Plаintiff sued defendant for unpaid commissions allegedly due plaintiff for services performed under a sales contract with defendant. Defendant filed a cross declaration for reimbursement of expenses, incurred by plaintiff and paid by defendant, the payment of which was allegedly the оbligation of plaintiff under said contract. After trial of the case to the circuit court without a jury, the court ordered judgment for plaintiff in substantially the amount claimed and dismissal of defendant’s cross claim. Prom denial of defendant’s motion for a new trial on both the declaration and crоss declaration, defendant appeals.
On December 5, 1958, the parties executed a contract, effective retroactively from October 30, 1958, which provided for the representation of defendant manufacturing company by plaintiff as a sales engineer. The contract, found by the lower court as controlling the disputed relationship of the parties, contained the following provisions pertinent to issues arising from plaintiff’s declaration:
(1) The plaintiff was authorized to solicit orders from any firms except 4 specific firms, among which were Chrysler Engineеring Division, Highland Park, Michigan, and Chrysler Missile Operations, Van Dyke, Michigan.
(3) Cancellatiоn of the contract could be effected by either party by written notice to the other party 60 days before cancellation date, and defendant was to pay plaintiff commissions due on all orders accepted before date of cancellation.
The issue rаised by defendant’s cross declaration, in regard to responsibility of plaintiff’s expenses, is governed by the following paragraph of the contract :
“It is understood your [plaintiff’s] expenses shall be your own responsibility. Should you feel any situation warrants an exception, your requests will be givеn due consideration. Unless we [defendant] have given authority to the contrary on such specific requests, however, we will not assume or pay any of your items of expense.”
The last paragraph of the contract provided that no further agreements between the parties would be binding unless in writing.
Pursuant to the contract, plaintiff solicited certain orders and was paid commissions thereon. Because plaintiff’s income from these commissions was quite meager for the first few months during which the contract was in effect, defendant established for him a drawing account оf $50 per week, chargeable against his commission earnings. The amounts drawn were always deducted from commission payments. Defendant also permitted plaintiff to use office space and telephone and authorized an automobile service station to allow plаintiff to charge gasoline and oil to defendant’s account. , The expenses incurred in connection with plaintiff’s use of office, telephone, gasoline and oil were paid by
The purchase orders for which plaintiff was awarded commissions by the trial court were admittedly procured by plaintiff and accepted by defendant during the term of the contract, and the fact that amendments to the purchase orders were later accepted by defendant does not alter the effect of the contract on payment of сommissions for procurement of orders accepted within the term.
Plaintiff admits that the orders in question were for “production” items rather than “prototype” items, and that these orders were accepted by defendant with reluctance, caused by the fact that defendant’s operational facilities were more suited to the handling of low-volume, high-accuracy “prototype” work than of high-volume, low-accuracy “production” projects. Defendant’s general manager testified that this reluctance .was overcome “initially” by the desirability of aсcepting the orders “as a customer service.” He further testified that “we were in a position where we couldn’t refuse to accept them without jeopardizing our position in future business.”
The problem created by this situation is whether the agreement between the parties callеd for commissions to be paid to plaintiff for such “production” orders. The written contract nowhere classified the orders governed thereby, and, in fact, declared that commissions would be paid on “all orders secured by you [plaintiff] and accepted by us [defendant].” Defendant contends, however, that the written contract should not be construed strictly literally on
Plaintiff contends, on the' other hand, that the words “all orders” are to be cоnstrued literally, because that was the intent of the parties at time ¡of execution and because the contract was drawn by ¡defendant, against whom its wording should, therefore, be construed strictly. Plaintiff further points 1© the fact that the Chrysler account commissions were first paid to him long beforе the “production” ¡orders came into controversy, and alleges that the ■payment of the Chrysler account commissions was rather another attempt by defendant to provide adequate compensation to plaintiff.
On July 18, 1960, plaintiff terminated the contract by sending to defendаnt written notice thereof, effective immediately. Since the contract provided for ¡60 days’ notice of termination, the premature termination constituted breach of the contract. Defendant pleaded this breach as a bar to plaintiff’s suit. The trial court ruled that since dеfendant’s proper remedy for breach was a claim for damages thereon, the absence of such a claim made the breach immaterial to determination of the issues actually raised. Defendant contends on appeal that the trial court erred in so ruling, and attempts to support this position by citing
Jones
v.
Berkey,
“ ‘He who commits the first substantial breach of a contract cannot maintain an action against the other contracting party for a subsequent failure on his part to perform.’ ”
Since the present case does not involve a contract whеrein time is of the essence, the breach found in the sudden termination does not affect an element so essential as to amount to a breach which is contemplated by the rule as “substantial.” Therefore,, the rule of the Jones Case does not bar the present plaintiff’s suit.
Defendant contends further that the trial court erred in denying defеndant’s cross claim for reimbursement of expenses incurred by plaintiff and paid by defendant. The item of plaintiff’s expenses was covered by the contract clause quoted above and repeated for convenience here:
“It is understood your [plaintiff’s] expenses shall be your own responsibility. Should you feel any situation warrants an exception, your requests wiil be given due consideration. Unless we [defendant] have given authority to the contrary on such specific requests, however, we will not assume or pay any of your items of expense.”
The testimony indicates, as stated above, that the items of expense involved were paid by defendant. Prom the undisputed facts that defendant did not deduct these expenses from plaintiff’s commission earnings as it did the drawing account amounts,,
In view of the above-quoted provision of the contract, we think the trial court could properly conclude that defendant, in paying and assuming the expenses, did by those very acts give “authority tо the contrary,” and thereby relieved plaintiff of the responsibility for payment of the expense items'in question. Therefore, the trial court did not err in dismissing defendant’s cross claim for reimbursement of these expenses.
In regard to the trial court’s determination that defendant is liable for commissions claimed by plaintiff to be due him under the contract, defendant on appeal assigns error to the court’s denial of 2 avenues of defense: (1) that the contract terms involved were ambiguous and that, therefore, the intent of the parties at the time of execution, as this intent is shоwn by the circumstances surrounding execution, should control; and (2) that the written contract was subsequently modified by an oral agreement between the parties.
Defendant correctly contends that where a latent ambiguity exists in a contract, extrinsic evidence is admissible to indicate thе actual intent of the parties as an aid to the construction of the contract.
A latent ambiguity is one “where the language employed is clear and intelligible and suggests but a single meaning, but some extrinsic fact or extraneous evidence creates a necessity for interprеtation -or a choice among 2 or more possible meanings.” Black’s Law Dictionary (4th ed), p 105. Since the ■detection of a latent ambiguity requires a consideration of factors outside the instrument itself, extrinsic evidence is obviously admissible to prove the existence of the ambiguity, аs well as to resolve any ambiguity proven to exist.
In defense to its claimed liability, defendant also> affirmatively offered proofs of the existence of a. subsequent oral agreement modifying the written contract. In his written oрinion after trial, the court ruled that defendant had not sustained its burden of proving the existence of the oral contract. The insufficiency found by the court was, however, in regard to the proof of the consideration necessary for the' existence of the oral contract. This Cоurt has held that proof of consideration for a subsequent oral agreement allegedly modifying a written contract is not necessary, because “if the parties considered it to their advantage to depart from strict performance of the agreement, that would constitutе a sufficient consideration.”
Jacob
v.
Cummings,
The trial court did not make a finding, however, as to whether the defendant sustained its burden of proof of the element whieh must be proved to еstablish the existence of the oral agreement, namely, mutual assent. This Court, in reviewing controverted issues of fact in a law case tried without a jury, does not consider the case
de novo
as if it were in equity.
Schneider
v.
Pomerville,
The judgment of the lower eourt is affirmed in its dismissal of defendant’s cross elaim. The ease is remanded only for the determination indicated above. GCR 1963, 810.
Costs of this Court, and of the trial eourt, will be taxed according to the final result.
On Remand.
Under date of August 5, 1964, pursuant to remand, the trial eourt made a determination as a matter of fact from conflicting testimony that defendant had not sustained its burden of proof as to the subsequent oral аgreement. Since the evidence in this, a law case tried to the court without a jury, does not preponderate against that finding, we will not disturb it.
Firemen’s Insurance Co.
v.
Sterling Coal Co.,
The judgment of the lower court is affirmed in the entirety. Plaintiff shall have costs.