Want v. Century Supply Company
1974 Mo. App. LEXIS 1230, 508 S.W.2d 515 (1974)
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Rule of Law:
An agent who is party to an agency agreement of indefinite duration and is terminated by the principal may recover in quantum meruit for the reasonable value of services rendered and expenses incurred if the agent has not had a sufficient opportunity to recoup those expenditures.
Facts:
- Plaintiff and defendant entered into an oral agreement for plaintiff to work for defendant.
- Plaintiff's job was to secure his former customers for the defendant, and the agreement specified he would have "as long as he wanted" and "whatever time was necessary" to do so, with no set deadline.
- Under the agreement, plaintiff would advance all costs himself and receive a five percent commission on the business he successfully brought to the defendant.
- Defendant issued a notice to plaintiff's business associates announcing that plaintiff was "now affiliated with defendant."
- Plaintiff worked for seven months, bringing in an average of $10,000 per month in business for the defendant.
- During this seven-month period, plaintiff spent $3,600 of his own money on expenses related to the work.
- After seven months, the defendant discharged the plaintiff without good cause.
Procedural Posture:
- Plaintiff filed a petition against defendant in a Missouri trial court.
- Defendant filed a motion to dismiss for failure to state a claim, arguing recovery was barred by the Statute of Frauds.
- The trial court granted defendant's motion and dismissed the petition with prejudice.
- Plaintiff, as appellant, appealed the dismissal to the Supreme Court of Missouri.
- The Supreme Court of Missouri transferred the case to the Missouri Court of Appeals, the intermediate appellate court, for lack of jurisdiction.
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Issue:
May an agent, terminated from an employment agreement of indefinite duration, state a claim for the reasonable value of their services and expenses when they have not had a sufficient opportunity to recoup their initial investment of time and money?
Opinions:
Majority - Clemens, Judge
Yes. An agent terminated from an agency agreement of indefinite duration can state a claim for recovery in quantum meruit. The court first dispensed with the Statute of Frauds defense, reasoning that the statute only bars oral contracts that cannot possibly be performed within one year. Since it was possible for the plaintiff to complete his performance within a year, the oral contract was not barred. The court then construed the plaintiff's petition as a valid action in quantum meruit. While agency agreements for an indefinite duration are generally terminable at the will of either party, there is a key limitation. Citing Beebe v. Columbia Axle Co., the court explained that if an agent, induced by the appointment, has in good faith incurred expenses and devoted time and labor without a sufficient opportunity to recoup those costs, the principal must provide just compensation. The law will not permit a principal to be unjustly enriched by an agent's uncompensated efforts and expenditures. Therefore, the plaintiff's petition stated facts that, if proven, would warrant relief.
Analysis:
This decision reaffirms and applies an important equitable exception to the at-will termination doctrine for agency relationships of indefinite duration. It solidifies the principle that a principal's right to terminate is not absolute and does not extinguish the duty to compensate an agent for the value of their upfront investment of time and money. The case establishes that agents can use a quantum meruit claim to prevent a principal from benefiting from the agent's initial efforts without providing a reasonable opportunity for the agent to be compensated through the agreed-upon terms. This precedent provides a crucial protection for sales agents, distributors, and others who must make significant initial investments to generate future revenue.
