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Summer v. Fabregas

Decided: October 31, 1958.

ALEXANDER SUMMER AND EDITH SUMMER, TRADING AS ALEXANDER SUMMER CO., PLAINTIFFS-APPELLANTS,
v.
JOHN E. FABREGAS, JR., DEFENDANT-RESPONDENT



Price, Schettino and Hall. The opinion of the court was delivered by Schettino, J.A.D.

Schettino

Plaintiffs appeal from a judgment based upon a jury's verdict of no cause of action, from a denial of plaintiffs' motion for judgment at the end of the case, and from a denial of plaintiffs' motion for a new trial.

This is a contract action whereby plaintiffs seek recovery for certain loans and other moneys advanced by plaintiffs to defendant totalling $4,232.

Plaintiffs, licensed real estate brokers, by a written contract dated November 15, 1955 employed defendant as a real estate and industrial engineering and building service salesman for a term of one year with compensation to be only in the form of commissions. The most pertinent provisions of the agreement for the purposes of this case are paragraphs 4 and 12 which are as follows:

"4. That it shall be the duty of the Employer to instruct the Employee in that branch of the business of the Employer in which

the Employee is employed by the terms of this agreement and to give the Employee the benefit of his experience and trade data acquired in the conduct of such business."

"12. That the right to share in such commissions by the Employee shall not accrue until the commission has actually been collected by the Employer, but the Employer may, in his discretion, grant to the Employee such advances on account of such commission as he may from time to time deem fit and reasonable. It is understood and agreed, however, that such advances are not to be deemed as part payment of uncollected commissions nor as salary or other compensation, but are to be regarded strictly as temporary loans for the accommodation of the Employee. If, at the termination of this agreement or of the employment thereunder, or if at any other time, the advances so made to the Employee shall exceed the credits to his account for his share of commissions collected, then such excess of advances, overdraft or debit balance in the account of the Employee shall be owing by the latter and be payable upon demand to the Employer hereunder. Upon the receipt of payment of a commission by the Employer, it shall thereupon credit the account of the Employee with the portion of said commission due the Employee under the terms of this agreement."

At the time the contract was entered into plaintiffs also delivered to defendant a letter stating that:

"* * * you will * * * devote your activities to the handling of industrial properties and sale of Alexander Summer Industrial Service Company services. You will receive $150 per week for a period of six months, which will be a loan against commissions. Prior to the end of the six month period, your activities will be reevaluated and a determination made as to its continuance * * *."

Parenthetically, it should be observed also that the industrial service company referred to was discontinued during the six-month period.

Plaintiffs' only witness gave testimony to establish that they had given defendant $150 per week from November 17, 1955 through May 22, 1956; that defendant received 28 such payments totalling $4,200; that plaintiffs had paid for defendant's benefit several small charges amounting to $32; that the $150 payments were loans; that each payment was made by check containing the word "loan" on its face; that defendant personally accepted and endorsed each

check; that each month a statement indicating that the payments were "loans" was submitted to defendant and acknowledged by defendant to be correct; that plaintiffs agreed to credit against the loans commissions earned by defendant but there was none earned, and that these payments were made in accordance with the provisions of paragraph 12 and had not been repaid.

We note that paragraph 12 contains an express provision for repayment of these moneys in any event. This provision takes the case out of the general rule that an employee who receives advances on account of future commissions is not required to repay any excess of the advances over the amount of commissions earned in the absence of express agreement to repay. Roofing Sales Co. v. Rose , 103 N.J.L. 553, 557 (Sup. Ct. 1927); 57 A.L.R. 33; 165 A.L.R. 1367.

Defendant admitted that he received a total of $4,200 at the rate of $150 per week for approximately six months, as well as $32 for incidental moneys paid out by plaintiffs for defendant's benefit. He contended that $3,932 of the total were "loans" representing advances, but that $300 representing the two last weeks' payments were not loans but outright grants. Defendant argued that he was not required to repay the $3,932 because plaintiffs refused and failed to perform their contractual obligations to him, especially those duties set forth in paragraph 4, and that such refusal or failure amounted to a material breach of the agreement excusing repayment on his part and barring recovery by plaintiffs. He particularized these breaches as consisting of (a) plaintiffs' failure and refusal, after numerous demands by defendant, at any time to instruct defendant as a real estate and industrial engineering and building service salesman, and (b) plaintiffs' neglect or refusal to give defendant the benefit of ...


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