Norden v. Metson

DOOLING, J. In 1935 appellant (a civil engineer) was employed by Mr. and Mrs. MacKenzie Gordon and Mrs. Gordon’s mother (hereinafter called the Gordons). The Gordons were minority stockholders of the Santa Cruz Lime Company. They were asserting a claim, as such minority stockholders, against the Santa Cruz Portland Cement Company for encroachments by the latter company upon the property of the former. The Gordons had discussed the possibility of arbitrating this claim with officers of the Santa Cruz Portland Cement Company and appellant was employed by the Gordons to evaluate their holdings and the damage to their interest in the Santa Cruz Lime Company, with a view to presenting their claims adequately in the proposed arbitration. It was contemplated at the time of his employment that appellant, after completing his evaluation, should act as the Gordons’ representative in the anticipated arbitration.

On November 21, 1935, appellant wrote a letter to Mr. MacKenzie Gordon in which he proposed that he be paid for his services either a per diem compensation of $25 or a flat monthly rate of $300.

The letter opened with this language:

“Relative to the work in which you have asked me to act as arbitrator in the matter of an accounting and settlement, [597]acceptable to Mrs. Gordon and yourself, by the Santa Cruz Portland Cement Company and Santa Cruz Lime Company.

After proposing the alternative of $25 per day or $300 per month the letter continued with this paragraph (numbered “C”) :

“After the arbitration is completed and a final agreement has been arrived at as between yourselves and the Cement company, either for the payment of cash, or other equivalent consideration of value, I am to receive a percentage of the total amount in excess of .$50,000, based on a straight line increase in the percentage commencing at 6.4% and increasing to 8.4% on $50,000 excess, or where the total amount is $100,-000. For any total settlement over $100,000 the same straight line percentage increase shall apply.”

In view of the argument made by appellant it may be well to notice at this point that the proposal made in this letter contemplated that appellant was “to act as arbitrator in the matter of an accounting and settlement” and that the percentage compensation on any amount received by the Gordons in excess of $50,000 was to be received only “after the arbitration is completed and a final agreement has been arrived at.”