EN
BANC
L. P.
FIEGE AND
E.
E. BROWN,
Plaintiffs-Appellants,
G.
R.
No. 17729
March
7, 1922
-versus-
SMITH,
BELL &
COMPANY, LTD.,
AND J. C.
COWPER,
Defendants-Appellees.
D
E C I S I
O N
JOHNS,
J :
The defendant, Smith,
Bell & Co., Ltd., is a corporation organized under the laws of the
Philippine Islands, with its principal office in the City of Manila. In
1918, the defendant Cowper was in the employ of the defendant
corporation,
which, among other things, was engaged in the sale of machinery and
equipment
for the use of manufacturers of coconut oil.
As the result of
negotiations
with the company, on May 6, 1918, Cowper wrote the following letter:
"I have arranged with
Mr. Schmidt of your company, that I Mr. J. C. Cowper, and Mr. L. P.
PHAGE
shall receive half of the profits received from this deal."
This letter referred to
what is known in the evidence as the Harden contract. Later, both
plaintiffs
here became associated with Cowper in finding purchasers and in the
sale
of such machinery for the defendant corporation. Outside of the above
letter,
there is no written contract as to what the plaintiffs should receive
or
the defendant should pay them for their services, and between PHAGE,
Brown,
and Cowper, as one party, and the defendant corporation, as the other.
As a result of their
services, a number of purchasers were found for the machinery with whom
the defendant corporation entered into written contracts for its sale
and
delivery, and undertook in good faith to carry out the terms and
provisions
of the different contracts with the respective purchasers. The
plaintiffs
PHAGE and Brown now claim that the signing of the respective contracts
by the company with the respective purchasers made and constituted a
complete
sale of the machinery, and that their compensation should be based upon
the gross amount of the contracts, which should be construed as
completed
sales. In other words, when the contracts were signed, their services
were
complete and their commissions were earned.
Claimed that the
defendant
company has breached its contract, and refused to account or settle
with
the plaintiffs for their services, they commenced this action, to
recover
from the defendant corporation, and because Cowper refused to join the
plaintiffs, he was made a defendant in the action.
Among other things,
the Complaint alleges that, under the terms and conditions of the
contract,
the plaintiffs and their associate Cowper were to seek buyers for the
machinery
which were accepted to the defendant company, and that the prices were
to be fixed by the plaintiffs, as brokers, but which should, in no
case,
be less than P10,000 for each expeller, and that the date of delivery
should
not be specific but only approximate.
"That for their
services
the plaintiffs and associate, as partners, acting as broken for the
defendant
company, were to receive one-half of the difference between the cost of
the machinery and equipment laid down in Manila, P. I., and the prices
at which the same were sold to buyers secured by the said brokers."
That the plaintiffs secured
orders for machinery and equipment and which were delivered to, and
accepted
by, the defendant company, as follows:chanroblesvirtuallawlibrary
[Following is a list
of the contracts, dates, with whom made, and amounts aggregating to
P313,000].
It
is then alleged
that the purpose of carrying out the respective contracts, the
defendant
imported all of the specified machinery, but that it has failed and
refused
and still refuses to make any settlement with the plaintiffs or to
render
any accounting of the cost of the machinery, or to make any payments,
either
in full or on account, of the services rendered. That the plaintiffs
have
no way to determine the amount of the compensation which they should
receive,
and that it can only be ascertained by means of an accounting, which
the
defendant company should make. That they are entitled to recover
approximately
P35,000, and they pray that the defendant company be required within a
reasonable time to furnish the plaintiffs a full and complete
accounting,
and to pay them the amount found to be due for the services rendered,
upon
which they should have interest from the time the machinery was
imported,
and for such other and further relief as may be just and equitable.
For answer, the
defendant
admits that at the times alleged the plaintiffs were associated, as
partners,
under the firm name of the Philippine General Commercial Company; that
it is a corporation as alleged; and that in the year, 1918, it engaged
the plaintiff to act as brokers for the sale of machinery and
equipment,
and they delivered purchasers' contracts to the defendant company which
it accepted, amounting to P313,000, as alleged in paragraph 6 of the
complaint.
That the defendant J. C. Cowper was formerly a partner of the
plaintiffs,
and withdrew from the partnership on August 8, 1918, and that he had an
interest in the amount which the plaintiffs should recover, but refused
to join with them, and denies all other materials allegation of the
complaint,
and, as a further and separate defense, alleges that the plaintiffs and
defendant Cowper secured orders for machinery and equipment, for which
the company "agreed to pay plaintiffs and the defendant J. C. Cowper,
in
equal shares, one-half of the net profits derived by said defendant,
Smith,
Bell & Co., Ltd., from said orders."
"That delivery has
been accepted on only one of the orders set out in the said complaint,
to wit, that of A. Chicote, six expellers, P75,000, dated August
11,1918."
It is then alleged
that outside of P2,000 paid by the Insular Coconut Oil Co., on its
order
of August 22, 1918, no other payments have been made on the respective
contracts by any of the other purchasers, which were secured by the
plaintiffs.
That until such payments have been made, the defendant company cannot
ascertain
the net profits, but that it has received any profits whatever from any
of the other orders, and that as soon as full payments of any order is
made by the purchaser, the company will render an accounting to
plaintiffs,
and pay them any amount found due.
Upon such issues, the
case was tried, and a judgment was rendered for plaintiffs for
P6,511.17,
without interest or cost, from which they appealed, claiming that the
court
erred in failing to find that the plaintiffs were entitled to
commission
on two different contracts: that the court erred in holding that
plaintiffs'
recovery should be based upon the defendant company realizing a profit
on the respective contracts; and in rendering judgment without interest
or costs.
The defendant company,
having admitted that the plaintiffs procured purchasers for machinery
for
the amount alleged, the important question here is how much plaintiffs
have earned on account of their services, and they it becomes due and
owing.
There is no controversy as to the rate of compensation. Both parties
agreed
that it should be "one-half." Plaintiffs claim that it should be
one-half
of the difference between the cost of the machinery laid down at Manila
and the prices specified in the contracts with the respective
purchasers.
The company contends that the plaintiffs were to receive of the
admission
made no money has been received or collected on any of the remaining
contracts,
and that the company has in good faith endeavored to enforce the
contracts
and collect the money, but it has been unable to do so, and that, at
such
time in the future as any money is collected, it is ready and willing
to
account to the plaintiffs.
Although the oral
evidence
pro and con is more or less conflicting, the trial
court
found that the letter of May 6, 1918, above quoted, was the basis of
the
contract under which the services were rendered, and that the
plaintiffs
were only entitled to recover one-half of the net profits that the
company
made out of its contracts with the purchasers, and limited the amount
of
plaintiffs' recovery to the one-half of the net profits, which the
company
had actually received and collected under the contracts, or P6,511.17.
April 15,1918, PHAGE,
Brown and Cowper formed a partnership known as the Philippines General
Commercial Company to do a general brokerage business. It is admitted
that
on May 6, 1918, Cowper wrote the letter above quoted, and that the
different
members of the firm and the defendant company knew that the letter was
written and received. August 15, 1918, the respective members of the
firm
signed a writing, which, among other things, recites:chanroblesvirtuallawlibrary
"It is further agreed
that whatever commissions may be due or become due to the members of
the
copartnership on orders for machinery or merchandise shall be paid by
Smith,
Bell & Co. pro rata among the three partners, etc.," and that on
the
same date the three members of the firm addressed the following letter
to the defendant company:chanroblesvirtuallawlibrary
"The undersigned hereby
request that all commissions that may accrue on orders for machinery or
merchandise accepted or pending acceptance in which we, or any of us,
may
be interested, be paid as same fall due to the undersigned individually
in pro rata shares of one-third of such commissions."
The contract with
Harden
was dated May 16; with Vicente Sotelo two contracts were dated August
16,
and two August 20; one with A. Chicote was August 11; and the other
August
19, and the one with the Insular Coconut Oil Co., August 22, all in the
year, 1918. When you consider the dates of the respective contracts,
the
recital in the agreement between the members of the firm, and the
letter
to the firm of August 15, become important. The firm agreement recites
"that whatever commission may be due or become due," and the letter
recites
"that all commission that may accrue on orders for machinery or
merchandise
accepted or pending acceptance."
The expellers were
not to be sold for less than P10,000. As we construe the contract, the
plaintiffs and Cowper during his partnership, as one party, and the
defendant
company, as the other party, were to divide equally the profits of each
contract, and plaintiffs are entitled to one-half of the profits out of
each contract, and until such time as the company made a profit on a
given
contract, plaintiffs' commission was not earned as to that contract.
There
was no profit through the mere signing of the contract by the purchaser
and its acceptance by the company. There would not be any profit until
the purchaser paid all the money and complied with his contract. Until
such time as the company realized a profit on the contracts, there was
nothing to share or divide.
The authorities cited
by the attorneys for the appellants are good law, but, under the facts
in this case, they are not in point.
Plaintiffs' commission
was to be paid out of, and is limited to, net profits, and except as to
the amount found by the trial court, there is no evidence of net profit
on any of the contracts.
No tender was made
before October 15, 1919, the date of filing the complaint, and none is
alleged in the answer.
September 8, 1920,
through its attorneys the defendant wrote a letter to plaintiffs'
attorney,
in which they say they say they are willing to pay as commission on
contracts
for the sale of machinery the sum of P6,511.17, "in full settlement of
all claims which they have upon our clients on that behalf as of this
date,"
and we "hereby tender you the sum of P6,511.17 in full settlement of
all
claims due by our clients as of this date."
As applied to the
existing
facts, it might be questioned as to whether this was a good tender of
the
P6,511.17. But, assuming that it was valid for that amount, it was made
nearly one year after the action was commenced and more than one year
after
the defendant had collected the money upon the contracts, and it does
not
include interest on the money collected or the accrued costs.
The evidence shows,
and the company in effect admits, that from and out of moneys which it
had previously collected on the contracts, the plaintiffs were entitled
to have and receive P6,511.17. Under the contract between the
plaintiffs
and the company, this money should have been paid to the plaintiffs
when
it was collected.
The lower court found
that the plaintiffs were not entitled to interest and costs. That was
error.
In so far as it found that the plaintiff were entitled to judgment for
P6,511.17, the judgment of the lower court is affirmed. In all other
respects,
it is reversed, and a judgment will be entered here in favor of the
plaintiffs
for P6,511.17, with interest from the 15th of October, 1919, at the
rate
of six per cent per annum together with costs in favor of the
plaintiffs
in both this and the lower court.
This judgment to be
without prejudice to plaintiffs' right to recover any other profits
which
may have accrued or which may hereafter accrue upon any of the
remaining
contracts. So ordered.
Araullo, C.J.,
Johnson, Street, Malcolm, Avancena, Villamor, Ostrand, and Romualdez, JJ.,
concur. |