Louis Auerbach, Inc. v. Ramer

Whitaker, J. The fifth cause of action to which the demurrer was interposed arose on a written contract between the plaintiff (employer) and defendant (employee) and is brought for the recovery of an excess of moneys advanced by the plaintiff over and above commissions earned by the defendant pursuant to the terms of his employment. The fifth cause of action sets up a written agreement between plaintiff and defendant whereby plaintiff employed defendant as traveling salesman and defendant entered into the employ of plaintiff as such. The agreement, so far as it is material, is as follows: “ The employee further agrees that he will personally bear and pay all and singular the traveling expenses incurred by him upon each and all of his selling trips, and any sums which the employer shall or may advance to him on account of such traveling expenses, shall be charged personally to the employee, and deducted from the amount of his commissions as hereinafter provided. “As and for full compensation for all of the services to be rendered by the employee, and in lieu of a salary therefor, the employer agrees to pay to the employee, and the employee agrees to accept and receive commissions upon the following basis, to wit: “(a) Ten per cent (10$) of the gross selling price [647] of all merchandise comprising the general line of neckwear manufactured by the employer, except that where the same is sold in job lots said commission is to be five per cent (5%) only; “(b) A commission of five per cent (5#) upon the merchandise comprising hosiery and angora goods dealt in by the employer. “ The employer agrees to advance to the employee the sum of Fifty ($50) Dollars, each and every week during the continuance of this agreement, on account of commissions, which the employee shall or may make and earn under and pursuant to the terms hereof, which said advances shall be charged to the personal account of the employee, and shall, as hereinbefore provided, be deducted from the earnings of the employee.” Plaintiff alleges that the agreement terminated on October 26, 1912; that during the continuance of the contract plaintiff advanced money to defendant under its terms for traveling expenses and also on account of anticipated commissions; that at the termination of the contract such advances amounted to $373.45 in excess of commissions earned by defendant. Plaintiff asks judgment for that amount. Defendant demurred to the said fifth cause of action on the ground of insufficient facts.' The demurrer was overruled. The learned justice stated in his opinion: “ The language used in the agreement takes this claim out of the rule as stated in Durante v. Raimon, 136 App. Div. 448.” The learned justice was probably correct when he stated that the language used in the agreement in the case at bar takes the claim outside of the rule stated in the case referred to. The facts of that case were quite different. There are other cases, however, which lay down the rule that advances made in contracts similar to the one in the case at bar are not [648] loans and cannot be recovered. This principle is laid down in . Northwestern Mutual Life Ins. Co. v. Mooney, 108 N. Y. 118, where the court said, speaking of an advance made pursuant to a contract similar in purpose, that the advance, if to be used to promote the business of the person making it, could be considered neither as a gift nor a loan. There is later judicial recognition and approval of this general doctrine in the case of Schlesinger v. Burland, 42 Misc. Rep. 206, also in the case of Wolfsheimer v. Frankel, 130 App. Div. 853. The rule to be deduced from these and other similar authorities is that, where a contract of employment provides for advances to the employee and which are to be charged to and deducted from the commissions agreed by the employer to be paid to the employee as the same may accrue, the employer cannot, in the absence of either an express or implied agreement or promise to repay any excess of advances over the commissions earned, recover from the employee such excess. The question in the case at bar, therefore, resolves itself into one of interpretation of the contract between the parties. I can find no such express or implied agreement or promise in such contract. While the advances are to be charged ‘ ‘ personally to the employee,” they are to be deducted from the amount of his commissions. They are payable out of a specific fund, to wit, the anticipated commissions. The respondent in his brief lays much stress on the words in the contract: ‘ ‘ which said advances shall be charged to the personal account of the employee.” Even if we take these words alone, without giving the words which follow and which declare they should be deducted from the earnings of the employee any force, they do not contain any express or implied contract to [649] repay. If the parties had it in their minds to make the defendant pay back any excess of advances, they certainly would have said so. It would have been a simple matter, and it is incomprehensible that such' a simple provision should have been omitted if the parties had intended otherwise. The words are not sufficient to create a personal liability on the part of the defendant, and in my judgment were never intended to create such liability. The order and interlocutory judgment overruling the demurrer should be reversed, with ten dollars costs and disbursements, and the demurrer sustained, with ten dollars costs, with leave to the plaintiff to plead over within six days after service of a copy of the order entered herewith, with notice of entry thereof in the City Court upon payment of costs in this court and in the court below. Lehman and Bijtjb, JJ., concur. Order and interlocutory judgment reversed, with ten dollars costs and disbursements, and demurrer sustained, with ten dollars costs.