Mannion v. Stallings & Co., Inc.

• Decision Date: 24 September 1990
• Docket Number: No. 1-89-0941,1-89-0941
• Citation: 149 Ill.Dec. 438,204 Ill.App.3d 179,561 N.E.2d 1134
• Parties: , 149 Ill.Dec. 438 Gerald F. MANNION, Jr., Plaintiff/Counter-Defendant-Appellant, v. STALLINGS & COMPANY, INC., Defendant/Counter-Plaintiff/Third-Party Plaintiff-Appellee (Mannion Mechanical Services, Inc., Third-Party Defendant-Appellant).
• Court: United States Appellate Court of Illinois

Page 1134

561 N.E.2d 1134

204 Ill.App.3d 179, 149 Ill.Dec. 438

Gerald F. MANNION, Jr., Plaintiff/Counter-Defendant-Appellant, v. STALLINGS & COMPANY, INC. Defendant/Counter-Plaintiff/Third-Party Plaintiff-Appellee (Mannion Mechanical Services, Inc., Third-Party Defendant-Appellant).

No. 1-89-0941.

Appellate Court of Illinois First District, First Division.

Sept. 24, 1990.

Donald L. Johnson, Chicago, for Gerald F. Mannion, Jr. and Mannion Mechanical Services, Inc.

Burke & Burke, Ltd., Chicago (John M. Burke, of counsel), for Stallings & Co., Inc.

Presiding Justice BUCKLEY delivered the opinion of the court:

This appeal arises from an action brought by Gerald F. Mannion (Mannion) against Stallings & Company, Inc. (Stallings) to recover commissions under an oral employment agreement and Stallings' counterclaim against Mannion and third-party complaint against Mannion Mechanical Services, Inc. (Mechanical Services) for tortious interference with contractual relations or business expectancy. Mannion appeals from the circuit court's order directing a verdict against him on his breach of contract action, and Mannion and Mechanical Services appeal from the judgment entered against them in the amount of $50,948 on Stallings' tortious interference action. We affirm.

Stallings, an Illinois corporation with offices in the City of Glenwood, Illinois, is engaged in the business of manufacturing and marketing industrial controls systems. Mannion, together with his brother James R. Mannion and Mechanical Services, own certain patents relating to energy management systems, known as the "BRDG-TNDR" systems, which control water flow in large chilled and/or hot-water systems.

On January 1, 1979, Mechanical Services, to which Mannion and his brother had granted the exclusive license to the BRDG-TNDR patent, entered into a written agreement with Stallings whereby Stallings was granted the exclusive license under the patent to manufacture, use and sell BRDG-TNDR products and Stallings, in turn, agreed to pay certain flat fees and share net profits pursuant to a specified formula. From August 1977 to March 1983, Stallings employed Mannion as a salesman to work on jobs involving BRDG-TNDR systems and non-BRDG-TNDR systems.

In his breach of contract action before the circuit court, Mannion sought to recover past-due commissions for work performed on non-BRDG-TNDR jobs under an oral employment agreement. In its counterclaim and third-party claim, Stallings sought to recover damages for Mannion's and Mechanical Services' interference with its contractual relations or prospective business relations with a third party pursuant to its rights under the BRDG-TNDR patent.

At trial, the following evidence was presented in Mannion's breach of contract action. Mannion testified that around the time he accepted his employment with Stallings, he had a conversation with Thomas Stallings, Stallings' president, wherein they discussed that Mannion would "come to work for Mr. Stallings * * * and that [they] would share fifty-fifty in the proceeds from the work that [Mannion] developed * * * in the expansion of these present products and new system-oriented products." Mannion testified that they agreed that he would receive a $20,000 annual salary plus necessary sales expenses and the use of an automobile. He also testified that during his employ with Stallings, he received commissions on non-BRDG-TNDR items, which were computed under a formula using a 30% discount from the job profit to account for overhead, leaving a residual of 70% of the job profit to be divided on an equal basis between Stallings and himself.

On cross-examination, Mannion responded affirmatively to whether it was his understanding that he would receive a commission on every job he "touched" at Stallings, but later clarified his answer to be "it was our agreement that any job that I matured to order as my input * * * in my particular area, I would get commission on." Upon further questioning, Mannion responded "[m]y agreement with Stallings * * * was that we would share in the work we did, and as defined between the two of us, which followed a basic product type line. I also had the responsibility to handle some of Mr. Stallings' lines without any commission."

On redirect examination, Mannion expounded further upon his understanding of the agreement:

"[A]ny job that incorporated a specific system concept with, where we would build up a system, an engineer system, or sell product that was of the Brant manufacture, OCI, Hume, so forth, the lines that I brought, and also the lines that I was to develop with Mr. Stallings, it was under these logos * * * I was entitled to a commission arrangement."

Mannion offered into evidence computations prepared by Stallings' bookkeeper on two non-BRDG-TNDR jobs on which he was paid commissions and charts prepared by himself listing commissions paid to him and those due him on non-BRDG-TNDR jobs, the latter of which Thomas Stallings identified as jobs for which Stallings had received compensation. Mannion testified that between 1977 and the end of 1982, he was paid $48,374 on non-BRDG-TNDR jobs. He admitted on cross-examination that his suit sought reimbursement only for commissions accruing on non-BRDG-TNDR jobs in 1982 and 1983 and stated that, although he "worked on" numerous other non-BRDG-TNDR jobs during the years 1977-81, he received one commission check in 1977-78, probably five commission checks in 1979, one commission check in 1980, and no commission checks in 1981.

Mannion also introduced into evidence letters Stallings sent to him in 1980, 1982, and 1983 which explained the money and benefits which had been paid to him during each year. Stallings' bookkeeper testified that Mannion never complained about not receiving all the commissions due him after Stallings sent these letters.

After the court directed the verdict in favor of Stallings on Mannion's breach of contract claim, evidence was introduced on Stallings' counterclaim and third-party claim. On adverse examination, Mannion testified as follows. While he was employed by Stallings in 1982, he contacted Honeywell, Inc., located in Orlando, Florida, to sell BRDG-TNDR systems on behalf of Stallings. He traveled to Miami various times in connection with this business and was reimbursed for his expenses. Thomas Stallings and employees Ray Putzi and Julie Fink also worked on the Honeywell project. By the summer of 1982, the Honeywell job was "possibly in the bid stage." Mannion received a letter dated November 4, 1982, from Honeywell's sales representative informing him "that there are some drawings coming and that there's an additional item to be bid." The letter also referred to specifications for the Honeywell project, which indicated that the "Mannion I-S system" would be manufactured by Honeywell.

Stallings introduced into evidence a purchase order "subcontract agreement" in the amount of $171,000, which was signed by Honeywell and dated January 7, 1983. Stallings also adduced a letter sent by Honeywell to Stallings on January 20, 1983, informing it of its intent to enter into a contract for an additional $40,000 item.

Thomas Stallings testified that the Honeywell job was entered into the Stallings' computer on January 12, 1983. He could not recall having seen a signed acceptance of the Honeywell purchase order. Thereafter, Mannion and Fink began to prepare drawings for the Honeywell job.

The following was further disclosed by Mannion's testimony. Mannion believed Stallings breached the patent license agreement in October 1982 and was aware that the patent agreement contained a provision requiring a 90-day notice to the breaching party and giving the breaching party the right to cure any alleged default within the 90-day period. Mannion adduced a letter, dated January 6, 1983, and marked "received January 11, 1983," sent by James Mannion to Stallings informing it that Stallings and Mechanical Services were in breach of the patent agreement and that "[b]oth have been given the full 90 days to cure the breach." Mannion testified that Thomas Stallings informed him in early January 1983 that he had received this notice.

Mannion testified that he sent a telegram on March 1, 1983, notifying Stallings that it was in default of the patent license agreement and that he was terminating the agreement "as of January 1, 1983." Mannion also sent Honeywell a telegram on March 1, informing it that Stallings had been put on notice for patent infringement of the Mannion BRDG-TNDR patent. The telegram further stated that "to cause minimum delay Mannion Mechanical will honor the current job price and supply material and services for systems, price, conc, D $40,000 bag claim FIS $171,000."

On March 11, 1983, Mannion directed a letter to Honeywell which he understood would "hold Honeywell harmless" for any claims made by Stallings. On that date, he also submitted a bid quotation to Honeywell. Mechanical Services ultimately received the Honeywell job and was paid $211,000 upon its completion. Mannion testified that Mechanical Services received between a $5,000 and $5,500 profit on the job.

Herbert L. Dean, Stallings' accountant since 1977, testified over Mannion's objection, that had Stallings performed the Honeywell job, it would have made a gross profit of $111,973, a net profit of $78,381, and, after deducting Mannion's share, a profit of $50,948. Dean further testified that Stallings incurred $33,592 in overhead even though it was not awarded the Honeywell project. Dean calculated the interest on the $84,540 total loss to be $21,125 from early 1983 through the end of 1988 at a 5% interest rate.

On Mannion's appeal from the judgment entered against him on his breach of contract action, he contends that the circuit court erred in directing the verdict against him at the close of his case-in-chief. When ruling on a motion for judgment at the close of a plaintiff's...