Supreme Court of Canada
Whyte v. National Paper Co., (1915) 51 S.C.R. 162
Date: 1915-02-15
Alexander Whyte (Plaintiff) Appellant;
and
The National Paper Company (Defendants) Respondents.
1914: December 17; 1915: February 15.
Present: Sir Charles Fitzpatrick C.J. and Davies, Idington, Duff and Anglin JJ.
ON APPEAL FROM THE APPELLATE DIVISION OF THE SUPREME COURT OF ONTARIO.
Principal and agent—Commission on sales—“Accepted orders”—Contract for sale—Construction.
A paper manufacturing company in Quebec agreed to give W. a commission of five per cent. on all “accepted orders” obtained by him in Ontario to be payable as soon as an order was shipped. Through W.’s agency a contract was entered into whereby a company in Toronto agreed to purchase from the Quebec company during one year paper of a specified kind to the extent of not less than $35,000 to be furnished from time to time on receipt of specifications and directions as to destination. When paper to the value of over $5,000 had been shipped under this contract the Toronto company refused to furnish further specifications on the ground that said paper was not satisfactory and the contract was not further performed.
Held, per Fitzpatrick C.J. and Idington J. (Duff J. contra), that the contract with the Toronto company constituted an “accepted order” within the terms of the agreement with W. who, as it was through the fault of his principals that the contract was not performed, was entitled to the balance of his commission on the contract price of $35,000.
Per Davies and Anglin JJ.—If under the contract the only “accepted orders” were those filled from time to time on receipt of specifications and directions from the purchasers the discontinuance of their sending in the same was due to the failure of the vendors to furnish satisfactory paper and W. was entitled to damages for being prevented by such failure from earning his commission. As the evidence shewed that he had done all that could be incumbent upon him to have the contract performed the measure of his damages would be his commission on the contract price.
Per Duff J. dissenting.—The only “accepted orders” under the con-
[Page 163]
tract were those to be filled from time to time on receipt of specifications. As his case under the pleadings was confined to recovery of the commission on the basis of the contract with the Ontario company being an “accepted order” and as no claim was put forward (or investigated) at the trial on the basis of the appellant having wrongfully been prevented earning his commission by procuring “accepted orders” or advanced by the appellant at any stage of the proceedings, the judgment could not be sustained on that basis unless it was clear that all the evidence bearing upon such a claim was to be found in the record.
APPEAL from a decision of the Appellate Division of the Supreme Court of Ontario reversing the judgment at the trial in favour of the plaintiff.
The material facts are stated in the above head-note.
Hamilton Cassels K.C. for the appellant.
Masten K.C. for the respondents.
THE CHIEF JUSTICE.—The appellant’s case is that he was entitled under the agreement with the respondent company to a commission “on all accepted orders,” which is in the circumstances the equivalent of “all sales, whether followed by delivery or not,” and that the contract with the Buntin, Reid Co. is a sale within the meaning of that commission agreement.
The whole case, therefore, depends upon the nature of the latter contract. I have no doubt that for the reasons given by Mr. Justice Middleton, the Buntin, Reid order once accepted constituted an agreement binding upon both parties to it. It contains the essential elements of a contract of sale, the thing sold is properly described and the respondents were thereafter entitled to the benefit of that contract if they
[Page 164]
wished to enforce it. That agreement should, in my opinion, be treated as an accepted order.
The trial judge found, and that finding is not disturbed, that the Buntin, Reid Co. was able to pay for the goods and that the default in carrying out the agreement was wholly attributable to the respondent company. The appellant is, therefore, entitled to his commission.
It is urged that with the concurrence of the appellant a rebate of 10c. a hundred pounds on paper to be supplied under the contract was to be allowed the Buntin, Reid Co. There is no doubt that,such an arrangement was made, and the only question is:—Who was to pay the rebate?
I would be disposed to hold that the evidence is not sufficient to justify the deduction of that rebate out of the appellant’s commission, but out of deference to the opinions of my brother judges, I agree that the deduction should be made.
I would allow the appeal for the balance with costs.
DAVIES J.—I concur with Mr. Justice Anglin.
IDINGTON J.—The respondent by a letter dated 15th January, 1912, agreed to pay appellant a commission of five per cent. on all accepted orders.
He acting thereunder procured a binding contract duly executed between the Buntin Reid Company and respondent whereby the former bound themselves to purchase from the latter during a period of one year, not less than thirty-five thousand dollars worth of paper at a price named, and of a kind specified, to be
[Page 165]
fully up to the standard of samples submitted, and to be shipped as directed, from time to time to points named in Ontario.
It is contended that contract was not, though duly executed and binding upon the purchaser, an order within the meaning of the said obligation.
The learned trial judge held it was such an order and entered judgment accordingly but the Appellate Division, holding it was not such an order, reversed the judgment.
The first, and as Mr. Justice Middleton appropriately calls it the dominating and controlling, clause of the letter of the contract is followed by a paragraph therein which is relied upon by the Appellate Division. It provides that
this commission shall be payable immediately the order is shipped and failing the customer paying the account, we shall deduct from the first settlement with you the commission paid on said order.
If this term “shipped” is to be construed as the Appellate Division seems to hold, it would have been quite competent for the respondent to have dishonoured every order got, no matter how much labour or expense appellant may have been put to in obtaining same. I cannot think that ever could have been contemplated by the parties; so the term “shipped” must be given a more reasonable meaning and not as applicable to what might but for the default of the respondent have been shipped.
Then the provision that the commission might have been deducted in the event of the customer failing to pay, certainly cannot apply to the case of non-shipment. It seems clearly pointed to the sensible meaning of the case of the customer through want of means or failure to meet his obligations making de-
[Page 166]
fault in payment. It certainly, even in such a case does not extend to a time when the customer had ultimately paid. It is not necessary to solve all the riddles within the expression, but as I read that, it was designed, merely to secure orders being got from first-class customers, of good financial standing, and thus to enlist the assistance of appellant in securing the easy collection of accounts.
It does not seem to me that either of these terms of that clause were designed to cover the case which has arisen.
The Buntin, Reid Company’s firm admittedly stands high in the commercial world and no question can arise as to their financial responsibility.
It seems they refrained from giving specifications for further deliveries because of respondent having failed to live up to its contract. If so the appellant is not to be deprived of his commission on their accepted order, any more than the real estate agent, whose commission has been earned by a mere introduction or actual sale, no matter how little may come of the transaction later through any one of a multiplicity of causes likely to arise in such dealings.
If this order failed through no fault of respondent to produce the specifications enabling delivery within its terms, then a right of action accrued to the respondent against the Buntin, Reid Company for damages which would include (not in terms but incidentally by reason of the legal measure of damages in such a case) this very commission.
It would be somewhat anomalous if after defeating appellant here, respondent sued and got such damages. How could Buntin, Reid & Company an-
[Page 167]
swer their default and ask any consideration for what had happened in this action?
If respondent failed by reason of its own default then it surely cannot be excused herein.
It seems to me that it never was intended the provision in this second clause meant any more than that on the one hand the time of shipment was a convenient term for payments, and to be read as if shipped or ought to be shipped, and on the other hand a spur to stimulate appellant and not a means of depriving him ultimately of all compensation.
The third clause seems to put that beyond doubt. It is as follows:—
You shall have the exclusive agency for the Province of Ontario with the above exception and at any time this agreement should cease we shall pay you on all accepted orders up to the termination of this agreement.
His engagement ceased before this action and this term of the contract thus came into operation.
I think the appeal should be allowed with costs here and below and the trial judgment be restored.
Since writing the foregoing I find some of my brother judges proceeding upon a ground neither taken in the pleadings nor in the notice of appeal to the Appellate Division nor in the factums here, to cut down the amount claimed. Indeed, the factum of respondent signed by able and experienced counsel puts the matter in dispute in appeal neatly thus:—
So that the issue is narrowed to the question whether or not the respondents are bound under the terms of the documents hereinafter set forth to pay to the appellant a commission on paper which has never been supplied because orders specifying the necessary particulars of same were never received. In other words, the question in dispute is narrowed to whether or not the respondents should pay the said sum of $1,491.36.
[Page 168]
I most respectfully dissent from such a departure from the grounds upon which the case has heretofore proceeded.
DUFF J. (dissenting).—I concur in the construction put upon the phrase “accepted order,” in the letter of the 15th January, 1912, by the first appellate division.
That seems to be sufficient to dispose of the appellant’s claim as presented in the statement of claim. It was suggested, however, during the course of the argument, from the bench, and after some hesitation the appellant’s counsel, who had not taken the ground in his factum, accepted the suggestion, that there was evidence sufficient to support a claim on the ground that the respondents had by their conduct wrongfully prevented the appellant earning his commission by procuring “accepted orders” on the principle expressed by Mr. Justice Willes in Inchbald v. Western Neilgherry Coffee, T. and C. Plantation Co., in a passage adopted by the Judicial Committee in Burchell v. Gowrie and Blockhouse Collieries, at page 626, as follows:—
I apprehend that wherever money is to be paid by one man to another upon a given event, the party upon whom is cast the obligation to pay, is liable to the party who is to receive the money if he does any act which prevents or makes it less probable that he should receive it.
It is true that there is some evidence and perhaps on the case as it stands sufficient evidence can be collected to justify (standing by itself) the inference that it was the failure of the respondents to live up to the terms of their contract with the Buntin Reid Co. of the 4th June, 1912, which the appellant had
[Page 169]
procured that led to a discontinuance of the sending of orders by the Buntin Reid Co. under the terms of that contract, and thereby prevented the earning of commissions which would have been earned if orders had been sent and filled as contemplated by the contract.
That, however, was not the case made by the plaintiff on the pleadings and I do not think it can fairly be said that any such case was investigated at the trial. In order to understand exactly what did happen at the trial it is perhaps necessary to glance at the pleadings. In paragraph 6 of the statement of claim it is alleged that the plaintiff obtained many orders for the defendants which were accepted by the defendants. In paragraph 7 particulars of the orders obtained by the plaintiff and accepted by the defendants in respect of which the defendants have not paid to the plaintiff the stipulated remuneration, are given; and amongst the orders specified there is this:—June 4th, 1912, order of Buntin Reid Co., $35,000. The statement of defence in paragraph 3 meets this claim as follows:—
Save and except the orders as hereinafter mentioned none of the orders referred to in the statement of claim were accepted, shipped and paid for to or by customers in the plaintiff’s district in the province of Ontario
the exceptions comprising a number of orders amounting to $1,444.63. Then in paragraph 5, the defendant company says that the commission on the whole of the Buntin Reid contract never became payable on the following grounds: (a) The paper was not sufficiently specified in the contract to make it possible to ship the goods without further instructions;
(b) The particulars necessary were not stated in the contract;
[Page 170]
(c) Orders were never given nor were goods ever shipped or paid for except those on which the plaintiff has received commission.
Besides joining issue, the plaintiff meets this defence by alleging that the non-delivery of the goods to the Buntin Reid Co. to the value of $35,000 was occasioned entirely by the defendants’ default, “the Buntin Reid Co. being at all times ready to take delivery if the defendant company on its part had been ready and able to deliver the same.”
The plaintiff’s case on the pleadings therefore was that the agreement with the Buntin Reid Company was an “accepted order” within the meaning of the letter of the 15th of Jan., 1912, and that the condition that the commission should be payable “immediately the order is shipped” in the second paragraph of the letter had become inoperative because the non‑shipment of goods was due to the default of the defendant company.
That was the plaintiff’s case on the pleadings. At the trial that case was supported by evidence put forward to shew that the Buntin Reid Company had discontinued sending orders because of the difficulty of getting their orders filled; in short because of the failure of the defendants to fulfil their contract. It is important to emphasize the point for the purposes of the question now under discussion that the foundation of the plaintiff’s claim here is the proposition that the contract with Buntin Reid was an “accepted order” within the first paragraph of the letter referred to.
The alleged default of the respondents in the performance of their contract is not put forward as the
[Page 171]
Substantive ground of the plaintiff’s alleged right of recovery as shewing, in other words, that the respondents had by their conduct wrongfully prevented the appellant obtaining “accepted orders,” but for the purpose, as I have already mentioned, of shewing that the condition comprised in paragraph 2 had become inoperative. The learned trial judge held that the plaintiff had established his right to recover on this basis his judgment shewing very clearly that he was not passing upon any claim of the character now suggested.
The contract in the first place provides for payment of commission on all accepted orders, and this, I think, is the dominating and controlling clause, to which all other provisions are subsidiary. This general provision is followed by a clause providing that the commission is to be payable “immediately the order is shipped, and failing the customer paying the account we shall deduct from the first settlement with you the commission paid on said order.”
It is contended by defendant that this limits the generality of the primary obligation and shews that the commission is not to be paid unless the order is actually shipped.
I do not think that this is the true construction of the clause. The parties were contracting upon the assumption that each would perform its obligations. The commission was to be paid upon all orders accepted. Some of these orders would be for immediate delivery, some for future delivery. The commission was not to be paid until the goods were shipped, that is, until the time provided for shipment. The defendants cannot free themselves from liability to pay commission, by breach of contract.
The Buntin, Reid Company are undoubtedly of good financial standing, and, if they are in default, can readily be made answerable for damages. I think the defendant is in this dilemma: If the failure to complete the Buntin, Reid contract arose from its own fault, then it must pay the plaintiff’s commission. If the failure arises from the fault of the Buntin Reid Company, the defendant has an adequate right of action against them for damages, and this does not relieve them from payment of commission.
If driven to determine the issue as to whose fault it was that the contract was not completed, I should find that the defendant and not the Buntin Reid Company were to blame. In every aspect of the case the plaintiff, I think, is entitled to succeed.
The basis of all this is, of course, the proposition
[Page 172]
upon which the learned judge’s judgment is founded namely, that the Buntin Reid contract constituted an “accepted order” within the letter to the plaintiff.
The result is that the ground of relief now suggested that the respondents’ conduct by preventing the appellant from obtaining orders precludes them from denying that “accepted orders” were obtained for the amount of $35,000, was never investigated at the trial. While a good deal of the evidence that was given would have been quite relevant to that issue the respondents were not called upon to meet it and judgment cannot be given against them upon an issue which they were never called upon to meet, by reason of evidence put forward alio intuitu unless indeed we could be satisfied that we have all the evidence that could be produced before us now. The respondents were entitled to go into court meeting the claim of the appellant which was based upon the proposition that the Buntin Reid contract was an “accepted order” within the meaning of the letter, by simply denying that proposition. Succeeding in this the appellant’s case as put forward is destroyed at its foundation. In these circumstances as has been pointed out again and again in the judgments of this court as well as of other courts of appeal, we should be running the gravest risk of doing injustice by allowing a case now to be made on another foundation at this stage. Rudimentary fair play forbids it.
ANGLIN J.—I am, with respect, of the opinion that this appeal should be allowed and the judgment of the learned trial judge restored, subject, however, to a reduction in the amount of the plaintiff’s recovery as stated below.
[Page 173]
On one possible construction of the agreement between the plaintiff and defendants his commission was earned when the defendants saw fit to accept the offer, or order, which he had procured for them from The Buntin Reid Company. In that view his right to payment would arise when the order was shipped, or, in the event of the order not being filled, when the time for filling it according to its terms had elapsed. The defendants might have declined to accept the order in the form in which it was procured. They might have insisted upon its being in such form that further specification by the purchasers would not be necessary. They saw fit to accept it, and it may be that it was an “accepted order” within the meaning of that term in their agreement with the plaintiff. But 1 am not altogether satisfied that the construction put upon the correspondence by the Appellate Division was not correct, namely, that “accepted orders” meant orders upon which, without further specification of the goods to be supplied, the defendants should be entitled to make delivery and thereupon to sue for the price. I proceed to deal with the case on this footing.
The order, if it may be so termed, obtained by the plaintiff from the Buntin Reid Company was subsequently filled in part. That it was not wholly filled was, on the evidence, due to the failure of the defendants to furnish, upon the specifications which were sent them by the Buntin Reid Company, goods of a satisfactory quality and in compliance with their obligations. It may be that the defendants’ failure to supply satisfactory goods upon these early specifications did not relieve the Buntin Reid Company from
[Page 174]
their obligation to send in further specifications to the extent stipulated in their contract. But if the failure of the defendants to obtain such further specifications and directions for shipment was ascribable to their own default in supplying goods of a merchantable quality and in compliance with the contract, whatever may have been the effect upon the legal rights of the defendants and the Buntin Reid Company inter se, the plaintiff was thereby prevented from becoming entitled to payment of his commission, if, in order that he should become so entitled it was necessary that the Buntin Reid Company should send in specifications and directions for shipment. Under these circumstances the plaintiff would be entitled to recover damages from his principals. If he had done all that was incumbent upon him in order to earn his commission on the Buntin Reid order, and if the sole reason why the contract made through him was not fully carried out was the default of the defendants, his damages would be the amount of the commission itself. If there was still something to be done by him in the discharge of his duty to the defendants—for instance, if it was part of his obligation to procure the actual specifications and shipping directions from the Buntin Reid Company and he had not taken the steps necessary for that purpose, although he had omitted to do so solely because he knew it would be labour wasted in view of the refusal of that company to take further shipments—his damages would be somewhat less than the full amount of his commission. I am not satisfied that it was part of the plaintiff’s obligation to procure such specifications and shipping directions. Had it not been for the de-
[Page 175]
faults of the defendants in regard to the early shipments, further specifications and shipping directions would, in all probability, have come to them from The Buntin Reid Company without any further solicitation or intervention on the part of the plaintiff. But upon the evidence it appears that the plaintiff in fact did his utmost to obtain such further specifications and directions and that his efforts proved unavailing solely because The Buntin Reid Company declined to take chances of incurring liability for damages to their own customers through supplying to them such defective and unmerchantable goods as the defendants had furnished upon the first specifications sent to them. These defaults of the defendants were beyond any reasonable doubt the real cause why The Buntin Reid Company did not take from them goods in quantity greater than the minimum of $35,000 worth stipulated for in their order or contract. But for those defaults the defendants would, in all human probability, have had from The Buntin Reid Company demands for paper in excess of the minimum quantity specified in their contract. In point of fact The Buntin Reid Company purchased, during the currency of their contract with the defendants, from other paper mills, at a price materially higher than that which they had agreed to give to the defendants, $46,940.23 worth of paper of the class and quality covered by their contract with the defendants. If, therefore, the plaintiff did not fully earn his commission by procuring an order which the defendants accepted, and if in order to fully earn it he was further obliged to obtain specifications and shipping directions from the Buntin Reid Company, he was prevented by the default of the de-
[Page 176]
fendants themselves from obtaining such specifications and directions although he made the necessary efforts to do so, and in that view of the case he is entitled by way of damages to a sum equivalent to the commission which he was thus prevented from earning.
The respondent objects that in his statement of claim the plaintiff confines his demand to the recovery of commission eo nomine and does not prefer an alternative claim for damages on the footing that the defendants had prevented his earning his commission, and that he should not now be allowed to recover on such an alternative claim. In his reply, however, the defendant alleges the facts necessary to support such an alternative claim, and at the trial these facts, which could be relevant only if a claim for damages on the basis indicated was to be considered, were fully gone into in evidence. Under these circumstances there is no difficulty in dealing with the case as if a prayer for the alternative relief had been formally included in the statement of claim. Nor can the defendants very well object to this being done, since it was pressed at bar on their behalf that a matter of defence presently to be dealt with, which they did not plead and to which I find no allusion in the judgment of the trial judge, in their reasons of appeal to the Appellate Division, or in their factum in this court, should now be taken into consideration.
The defendants allege that when the bargain with The Buntin Reid Company was made it was arranged, with the concurrence of the plaintiff, that the purchasers should be allowed a rebate of ten cents a hundred pounds on paper to be supplied under the contract, and that this rebate should be paid by the plain-
[Page 177]
tiff out of his commission. That an arrangement for such a rebate was made is common ground. The plaintiff, however, denies that he was to pay it. Although this arrangement is not pleaded in the statement of defence, nor alluded to in the Appellate Division, nor in the respondents’ factum, it was investigated at the trial. The evidence upon it of the plaintiff and that of the defendants’ manager is in direct conflict. The question, however, is concluded against the plaintiff, in my opinion, by two letters written by him to the defendants on April 19th 1913, and April 30th, 1913, in the first of which he says:—
I refuse to further continue allowing them (The Buntin, Reid Company) a rebate on my portion of that commission,
and in the second, alluding to this former letter, he speaks of
the continuance of allowing them a rebate of a portion of the commission paid me.
These letters are not satisfactorily explained. While the agreement for the rebate was discreditable to the defendants, it was not of such an illegal or illicit character that they are precluded from claiming the benefit of it as against the plaintiff. Calculated on the basis of the price mentioned in the contract, the plaintiff’s full commission of 5 per cent. would amount to 32½ cents on every hundred pounds of paper to be supplied. Deducting from this ten cents per hundred pounds would leave his net commission 22½ cents per hundred pounds. His recovery for commission at the trial, where this partial defence was not given effect to, was $1,596.43 of which $1,491.36 represented commission on the Buntin Reid order. This would be at the rate of 32½ cents per hundred
[Page 178]
pounds. The ten cents a hundred pounds rebate would amount to $458.88. Deducting this sum from the total recovery $1,596.43 there is a balance of $1,137.55 and that is the sum for which the plaintiff is, in my opinion, entitled to judgment.
I think the plaintiff should have his costs of the appeals to this court and the Appellate Division, as well as his costs of the action.
Appeal allowed with costs.
Solicitors for the appellant: Cassels, Brock, Kelley & Falconbridge.
Solicitors for the respondents: Masten, Starr & Spence.
Email this Content