Story Case

The Rover Typewriter Company entered into a contract with Herbert Hobson, appointing the latter as their representative in Spain for five years, beginning in 1895. It was agreed that Hobson should receive a stated salary per year and a commission on all typewriters sold in Spain, but that the commission should not be paid until the end of the five years' period, when an accounting should be made. At the time the Spanish-American war was declared there was a commission of $500 owing to Hobson. The war compelled the termination of the contract of agency. The company refused to pay a commission on the ground that this was not to be paid until the end of the five-year period. Can the company be compelled to pay?

Ruling Court Case. Clark Vs. Gilbert, Volume 26 New York Reports, Page 279

Gilbert had a contract with the government of the United States for the construction of a sectional dry dock at Mare Island, California, and was to have a lease of the dock for three years for the repair of merchant vessels as well as government vessels. Hier-mans was engaged by Gilbert to take charge of his business in California until his lease expired. He was to receive a specific salary and one-third of all profits. Just prior to the time when the contract would have been completed, Hiermans died. Gilbert and his associates refused to pay his estate the share of the profits which accrued up until the time of the death of the agent. So Clark, as executor of Hiermans, brings this action to recover the amount due from Gilbert to Hiermans.

The decision of the Court is contained in the following statement: "The Court decided in Wolfe vs. Howes, 20 New York 197, that where a person is prevented by sickness or death from fully performing a contract for personal services which he has partially performed, compensation may be recovered for the services actually rendered by him, under the contract. That decision shows that the plaintiff, as executor, may recover, in this case, compensation for the services which his testator, Hiermans, rendered for the defendant, although he was prevented by sickness and death from performing all he was to render according to the agreement between them."

Ruling Law. Story Case Answer

If, for any reason, the relation of principal and agent is terminated without fault of either party, as by the death of the principal or agent, or by the destruction of the subject matter without fault of the agent, the agent is entitled to be compensated for what he has done. This right is not necessarily based upon the contract, but the compensation agreed upon is evidence of what his services were worth. He should receive a reasonable compensation for his services, determined by all the circumstances.

In the Story Case, Hobson should receive the commissions due up to the time of the commencement of the war, because the contract was terminated through no fault of either party.