Opinion filed November 4, 1931.
Effect of Failure of Record To Show Exception to Judgment — Sales — Evidence Relating to Issues Made by Pleadings — Trial — Offer of Evidence — Construction of Record on Review — Necessity That Error Appear To Secure Reversal — Test as to Correctness of Exclusion of Evidence — Principal and Agent — Declarations of Supposed Agent — Harmless Error — Limitation of Evidence as to Damages to Specifications Filed — Effect of Failure To Except to Findings in Attempt To Raise Question Whether Findings Supported by Evidence — Premature Motion for Directed Verdict — Conclusiveness of Findings to Which No Exception Is Taken.
1. That record did not show that exception was taken to judgment, did not preclude Supreme Court from considering and disposing of trial questions properly raised and brought before it by bill of exceptions.
2. Evidence that defendant failed to comply with terms of contract for sale of musical instruments, and that contract was cancelled by plaintiff for that reason, held within issues, where defendant filed complaint in set-off alleging that he was damaged by loss of profits because plaintiff wrongfully and fraudulently cancelled and withdrew from defendant exclusive agency for sale of its musical instruments and appointed other agencies for sale thereof.
3. To be available, offer of evidence must be specific enough to make its relevancy appear to court.
4. Construction of record on review is always against excepting party.
5. Supreme Court will not search transcript to discover reversible error.
6. Correctness of exclusion of evidence must be tested by state of case at time offer was made.
7. Agency cannot be shown by mere acts and declarations of supposed agent made out of court.
8. In action of contract for breach of contract for sale of musical instruments, exclusion of letter from manufacturer of instruments to plaintiff, containing declarations that plaintiff was direct factory branch of manufacturer, held without error, there being no competent evidence of agency in case.
9. In such action, exclusion of letter to show writer's agency for plaintiff, if error, held harmless, where plaintiff had already conceded that writer was its manager and had authority to bind it by agreement with defendant.
10. In such action, exclusion of part of letter stating that writer had taken over managership of "this branch" of certain company, held without error, offer thereof being merely attempt to establish agency by out of court declarations of alleged agent.
11. Where no exception was taken to finding that there was no liability for breach of contract on part of plaintiff, as claimed by defendant in his plea in set-off, ruling which limited scope of evidence as to defendant's damages to claimed loss of profits from sales specifically scheduled in his specifications, held harmless, matter of defendant's damages not being in case.
12. Where no amendment, nor suggestion of amendment, to defendant's specifications was made, court correctly restricted evidence relating to defendant's damages to claimed loss of profits from sales specifically scheduled in his specifications in set-off.
13. Where findings were unexcepted to, question whether findings made were supported by evidence was not presented for consideration.
14. Motion by defendant at close of all evidence for judgment for amount of his specification in set-off, on ground that plaintiff was a foreign corporation doing business within State, and that it had not proved that it had received certificate therefor, and was prohibited by G.L. 5009 from maintaining action, held properly denied as premature, where pleadings and evidence presented controverted questions of fact, and nature of case required court to find and state facts.
15. Where case is tried by court and facts found, and findings stand unchallenged by exception, case in Supreme Court is controlled by facts found.
16. Defendant taking no exception to failure of court to find as requested, nor to findings as filed, no question relating thereto is saved for review.
ACTION OF CONTRACT for breach of contract for sale of musical instruments. Plea, general denial, defendant also filing complaint in set-off, with specifications, on which plaintiff joined issue by general denial. Trial by court at the June Term, 1930, Bennington County, Bicknell, J., presiding. Judgment for plaintiff. The defendant excepted. The opinion states the case. Affirmed.
Edward H. Holden (Francis E. Morrissey and Norton Barber of counsel) for the defendant.
The pleadings in this case consisting of plaintiff's complaint of the common counts with specifications, answer constituting general denial, and declaration by defendant in set-off with specifications, it was error to admit evidence as to why plaintiff terminated contract. A general denial puts in issue only those facts which plaintiff (defendant as to his counter-claim being in same position as plaintiff) must aver and prove in order to establish a prima facie case, and does not authorize introduction of evidence in support of any new matter. Mark et al. v. Stuart-Howland Co., 226 Mass. 35, 2 A.L.R. 678; Kellogg v. New Britain, 62 Conn. 232, 24 A. 996; Snow v. Chatfield, 11 Gray (Mass.) 12; Wheeler v. Lawson, 103 N.Y. 40, 8 N.E. 360; 49 C.J. 800, and cases cited.
All new matter, such as an affirmative defense, matters in justification or in confession or avoidance, must be specially pleaded, and, if not so pleaded, they are outside the issues and not admissible in evidence. Howard National Bank v. Wilson, 96 Vt. 438, 49 C.J. 801, 21 R.C.L. 567-571; Seaver et al. v. Lang, 92 Vt. 501; Congdon v. Torrey, 95 Vt. 38; Berkley v. Burlington Cadillac Co., 97 Vt. 260; Powell v. Rockwell, 97 Vt. 528.
While a party is bound by his specification, where other sales of same kind as those actually specified, the persons unknown at that time, were claimed in specification, a party should be allowed to put in evidence of such other sales as would not cause surprise, the purpose of specification being to prevent surprise. Greenwood v. Smith, 45 Vt. 37; Bates v. Quinn, 56 Vt. 49; McKane v. Gordon Hoar, 85 Vt. 253.
General rule is, that measure of damages for the breach of a contract giving an agent an exclusive selling territory, where principal invades such territory, or revokes the contract of agency, is the amount of profits, commissions, or discounts of which the agent is deprived by the action of the principal. 8 R.C.L. 649; 21 R.C.L. 836; L.R.A. 1916B, 868; Randall v. Peerless Motor Car Co., 212 Mass. 352; Horlweg v. Schaefer B. Co., 197 Fed. 689; Meuller v. Bethesda M.S. Co., 88 Mich. 390; Orester v. Dayton Rubber Mfg. Co., 228 N.Y. 134; Pittsburg Gage Co. v. Ashton Valve Co., 184 Pa. 36; White Co. v. Farley, 219 Ky. 66, 32 A.L.R. 239.
When no time is fixed for the duration of an exclusive agency, the law applies a reasonable time. Erskine v. Chevrolet, 185 N.C. 479, 32 A.L.R. 196.
The things which plaintiff did in Vermont constituted "doing business" therein; and, not having a certificate of authority therefor as required by G.L. 4995, it could not maintain an action in this State upon a contract made by it therein while acting without lawful authority; and, the statute expressly prohibiting an act, a contract in violation of its provisions is void. G.L. 5009; Kinnear Gager Mfg. Co. v. Miner, 89 Vt. 572; Lycoming Fire Ins. Co. v. Wright Son, 55 Vt. 526; Harris v. Runnels, 12 Howard, 79.
When the right of a contracting party to make a contract is dependent upon his compliance with statutory requirements, in a state which prescribes duties to be performed by such party as a condition precedent to his right to make a contract, he must aver and prove a compliance with such requirements. Lycoming Fire Ins. Co. v. Wright Son, supra; Sullivan v. Vernon, 121 Ala. 393; Tabor v. Interstate Bldg., etc., 91 Tex. 92.
A defense for failure to comply with the statute or to allege and prove compliance therewith is available under the general issue, which allows any defense that tends to show no such cause of action legally existed. Malthie v. Sparton, 40 Vt. 286; Thrall v. Wright, 38 Vt. 484; Limerick Bank v. Adams, 70 Vt. 132; Blaisdell v. Davis, 72 Vt. 295.
Cebra Q. Graves for the plaintiff.
The record fails to show that defendant excepted to the findings of the chancellor, in the absence of which exceptions to rulings of the chancellor as to admission of evidence are not available, even though judgment were excepted to, and Supreme Court is bound by findings and cannot supplement them by scanning transcript. Cutler Co. v. Barber, 93 Vt. 468; Morgan v. Gould et al., 96 Vt. 275; Powell v. Merrill, 92 Vt. at page 130.
Where incapacity of plaintiff to sue is not apparent upon face of declaration, it must be taken advantage of by some appropriate dilatory procedure or plea in bar, and cannot be availed of under general issue. Underhill v. Rutland R.R. Co., 90 Vt. 462; Noyes et al. v. Pierce, 97 Vt. 188; Howard National Bank v. Wilson and Trustee, 96 Vt. 438.
Although contract for sale of goods was made in Vermont by a corporation unauthorized to do business therein under G.L. 4995, by reason of having failed to obtain a certificate of authority therefor, where goods were to be shipped, and were shipped to buyer's place of business in this State from another state, shipment was in interstate commerce, and seller had the right under the federal Constitution to maintain an action for the purchase price, which could not be taken away, and which rendered inapplicable G.L. 5009, denying corporations unauthorized to do business in Vermont the right to maintain action on a contract made in this State. Aetna Chemical Co. v. Spaulding Kimball Co., 98 Vt. 51; Livingston Mfg. Co. v. Rizzi Bros., 86 Vt. 419; Kinnear Gager Mfg. Co. v. Miner, 89 Vt. 572.
Present: POWERS, C.J., SLACK, MOULTON, THOMPSON, and GRAHAM, JJ.
The action is contract. The plaintiff's complaint is the common counts with specifications. The defendant's answer is general denial. The defendant also filed a complaint in set-off with specifications, on which issue was joined by plaintiff's general denial. The trial was by court, finding of facts were filed, and judgment was for the plaintiff to recover the amount of its specifications. The defendant brings the case here for the review of certain questions saved by exceptions at the trial. The findings stand unchallenged by exception. The record does not show that any exception was taken to the judgment, but that omission does not preclude us from considering and disposing of trial questions properly raised and brought before us by a bill of exceptions. Brown v. Vermont Mutual Fire Ins. Co., 92 Vt. 272, 274, 102 A. 1042, and cases cited; see, also, Jenness v. Simpson, 84 Vt. 127, 78 A. 886.
The plaintiff is a Massachusetts corporation. The defendant conducts a music store at Bennington. In April, 1926, the defendant began purchasing musical instruments and supplies from the plaintiff and from time to time purchased such instruments from the plaintiff down to and including March 23, 1927. The instruments and supplies were sold on credit. The defendant was not the agent of the plaintiff in any transaction between them. Before the first purchase by the defendant, the parties entered into a parole contract whereby it was agreed that the defendant was to have the exclusive sale of the Conn Boston Company musical instruments in Bennington County. The defendant was to keep in stock not less than five hundred dollars worth of instruments; he was to make monthly reports to the plaintiff of the sales made by him; he was to remit when cash sales were made, and when sales were made on credit, he was to turn over to the plaintiff the lien note or evidence of security taken by him for the purchase price of any instrument sold. The findings state that the trial court is unable to find that the plaintiff in any way materially breached the contract, but they show that the defendant did, and that, because of defendant's default, the plaintiff terminated the contract and sold its musical instruments to another dealer in Bennington.
Evidence was received tending to show that the defendant failed to comply with the terms of his contract, and for that reason, the plaintiff cancelled it. This evidence was admitted subject to the exception of the defendant that it was outside of the issue made by the pleadings. The defendant treats the evidence as presenting an affirmative defense, not pleaded. The defendant's complaint in set-off alleges that he was damaged by the loss of profits because the "* * * * plaintiff wrongfully and fraudulently intending to injure the defendant and his said business cancelled and withdrew from the defendant the exclusive agency and appointed other and divers agents and agencies for the sale of such merchandise * * * *." The plaintiff met this allegation with a general denial. The issue was clearly within the pleadings, and the evidence was properly received.
After the defendant had testified that his first information of the cancellation of his contract was by letter from the plaintiff on July 7, 1927, the plaintiff, for the purpose of contradicting him on that point, offered in evidence a letter written to the defendant by C.G. Conn, Ltd. of Elkhart, Ind., and dated November 2, 1926. This letter is Plff's Ex. 20, and was received in evidence without objection. It advises the defendant that, not having received a reply to previous letters, Conn, Ltd. had concluded that he was not interested in the agency and, for that reason, it had closed a contract for the sale of Conn instruments with the Noveck Studio at Bennington. After Ex. 20 was admitted, for the purpose above indicated, the defendant offered in evidence another letter received by the defendant from C.G. Conn, Ltd. (identified as Deft's O), and dated November 9, 1926. This letter states, in substance, that a copy of the writer's letter to Noveck Studio is enclosed, and asks for an inventory of defendant's stock of Conn instruments and offers to place the defendant upon its Class "B" agency. The terms of such an agency are detailed. The defendant is also requested to advise the writer whether he approves of a classification under a Class "B" franchise direct from the Conn, Ltd. factory. Copy of the letter mentioned as having been written to Noveck Studio was sent to the defendant with Deft's O. This copy is identified as Deft's O-1 and was offered in evidence with Deft's O. The latter letter is dated November 9, 1926, and advises the Noveck Studio, in substance, that at the time of placing the exclusive agency of C.G. Conn, Ltd. with them, it did not know of the agreement between the plaintiff and the defendant and that it would have to recognize that agreement. A method for the disposition of stock on hand and for the termination of the Noveck agency was stated. When Deft's O and O-1 were offered, the court asked the purpose of the offer and counsel for the defendant stated, "In connection with plaintiff's exhibit 20 and as contradiction to the subject matter set forth in that exhibit." The trial court, apparently having in mind the purpose for which Ex. 20 was in evidence, asked: "What part of 20 do you say is contradicted by O and O-1," and defendant's counsel replied: "It shows that the objection set up in plaintiff's exhibit 20 was waived by defendant's O and O-1." Upon objection by plaintiff, the offer was excluded, subject to defendant's exception. To be available, an offer must be specific enough to make its relevancy appear to the court. Moncion v. Bertrand, 98 Vt. 332, 341, 127 A. 371. The construction of the record on review is always against the excepting party. Higgins, Admr. v. Metzger, 101 Vt. 285, 298, 143 A. 394. It is fair construction of the record that the offer of O and O-1 as finally made and ruled upon was not in contradiction of Ex. 20, for the limited purpose that exhibit was in evidence, but rather for the purpose of showing a waiver by plaintiff of any claimed violation of contract by defendant.
In connection with the discussion of this offer, the court stated that, upon objection, it had repeatedly excluded offers of letters written by C.G. Conn, Ltd., for the reason that there was nothing in the record to show any agency which would make its acts and declarations binding upon the plaintiff. In view of what took place between the court and counsel, we think that the absence of any evidence tending to show such agency formed the basis of the ruling excluding the offer, and that counsel so understood it. If there was any evidence in the case at the time the offer was made tending to establish such fact it has not been called to our attention, and we do not search the transcript to discover reversible error. Hopkins, Trustee v. Sargent's Estate, 88 Vt. 217, 222, 92 A. 14, L.R.A. 1915D, 1010. Error must be made to appear. Higgins, Admr. v. Metzger, supra. Our attention is called to some evidence which came into the case after this offer was made, but this evidence cannot be used to sustain the defendant's contention. The correctness of the exclusion must be tested by the state of the case at the time the offer was made. Ravine House Co., Inc. v. Bradstreet, 102 Vt. 370, 375, 376, 148 A. 481; State v. Lapan, 101 Vt. 124, 132, 141 A. 686. The defendant argues that these letters, O and O-1, tend to confirm the relation existing between C.G. Conn, Ltd., and the plaintiff. They were not offered for any such purpose. Besides, agency cannot be shown by the mere acts and declarations of the supposed agent made out of court. Hendrickson v. Inter. Harvester Co., 100 Vt. 161, 165, 135 A. 702; First National Bank of Montpelier v. Bertoli, 87 Vt. 297, 311, 89 A. 359, Ann. Cas. 1917B, 590; Taplin Rowell v. Harris, 88 Vt. 15, 18, 90 A. 956; Prouty v. Nichols, 82 Vt. 181, 184, 72 A. 988, 137 A.S.R. 996; Sias v. The Consolidated Lighting Co., 73 Vt. 35, 42, 50 A. 554.
This rule applies with equal force to declarations therein that the plaintiff is a direct factory branch of C.G. Conn, Ltd. The contention of the defendant that the latter company made use of the plaintiff as its instrument through which to perform its business, and that either was the agent of the other, and the acts of one were binding upon the other, is not supported by any competent evidence from which that conclusion may fairly and reasonably be drawn. Further, the defendant has failed to show prejudice by the exclusion. He admits, and the findings state, that his contract with the plaintiff was not terminated, and that he was operating thereunder for several months after November 9, 1926. No sales by Noveck Studio with consequent loss of profits to him are shown by reason of the then temporary contractual relations between C.G. Conn, Ltd., and the Noveck Studio. The exception is not sustained.
Deft's D is a letter dated June 7, 1926, which was written and mailed to the defendant by one Myers, as manager of the plaintiff. It was first offered as tending to show Myers agency for the plaintiff, and was excluded subject to defendant's exception. That Myers was the agent of the plaintiff was not questioned. The plaintiff conceded that he was its manager and had authority to bind it by agreement with the defendant. If it was error to exclude the letter for that purpose, it was harmless. This letter was again offered as tending to show that Myers held out the plaintiff as a branch of C.G. Conn, Ltd., and as proof that the acts of that company were binding upon the plaintiff. The defendant saved an exception to its exclusion for that purpose. The letter states: "It may be of interest to you to know that since the writer's last visit to your city I have taken over the managership of this branch of C.G. Conn, Ltd." This part of the offer is only another attempt to establish the fact of agency by the out of court declarations of the alleged agent. This, it has become trite to state, cannot be done. Besides, the fact, if shown, that the plaintiff was a subcorporation of C.G. Conn, Ltd., without more, would not have the effect claimed for it. The exclusion was without error.
Subject to defendant's exception, the trial court limited the scope of the evidence and the defendant's right of recovery in set-off to claimed loss of profits from sales specifically scheduled in his specification. The findings state: "We are unable to find that during the life of the contract the plaintiff in any way materially breached its terms, and that deft. did, and find that the defendant is not entitled by way of credit against the plaintiff's account anything in the way of commission on musical instruments sold in Bennington County by other dealers." Since no exception was taken to the finding, that there was no liability for breach of contract on the part of the plaintiff, the matter of defendant's damages was not in the case, and so, the ruling, right or wrong, was harmless. Boynton v. Hunt, 88 Vt. 187, 188, 92 A. 153.
Moreover, there being no suggestion of a request to amend the specifications, nor of any amendment thereto, either expressly or by implication, the court correctly restricted the evidence. Aseltine v. Perry, 75 Vt. 208, 210, 54 A. 190; Bank of United States v. Lyman, 20 Vt. 666, Fed. Cas. No. 924; Lapham v. Briggs, 27 Vt. 27.
The defendant argues that the finding, in effect, that the plaintiff did not materially breach the terms of the contract is not supported by the evidence. But, since the findings are unexcepted to, no such question is presented for consideration. Wolcott v. Mongeon, 88 Vt. 361, 364, 92 A. 457; Pierce v. Torrey, 101 Vt. 366, 143 A. 543.
At the close of all the evidence, the defendant moved for judgment for the amount of his specifications in set-off on the grounds that the plaintiff is a foreign corporation; that its contract with the defendant was such as to constitute "doing business" within the State; and that it had not proved that it had received a certificate from the commissioner of foreign corporations as required by G.L. 4995, and so was prohibited by G.L. 5009 from maintaining the action. The motion was overruled, and the defendant excepted.
The point is not raised, and so we do not consider the propriety of presenting the question by such a motion, even if the case was one to which the statute applied. The motion was properly disposed of on other grounds. The pleadings and the evidence presented controverted questions of fact, and the nature of the case required the court to find and state the facts. G.L. 2259. The motion, therefore, was premature and, for that reason, was properly denied. Raithel v. Hall, 99 Vt. 65, 70, 130 A. 749. The motion is without merit on the facts. The findings state: "The instruments and supplies were sold on credit. We do not find that the defendant was agent of the plaintiff in any transaction involved in this case." The defendant concedes that this is equivalent to an express finding that the plaintiff was not "doing business" in this State, but he calls to our attention evidence in the transcript tending to show the contrary. We cannot notice this evidence. The case in this Court is controlled by the facts found. This is the mandate of the statute. G.L. 2259. Powell v. Merrill, 92 Vt. 124, 130, 103 A. 259; Grapes v. Rocque, 96 Vt. 286, 290, 119 A. 420; Hooper, Trustee v. Kennedy, 100 Vt. 376, 378, 138 A. 778.
It appears from the record that the defendant requested the court to find facts in accordance with his claims under this motion, but he took no exception to the failure of the court so to find, nor to the findings as filed. The risk was his, and, having failed to present the question for review by proper exceptions, he must abide by the result.