Atkinson v. New Britain Mach. Co.

• Decision Date: 16 May 1946
• Docket Number: No. 8825.,8825.
• Citation: 154 F.2d 895
• Parties: ATKINSON v. NEW BRITAIN MACH. CO.
• Court: U.S. Court of Appeals — Seventh Circuit

154 F.2d 895 (1946)

ATKINSON v. NEW BRITAIN MACH. CO.

No. 8825.

Circuit Court of Appeals, Seventh Circuit.

April 9, 1946.

Rehearing Denied May 16, 1946.

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Alvin Glen Hubbard and Jacob Geffs, both of Chicago, Ill., and Mortimer H. Camp, of New Britain, Conn., for appellant.

Franklin D. Trueblood, of Chicago, Ill., for appellee.

Before EVANS, SPARKS, and MAJOR, Circuit Judges.

MAJOR, Circuit Judge.

This appeal is from a judgment in favor of the plaintiff in the sum of $95,000, entered January 12, 1945. The judgment, predicated upon the verdict of a jury, was for compensation alleged to be due and owing the plaintiff under a contract of employment for services rendered during a part of 1941 and 1942.

The errors urged for reversal in the main are directed at the court's charge to the jury. Other errors asserted are that the award of compensation to plaintiff was contrary to the statute and public policy, that plaintiff failed to prove performance under the contract sued upon, and the admission and exclusion of certain testimony.

Defendant for many years has been engaged in the manufacture and sale of machine tools and parts therefor. In 1923, plaintiff entered into a contract with the defendant by which he became its exclusive sales representative for what was called the "Ohio territory," which included certain designated counties in Ohio and Indiana. This territory was subsequently enlarged to include certain counties in Pennsylvania and Kentucky. As compensation for his services, defendant agreed to pay plaintiff a salary of $5,000 per year, his traveling expenses, and a commission of 1¼% on all sales orders sent in from his territory and accepted at defendant's home office after a minimum annual volume of $200,000 had been reached. This initial contract of employment, insofar as it pertains to plaintiff's compensation and the territory assigned to him, was reduced to writing in the form of letters and telegrams.

Plaintiff acted and represented defendant in the capacity related under the 1923 contract without change until 1935. In the latter year plaintiff's compensation was changed, as is evidenced by defendant's letter dated January 8, 1935. In this letter, among other things, it is stated:

"In compensation for your work, we are to pay you on a monthly basis at the rate of $3,600.00 a year, but it is to be definitely understood that our arrangement with you is on a month to month basis.

"In addition to your salary at the above rate, we will pay you a commission of 1¼% on all billings into your territory in excess of $100,000.00."

In 1938, plaintiff's base salary of $5,000 per year was restored, as is evidenced by defendant's letter dated March 24 of that year. By the terms of this letter plaintiff's commission remained unchanged. Plaintiff continued his employment, rendered services as he had theretofore done, and was compensated according to the terms of the 1938 letter until early in 1941, when certain events occurred which gave rise to this law suit.

On March 14, 1941, plaintiff at his home in Cleveland, Ohio, was called by telephone from Washington by Mr. Steinle, defendant's vice president and sales manager, who requested plaintiff to come to Washington and serve on the Army and Navy Munitions Board. Plaintiff, because of his health and the unfavorable Washington climate, expressed an unwillingness to do so. Steinle was insistent and made an appointment to meet him in Cleveland. This meeting was had and plaintiff handed Steinle his written resignation dated March 29, 1941, effective April 1 of that year. Upon reading the same, Steinle tore it in pieces and insisted that plaintiff accept the assignment. Plaintiff reluctantly agreed. Shortly thereafter plaintiff left for Washington by way of New Britain, Connecticut (defendant's home office), where he tried to persuade Mr. Pease, defendant's president, to relieve him of the assignment. Pease, as Steinle had theretofore done, emphasized the importance of plaintiff's acceptance of the assignment because of the war situation with which the country was faced.

We find no serious dispute between the testimony of plaintiff on the one hand and Steinle and Pease on the other as to the representations which were made to plaintiff in order to persuade him to take the Washington assignment. In short, plaintiff was promised as an inducement for his acceptance that he would not be penalized in any way, that the defendant would treat him the same as though he remained in the Ohio territory and would continue the payment of his commissions the same as before, subject to any change in management policy of the defendant. It was admitted by Steinle that plaintiff would have been subject to a change in management policy had he remained within the confines of the Ohio territory. There is no room for doubt but that plaintiff understood and was promised by defendant that the agreement as to compensation then existing between the parties was to remain unchanged upon his acceptance of the Washington assignment.

Plaintiff moved from the Ohio territory to Washington, D. C., and became a technical consultant to the Army and Navy Munitions Board on April 1, 1941. He served on that Board as a Dollar a Year man until May, 1942, when, at defendant's request, he returned to New Britain and worked for about six weeks on defendant's Order Board. On June 15, 1942, plaintiff, at the suggestion of the defendant and over plaintiff's protest, again returned to Washington where he became a consultant to the War Production Board. He served in this capacity until January 1, 1943. During all the time plaintiff was in Washington he continued to serve defendant in the Ohio territory by correspondence, telephone, telegram and occasional visits to the territory. He maintained an office in Washington on behalf of the defendant and was held out to the public as its representative in the Ohio territory. Defendant had other representatives in the territory who submitted daily reports to its home office just as plaintiff had done prior to his going to Washington, copies of which were mailed to the plaintiff in Washington until about the middle of 1942.

It is not disputed but that defendant continued to pay plaintiff his regular salary of $5,000 per year throughout 1941 and 1942, his expenses, except those incurred in government business which were paid by the government, just as it had done prior to his going to Washington. They also paid him commissions until late in 1941, in accordance with the reports of sales made in the Ohio territory. Payment of salary was usually made on a four weeks' basis, that is, thirteen payments per annum. Commissions were paid in a similar fashion except no commissions were paid during a year until sales in the territory exceeded $100,000. Plaintiff on numerous occasions in the fore part of 1942 requested payment of his commissions. On September 13, 1942, defendant tendered plaintiff a written contract for the year 1942, which provided among other things for a "ceiling" of $15,000 on his 1942 commissions. Plaintiff by letter refused the terms proposed, stating, "The terms you mention are not according to our arrangement." Other correspondence followed which evidenced the continuing demand of plaintiff for payment and the refusal of defendant to pay. Defendant by its letter of December 16, 1942, asserted in effect that plaintiff was bound by an oral agreement entered into early in January, 1942, as a basis for a yearly contract. Plaintiff was also notified in this letter that his contract of employment was terminated as of December 31, 1942, and a check for $15,000 was tendered plaintiff as payment in full for commissions for the year 1942, which plaintiff refused to accept.

Insofar as the facts are concerned, defendant's main and perhaps sole defense was that plaintiff's employment contract was modified or rescinded in the early part of January, 1942. The issue having been decided by the jury adversely to the defendant and there being no contention but that the jury's determination is supported by substantial evidence, there would under such circumstances ordinarily be no occasion for this court to discuss the evidence pertaining to such issue. However, the facts concerning defendant's contention that the contract was modified or rescinded are so closely related to the criticism directed at some of the court's instructions that it appears appropriate to consider them at this point.

Defendant's contention that the contract was rescinded or modified is predicated upon a conversation which Steinle claims to have had with the plaintiff on January 8, 1942, in a hotel room in Washington. He asserts in that conversation plaintiff was told that defendant would pay him for the year 1941 a total of $25,000 (including salary and commissions) and $20,000 (salary and commissions) for 1942, and that plaintiff accepted and agreed to the proposition. Plaintiff denied that any such conversation took place at any time or that any agreement was ever made reducing or limiting the defendant's contract liability. Steinle admits that his alleged oral agreement with plaintiff was to be reduced to writing. So far as the record discloses, however, no effort was made to do so until September 13, 1942, when plaintiff had submitted to him a proposed written contract effective as of January 1, 1942, providing for a salary of $5,000 per year and a maximum commission of $15,000. This proposed contract made no reference to the alleged oral agreement of January 8, 1942. Plaintiff refused to become a party thereto.

Defendant's letter of December 16, 1942, to plaintiff among other things stated, "We certainly have understood all this year that your compensation ceiling was $20,000, and have always offered payment on that basis * * *." Thus it becomes plain from this letter, as well as from the proposed contract of September 13, 1942, which provided a maximum...