Galloway v. Chicago-Soft, Ltd.
| Citation | 142 N.H. 752,713 A.2d 982 |
| Decision Date | 11 May 1998 |
| Docket Number | No. 96–101.,96–101. |
| Court | Supreme Court of New Hampshire |
| Parties | Bryan K. GALLOWAY v. CHICAGO–SOFT, LTD. |
Bragdon, Berkson, Davis & Klein, P.C., Keene (H. Neil Berkson, on the brief and orally), for plaintiff.
Brooks McNally Whittington Platto & Vitt, P.C., Hanover (W.E. Whittington IV, on the brief, Geoffrey Judd Vitt, on the reply brief and orally, and Eric D. Jones, on the reply brief), for defendant.
The defendant, Chicago–Soft, Ltd., appeals, and the plaintiff, Bryan K. Galloway, cross-appeals, the decision of the Superior Court (Brennan , J.) awarding the plaintiff commissions, liquidated damages, and attorney's fees arising from a wage claim made by the plaintiff against the defendant, his former employer. We affirm in part, reverse in part, vacate in part, and remand to the department of labor.
Galloway was hired as national sales manager by Chicago–Soft in November 1992. His compensation package included salary and commissions on the sales of various product lines. On August 2, 1994 (termination date), Chicago–Soft terminated Galloway's employment. Chicago–Soft initially paid Galloway his salary through the termination date and commissions based upon "receipts" as of July 31, 1994. Galloway then filed two statutory wage claims with the department of labor (DOL), see RSA 275:51 (1987) (amended 1995, 1997), seeking unpaid salary, commissions, profit sharing and vacation benefits, an unpaid bonus, and severance pay. An initial award by the DOL was reversed and remanded by the superior court. The ensuing second award by the DOL was reversed a second time by the superior court, which held, inter alia , that Galloway was entitled to commissions on sales collected through August 31, 1994, liquidated damages on unpaid salary, vacation, and commissions, and reasonable attorney's fees. This appeal followed.
On appeal, both parties dispute the superior court's award of commissions on sales collected through August 1994. Chicago–Soft also argues that the superior court erred when it awarded liquidated damages and attorney's fees. Galloway contends that the superior court erred in denying his claim for statutory interest and in refusing to award the proper amount of attorney's fees.
The superior court ruled that Galloway was entitled to commissions on sales collected through the month of August 1994. Both parties contend that the trial court's ruling was erroneous. Chicago–Soft argues that the court improperly substituted its own findings of fact for those of the DOL, which held that Galloway was entitled to commissions on collections only through the termination date. Galloway argues that the court erred in not awarding commissions on all sales closed before the termination date and in failing to award commissions on sales pending at termination and later closed. We hold that, as a matter of law, Galloway was entitled to commissions on sales closed by the termination date. We accordingly reverse the ruling of the superior court and remand this action to the DOL for a calculation of commissions due.
The dispute centers on a letter agreement sent to Galloway by Chicago–Soft's president in which he stated that Galloway's compensation would be calculated as follows:
Neither side contests that this letter formed the operating agreement regarding the terms of Galloway's employment. They contest, however, whether the terms of the agreement mean that Galloway should receive commissions on sales closed as of his termination date, or sales collected as of his termination date.
"As a general rule, the proper interpretation of a contract is ultimately a question of law for this court, and we will determine the meaning of the contract based on the meaning that would be attached to it by reasonable persons." Gamble v. University of New Hampshire , 136 N.H. 9, 13, 610 A.2d 357, 360 (1992) (quotation and brackets omitted). Where, however, the contract terms are ambiguous, and the fact finder below has properly looked to extrinsic evidence to determine the intent of the parties, see Holden Eng'g and Surveying v. Pembroke Rd. Realty Trust, 137 N.H. 393, 396, 628 A.2d 260, 262 (1993) ; Parkhurst v. Gibson (Parkhurst) , 133 N.H. 57, 61–62, 573 A.2d 454, 457 (1990), our standard of review is more deferential. See Baker v. McCarthy , 122 N.H. 171, 175, 443 A.2d 138, 140 (1982) ; cf . Keshishian v. CMC Radiologists , 142 N.H. 168, 177, 698 A.2d 1228, 1234 (1997). In those cases, the question of a contract term's meaning "should be left to the trier of facts unless the meaning of the extrinsic evidence is so clear that reasonable men could only reach one conclusion." Erin Food Servs., Inc. v. 688 Props. , 119 N.H. 232, 235, 401 A.2d 201, 203 (1979). Whether a contract term is ambiguous, however, is a question of law for this court to decide. Echo Consulting Services v. North Conway Bank, 140 N.H. 566, 569, 669 A.2d 227, 230 (1995).
We review the parties' employment agreement in light of the special rules that have developed with respect to the interpretation of commission sales employment contracts. See , e.g. , Oken v. National Chain Co ., 424 A.2d 234, 235–36 (R.I.1981).
As a general rule, a person employed on a commission basis to solicit sales orders is entitled to his commission when the order is accepted by his employer. The entitlement to commissions is not affected by the fact that payment for those orders may be delayed until after they have been shipped. This general rule may be altered by a written agreement by the parties or by the conduct of the parties which clearly demonstrates a different compensation scheme.
Vector Engineering & Mfg. Corp. v. Pequet , 431 N.E.2d 503, 505 (Ind.Ct.App.1982) (citations omitted) (emphasis added). If an employer intends for commissions to be calculated differently, either the contract language or the employer's acts must unambiguously demonstrate a departure from the general rule; otherwise, the employee is entitled to commissions on sales closed as a matter of law. Id . See generally Oken , 424 A.2d at 235–36; Diana v. Burnside Motors, Inc ., 30 Conn.Supp. 561, 304 A.2d 222, 224 (Conn.Com.Pl.1973).
In the instant case, both the contract terms and the conduct of the parties demonstrate, as a matter of law, that Galloway is entitled to commissions on sales closed as of his termination date. The plain language of the employment agreement sets forth that Galloway was to be paid on sales closed, both those "closed by [Galloway]" and by his predecessor. Furthermore, while the contract bases the applicable commission rate on sales collected during the calendar year, the contract never indicates that entitlement to those commissions will be based on any measure other than sales closed. Cf . Slusher v. Mid–America Broadcasting, 811 S.W.2d 443, 446–47 (Mo.Ct.App.1991) (). Finally, the contract never explicitly states that Galloway would be divested of any entitlement to commissions on sales closed by virtue of his termination. See id . at 446.
Furthermore, even assuming that the extrinsic evidence presented was properly admitted, cf . Parkhurst , 133 N.H. at 61–62, 573 A.2d at 457 (); Holden Eng'g and Surveying , 137 N.H. at 396, 628 A.2d at 262 (), it was not reasonable for either the superior court or the DOL to rule as it did. See Baker , 122 N.H. at 175, 443 A.2d at 140 (). Specifically, shortly after Galloway filed his wage claim with the DOL, Chicago–Soft's legal representative, acting at the direction of Chicago–Soft's president, wrote a letter to the DOL stating:
Mr. Galloway was paid commissions on those amounts received by Chicago–Soft which represent "new sales." It is difficult to determine what will be owed until such time as the customers actually pay.... We will be attempting to determine what the actual number is as the collection process continues.
Accordingly, we hold that as a matter of law, neither the employment agreement nor the conduct of the parties clearly indicated a specific contractual departure from the general rule that employees paid on a commission basis earn commissions when their employer accepts an order. While over the term of Galloway's employment, commissions were paid as the company made collections on invoices, we conclude that such evidence is not clearly indicative of whether an agreement existed whereby Galloway earned commissions when sales were collected. See Oken , 424 A.2d at 236 (); cf . Vector , 431 N.E.2d at 505 (). We therefore vacate the...
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