Hevesy Corporation v. Sauvé, [1958] SCR 113

Supreme Court of Canada

Hevesy Corporation v. Sauvé, [1958] S.C.R. 113

Date: 1958-01-28

Hevesy Corporation (Plaintiff) Appellant;

and

J. H. Sauvé (Defendant) Respondent.

1957: November 8; 1958: January 28.

Present: Taschereau, Rand, Locke, Fauteux and Abbott JJ.

ON APPEAL FROM THE COURT OF QUEEN'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC.

Contract—Interpretation—Contract of employment—Cancellation—Pleadings—Whether sufficient—Code of Civil Procedure, arts. 105, 110.

By a contract made in January 1952, the plaintiff agreed to employ the defendant as salesman on a commission basis for a period of one year, with a weekly drawing account of $75 plus travelling expenses which, it was stipulated, "are only advances and are repayable from commissions". A loan of $1,500 was made by the plaintiff to complete payment on the defendant's automobile, and was also to be repaid by deductions from the commissions, and not later than January 15, 1953. The plaintiff had the right to terminate the agreement in case of "proven incompetency" or "well known misconduct" on the part of the defendant. In that event, if the defendant was unable to repay any amounts owing, the car was to be turned over to the plaintiff and a bank draft, payable in 30 days, was to be issued for the balance.

In July 1952 the plaintiff gave 30 days' notice of the termination of the contract, and in September it instituted the present action, claiming a balance in its favour between the advances made and the commissions earned. Proceeding by way of conservatory attachment, the plaintiff alleged that the defendant had not devoted all his skill and energies to his work and was incapable of earning commissions equal to the advances made. It was also alleged that the automobile advance had not been repaid and that the car was now the plaintiff's property. The defendant made a cross-demand, alleging that he had lost commissions because of the plaintiff's inability to make deliveries to purchasers. The trial judge maintained the main action and dismissed the cross-demand, but a majority in the Court of Appeal dismissed both the main action and the cross-demand. The plaintiff appealed to the Supreme Court; the defendant did not appeal.

Held (Locke J. dissenting): The judgment of the trial judge should be restored. The plaintiff was justified in terminating the contract and entitled to recover the amounts owed by the defendant; and the action was not premature.

The pleadings were sufficient to entitle the Court to hold, if the allegations were proved, that the defendant had been guilty of "proven incompetency" if not of "well known misconduct", and left the defendant in no doubt as to the issue which he had to meet. The evidence justified the cancellation of the contract. The amounts advanced as drawing account and travelling expenses were not repayable only out of commissions. The adverb "only" in the contract qualified the word "advances" and not the word "repayable".

[Page 114]

APPEAL from a judgment of the Court of Queen's Bench, Appeal Side, Province of Quebec1, reversing, Taschereau J. dissenting, the judgment of Montpetit J. Appeal allowed, Locke J. dissenting.

P. Massé, Q.C., for the plaintiff, appellant.

C. A. Geoffrion, for the defendant, respondent.

The judgment of Taschereau, Rand, Fauteux and Abbott JJ. was delivered by

Abbott J.:—This appeal is from a judgment of the Court of Queen's Bench2 allowing, Taschereau J. dissenting, an appeal by respondent from a judgment of the Superior Court which had maintained the action taken by appellant and dismissed the respondent's cross-demand.

The facts which are fully set forth in the judgments below are briefly as follows: On January 9, 1952, by a contract in writing the appellant, a dealer in hospital, surgical and dental supplies, employed respondent as salesman on a commission basis for a period of one year with a weekly drawing account of $75 plus travelling expenses, the relevant clauses of the contract in this respect reading as follows:

4. The party of the first part will pay in advance a weekly drawing account of $75.

5. The party of the first part will advance the money for all expenses encountered during sales trips.

Items 4 and 5 are only advances and are repayable to party of the first part from commissions.

Appellant also advanced to respondent the sum of $1,500, being the balance due on a car owned by him, this amount to "be deducted from the commission accumulated after July 1, 1952, and January 1, 1953", and respondent undertook that the said amount of $1,500 would be reimbursed not later than January 15, 1953. In the light of these arrangements it is a reasonable inference that it was anticipated by the parties—or by the appellant at any rate—that the sales made by respondent during the period January 1952 to January 1953, would entitle the latter to commissions of at least $5,400. So far as appellant was concerned this expectation was no doubt encouraged by a statement produced by respondent before the contract was signed showing sales purporting to have been made by him of some $30,267.50 during a three months' period from

[Page 115]

September 24 to December 21, 1951, while he was employed as salesman for another concern dealing in hospital and surgical supplies.

In the result the sales made by respondent consistently fell far short of the volume expected and during the period from January 14 to June 30, 1952, respondent earned commissions of only $433.59, against which he had received advances of $1,595 plus the further sum of $1,500, balance due on his car.

The parties had provided for the dissolution of the contract in the event of certain contingencies, the clause relevant to this action reading as follows:

(b) In case of proven incompetency or a well known misconduct on the part of J. H. Sauve. In this case the party of the first part will have to send a written notice to the address of the party of the second part advising him of his leave in thirty days. The party of the second part must then pay in cash any amounts owing the party of the first part. If unable he must turn over the car and issue a bank draft for the balance of the debt, payable in thirty days.

On July 23, 1952, by registered letter, appellant advised the respondent that his services would not be required after the expiry of thirty days, and on September 2, 1952, instituted the present action.

Proceeding by way of conservatory attachment, appellant alleged that respondent had not devoted all his skill and energies to the sale of its products; and that since he was incapable of earning commissions equal to the advances made it had terminated the contract of employment. These two allegations are contained in paras. 2 and 5 of the declaration which read as follows:

2. Bien que la compagnie demanderesse ait avancé au défendeur la somme de $1,595 pour lui permettre de travailler entre le 9 janvier 1952 et 30 juin dernier, ce dernier n'a réussi à gagner que $433.59 comme commission, et n'a pas déployé toute son habileté et toute son activité à vendre les produits de la compagnie demanderesse;

* * *

5. Le 23 juillet 1952, voyant que le défendeur était incapable de gagner les avances qu'elle lui payait, la compagnie demanderesse a décidé de mettre fin à son engagement et lui a adressé l'avis prévu par le contrat tel qu'il appert à la copie dudit avis produit avec les présentes comme exhibit P-2, le défendeur étant requis de produire l'original s'il ne veut que preuve secondaire en soit faite;

The appellant claimed $1,161.41 being the difference between the advances made by it ($1,595) and commissions earned by respondent ($433.59). In addition appel-

[Page 116]

lant alleged the automobile advance of $1,500 and stated that since respondent has failed to repay this sum the automobile was now its property and in the conclusions of its action asked that the automobile be declared to be its property or, alternatively, that respondent be condemned to pay to it the sum of $1,500.

In defence respondent pleaded that he had devoted all his time to appellant's affairs; that if his sales were small it was due to appellant's inability to deliver; that the advances made to him had not exceeded $1,385; that the claim for the automobile advances was premature and that the purported dismissal was illegal.

Respondent also made a cross-demand alleging that because of appellant's inability to make deliveries to the purchasers found by him he had lost commissions amounting to $5,100. From this he deducted advances of $1,385 plus the automobile advance of $1,500, leaving a balance due him of $2,215.

In its plea to the cross-demand appellant denied its inability to make deliveries and in para. 9 made the following allegation:

Si le défendeur n'a pas obtenu plus de commandes, c'est qu'il ne travaillait pas sérieusement ou n'avait pas la compétence nécessaire pour faire le travail qu'il s'était engagé à accomplir;

The action and cross-demand were joined for proof and hearing, and on June 7, 1954, a single judgment was rendered in which the main action was maintained for $2,661.41 and the cross-demand dismissed.

The Court of Queen's Bench3, Taschereau J. dissenting, allowed the appeal as to the principal demand and dismissed appellant's action with costs but unanimously confirmed that part of the judgment dismissing respondent's cross-demand and there is no cross-appeal.

The judgment appealed from dismissed appellant's action for the following reasons: (1) that appellant had failed to establish the "proven incompetency" of respondent; (2) that the advances of $1,595 were repayable only out of commissions and could not be claimed otherwise; (3) that the claim for the automobile advance of $1,500 was pre-

[Page 117]

mature and (4) that there being no specific allegation of incompetency in the declaration, appellant was not entitled to submit evidence on the point.

So far as the adequacy of the pleadings is concerned, in any proceeding it is sufficient that the facts and conclusions be concisely, distinctly and fairly stated without entering into argument (C.C.P. 105) and any fact which if not alleged is of a nature to take the opposite party by surprise must be expressly pleaded (C.C.P. 110). The function of a Court is to achieve justice and the rules of pleading are intended to facilitate not to hinder that end. In the circumstances of this case the contract of employment could be validly terminated by appellant prior to January 15, 1953, only if respondent was guilty of either "proven incompetency" or "a well known misconduct", but I share the view of the learned trial judge that the facts alleged by plaintiff in its declaration, if proved, would entitle the Court to hold that the respondent had been guilty of "proven incompetency" if not of "well known misconduct". Moreover, it is clear from the pleadings, both in the principal action and on the cross-demand, that the respondent was in no doubt as to the issue which he had to meet.

On the merits I also share the view expressed by the learned trial judge that on the evidence appellant was justified on July 23, 1952, in invoking the clause in the agreement above referred to and terminating the respondent's contract of employment. It is true, as Taschereau J. has pointed out, that the volume of sales made by a salesman is not necessarily the test of his competence. In the present case, however, the volume of sales made by respondent in a large metropolitan area such as Montreal during a six months' period was consistently so far below the volume which, as I have said, appears to have been anticipated by the parties, as to create a strong presumption of incompetence which respondent completely failed to rebut. Moreover, this presumption was fortified by some evidence of sales made by other salesmen employed by appellant, during a comparable period, which exceeded those of respondent (although these salesmen worked only on a part time basis) as well as by evidence that respondent had failed to devote his whole time to appellant's business as he had contracted to do.

[Page 118]

With respect I am unable to share the view expressed by the majority in the Court below that the amounts advanced to respondent as drawing account and for travelling expenses were repayable only out of commissions earned and not otherwise. In my opinion the terms of the contract are clear: the respondent was engaged on a commission basis not on salary and commission and the clause above quoted referring to drawing account and travelling expenses states explicitly that these "are only advances and are repayable to the party of the first part from commissions". The adverb "only" qualifies the word "advances" not the word "repayable."

Since, as I have said, I am of the opinion that appellant was justified in terminating its contract with respondent in August 1952, it follows that it was entitled under the terms of the contract itself to recover the amounts owing to it by respondent and the action which it instituted on September 2, 1952, was not premature.

I would allow the appeal with costs and restore the judgment of the learned trial judge.

Locke J. (dissenting):—My consideration of the evidence and the proceedings in this matter leads me to the same conclusion as that reached by the majority of the Court of Appeal and, for the reasons given by Mr. Justice Casey, I would dismiss this appeal with costs.

Appeal allowed with costs, Locke J. dissenting.

Attorney for the plaintiff, appellant: P. Massé, Montreal.

Attorney for the defendant, respondent: J. Perrault, Montreal.