Walter Kidde & Co. v. Walton-Viking Co.
| Decision Date | 12 April 1946 |
| Docket Number | No. 13137.,13137. |
| Citation | 153 F.2d 988 |
| Parties | WALTER KIDDE & CO., Inc., v. WALTON-VIKING CO. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Irvin Fane, of Kansas City, Mo. (J. Branton Wallace, of East Orange, N. J., and Ludwick Graves, James H. Ottman, Jacob Brown, and Johnson, Lucas, Graves & Fane, all of Kansas City, Mo., on the brief), for appellant.
Paul R. Stinson, of Kansas City, Mo. (Robert B. Fizzell, Robert M. Zehring, and Stinson, Mag, Thomson, McEvers & Fizzell, all of Kansas City, Mo., on the brief), for appellee.
Before SANBORN, WOODROUGH, and JOHNSEN, Circuit Judges.
By written contract dated May 18, 1941, the plaintiff (appellee) was appointed defendant's (appellant's) agent, for one year, to sell, on commission in a specified territory, fire extinguishing equipment manufactured by defendant. During the year, the plaintiff procured from the Standard Steel Works, of North Kansas City, Missouri, orders for 10,800 fire extinguishers and brackets therefor. These orders were accepted by the defendant. Plaintiff and defendant disagreed as to the amount which the defendant was legally obligated to pay plaintiff as commissions for procuring these orders. Under the plaintiff's interpretation of the agency contract, plaintiff was entitled to commissions based upon the commission schedule of the defendant which was in effect on July 21, 1941, the date when plaintiff procured for the defendant, from the Standard Steel Works, a contract to purchase 750 extinguishers, with the option of purchasing more at the same prices during the ensuing year. Under the defendant's interpretation of the agency contract, the plaintiff's commissions were to be based upon the commission schedules which were in effect at the times the various orders were received by the defendant from the Steel Works.
The plaintiff brought this action, claiming a balance of $54,974.40 due from the defendant on account of commissions. The defendant denied that it was indebted to the plaintiff, and asserted that it had paid the plaintiff $484.07 more in commissions than was due under the agency contract. The case was tried to the court. Jurisdiction was based on diversity of citizenship. The parties agreed that if the court adopted plaintiff's construction of the agency contract, judgment should be entered against the defendant for $53,750.33, with interest from October 25, 1943, and that if the defendant's construction was adopted, the defendant should have judgment against the plaintiff for $484.07, with interest from April 1, 1944. The court entered judgment for the plaintiff, and the defendant has appealed.
By the terms of the agency contract, the applicable law is that of New Jersey. It is not claimed, however, that the law of that state relative to the construction of sales agency contracts differs from the law of other states.
The agency contract of May 18, 1941, between the parties was upon a form prepared by the defendant. The contract provided that:
"The agent shall be allowed as compensation for performance of its obligations hereunder a commission of an amount in accordance with that set forth in the current commission schedule and current split commission policies furnished to agents by the manufacturer, copies of which have been delivered to and receipt of which is herewith acknowledged by the agent."
The current commission schedule referred to provided:
* * * * * *
"Model 15 .............. $34.30
"Model 20 .............. 41.65"
The last paragraph of the schedule provided:
"The schedules are subject to change without advance notice and we reserve the right to act as final authority on questions of interpretation, or extension of them or to alter them if necessary to meet any unusual conditions not specifically covered."
The contract of the Standard Steel Works, dated July 21, 1941, which the plaintiff procured for the defendant, reads, in part, as follows:
Under this contract, the price of Model 15 was $43.75, and of Model 20, $54.74.
On July 1, 1941, the defendant issued a new "Schedule of Remuneration" to Agents, effective August 1, 1941, which reduced commissions on sales made after the latter date. On March 12, 1942, the defendant issued another "Schedule of Remuneration," effective March 16, 1942, further reducing agents' commissions on sales made thereafter. In each of these schedules, the clause relating to defendant's right to change or alter commission schedules was included.
Between November 10, 1941, and April 28, 1942, the defendant received orders from Standard Steel Works for 10,800 fire extinguishers and brackets as follows:
1941
Nov. 10, three orders aggregating 1660 Model 20's
1942
March 9, two orders " 1000 Model 15's
" 23, eight orders " 8040 Model 20's
April 28, one order for 100 Model 20's
All of these orders were accepted by the defendant and subsequently filled. They were all war orders for extinguishers and brackets to be installed in equipment manufactured by Standard Steel Works to fulfill war contracts. The total amount received by the defendant from Standard Steel Works for the 10,800 extinguishers and brackets was $638,405.
The commissions, as finally computed, allowed and paid to the plaintiff by the defendant upon these orders, were:
On the orders of Nov. 10, 1941, $ 6,274.80
" " " " March 9, 1942, 2,940.00
" " " " March 23, 1942, 8,061.67
" " order " April 28, 1942, 74.00
__________
A total of .................... $17,350.47
The computation of commissions by the defendant, with some adjustments favorable to plaintiff, was based upon the hypothesis that, under the agency contract, the changes in commission schedules were applicable to orders received after effective dates of the changed schedules. Under the plaintiff's interpretation of the contract, the commissions earned amounted to about $71,000.
Apparently, the effectiveness of the changed commission schedules with respect to orders procured by the plaintiff in the ordinary course of business was not disputed. The defendant contends that the changed schedules applied also to orders received from a customer who held an "annual purchase contract." The plaintiff contends that when it procured the "annual purchase contract" from the Standard Steel Works, plaintiff earned its commissions upon all purchases subsequently made thereunder, and that to allow the application of the changed schedules to such purchases would be to permit the defendant to change commissions after they had been earned. The weakness of the plaintiff's position is that the "annual purchase contract" obligated the Standard Steel Works to purchase only 750 extinguishers. It could, under its option, purchase more of defendant's extinguishers at the same price if it saw fit to do so, or it could supply its needs from other sources. It was as free to purchase its requirements (in excess of 750 extinguishers) from others as it would have been if the option did not exist. The procuring of the "annual purchase contract" by the plaintiff did nothing more than increase the probability that the Standard Steel Works would purchase from the defendant more than 750 extinguishers during the year the contract was in force. There is nothing in the agency contract or the commission...
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