Powers & Co. v. American Soc. of Tool Engineers, 8

• Decision Date: 02 April 1956
• Docket Number: No. 8,8
• Citation: 345 Mich. 392,75 N.W.2d 824
• Parties: POWERS AND COMPANY, Inc., a Michigan Corporation, Plaintiff and Appellee, v. AMERICAN SOCIETY OF TOOL ENGINEERS, a Michigan Corporation, Defendant and Appellant.
• Court: Michigan Supreme Court

Page 824

75 N.W.2d 824

345 Mich. 392

POWERS AND COMPANY, Inc., a Michigan Corporation, Plaintiff and Appellee, v. AMERICAN SOCIETY OF TOOL ENGINEERS, a Michigan Corporation Defendant and Appellant.

No. 8.

Supreme Court of Michigan.

April 2, 1956.

Charles W. Bishop, Detroit, for plaintiff-appellee.

Clyde L. Fulton, Highland Park, for defendant-appellant. Frederick O. Knauer, Highland Park, of counsel.

Before the Entire Bench.

BLACK, Justice.

Defendant-appellant's statement of facts, set forth in brief under Court Rule No. 67 (1945), has been accepted by plaintiff-appellee. We find that it fairly presents the questions brought here for review and therefore incorporate same into this opinion as follows:

'The defendant is a Michigan nonprofit corporation organized ane existing for scientific and educational purposes. In the early summer of 1944, and for a period of time prior thereto, the defendant's house organ, a technical and trade magazine bearing the name 'Tool Engineer', was being published monthly for it by an organization known as Bramson and Company. For reasons not appearing in the record, the defendant desired to make other arrangemenrs, and as a consequence entered into negotiations with one Robert B. Powers who was at that time engaged in the publication management business under the assumed firm name of Kenyon and Company.

'A written contract was executed on December 7, 1944 by the defendant Society and Robert B. Powers, doing business as Kenyon and Company, under the terms of which Kenyon and Company agreed to do 'all things necessary for the printing, publishing and distributing' of 'Tool Engineer' magazine. The defendant Society in turn agreed, inter alia, to 'furnish all necessary capital for the payment of salaries and expenses for the editorial, advertising and general business activities of the publication and for all printing, publishing and mailing costs' and to pay to Kenyon and Company 'fifteen (15%) percent of the net advertising income derived from the sale of advertising', the same to be computed and paid monthly plus 'a sum of money equal to twenty-five (25%) percent of the net profits from the publication of 'Tool Engineer", which amount was to be computed and paid yearly.

'Although there was some preliminary work done as early as September, 1944, the first issue of 'Tool Engineer' which Kenyon and Company published was that of February, 1945. When the revenue from the advertising which appeared in that issue was received, Kenyon and Company was paid its first compensation.

'Each month thereafter, during the year 1945, 'Tool Engineer' was published by Kenyon and Company, and in each issue, with the exeption of that of March, there appeared advertising.

'After each advetising bearing issue of the magazine was published and the advertisers had paid their bills, the publisher, Kenyon and Company, would automatically receive its 15 per cent compensation.

'On January 1, 1946 the defendant Society entered into a verbal agreement with the plaintiff, Powers and Company, Inc., a Michigan corporation, which agreement was ultimately reduced to writing on January 2nd of the next year, and it was upon this contract that the plaintiff subsequently brought suit.

'The need for this second contract was occasioned in part by the fact that Robert B. Powers, formerly operating Kenyon and Company, had, at about this time, incorporated his business under the name of Powers and Company, Inc. A further necessity for the execution of a new contract was the fact that the defendant Society wished to have published an annual directory of its then 18,000 members, for which no provisions had been made in the earlier contract.

'This contract of January, 1947 contained in it an expression of the desire of the parties 'to supersede said original contract by a new contract which shall clarify said original contract and make certain additions thereto and changes therein and provide for the continuation of the purposes of the former contract, of December 7th, 1944, and to provide for the continuation of the functions performed by Kenyon and Company through the publisher,' Powers and Company, Inc.

'Paragraph 5 recited the provision that 'The Society shall pay Powers and Company, Inc. fifteen (15) percent of the net receipts from advertising space sales in both 'Tool Engineer' and 'ASTE Directory', the same to be computed and paid monthly in regard to the 'Tool Engineer' * * *'.

'Paragraph 9 set forth the provision that 'Net receipts in regard to advertising space sales, is hereby determined to be the gross receipts from advertising space sold, less agency and space representatives commissions paid, and discounts allowed.'

'A provision for further conpemsation to be paid by the defendant Society to the plaintiff corporation was contained in paragraph 6, viz., 'The Society shall further pay to Powers and Company, Inc., in addition to the above, twenty-five (25) percent to the net receipts secured through the publication of 'Tool Engineer', same to be computed as of September 30th of each year, and paid over to Powers and Comapny, Inc. on or before October 20th, following'.

'The contract also provided that 'The Society shall furnish all necessary capital for the payment of salaries and expenses for the editorial, advertising and general business activities of both publications and for all printing, publishing and mailing costs in behalf of the 'Tool Engineer' and the 'ASTE Directory".

'The primary obligations of the plaintiff were set out in the contract as follows:

"13. Powers and Company, Inc. shall do, or employ others to do under its supervision, all things necessary for the editing, printing, publishing and distributing of said publications, which duties shall include, but not be limited to, the following, to-wit:

"A. Obtaining copyrights in behalf of the Society on all issues of said publications;

"B. Obtaining contracts for advertising in said publications;

"C. Organizing and maintaining and supervising an editorial, advertising and busienss staff for said publications, subject to the approval of the Society;

"D. Printing and publishing said publications, and distributing same by mail to persons named by the Society;

"E. Handling all art, mechanical, binding and mailing operations;

"F. Providing all paper required for the publications without interruption or delay.

"G. Issuing the 'Tool Engineer' monthly with an advertising and an editorial content subject to the approval of the Society acting through its Editorial Committee, and publishing the 'ASTE Directory' annually and within sixty days after the annual meeting of the Society, on the same busis'.

'In accordance with its terms this contract was evetually terminated on December 7, 1949, exactly five years after the execution of the original contract, by notice to the plaintiff that the defendant Society did not intend to renew the agreement at end of its life. The notice, in letter form, was sent in late November of 1948, thereby giving the plaintiff slightly more than the one year's notice required by the provisions of the contract.

'It is undisputed that the 'Tool Engineer' was published each month during the life of the contract and that the plaintiff, Powers and Company, Inc., received its 15 percent of the net receipts from the advertising which appeared in editions published during that time. It is likewise undisputed that the plaintiff was fully compensated for its efforts in connection with the 'ASTE Directory', and received all to which it was entitled under the twenty-five (25%) percent profit sharing provision of the contract relating to the publication of 'Tool Engineer'.

'The only claim advanced by plaintiff is for fifteen (15%) percent of the net receipts from certain advertising which was published and appeared in 'Tool Engineer' subsequent to December 7, 1949, the effective termination date of the contract under which the parties were dealing.

'There is no dispute as to the advertising in question, the net amount received therefore, or the percentage and amount due the plaintiff if, in fact, it is entitled to recover. It is plaintiff's right to any recovery which the defendant Society disputes.

'As to many of the facts and circumstances which existed during the period in question, there is basic agreement between the parties. For example, it is agreed that the advertising in question was solicited by solicitors or salesmen who, while supervised by the plainitff, were on the payroll of the defendant Society.

'It is also agreed that the advertising in question was solicited prior to the termination date of the contract between the plaintiff and the defendant, but was printed and appeared in editions of 'Tool Engineer' published and issued after that date by plaintiff's successors, the defendant Society's own employees. Likewise it is agreed that this advertising was not paid for by the various advertisers until after such time as it had actually appeared in the magazine.

'In general, the testimony offered to show the method employed in soliciting and procuring orders for advertising space in 'Tool Engineer' during the period in question, is in harmoney. According to that testimony, the solicitors contacted current and prospective advertisers, either dirctly or through their respective agencies, and endeavored to secure from them an indication of the amount of space which they might use in 'Tool Engineer' for advertising purposes during a forthcoming period of time, usually a calendar or fiscal year. These indications of the advertisers, as reduced to written form, are throughout the record referred to alternately as 'advertising contracts,' 'advertising orders', 'space contracts', and 'space reservations'. (Hereafter, for the sake of simplicity and consistency, the term 'advertising contracts' will be employed herein).

'The prospective advetisers executed these 'advertising contracts' primarily to...