 as damages in breach of its contracts.
The court finds that the contracts do not provide for the payment of $50.00 in claimed late charges.
Clarance J. Jones, Judge