Mayer v. Nethersole

Laughlin, J.: The appellant is an actress and the respondent is a theatrical manager, both of many years experience. ' The action was; brought to recover a balance of commissions on the “ profits ” of 'two theatrical seasons under the following contract, to wit: “ July 25th, 1898. . 5 Norfolk Street, “ Park Lane, W. “ Mr Dear Marcus Matér ■; “ The arrangement between us is, that you shall act for me as my American Manager for two Seasons in" America to commence on November twenty-first, 1898, at a weekly salary of one hundred dollars during each Season. In addition, you are to receive as commission on my profits of each season twenty-five per cent of the first five thousand dollars; after the first twenty thousand dollars profit,, thirty per cent of the next five thousand dollars and thirty-five per cent of everything over said amounts. Should I take a partner for my forthcoming London Season, you are to receive, in lieu of the above commission for the American Tours, seventeen per cent of the five first thousand dollars after the twenty thousand dollars aforesaid, .and twenty per cent of all profits over twenty-five thousand dollars and a weekly salary of $100. “ My American Tours are to be advertised as follows: “ Olga Nethersole’s Compart, “ Direction “ Marcus R. Mater. “ You are to give your personal and exclusive attention, and I am to charge to the expenses of my tours three, hundred dollars per week for my personal expenses. “Yours truly,. “OLGA NETHERSOLE. “ I accept the above, Marcus R. Mater.” — 385 — The contract was prepared by the parties without the aid of attorneys and executed at the appellant’s country home in England on the day it bears date. The appellant took no partner for her London season. The controversy is over the meaning of the word “ profits,” the appellant contending that the cost of “production,” which includes scenery,, costumes, properties and other expenses in preparing for the commencement of the theatrical season, as well as running expenses including salaries, railroad fares, royalties, advertising, etc., must be deducted before there are any profits, and the respondent insists that the cost of “ production ” should not be deducted. The referee has held, in effect, that the cost of “ production ” was a part of appellant’s permanent capital invested not merely for these two seasons but for the future, the property being and remaining hers, and that, therefore, the cost is not to be deducted in determining the amount of profits upon which the respondent’s commissions are to be computed under the contract. In making up his statement of account, however, the referee did not adhere strictly to this rule; but the plaintiff has not appealed and we are not called upon to determine what items allowed might have been rejected if the theory adopted by the referee be sustained. The appellant, through her brother who was her treasurer, kept two separate accounts, one a “ production ” account involving the items heretofore indicated as embraced in that term, and the other an account of running expenses including the items heretofore indicated as embraced in those terms and the receipts of the business. A copy of the account of the receipts and running expenses, which did not include any of the items of the “ production ” account, was given to the respondent weekly and the items of this account are not involved in the appeal. A statement of the production account was furnished to the respondent, about a month after the opening of each season. When the first statement of the production account was given to him, according to his testimony, he said to the treasurer, “ That has got nothing to do with me. That comes under the $20,000 allowed;” to which Mr. Xethersole replied, “Well, I just gave you the account to tally with our books.” The appellant’s counsel has stipulated that only the exceptions to the disallowance of certain specified items included within the cost — 386 — of production would be urged on' this appeal. These-items arc as follows : For the first season. “ Six months’, hire of Carmen costumes..........$980.00 Nov. 29, Carl Mayer for wigs............... 18.00 Dec, 12, Mr. Herman, on account of costumes for Camille........500.00 Jan. 27, Mr. Herman balance account..............1,427.50 Feb. 9, Wardrobe trunks...............59.00 Feb. 15, Herman further costumes.........12.00 Dec. 3, Mr, Frohman for Carmen scenery and dresses and properties..........600.00 Gratuity to Porter........................3.00 Termagant, Scenery, and costumes and properties..........7,220.00” For the second season. “ Carmen wardrobe......... $475.00 Wigs....................................57.50 Trip to Paris.......60.00 Profligate scenery................ 181.75 Scenery ................... 1,342.15 Carpenters..............................1,722.52 Costumes.................................... 450.00 Wardrobe.................................... 1,595.62 Furniture bought of Mr. Seidle..................... 1,048.50 Miss Nethersole’s dresses............ 4,150.00 ” The principal, plays.produced by the appellant; during;- these, twd' seasons were “¡The /Termagant*” “The- Profligate,” “Carinen,” “ Camille;”, and: “ Sapho.” : Theappellant had-, prior to the execution of the contract, produced “Carmen.” in London, and .had purchased the “scenery-and dresses and-properties.” second hand*, although it, .appears that her tain costum'es were hired for, the-folio wing, season in America. Before the;¡contract, went into: effect*:¡“The--Termagant”- had-been played by appellant for ¡six .weeks..,and a half: in. London-, .and she Was.the.:¡owner of • the scenery properties;and costumes therefor. Evidently this was within the contemplation of the387 parties at the time of making the contract, as appears from the statement “ my forthcoming London Season.” Some scenery was subsequently purchased for “ The Profligate,” and also costumes for Camille-” Stock scenery that was in the theatres was - used-for the other plays, in ■ appellant’s repertoire except “Sapho.” “ Sapho ” was not produced until the second year- The equipment for “Sapho” was purchased outright. The appellant furnished as part thereof several, dresses.previously purchased’ and worn as part of her private wardrobe which were charged in the production account- at $1,750. As appears from the items quoted,-the costumes for “ Carmen ” for the first year were rented for $980.. : These are the same costumes which became the property of the appellant the following - year upon: the - further, payment of $475. “ Carmen ”- was not played during the second season. All of the other disputed items were expenditures for property which, while essential to the production, was of a permanent nature and was' retained by the appellant as her own. The “ Termagant ” equipment was taken back to London and was worth at the time-of-the; trial-fifty per centum of its cost. The equipment for the other plays, except possibly the “ Profligate,” was in good condition at the time of the trial and worth .its original-cost -and- was likewise retained and used by appellant on her subsequent - starring tours. Bu-ring the first season the respondent received, besides his weekly salary, On account of profits $1,637.57: and during the second’season 81,231.73. The judgment is for the balance. hio settlement was had at the end of the first season and at the end of the second season, no statement was rendered to. respondent showing the amount of his commissions but the weekly statement showing the profits without deducting the cost of production was rendered as usual. It was; conceded that it was the custom in the theatrical-profession, “where the equipment was paid out of the profit account to divide it-after the season closes * * according to the terms of their agreement.” The respondent testified, without objection, that at the time of making the agreement the appellant spoke of having to produce -the plays and that he said, “ there should be a certain amount allowed for the production before any profits were to be divided ; I said, will $20,000 be enough, and she agreed that it would be sufficient.” The appellant was asked if there was — 388 — any conversation “ as to how that $20,000 was to be expended,” and answered, “ none whatever.” ' . This .question was objected to, and the referee stated that if any evidence had been received on that subject he was not aware of it, and should not regard it as binding upon him in the construction of the contract, and she was asked no further questions. If we had before us the parol communications leading up to the contract, the sense in which the word “ profits ” was used would doubtless clearly appear, and it is by no means certain that the contract was not sufficiently ambiguous on this subject, to justify parol evidence to show the sense in which the word “ profits ” was used by the. parties. (Manchester Paper Company v. Moore, 104 N. Y. 680; Flagler v. Hearst, 62 App. Div. 18.) The ruling of the referee, however, that there was no ambiguity relieved the appellant of proving the conversation 'between the parties, and this ruling seems to have been acquiesced in by both parties. We are, therefore, required to interpret the contract from the language employed. The respondent was given no voice in deciding what plays should be. produced and whether they should be produced with the appellant’s own equipment, with equipment to be purchased or with stock scenery and hired costumes. Nor does it appear, except as to certain items, whether the necessary equipment could have been hired. Ho provision was made for a division or sale of the equipment or capital remaining at the end of the contract period, according to the. conceded custom of the profession^ where the expense of production is first deducted from the profits. The respondent was an employee, technically speaking, but he was also in a sense jointly interested in the venture. It is reasonable to suppose that had it been contemplated that the cost of production was to be deducted from the returns before there were to be any profits for division some .agreement would have been made on the subject. In manufacture, agriculture and ordinary business, the word “ profit ” ordinarily means the excess of returns- over expenditures and may or may not, according to circumstances, include in the returns any increase in value of the capital and in the expenditures any depreciation of capital. In a more scientific sense it relates to that excess which remains after deducting from the returns not only the operating expenses and depreciation of capital, but also interest on the capital — 389 — employed. The _ appellant could not be heard to say that she intended in her offer to use the word “ profits ” in a technical or scientific sense, for the respondent presumably accepted it according to its ordinary meaning. She seeks to attach to it a special meaning different from the sense in which it is ordinarily used in the business world. She includes among the expenditures the cost of production, which is the money embarked in the venture at the outset; but she takes no account of the assets at the expiration of the contract. The transaction appears to have been a limited joint enterprise. The appellant was to contribute her time, talent and necessary equipment to produce the plays, and the respondent was to contribute his time and skill as manager. The sum of $20,000 was fixed as a proper compensation for the excess of her investment and hazard, to be first deducted from the profits; then the parties were to share in the remaining profits according to the percentage specified. We think the proper construction of the contract is that she was to bear the expense of production and that it was within the contemplation of the parties that this would be covered by the $20,000. Each case of this character must be decided upon its own peculiar facts. We find no authority directly in point, but these views are supported by analogous decisions. (Eyster v. Centennial Board of Finance, 94 U. S. 500 ; Rubber Co. v. Goodyear, 9 Wall. 788, 804; Park v. Grant Locomotive Works, 40 N. J. Eq. 114; affd., 45 id. 244; Tutt v. Land, 50 Ga. 339 ; People ex rel. Farnum v. Savings Union, 72 Cal. 199, 202; Connolly v. Davidson, 15 Minn. 519, 530; Braun’s Appeal, 105 Penn. St. 414; Proudfoot v. Bush, 7 Grant’s Ch. [U. C.] 518, 523; Bates Part. §§ 229, 230; Lind. Part. 8 [2d Am. ed. p. 12] ; Bouvier’s Law Dict. [Rawle’s Rev.], titles “Profits” and “ Net Profits.”) The case of Eyster v. Centennial Board of Finance (supra) is quite in point. There the government advanced $1,500,000 for the purpose of building the buildings for the Centennial Exhibition which the statute required to be repaid “ in full * * * before any dividend or percentage of profits shall be paid to the holders ” of stock in the corporation. The corporation sought to deduct the amount of subscriptions from the assets out of which the advance was payable. The court said, “ the capital stock of this corporation was not employed in but to prepare for, the business of the contemplated exhibition ; and. — 390 — the receipts of the exhibition, over and above its-current expenses, are the profits-of, the business* - These were-the only'profits anticipated, They are in fact the net receipts, which, according to the common understanding) ordinarily: represent -the profits of, a business, Thg public when referring, to the profits of.the business-, of a merchant, rarely .ever take into account the depreciation, of the buildings, in which- the-business is- carried on, notwithstanding they, may, have been erected out of the capital invested. Popularly speaking,. the.net receipts of a. business are its profits,, So here, as the business to be carried ón was-that of an .exhibition, and its, .profits-, were to-be .derived only ,from -its receiptgy to-the rpopular mind thg; net. receipts .Would represent the net profits.” ; ILcncc it, was held, that stock,subscriptions could not be repaid before-there: were “profits” out of-which to reimburse the government. This seems also to be the practical construction which the parties themselves placed on the contract. The-appellant kept- the production account entirely separate and distinct,, and -although settlement of - the other accounts was ¡regularly made this was allowed, to- 'stand unadjusted, and- the respondent had, notified the appellant’s treasurer that it, did. not concern him. The appellant. assumed to retain and utilize the equipment as her own and the respondent seems to have made.nó'objection-thereto,. . The language employed will bear this, construction andtit seems equitable. If it were not for .the fact that purchase of the costumes for “ Carinen ” during the second season was made at, a figure very low m- comparison with its rental for the prior..season^ which indicates an understanding that it was to be purchased, it might be doubted whether the item of §980 was not a proper expense to be deducted before paying the respondent’s commissions;: but it is apparent 'on examination of the decision of the. referee that he , erroneously allowed the appellant for insurance and other items, of expense properly belonging to the production account in excess of this amount. Therefore, on a -review of the whole case, we find no reversible error, and the judgment should be affirmed, with costs. , Van Bbunt, P. J., and Pattebson,- J., concurred; O’Bbi-en, 3., dissented. Judgment affirmed, with costs.