Donahue v. Rockford Showcase & Fixture Co.

• Decision Date: 13 January 1967
• Docket Number: Gen. No. 66--54
• Parties: Marjorie V. DONAHUE, as Administrator of the Estate of Joseph A. Donahue, Deceased, Appellant, v. ROCKFORD SHOWCASE & FIXTURE CO., a Corporation, Appellee.
• Court: United States Appellate Court of Illinois

Page 278

230 N.E.2d 278

87 Ill.App.2d 47

Marjorie V. DONAHUE, as Administrator of the Estate of Joseph A. Donahue, Deceased, Appellant, v. ROCKFORD SHOWCASE & FIXTURE CO., a Corporation, Appellee.

Gen. No. 66--54.

Appellate Court of Illinois, Second District.

Jan. 13, 1967.

On Rehearing Aug. 1, 1967.

Brown, Connolly & Oliver, Rockford, for appellant

Cannariato, Nicolosi & Pigatti, Rockford, for appellee.

ABRAHAMSON, Justice.

This is an appeal from a Declaratory Judgment entered February 18, 1966, by the Circuit Court of the 17th Judicial Circuit, Winnebago County, that found the parties to the suit had entered into a 'valid written contract' of employment that was, however, for an indefinite period of time and hence terminable at will. It also found that the plaintiff was entitled to damages in the amount of $5,087.92 for commissions earned under the terms of the contract prior to its termination.

Joseph A. Donahue, the original plaintiff, died subsequent to the trial, and his widow, as Administrator of his Estate, has been substituted as party plaintiff and appellant. For the sake of clarity we will refer only to the actions of Donahue and describe him simply as the plaintiff.

In July, 1962, the plaintiff was employed by the defendant, Rockford Showcase & Fixture Co. and given the title of 'Executive Vice-President'. His functions as an employee were to represent the defendant within a certain specified area and to sell its products, principally wooden displays and related items. The plaintiff continued to work for the defendant in that capacity through December of 1963 and was to receive by mutual agreement, a salary of $850.00 per month.

Sometime in December, 1963, the plaintiff discussed a modification of the association with an officer of the defendant corporation. In accordance with that discussion, the plaintiff, on January 19, 1964, wrote a letter to Mr. W. G. Michaelsen, as president of Rockford Showcase. The letter indicates that the parties agreed that subsequent to January 1, 1964, the plaintiff would receive a commission of 8% On all shipments of defendant's products to customers 'contacted and developed' by him in place of the monthly salary under the former, oral agreement. The letter specified in considerable detail those activities that the plaintiff would continue to perform on behalf of Showcase. It also provided that 'Due to my contributions of abnormally high expenses, relying on reorders for actual net compensation above expenses, the agreement to run until cancelled by mutual consent of both parties or changed by mutual consent.' The letter was signed by Michaelsen, as president, under the signature of the plaintiff, on January 27, 1964.

On February 4, 1964, the plaintiff wrote a second letter to Michaelsen that stated 'Your fairness in dealing with me relative to the commission agreement of January 19, 1964, has prompted the suggestions that the two items below be made an addition to that agreement.' The first of the 'items' provided that the plaintiff would be entitled to his commission on all reorders from his customers for a period of 30 months after the initial shipment. The second item was stated as follows:

'In order to protect you relatively to my aggressively contacting prospective customers and obtaining orders from them and not relying on reorders to return a minor amount of commission, I suggest that if my shipments, in any twelve month period, fall below twenty five thousand, neither gasoline and oil mileage nor commissions would be justified and as a result our agreement would be automatically cancelled. This would protect you and myself.

Sincerely,

/s/ Joseph A. Donahue'

This letter was also co-signed by Michaelsen as president.

Thereafter, some dispute arose between the parties in regard to back salary due the plaintiff for his services prior to January During trial, and in this appeal, the plaintiff contends (1) that the letters of January 19 and February 4, 1964, constituted a valid, binding contract of employment between the parties; (2) that by its terms the contract was to terminate only if the commissions of the plaintiff were to fall below $25,000.00 in any one year; and (3) that therefore the unilateral termination of the employment by the defendant on March 19, 1964, was a breach of that contract since there was no lawful basis to discharge him.

1, 1964. On March 20, 1964, the defendant notified plaintiff by mail 'that effective March 19, 1964, your association with Rockford Showcase & Fixture Co.' is terminated. Plaintiff returned a key, as requested by the defendant, by mail on April 5, 1964.

The defendant urged, at the trial, that the letters did not constitute a contract but inasmuch as the trial court, correctly in our opinion, determined that they did, and neither party has appealed from that portion of the judgment order, we will not concern ourselves with that point. Likewise, we will not consider the dispute as to whether the alleged misconduct of the plaintiff established sufficient cause to discharge him prior to the expiration of the duration of the agreement.

The plaintiff would have us hold that the agreement clearly established the intention of the parties and that it is not, therefore, subject to the construction of the court. It is, of course, true that the court will not resort to rules of construction where the agreement itself is clear and unambiguous. Herlihy Mid-Continent Co. v. San. Dist., 390 Ill. 160, 166, 60 N.E.2d 882; Illinois State Toll Highway Comm., etc. v. M. J. Boyle & Co., 38 Ill.App.2d 38, 51, 186 N.E.2d 390. It is significant, however, that it was the plaintiff who brought the Declaratory Judgment action to have the court declare the rights and duties of the parties under the agreement and it is our opinion that, under the circumstances, construction is necessary.

A contract, under certain circumstances, will be construed by the court to give effect to the intention of the parties where the terms of the agreement itself are not clear or are ambiguous. The intention of the parties to the agreement will be ascertained by an examination of all the facts and circumstances manifested by the evidence, including the relationship of the parties, the subject matter of the contract, and the purpose or object for which it was created. Kleinhans v. Reasor, 345 Ill.App. 467, 472, 473, 103 N.E.2d 655; Meeks v. George A. Fuller Co., 40 Ill.App.2d 172, 177, 189 N.E.2d 387. The agreement will be construed as a whole to give meaning to all the provisions that are contained in it. De Tienne v. S. N. Nielsen Co., 45 Ill.App.2d 231, 234, 195 N.E.2d 240; Belanger v. Seay & Thomas, Inc., 28 Ill.App.2d 266, 271, 171 N.E.2d 418. The contract will be construed most strongly against the party who prepared it for the reason that he chose the words to be used and is therefore more responsible for the existence of the ambiguity. Gothberg v....