Story Case

Mr. William Mason was a farmer who raised a large amount of wheat. A few weeks before the wheat was ripe, the Minneapolis Milling Company sent an agent down to purchase the grain for delivery when harvested. They entered into an agreement by which Mason was to sell to the Milling Company all of his grain when it was harvested and threshed. It was agreed that Mason should be paid the market price for his wheat at the time of delivery to the Company's elevator in Minneapolis. Each party gave the other a memorandum of the agreement.

The Milling Company refused to pay for the wheat after it was received and Mason was compelled to sue for his money. In the trial of the case the question arose as to whether or not this was an express contract. The company maintained that if any contract existed it was implied, since the time of delivery and the amount were not expressed.

Under the foregoing circumstances what should the court hold as to the nature of the contract, whether express or implied?

Ruling Court Case. Bovell Vs. Voorheis, Volume 20 Illinois Appeal Reports, Page 538

Lutes and his brother had been engaged for a number of years in the business of selling dry goods. In 1879 they failed in business and made an assignment of all of their property for the benefit of creditors.

Lutes and his brother owed a large amount of money to Voorheis, the defendant in this action. The latter purchased all of the stock in trade, formerly belonging to Lutes Brothers, and opened up a new business of the same kind. The defendant engaged him as manager of the new store. No written contract was entered into by and between the parties as to the compensation which was to be paid Lutes for his services. However, the testimony in the case showed an understanding that he was to receive one-half the profits of the business, a half of which he was to retain, and a half of which was to be applied to the payment of the debt which Lutes owed Voorheis.

For six years Lutes acted as manager of the business. At this time he died. During these six years the business had prospered and large profits had been made. But at no time had there been any settlement made between Voorheis and Lutes as to the compensation of the latter.

After the death of Lutes, Bovell, the plaintiff, was appointed his administrator. He brought this action to recover of the defendant one-half the profits made during the time that Lutes acted as manager for the defendant. The defendant contended that, since there was no express contract, that he was liable only for a reasonable compensation for the services of Lutes, which was considerably less than one-half the profits made during that time.

Decision

The testimony in the case indicated an express contract between the parties. The fact that it was not reduced to writing is immaterial. Further, the contract of employment is no less express, because the "price" or "amount" that Lutes was to receive was not agreed upon in advance, but was made to depend upon the uncertain result of some business venture, or upon other contingencies which would in the future determine the compensation he would receive.

Accordingly, it was held that the plaintiff was entitled to recover one-half the profits made in the business during the six years that Lutes acted as manager.

Ruling Law. Story Case Answer

Contracts may be express or implied in respect to the manner in which they are entered into.

An express contract is one where the parties expressly agree upon the terms of the contract. They agree upon the time for performance, the amount to be received, or whatever the nature of the contract demands. But a contract is none the less express because the parties leave some term dependant upon some future event. They have expressly agreed upon that as a determining factor.

Thus, in the Story Case, there is no doubt but that the contract there entered into was an express contract; this is true notwithstanding that at the time it was made, neither knew how many bushels of grain there would be and neither knew what the market price of wheat would be at the time for delivery.