Vaughan v. American Asso. Co. Inc.

Full title: VAUGHAN v. AMERICAN ASSOCIATED COMPANIES INC. et al

Court: Court of Appeals of Georgia

Date published: Apr 11, 1952

86 Ga. App. 672 (Ga. Ct. App. 1952)

72 S.E.2d 149

Opinion

33950.

DECIDED APRIL 11, 1952. ADHERED TO ON REHEARING JUNE 6, JULY 18, 1952. REHEARING DENIED JULY 29, 1952.

Suit on contract; from Fulton Superior Court — Judge Pharr. October 31, 1951.

Sutherland, Tuttle Brennan, C. Baxter Jones Jr., for plaintiff in error.

Thomas B. Branch, Herbert J. Haas, Joseph F. Haas, contra.

1. The contract between the plaintiff and the defendants provided that the plaintiff's percentage of profits was to be computed "as shown on the books of the company." The auditor and the court reviewing the auditor's findings erred, under the pleadings and evidence, in holding that the expression in quotations is explainable by prior practices, waivers, and agreements, and in not holding that the plaintiff's percentage of profits is to be computed from data shown by the books of the company and not according to an irregular formula of the defendant company not shown generally on the books of the company but only on a specific page where the results of the formula were placed.

2. The court, in passing on exceptions of law to the auditor's report and trying issues of fact by agreement, erred in making findings of law and fact contrary to the rulings of this court herein.

DECIDED APRIL 11, 1952 — ADHERED TO ON REHEARING JUNE 6, JULY 18, 1952 — REHEARING DENIED JULY 29, 1952.

This is the second appeal of this case. For the first decision on demurrers to the petition see American Associated Companies v. Vaughan, 76 Ga. App. 121 ( 44 S.E.2d 921). After the case was returned to the trial court, the plaintiff filed the following amendment: "1. By striking Paragraph 2 and inserting in lieu thereof, the following: 2. During 1941, plaintiff entered into a verbal contract of employment effective June 1, 1941, with defendant corporation, acting by and through Armand May, president of the defendant corporation, which contract of employment provided that plaintiff should manage the converting department of the defendant corporation, and for his services should receive a salary of $300.00 per month plus 20% of the net profits of the converting department. 2. By striking Paragraph 3 and inserting in lieu thereof, the following: 3. In 1942, the contract mentioned in Paragraph 2, above, was modified by plaintiff and by defendant corporation, acting by and through Armand May, president of defendant corporation, effective January 1, 1942, to provide that in the future plaintiff for his services should receive a salary of $300.00 per month plus 17 1/2% of the net profits of the converting department. 3. By striking Paragraph 4 and inserting in lieu thereof, the following: 4. Under the contract mentioned in Paragraphs 2 and 3, above, the plaintiff and the defendant corporation, acting by and through Armand May, president of the defendant corporation, agreed that the net profits of the converting department would be determined by deducting from the gross profits of said department received by the defendant corporation, the expenses of said department paid by the defendant corporation, the expenses of striking Paragraph 8 and inserting in lieu thereof, the following: 8. Plaintiff several times sought to have Armand May, president of the defendant corporation, C. M. Brown, treasurer of the defendant corporation, and William L. Plunkett, bookkeeper of the defendant corporation, explain to plaintiff the method used by the defendant corporation in computing the share of the profits of the converting department to which plaintiff was entitled under the said contract of employment, but plaintiff received from each of them only vague and complicated explanations which he did not understand, and plaintiff alleges on information and belief that the amounts paid plaintiff by defendant corporation from time to time to cover plaintiff's share of the profits did not equal his full share of the net profits of the business in accordance with the contract of employment. 5. By adding to the end of Paragraph 11 the following sentence: The names of the officers of the defendant corporation acting for and on behalf of the defendant corporation in making the contract of employment and promises referred to in this paragraph are set forth in Paragraph 2, 3 and 9, above."

The case was referred to an auditor, who on October 31, 1949, allowed an amendment by American Associated Companies Inc. to its answer, as follows: "1. For some time prior to the 1st day of January, 1941, plaintiff, George M. Vaughan, was employed in what was known as the converting department of defendant American Associated Companies, Inc. 2. The person in charge of said converting department was one H. C. Allen, Jr. 3. The said H. C. Allen, Jr., gave notice of his intention to leave the employ of said American Associated Companies, Inc. 4. The defendant American Associated Companies, Inc., acting through its president, Armand May, made an offer to plaintiff, George M. Vaughan, to make him head of said converting department. Verbal negotiations resulted in an exchange of letters between the said Vaughan and the said May, outlining the terms of the employment of the said Vaughan; said letters are attached hereto as Exhibits 1 and 2. 5. Said Vaughan entered upon and continued the performance of his duties until the month of August, 1941, when the said May, acting for the defendant American Associated Companies, Inc., wrote the said Vaughan the letters attached hereto as Exhibits 3, 4, 5 and 6, outlining terms under which the said Vaughan would work thereafter. 6. The said Vaughan acquiesced in each change of the terms under which he would work and thereafter worked under said changed terms. 7. As will be observed from said letters attached hereto as Exhibits, the said Vaughan was to share in the profits of said converting department. The profits of said department were at all times determined by making certain set and determined charges and deductions. 8. After the said Vaughan had worked under said arrangements for a short period of time he raised the question as to the method of determining the profits of said converting department and he was informed as to the formula by which said profits were determined. 9. Thereafter the said Vaughan continued to work for the defendant American Associated Companies and was paid his share of the profits of the converting department as determined by the formula which had been fully explained to him. 10. The said Vaughan raised the question of the terms under which he was working in the early part of 1943 and on the 14th day of December, 1943, the said May, acting for the defendant American Associated Companies, Inc., wrote him the letter attached hereto as Exhibit 7. Subsequent letters relating to the terms of said Vaughan's employment are attached hereto as Exhibits 8 and 9. 11. Thereafter the said Vaughan continued to work for the defendant American Associated Companies and was paid his share of the profits of said converting department as determined by said formula which, on numerous occasions, had been explained. 12. During the year 1945, the plaintiff Vaughan determined to leave the employ of defendant American Associated Companies, Inc., and enter business on his own account. This came to the attention of defendants when they learned that the said Vaughan was persuading certain of the employees of the defendant American Associated Companies, Inc., to accept employment from him in his new venture. 13. Thereafter discussions were had by the said Vaughan and employees of the defendant American Associated Companies, Inc., as to the terms under which the said Vaughan would leave the employ of said American Associated Companies, Inc. The questions involved, principally, were the questions of the said Vaughan enticing away employees of the defendant American Associated Companies, Inc., and what should be paid the said Vaughan on account of orders that he had sold but which had not been shipped by the time he left the employ of said American Associated Companies, Inc. No question was raised in the discussions as to the fact that the said Vaughan would receive his share in the profits of the converting department of the said American Associated Companies, Inc., for the fiscal year of said company ending September 30, 1945, according to the formula that had been theretofore followed in determining such profits. The contract attached to plaintiff's petition as Exhibit 'A' was the result of the discussions between the parties. 14. It was not the intention of the parties to the contract attached to plaintiff's petition as Exhibit 'A' that there should be any figuring of any profits of said converting department back of or for the fiscal year of American Associated Companies, Inc., ending September 30, 1945, or that any different formula should be used in determining the profits of said department than the formula that had been uniformly used up to that time. 15. On the contrary, said parties to said contract attached to the plaintiff's petition as Exhibit 'A' intended that the said Vaughan should be paid the figure shown on the books of American Associated Companies, Inc., to be the said Vaughan's share of the profits of said converting department. 16. At said time, the books of the American Associated Companies, Inc., showed Vaughan to be entitled to the sum of $2,282.80 as his share of the profits of said converting department for the year ending September 30, 1945, and in accordance with the terms of said Exhibit 'A' said sum was paid to, and accepted by, said Vaughan on December 6, 1945. 17. The only thing remaining to be done by the defendants was to carry out the remaining terms of said contract attached to plaintiff's petition as Exhibit 'A' which defendants have done or offered to do. 18. In accordance with the terms of said Exhibit 'A' defendant, American Associated Companies, Inc., on the 9th day of January, 1946, paid to said Vaughan his share of the profits of said converting department for the months of October and November, 1945, in the amount of $579.03, and on the 24th day of April, 1946, tendered the amounts due for December, 1945, and January, 1946, in the amount of $1282.45, which was the amount that he was entitled to receive according to the uniform practice that had theretofore been followed by the parties. Said tender was refused. Defendants admit that the said Vaughan is entitled to receive said amount of $1282.45, and renew their offer to pay him said sum. 19. No variation has ever been made in the method of determining the profits of the converting department of American Associated Companies, Inc., from the time that the said Vaughan became the head of said department and the time he left the employ of said company and the method used in determining said profits was on several occasions explained to the said Vaughan and he knew that all payments of profits made to him were determined by the use of said formula. 20. The employment of the said Vaughan by the American Associated Companies, Inc., was always for an indefinite term and could have been terminated at any time by either of said parties. 21. This defendant denies that any amount other than said sum of $1282.45 is due the said Vaughan and denies that he is entitled to any accounting to determine the profits of said converting department back of the 30th day of September, 1945."

The auditor made findings as follows: "(1) That on July 1, 1941 (date stipulated between parties), George M. Vaughan, under an oral contract of employment, began working for the American Associated Companies, Inc., . . (2) That under the terms of the said oral contract George M. Vaughan was to be compensated by receiving a salary of $300.00 per month plus a sum equal to 20% of the net profits of the Converting Department of American Associated Companies, Inc., of which said department he was manager. (3) The employment conditions as set forth in Finding of Fact number (2) above continued until January 1, 1942, on which date the oral contract was amended orally by mutual consent of the parties so as to reduce the percentage of net profits of the converting department which the said Vaughan was to receive from 20% to 17 1/2%. (4) That the said Vaughan during the period of his employment by the American Associated Companies, Inc., received periodically from his employer statements of the sums which the said company stated were the profits of the converting department. (5) That the said Vaughan questioned the manner of arriving at the sums stated by the company to be the profits of the converting department by asking employees and officials of the company to explain to him the meaning of the various entries on the statements so furnished him. (6) That explanations of the said entries were made to Vaughan by the employees and officers of the company and that the explanations were not fully understood by Vaughan. (7) That the said Vaughan fulfilled to the satisfaction of the company the duties required of him under the terms of his employment. (8) That Vaughan was paid and accepted without protest during the continuation of his employment by American Associated Companies, Inc., various amounts represented to him by the company to be his share of the profits under the terms of the oral contract. (9) That all of the books, vouchers and records of the business of the converting department managed by Vaughan were kept by the officers and employees of the company at its principal place of business in Atlanta, Georgia, located physically on the same premises as those occupied by the converting department, full access to which said books, vouchers and records were available to Vaughan at all times during the period of his employment, and further that Vaughan did not during the course of his employment make any demand to be allowed to examine said books and records. (10) That on December 5, 1945, Vaughan entered into a written contract with American Associated Companies, Inc., and Armand May, which said contract embodied the terms of the original oral contract and added to the original oral contract certain provisions not covered by the oral contract, and that the said written contract was attached to the plaintiff's petition and marked Exhibit 'A'. (11) That the rights and obligations of the parties to the said contract were as follows: All parties to the contract acknowledged that since June 1, 1941, Vaughan had been employed by The American Associated Companies, Inc., as manager of the converting department of the said company receiving $300.00 per month and 17 1/2% of the net profits of the said department in accordance with the practice heretofore followed by the company; both parties acknowledged that Vaughan was desirous of entering into another business and had tendered his resignation to the company and that the company had accepted the resignation subject to these terms:- That Vaughan was to leave the employ of the company immediately and was not to interfere in any wise with any employee of the company except Mrs. Fay Peebles; that the company would purchase from Vaughan at par value, plus accrued dividends, Vaughan's 115 shares of Prior Preferred stock of the company; that Vaughan was to receive: (a) A settlement of his share of the profits of the converting department through September 30, 1945, as shown on the books of the company audited and found correct; plus (b) A settlement of his share of the profits of the converting department for the months of October and November, 1945, in accordance with the practice heretofore followed by the company and Vaughan in ascertaining the profits; such share to be paid Vaughan on or before December 31, 1945; plus (c) His share of the profits of the converting department for the months of December, 1945, and January, 1946, as well as the sum of $300.00 as salary for December, 1945, it being stipulated that he had already received the $300.00 salary item for the months of October and November, 1945. It was further stipulated that orders for merchandise in the amount of approximately $575,000.00 were then on the books as being orders for goods of the converting department and that the profits of the department to be received by Vaughan for the period of December, 1945, and January, 1946, should be the profits on those orders then on hand and to be shipped and accepted by the customers of the company. It was further stipulated that Vaughan would be charged with 17 1/2[%] of any loss sustained on such orders by the converting department and that Vaughan was to receive no share of profits nor bear any share of losses for orders or purchases made by the company between December 5, 1945, and January 31, 1946, with the exception of $575,000.00 in estimated orders then on hand. It was further agreed that if the converting department suffered losses for shipments made prior to September 30, 1945, or for the period ending November 30, 1945, or for the period ending January 31, 1946, on which shipments the converting department has been credited with profit, Vaughan was to be charged his proportion of such losses and if Vaughan had already received the profit when the loss was ascertained, that Vaughan would repay his share of such loss; and that if Vaughan did not agree to the American Associated Companies' figures as to any such losses the accounting firm of Peat, Marwick, Mitchell and Company would determine the amount of the loss and Vaughan and the defendant's would share equally the cost of the audit. Vaughan was not to interfere with orders on hand in any department, any of the company's sources of supply for orders now on hand, or with any bleacheries with which the company was conducting its business regarding unfilled orders; and it was finally agreed that upon payment to Vaughan under the terms of the agreement the company was to be under no further obligation to Vaughan. (12) That the written contract of December 5, 1945, called for payment of a settlement to Vaughan of the amount as shown upon the books of the company as being his unpaid balance as of September 30, 1945, and that the amount as shown on the said books was not subject to any deductions but was a fixed figure. (13) That the balance as shown on the books of the company as the amount to which Vaughan was entitled as of September 30th, 1945, was the sum of $6,470.09 toward payment of which Vaughan received cash payments of $2,282.80. (14) That the written contract of December 5, 1945, called for payment to Vaughan of a settlement for his share of the profits of the converting department for the months of October and November, 1945, in accordance with the practice theretofore followed by the company and Vaughan in ascertaining said profits. (15) That Vaughan's share of the profits of the converting department for the months of October and November, 1945, amount to $579.03. (16) That the written contract of December 5, 1945, called for payment to Vaughan of a settlement of his share of the profits of the converting department for the months of December, 1945, and January, 1946, in accordance with the practices followed by the company and Vaughan in ascertaining the profits. (17) That Vaughan's share of the profits of the converting department for the months of December, 1945, and January, 1946, amount to $1,391.92. (18) That the total of Vaughan's share of the profits of the converting department for the months of October, November and December, 1945, and January, 1946, was $1,970.95. (19) That to apply to the sum set forth in Finding (18) above Vaughan received in payments made for his benefit $4,349.53 which was $2,378.68 in excess of the sum to which Vaughan was entitled. (20) That the accounting procedures of American Associated Companies insofar as they determined net profits of the converting department were not procedures usually followed by expert accountants in determining net profits, in that interest on invested capital used by the converting department was deducted from gross profits in determining net profits of the converting department, and in that a portion of the income taxes paid by the American Associated Companies, Inc., was deducted from gross profits in determining net profits of the converting department. (21) That Vaughan by the terms of the contract of December 5, 1945, affirmed his agreement to accept such practices as were followed by the American Associated Companies in determining the net profits of the converting department. (22) That following the execution of the contract of December 5th, 1945, the American Associated Companies, Inc., on December 6th, 1945, paid to the plaintiff the sum of $2,282.80; that the said sum was paid by a check in that amount attached to a statement giving the amount as shown on the books of the American Associated Companies as being the amount of the plaintiff's share of the profits of the converting department of the said corporation through September 30th, 1945, and including additions to the said amount and deductions therefrom between the dates of September 30, 1945, and December 6, 1945. (23) That all charges made against the aforementioned amount shown on the books of the American Associated Companies as of September 30, 1945, were either paid to the plaintiff or paid for his benefit. (24) That the sum of $3,257.77 as shown on the statement furnished the plaintiff as referred to in Finding (22) above was paid by the American Associated Companies, Inc., to the United States of America as withholding tax for the benefit of George M. Vaughan and was paid on December 1, 1945. (25) That the payments made to Vaughan prior to September 30th, 1945, represented 20% of the profits of the converting department from July 1, to December 31, 1941, and 17% of the profits of the converting department thereafter in accordance with the accounting procedures and practices of the American Associated Companies, Inc., during the period of Vaughan's employment by that company. (26) That if the American Associated Companies, Inc., had followed account procedures usually followed by expert accountants that Vaughan, in addition to what he did receive, would have received as his previously stated percentages of the profits of the converting department through September 30, 1945, the following sums for the periods indicated, totalling $52,969.05: July 1st to December 31, 1941 — $3,886.97; January 1, 1942 to December 31, 1942 — $11,611.66; January 1, 1943 to September 30, 1943 — $14,239.51; October 1, 1943 to September 30, 1944 — $15,929.80; October 1, 1944 to September 30, 1945 — $7,301.11."

The auditor made the following conclusions of law: "(1) That Vaughan is entitled to receive from the American Associated Companies and Armand May the sum of $4,187.29 as the unpaid balance of Vaughan's share of the profits of the converting department for the period ending September 30, 1945; plus interest on that sum at the rate of 7% per annum since December 5, 1945. (2) That Vaughan is not entitled to receive any sum in addition to that which he has already received for the period from October 1, 1945, to December 1, 1945. (3) That Vaughan is not entitled to receive any sum in addition to that which he has already received for the period from December 1, 1945, to February 1, 1946. (4) That the portion of the contract of December 5, 1945, in the preamble thereto which states that Vaughan has been receiving '17 1/2% of the net profits of the said department, in accordance with the practice heretofore followed by the company' is conclusive on the parties to the said contract and that even though the accounting procedures followed by the company were not procedures usually followed by expert accountants in determining net profits, Vaughan was, nevertheless, bound by these procedures as to the determination of the sums to which he was entitled and cannot be heard to complain of those procedures. (5) That the words 'Vaughan is to receive' as set forth in Paragraphs 4 and 5 of the contract of December 5, 1945, contemplated that Vaughan would receive from American Associated Companies and Armand May and did not contemplate any payment by Vaughan to the American Associated Companies or Armand May; therefore, the over-payments to Vaughan for the period from October 1, 1945, to February 1, 1946, cannot be charged, as were cash payments, against the sum to which Vaughan was entitled for the period ending September 30, 1945, from which latter sum no deductions except actual payments could properly be made. (6) That upon payment by American Associated Companies and Armand May to Vaughan of the sum of $4,187.29 plus interest on that sum at the rate of 7% per annum since December 5, 1945, Vaughan will have no further claims against either of the defendants arising out of the contract of December 5, 1945. (7) That as a matter of law the defendants were required to pay to the United States of America any sums withheld from Vaughan at their source as income taxes to the United States of America on earnings of Vaughan from the American Associated Companies, Inc."

The plaintiff filed a petition to recommit to the auditor as follows: "I. The findings of fact which, plaintiff contends, cover essential issues in the case and which should be found are as follows: 1. A finding to the effect that throughout the period of Vaughan's employment he relied on statements made to him by the defendants that he would be paid what he was entitled to under his original contract. 2. A finding to the effect that Vaughan failed to receive 20% of the net profits of the converting department from June 1, 1941, to December 31, 1941, and 17 1/2% of the profits of the converting department for the remainder of his period of employment as agreed upon in the oral contract of employment, and the amount by which the company failed to pay him the respective percentages for the several periods was as follows: (the figures set out in Finding (26) of the Auditor's Finding of Fact). 3. A finding to the effect that there was no definite method of accounting or allocation of the earnings of the converting department discussed and understood by the defendants and Vaughan mutually which, by agreement or practice, superseded the terms of the oral contract that he was to be paid a percentage of the profits of the converting department. 4. A finding that nowhere on the books of the company was there an entry showing the profits of the converting department after a sum of approximately 40% or any other amount denominated 'Income Tax' by the defendants had been deducted, but this figure of approximately 40% was deducted from the percentage Vaughan was entitled to after the profits of the converting department were computed and before a credit was made to Vaughan's account II. The Conclusion of Law which the plaintiff contends is material to the case, and which should be made, is as follows: 1. A conclusion that under the terms of the contract of December 5, 1945, the company was required to pay Vaughan a sum arrived at as follows: The net profits of the converting department were to be computed for each of the accounting periods, using in that computation normal accounting methods, and that in using normal accounting methods the company would not be permitted to make a deduction as a charge of interest on invested capital against the converting department and would not be permitted to make a deduction, after figuring profits, of 40% or any other figure as 'Income Tax'; and that of such figure Vaughan's share was to be computed at 20% for the period of June 1, 1941, to December 31, 1941, and at 17 1/2% for all subsequent periods through September 30, 1945. Against this figure Vaughan was to be charged the amounts previously paid him. This would amount to the payment to Vaughan of his share of the net profits of the converting department through September 30, 1945. Wherefore, plaintiff prays that the case be re-committed to the auditor for the making of the above findings of fact and conclusions of law."

The plaintiff filed exceptions to the auditor's report as follows: "I. Exceptions of Fact. 1. Plaintiff excepts as a matter of fact to finding No. 8 of the findings of fact of the auditor's report, in that said finding as plaintiff contends is contrary to the evidence adduced on the trial, and as plaintiff contends is without evidence to support it, the plaintiff having repeatedly testified that he protested that the payments made to him based on the computations of the company were not correct and that this protest continued until the execution of the contract of December 5, 1945, and that this evidence was not disputed by defendants; and on the further ground as plaintiff contends that the evidence conclusively shows that at no time during his employment did Vaughan receive from the defendants an amount 'represented to him by the company to be his share of the profits under the terms of the oral contract,' but, on the other hand, that Vaughan was required to leave the larger part of his profit-sharing in the company, and he was only paid such amounts as he called for from time to time in cash up to said amount, and the payments were never accompanied by any statement or representation that they were his share of the profits under the terms of the oral contract. There is no evidence, as plaintiff contends, that Vaughan was ever, prior to December 5, 1945, given a payment accompanied by a statement or explanation either oral or written, as to how it was computed or that it represented his share of the profits, and there is no evidence as plaintiff contends that Vaughan ever received a statement showing the deduction of the 40% figure that the defendants called 'income tax'. 2. Plaintiff excepts as a matter of fact to finding No. 12 of the findings of fact of the auditor's report on the ground that as plaintiff contends the said finding is erroneous as a matter of law, in that the said finding results from a construction by the auditor of the terms of a written contract, to wit, paragraph numbered 3 of the contract of December 5, 1945, which provides that 'Vaughan is to receive a settlement of his share of the profits of the department of the company known as the converting department through September 30, 1945, as shown on the books of the company, heretofore audited and found correct by Peat, Marwick, Mitchell Company, certified public accountants'; and said written contract must be construed as a matter of law to mean that Vaughan is entitled to receive his percentage of the profits of the converting department which are to be figured for the entire period of Vaughan's employment in accordance with normal accounting practices and to which his percentage is then to be applied; and on the further ground that such finding is incorrect as a finding of fact because it is inconsistent with the evidence in this case which shows that there was a figure on the books of the company at a page denominated 'George M. Vaughan Profit-sharing,' and if the parties had meant to accept that figure as the amount that was to be paid to Vaughan, it is clear that they would have inserted that figure instead of the language that was used in said paragraph 3 of the written contract. 3. Plaintiff excepts to finding No. 21 of the findings of fact in the auditor's report in that the said finding refers to 'his agreement to accept such practices as were followed by the American Associated Companies in determining the net profits of the converting department,' whereas there is no evidence to support a finding that there was any such agreement on the part of Vaughan, who was there referred to, and on the further ground that the said finding is inconsistent with the correct construction of the contract of December 5th which must as a matter of law be held to provide for the payment to Vaughan of his share of the net profits of the converting department for the period of his employment notwithstanding such practices as were followed by the company, and on the further ground that such finding should not be a finding of fact, but the said finding amounts to a conclusion of law which as plaintiff contends is incorrect. 4. Plaintiff excepts to finding No. 25 of the finding of fact in the auditor's report in that the evidence is undisputed that even under the accounting procedures and practices of the American Associated Companies Vaughan was not paid 20% of the profits of the converting department from July 1 to December 31, 1941, and 17 1/2% of the profits of the converting department thereafter to September 30, 1945, because even after making allowance for the accounting procedures and practices of the company, Vaughan was then paid or credited on the books of the company with an amount that was approximately 40% less than his 20% or 17 1/2% respectively, and that the said 40% deduction did not represent accounting procedures and practices in the determination of the profits of the converting department, but amounted to an arbitrary deduction made out of Vaughan's share after the profits were determined in accordance with the company's practice. Exceptions of Law. 1. Plaintiff excepts to conclusion No. 4 of the conclusions of law in the auditor's report in that the preamble to the contract of December 5, 1945 cannot be held to be conclusive on the parties to be bound by the accounting procedures followed by the company prior to that date, since the said language was merely a recitation of the fact that payments had theretofore been made on that basis and the said statement does not modify the obligation of the company, which is set forth in paragraph 3 of the contract, which is to pay Vaughan his share of the profits of the company through September 30th without reference to its own peculiar accounting procedures and without the deduction of the 40% amount which the company denominated 'income tax.' 2. Plaintiff excepts to conclusion No. 6 of the conclusions of law in the auditor's report on the ground that the evidence clearly shows that Vaughan is entitled to the sum of $52,969.05, together with interest from the following dates: (the dates and amounts shown in finding (26) of the auditor's finding of fact), which represent the amounts by which he failed to receive his correct percentage of the net profits of the company for the period ending on the said respective dates."

By agreement of counsel the case was submitted to the court for determination of all questions of law and fact without the necessity of submitting questions of fact to a jury. The court entered the following judgment: "(2) It is ordered that the plaintiff's petition to re-commit the case to the auditor is denied. (3) Exceptions to Rulings on Evidence. Defendants filed certain exceptions to rulings of the auditor upon objections to evidence. On these exceptions it is ordered that defendant's exceptions numbered (1), (2), (3), (6), (7), (8) be and they are hereby sustained and the auditor's rulings complained of therein are hereby reversed. Defendant's exceptions to rulings on evidence numbers (5) and (6) are overruled. (4) Exceptions to Auditor's Report. By agreement of all counsel for the parties this case was submitted to the court for determination of all questions of law and fact without the necessity of submitting questions of fact to a jury. (4a) Plaintiff's Exceptions. It is hereby ordered that plaintiff's exceptions of fact numbered 1, 3, 4 are overruled. Plaintiff's exception of fact number 2 complains of the auditor's finding of fact number 12. I believe the auditor's finding of fact number 12 was erroneous as will be pointed out later, but I do not believe it was erroneous in the respects or for the reasons complained of by the plaintiff and it is therefore ordered that plaintiff's exception of fact number 2 is overruled. It is ordered that plaintiff's exceptions of law numbered 1 and 2 are hereby overruled. (5) Opinion, Findings and Judgments. Basically this case resolves itself simply to the question: Does paragraph 3 of the Dec. 5th, 1945, contract require a recalculation of the profits of the converting department from June 1941 to September 30, 1945? The gist of the plaintiff's contentions is that in June, 1941 he had an oral contract of employment for the payment to him of a fixed percentage of the net profits of the converting department and that net profits meant net profits calculated according to normal accounting practices and that interest on invested capital and income tax were not to be deducted and that the overhead administrative expenses chargeable were to remain either the same amount in dollars or the same percentage; that he was not paid upon this basis and that Paragraph 3 of the written contract dated December 5, 1945 under which his employment was terminated obligated the defendants to go back over the entire period from June 1, 1941 and recalculate the net profits without deductions for interest on invested capital and income tax and with either a fixed amount or percentage of administrative expense and to pay him the agreed percentage of the profits so calculated through September 30, 1945. Paragraph 3 of the December 5 agreement reads as follows: 'Vaughan is to receive a settlement of his share of the profits of the department of the company known as the converting department through September 30, 1945, as shown on the books of the company, heretofore audited and found correct by Peat, Marwick, Mitchell Company, Certified Public Accountants.' From a consideration of the entire written contract and of all of the evidence in the case, I am compelled to find against the plaintiff's contentions. In my opinion Paragraph 3 of the written contract obligated the defendants to do precisely what they did and the conduct of the parties as disclosed by the evidence shows that both the plaintiff and the defendants construed the written contract in that manner. There is no evidence that at the time the December 5 contract was entered into the plaintiff made any contention that he was entitled to a recalculation of the net profits of his department. There is no evidence that he made any contention at that time that he had not been paid in accordance with the oral agreement of employment. It is inconceivable to me that if he had raised any such question some mention or reference to it would not have been made in the contract. If the contract means what the plaintiff contends, what is the basis upon which the administrative expenses was to be calculated? Was it to be the same in dollars as it was in June, 1941, or was it to be the same in relative percentage? The fact that no reference is made in the contract, at least as to this, indicates that it was not intended or agreed that any recalculation of net profits should be made. The conduct of the parties shows that they construed and intended the contract to mean exactly what was done by the defendants. The day following the contract, December 6, 1945, the defendants sent to the plaintiff a statement showing his ledger account balance October 1, 1945 and the subsequent changes thereto, reflecting a net balance due the plaintiff of $2282.80 and a check was transmitted therewith to the plaintiff which was endorsed and used by the plaintiff as shown by Exhibits 7 and 8. If the plaintiff had construed the contract of the day before to mean that a recalculation was to be made over the entire period of the previous four years and four months, could he have contemplated that it be done overnight? Exhibit 7 does not indicate any recalculations but on the other hand shows that the figure of $6470.09 was the October 1, 1945 balance taken from the ledger. Neither Paragraph 3 nor any other provision of the contract contemplates or requires any partial payment of plaintiff's share of the profits through September 30th and nothing in the statement and check sent December 6, 1945 indicates that it is in any manner a partial payment. The evidence as to the conduct of the parties prior to December 5, 1945 indicates that plaintiff received statements at intervals showing his profit sharing accounts and that on some occasions he raised some question or made some inquiry concerning the basis of arriving at the profits. While the evidence is somewhat vague and confused it leads me to the conclusion that Vaughan knew the profits were being figured in accordance with some formula used by the company and that he acquiesced in the calculation of profits upon that basis and thereby assented to the construction which the defendants placed upon the employment contract. But whether this conclusion is justified or not, this suit is based upon the December 5 contract. And when it is sifted down, the real question in the case is whether or not Paragraph 3 of the December 5, 1945 contract was an agreement that Vaughan's share of the profits was to be recalculated over the entire period of his management of the converting department. There is nothing in that contract which requires that the plaintiff's share of the profits be calculated in any manner different from what they had been calculated in the past. And there is nothing to show that the parties intended it to require any recalculation. If there was any controversy between the parties as to the method of calculating profits, there is no hint or suggestion of it in the December 5th contract, or in the surrounding circumstances as disclosed by the evidence. The mere use of the words 'his share of the profits' does not reflect any intention to change the meaning of the term 'profits' from the meaning it had previously been given by the conduct of the parties over the past four years — nor different from the meaning indicated in the preamble paragraph of the December 5th contract. The auditor found (finding of fact number 12) that the December 5 contract called for payment 'As of September 30, 1945,' without any deductions. I do not believe this conclusion is sustained by the evidence. The contract simply provides that Vaughan is to 'receive a settlement of his share of the profits . . through September 30, 1945 as shown on the books of the company heretofore audited and found correct by Peat, Marwick, Mitchell and Company, Certified Public Accountants.' As I construe it that provision means that his share of the profits through September 30, 1945 was shown on the books. The use of the word 'settlement' to me means that his share of the profits for that period was subject to whatever proper deductions were to be made therefrom in the usual manner, such as cash disbursements for his benefit and the payment of withholding tax which is exactly what was done by the defendants. I do not believe that it required a payment to him of that sum shown on the books as his credit balance 'as of September 30.' The credit figure on his account on September 30, 1945, was not his total share of the profits for the period ending September 30, but was his net credit balance on that date (See Exhibits 30 and 34). It seems clear to me that the parties did not intend that he was to get 17 1/2 percent of the net profits without deduction for any disbursements for his account. It is my opinion, therefore, that the defendants have offered to fully comply with the obligations imposed upon them by the December 5, 1945 contract and the offer by the defendants of the check for $1282.42 was an offer by them of the balance due the plaintiff pursuant to the provisions of that contract. However, the defendants did not continue their tender in the original answer and therefore the plaintiff is entitled to interest on that sum from April 22, 1946 to date. Judgment is hereby rendered in favor of the plaintiff against the defendants for the sum of $1282.42, together with interest from April 22, 1946 to date at the rate of seven per cent per annum. This October 31, 1951."

The plaintiff excepted directly to this judgment, assigning error as follows: (1) on the court's refusal to re-commit the case to the auditor; (2) on the court's finding against the plaintiff's exception to the auditor's 8th finding of fact; likewise as to the plaintiff's exception to the auditor's 12th finding of fact; his exception to the auditor's 21st finding of fact; his exception to the auditor's 25th finding of fact; his exception to the auditor's 4th conclusion of law; his exception to the auditor's 6th conclusion of law.

Error is also assigned in the bill of exceptions as follows: "(9) Because the portion of said order which states, 'that Vaughan knew the profits were being figured in accordance with some formula used by the company and that he acquiesced in the calculation of profits upon that basis and thereby assented to the construction which the defendants placed upon the employment contract,' is contrary to the evidence and is supported by no evidence. There was no evidence that plaintiff in error signed any release or made any statement or otherwise acted so as to create an estoppel or waiver or acquiescence against his insisting on a true calculation of the profits in accordance with the contract. There is no evidence that the parties ever made any accord or settlement concerning profits, prior to the written contract of December 5, 1945. There is no evidence that the company ever furnished any consideration to plaintiff in error for any agreement or acquiescence on the part of the plaintiff in error diminishing the payments to which he was entitled for his services to the company. There is no evidence of any conduct on the part of plaintiff in error tending to mislead the company, and on which the company relied to its detriment so as to create any waiver or estoppel against plaintiff in error. Even if plaintiff in error knew that the company was construing the contract in a way not understood by plaintiff in error, yet the company also knew that plaintiff in error was construing the contract in a way not understood by the company. Therefore, inasmuch as there is no evidence of an accord or settlement being reached between the divergent ways, or of waiver or estoppel or release or consideration, neither party acquiesced in the construction by the other, particularly since plaintiff in error never received all money admittedly owing to him, but instead some amounts undefined to plaintiff in error were always held back in reserve by the company. It was as harmful to plaintiff in error for the judge sitting without a jury to make the finding herein complained of, as it would have been for the judge sitting with a jury to charge the finding herein complained of. Said finding was harmful and prejudicial to plaintiff in error because, by limiting him to his share of the profits according to the company's peculiar accounting practices, it deprived him of the whole basis of his claim which was that he was entitled to his proper share of the profits according to normal and correct accounting practices. (10) Because the portion of said order which states, 'the real question in the case is whether or not Paragraph 3 of the December 5, 1945 contract was an agreement that Vaughan's share of the profits was to be recalculated over the entire period of his management of the converting department. There is nothing in that contract which requires that plaintiff's share of the profits be calculated in any manner different from what they had been calculated in the past. And there is nothing to show that the parties intended it to require any recalculation,' is contrary to law, and is contrary to the evidence and is supported by no evidence. As a matter of law, such finding and ruling of the trial judge completely misses the basic question of the case, and deprives plaintiff in error of the essence of his contentions; it was the contention of plaintiff in error that he was entitled to a calculation of the profits to which he was entitled, and not to a recalculation; there is no evidence that there had ever been any mutual calculation of the profits owing to plaintiff in error in the first place prior to December 5, 1945, and therefore it was not a recalculation but instead was the first mutual calculation ever to be planned or made between the parties, which was contemplated by said contract of December 5, 1945. As a matter of law, so much of said finding and ruling as states that the profits owing to plaintiff in error were not to 'be calculated in any manner different from what they had been calculated in the past,' makes the same mistake and deprives plaintiff in error of the same contention; they had never been mutually calculated in the past. So much of said finding and ruling as states, with regard to the contract of December 5, 1945, that 'there is nothing to show that the parties intended to require any recalculation,' is a misconstruction of the basis of the claim of plaintiff in error, and places on him an unfair burden, in that said contract of December 5, 1945, did not need to show any intent of the parties to require a recalculation of profits, because there is no evidence whatever that there had ever been any mutual calculation of profits between the parties in the first place. As a matter of law this was harmful and prejudicial to the plaintiff in error, because the entire suit of the plaintiff in error was brought to enforce his right to a calculation of profits for the first time, whereas the finding and ruling of the trial judge held that plaintiff had no right to a calculation of profits for the first time, but instead had to show some right to a recalculation of profits, although no mutual calculation of profits had ever been made in the first place. (11) Because the portion of said order which states, 'the mere use of the words "his share of the profits" does not reflect any intention to change the meaning of the term "profits" from the meaning it had previously been given by the conduct of the parties over the past four years — nor different from the meaning indicated in the preamble paragraph of the December 5th contract,' is contrary to law, and is contrary to the evidence and is supported by no evidence. There is no evidence that the term 'profits' had ever been given any meaning by the conduct of the parties during the past four years, and instead the evidence is undisputed that plaintiff in error had throughout protested against the accounting practices which the company sought to use. The evidence is undisputed that, not only did plaintiff in error protest the method of payment, but the company assured him that payments would actually be made in accordance with the terms of the original contract. Plaintiff in error testified: 'As to whether I discussed that figure or took exceptions to it with the officials of the company — at times I questioned Mr. Plunkett or Mr. Brown as to how that was arrived at, it did not seem that it was right, to me, based on the figures of the profit of the company that I was given from time to time' (B/E 3); 'I had not made any serious protest earlier than 1944 because, frankly, I was too busy operating the company to pay much attention to what was being credited to my account' (B/E 13); 'As to whether I ever tried to find out — usually I would get silly answers, to tell you the truth of the matter, I mean, after all, I was making considerable money for the company, in my estimation the company was operating profitably. I was told that I would be paid in accordance with the agreement and I presumed I would' (B/E 12); 'After I raised the question of how profits of the converting department were figured I was not furnished monthly statements of my share of the expenses and my share of the profits of the converting department' (B/E 11); 'As to whether they made any statement to me as to why that was being charged — every time that I made some complaint I was assured before we finished the discussion that I wouldn't suffer by any changes they made or anything that I might question, that I would always definitely get what I was supposed to get in accordance with our agreement' (B/E 8); 'I continued to work until it came to a point where I saw they were not going to do what they kept telling me they would do' (B/E 9). Therefore, as a matter of law, in view of the uncontradicted evidence, it was error for the judge to assume that the term 'profits' had been given any meaning by the conduct of the parties, and to decide the case on such erroneous assumption. Furthermore, as a matter of law, it was error for the judge to import 'the meaning indicated in the preamble paragraph of the December 5th contract' into the construction of the phrase 'his share of the profits,' in Paragraph 3 of said December 5th contract; the portion of the preamble referring to the accounting practices of the company was expressly referred to in certain numbered paragraphs of said contract, but was not referred to at all in Paragraph 3 of said contract, and therefore was not intended to be imported into Paragraph 3 of said contract. This error on the part of the trial judge was harmful and prejudicial to plaintiff in error because it held that he was not entitled to have his profits calculated in accordance with normal and correct accounting practices, but instead that his profits had already been calculated and that he was not entitled to have them re-calculated. (12) Because the judgment in favor of the plaintiff in the amount of $1,282.42 with interest is too small, inasmuch as the undisputed evidence clearly shows that plaintiff in error is entitled to the sum of $52,969.05, together with interest from the following dates: December 31, 1941, on $3,886.97, December 31, 1942, on $11,611.66, September 30, 1943, on $14,239.51, and September 30, 1945, on $7301.11, which represent the amounts by which he failed to receive his correct percentage of the net profits of the company for the period ending on the said respective dates. (13) Because said order is contrary to law, and is contrary to the evidence, and is contrary to the weight of the evidence, and without evidence to support it, and therefore plaintiff in error is entitled to a new trial."

FELTON, J.

After the filing of a second motion for a rehearing in this case, the defendants in error suggested a diminution of the record and asked that the missing record be sent up and considered. As a part of the request the clerk of the trial court certified the record referred to. This certified record will be considered as a part of the record, as it bears the proper certificate. This record consists of demurrers to the defendants' amendment filed October 31, 1949, and the judgments overruling the demurrers. The demurrers (identical as to each defendant) are as follows: "1. Petitioner demurs specially to the allegations contained in paragraphs 1, 2, 3, 6, 7, 8, 9, 10, 11 and 19, on the ground that they are irrelevant and immaterial to the issues in the case in the light of the written contract attached as Exhibit A to the petition, which said contract is admitted by the defendant in his said amended answer, in that the said contract, and particularly paragraph 3 thereof, places on the defendant, American Associated Companies Inc., the obligation of paying Vaughan his percentage of the net profits of the company without reference to any practice, custom or waiver, and such allegations attempt only to show a practice, custom or waiver inconsistent with the terms of the said written contract. 2. Petitioner demurs specially to the allegations contained in paragraphs 13, 14, and 15, on the ground that they seek to vary or explain the plain and unambiguous terms of the written contract of December 5, 1945, and particularly paragraph 3 thereof."

The defendants in error insist that the ruling on the foregoing demurrers constitutes the law of the case, since no exceptions were filed to these judgments. In our original opinion in this case we held that our ruling in this case on its first appearance here meant that the written contract sued on, and especially the expression "as shown on the books of the company," was unambiguous and meant a percentage of the profits of the company as the data and information on the books showed to be due as a matter of fact under correct accounting practices. In so construing our prior decision we now believe we were in error. In that decision we neither said nor intimated anything as to the meaning of the words above quoted. We simply held that the intention of the parties would be controlled by the expression "as shown on the books of the company," whatever it might mean, and not by past practices, waivers, etc. We are of the opinion that the defendants' amendments, referred to just above, are sufficient to allege an ambiguity in the meaning of the expression "as shown on the books of the company," The blanket attack of the first paragraph of the demurrer puts it into the category of a general demurrer and, since the paragraphs as a whole which were attacked by the demurrer contain enough to raise the question of the ambiguity of the said quoted expression, the court did not rule contrary to our ruling in the prior appeal. The second paragraph of the demurrer was properly overruled for the reason that the amendment raised the question of ambiguity in the contract, and the amendments did not as a matter of law seek to vary the terms of an unambiguous contract. Such a ruling was not contrary to our prior decision. In this view the overruling of the said demurrers did not fix the law of the case to be that the parties construed the written contract to mean that the profits were to be computed in accordance with past practices, waivers, etc., a contention which we do not think was authorized by pleadings or evidence. This question was the only real question settled by the ruling on the first appearance of the case. We ruled that past practices, waivers, etc., were superseded by the written contract.

Now we come to the crux of the case. Since the amendments raised the question of ambiguity as to the meaning of the words "as shown on the books of the company," what do such words ordinarily mean, and what did they mean to the parties to this case? Ordinarily such an expression means that the percentage of profits was to be computed from the data and information shown by the books by a computation which would honestly and fairly show the profits under usual, prevailing business practices. If the expression had a different meaning and both parties so understood it, such different meaning would prevail. The defendants alleged in their amendments and sought to prove that the books of the company as audited and found correct by named auditors showed that there were special pages in the books of the company showing the plaintiff's account and showing amounts due the plaintiff as arrived at by the use of a special formula used by the defendants in accordance with past practices. These special pages did not show the complete working of the formula or completely how the figures were arrived at. There was no evidence that the plaintiff understood that the meaning of "as shown on the books of the company" was that the particular pages purporting to show the results of the formula were "the books" of the company contemplated by the contract. The formula provided that interest on invested capital in the converting department be charged as an expense before computing the plaintiff's share of profits, and that income taxes were to be deducted before computing his profits, which practice the auditor held not to be in accord with general accounting practice. The court held in effect that the practice followed in computing the plaintiff's profits showed what the parties intended by the provision in the written contract as to computation of profits "as shown on the books of the company," a contention we do not interpret the amended answer to raise. In this we think that the court was in error because the contract sued on specifically provided for settlement for one period according to past practices, etc., and for settlement for the other period of payment of a percentage of profits "as shown on the books of the company." In the prior decision this court held that the written contract superseded all prior agreements, practices, waivers, etc., and we do not see how such prior agreements could be considered to control and determine the meaning of the written contract. If the special pages in the book had the same result entered thereon as the past practices would show, then why the use of two different methods of showing the plaintiff's share of the profits? The original oral contract of the parties made no mention of the "books of the company," so the past practices could throw no light on what the parties meant by that expression so far as either contract was concerned. Past practices, waivers, etc., can throw no light on what the parties meant by "as shown on the books of the company," because the second, written contract was a new contract, which contained different provisions from the first and by which past agreements, practices, and waivers were swallowed up and superseded. The expression, "as shown on the books of the company," in our view, could only mean one of two things — either a percentage of profits shown by data and figures and information on the books from which the profits were computed by accepted and usual truthful business methods; or the expression had a peculiar and special meaning, to wit, what the plaintiff's special pages showed, because it was contended that some of the parties so understood the contract and that the other acquiesced in such interpretation. Since the evidence does not authorize a finding that the parties understood the expression to mean that the plaintiff's particular pages would control the settlement, the first meaning of the expression above must be held to have been the legal meaning of the expression. One furnishing the capital is not entitled to interest on the stock when a division of profits is made. Tutt v. Land, 50 Ga. 339. Neither would it be fit and proper to deduct income taxes before computation of the plaintiff's share of the profits. The auditor so held, in effect. Neither the auditor nor the court held that the plaintiff was precluded by reason of accord and satisfaction or estoppel.

After a careful re-review of the case, we are of the opinion that the finding by the court on the grounds stated was not authorized by the evidence. The correspondence attached to the defendants' amendments herein referred to, introduced to show what the original contract was, does not show a contract as to how the plaintiff's share of the profits was to be computed, so as to be a guide for the construction of the last contract. The auditor and the judge found that the original contract was oral, and the evidence conclusively showed that this contract simply provided that the plaintiff's share of the profits would be a certain percentage of the profits, without providing how they should be computed.

2. The court did not err in refusing to recommit the case to the auditor. The errors committed require a reversal of the court's judgment, which will cover the points raised on the petition to recommit.

The auditor and the court should have found, under the pleadings and evidence before them, that the plaintiff's share of the profits should be computed from the data shown by the defendants' books generally, and not according to the formula which was used by the defendants and the results of which were placed on special pages of the books. It follows that the court erred in its findings of law and fact contrary to the rulings of this court. The foregoing opinion, on second motion for rehearing, is substituted for the former opinion, which is withdrawn. The judgment of the court is adhered to on rehearing.

Judgment reversed. Sutton, C.J., and Worrill, J., concur.