Krupnick & Associates, Inc. v. Hellmich
| Decision Date | 13 April 1964 |
| Docket Number | No. 1,No. 49993,49993,1 |
| Citation | 378 S.W.2d 562 |
| Parties | KRUPNICK AND ASSOCIATES, INC., (Plaintiff) Appellant, v. Edward J. HELLMICH et al., (Defendants) Respondents |
| Court | Missouri Supreme Court |
Newmark & Baris, Irl B. Baris, Michael N. Newmark, St. Louis, for appellant.
G. M. Redman, La Tourette & Rebman, St. Louis, for respondents.
WELBORN, Commissioner.
This is an action for damages for breach of an alleged contract under which appellant, Krupnick and Associates, Inc., was to furnish advertising services to respondents. A jury returned a verdict in favor of appellant for $16,302.60, plus interest. The trial court subsequently set aside the verdict and entered judgment for respondents. This appeal is from the judgment so entered. Because of the amount in controversy, we have jurisdiction of the appeal.
Appellant, Krupnick and Associates, Inc., is a Missouri corporation, engaged in the business of an advertising agency in the City of St. Louis. The individual respondents, Edward J. Hellmich and Ernest E. Hellmich, were partners in business conducted in St. Louis under the names, 'The Branchell Co.,' and 'Hellmich Mfg. Co.' The other individual respondents, Emil Hellmich and Karl Kress, were also partners in the Hellmich Mfg. Co. Hellmich Mfg. Co. manufactured melamine plastic dinnerware. The Branchell Co. sold the products of Hellmich Mfg. Co. The two partnerships operated jointly and any obligation under the contract in question was the obligation of both partnerships. We will refer to the individual respondents collectively as 'Branchell.' Lenox Plastics, Incorporated, also a party respondent, is a Delaware corporation, licensed to do business in Missouri. It purchased the business of Branchell in January, 1958.
In its petition, appellant alleged that it agreed with Branchell, in August, 1957, to prepare an advertising campaign for Branchell for 1958 on which Branchell agreed to spend $143,242.25 for advertising, with appellant to receive 15% of that amount as compensation for its services, and that appellant, in reliance on the agreement, performed all services required of it for the advertising campaign. The petition alleged the sale of Branchell's business to Lenox Plastics, Incorporated, in January, 1958, and that Lenox thereafter carried on the business; that on or about January 31, 1958, respondents attempted to cancel the agreement by directing appellant not to place any more advertising, although the appellant had fully performed the work to be done by it under the agreement. Damages were sought in the amount of $18,929.85, which amount was reduced by amendment at the trial to $16,302.60.
Admitting the allegation regarding the sale to Lenox, separate answers of Lenox and of the individual respondents, jointly, denied the essential allegations of the petition.
Appellant's witnesses at the trial were Harvey Brown, vice-president and account executive of appellant, who handled the Branchell account, and Sam Krupnick, appellant's president. From their testimony, viewed in the light most favorable to appellant, the jury could have found that Branchell did, in October, 1957, after a series of conferences with representatives of Krupnick, establish an advertising budget for the year 1958 in which approximately $143,242 would be spent on periodical advertising; that thereafter Krupnick went to work on a final plan for such advertising, which included 'which media to run, which month to carry, which type of ad * * * and a budget breakdown of how much for each ad and which publication, which month * * *.' Such program was prepared and submitted in writing to Branchell early in December, 1957, the document detailing the objectives of the program and the type of advertising to be employed. A detailed schedule was included, showing the months in which advertisements were to be placed in each of ten magazines of general, nationwide circulation, such as Life, Good Housekeeping, and in five trade publications. The program showed the amount budgeted to be spent for each advertisement insertion. The total was $120,839.10 for national publications and $27,647.96 for trade publications. Minor modifications were subsequently made in the plan which resulted in a planned expenditure of $143,242.25. Early in December, 1957, Branchell approved the program and told Krupnick to go ahead and try to get the ads ready for the program. It was agreed 'to proceed, get the photography done, get the type set, get the ads prepared as early as possible so they could be shown or part of them shown at the sales meeting at the end of the year.'
Upon Branchell's approval of the program, Krupnick proceeded to complete the advertisements. The program called for ads to be run in spring publications, in March, April and May, with the same advertisements being repeated in the fall, so that additional work was not required for the fall publications, once the first advertisements had been prepared. Krupnick completed 90% of the work required to produce the advertisements involved in the program. At sales meetings of Branchell personnel in January, 1958, the personnel were told of the advertising program of the company for 1958, which was the program Krupnick had prepared.
Prior to January, 1958, negotiations had been under way for Lenox' acquisition of the Branchell business. Krupnick's president, Sam Krupnick, was aware of the negotiations. Early in January, 1958, Ernest E. Hellmich, who was then in Pittsburgh, telephoned Sam and told him that the sale had been completed; that he would continue to be in charge of the St. Louis business; that Krupnick should go ahead with the 1958 advertising program as planned, but that he could give no assurance for the following year.
On January 31, 1958, a conference was held between representatives of Lenox and Krupnick. At that meeting, Krupnick personnel explained to Lenox the work which had been done toward completion of the program, which, according to Brown, was 90% completed. Lenox' representatives told Krupnick that Lenox did not wish to carry out the advertising program planned for Branchell and that only a few of the advertisements planned should be placed in accordance with express authorization.
Advertisements were placed by Krupnick in some trade publications and one national publication. The amount billed respondents for such advertisements and other production costs totalled $34,558, which was paid. On April 11, 1958, William Trotter, advertising manager of Branchell, wrote Brown:
There was no evidence presented of an express discussion of Krupnick's compensation in connection with the 1958 advertising program. The evidence on this subject showed that, in 1956, Krupnick made a study of Branchell's operations and presented a 'Sales Betterment Plan,' which included 100 specific recommendations regarding Branchell's operation. Among the recommendations was one for an advertising budget of $420,000 for the year 1957. Branchell paid Krupnick $19,600 for the study and report. However, Branchell did not accept fully the advertising budget recommended and spent, in 1957, approximately $172,000 for advertising, through Krupnick.
The Sales Betterment Plan was a document of several hundred pages. Included was a 24-page statement of Krupnick on the subject of 'Invoicing Policies and Compensation,' the first sentence of which read: 'This is our method of compensation and invoicing clients for the services we perform.' Under the heading, 'SOURCES OF COMPENSATION,' the following appeared:
'A. We derive our compensation from four sources:
'1. Commission we receive from the purchase of space, time, materials, and services for clients from media and sources which normally include standard agency commission in their charges.
'a. Standard agency commission is derived from the 15% discount allowed by the medium used. The medium bills its time or space to the agency at full rate, less the 15% discount. The difference between the full rate and the net total is the agency commission. This discount is not available to clients on direct purchase. Example:
Total cost of time or space at full card rate - $100.00
Less standard 15% agency commission - 15.00
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Total cost to agency - 85.00
Agency gross income - 15.00
Approximately 70% of the agency's total compensation comes from this source.
'2. Commission added by us to the cost of media, services, or material necessary to produce advertising, purchased for the client from sources which do not include standard agency commission in their charges.
* * *
* * *
'3. Charges based on established rates for standard or special services on commissionable and noncommissionable advertising performed by the agency for the client.
* * *
* * *
The final page of the treatise on 'Invoicing Policies and Compensation' read as follows:
written notice by registered mail.
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...(finding of a valid contract precludes recovery on a quantum meruit theory under Missouri law) and Krupnick & Associates, Inc. v. Hellmich, 378 S.W.2d 562, 569-570 (Mo.1964) (holding that an express contract would preclude the existence of the contract necessary to form the basis for recove......
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