Reed v. Kaydon Engineering Corp.

• Decision Date: 22 February 1972
• Docket Number: Docket No. 9657,No. 1,1
• Citation: 196 N.W.2d 487,38 Mich.App. 353
• Parties: Paul F. REED, d/b/a Reed Bearing and Equipment Company, Plaintiff-Appellant, v. KAYDON ENGINEERING CORPORATION, a Michigan corporation, Defendant-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 487

196 N.W.2d 487

38 Mich.App. 353

Paul F. REED, d/b/a Reed Bearing and Equipment Company Plaintiff-Appellant, v. KAYDON ENGINEERING CORPORATION, a Michigan corporation Defendant-Appellee.

Docket No. 9657.

Court of Appeals of Michigan, Division No. 1.

Feb. 22, 1972.

Released for Publication April 24, 1972.

Paul D. Sherr, August, Thompson & Sherr, Southfield, for plaintiff-appellant.

Parmenter, Forsythe & Rude, Muskegon, for defendant-appellee.

Before LEVIN, P.J., and R. B. BURNS and GILLIS, JJ.

LEVIN, Presiding Judge.

The plaintiff, a manufacturer's representative, commenced this action for commissions after the defendant manufacturer terminated the contract between them.

The defendant, Kaydon Engineering Corporation, is a manufacturer of ball bearings. The plaintiff, Paul F. Reed, doing business as Reed Bearing and Equipment Company, was its sales representative in part of the State of Michigan.

Reed commenced this action claiming that he is entitled to $25,000 in commissions on $300,985.96 of orders placed with Kaydon from Reed's territory before October 31, 1966, the effective date of termination. Kaydon contends that no unpaid commissions are owing because the $300,985.96 of orders were shipped after the effective date of termination, and the contract provides that commissions are payable only on orders shipped before termination.

The contractual relationship of the parties is stated in a printed form of contract prepared by Kaydon entitled Sales Representation Agreement. It provides in part:

(a) Kaydon appoints Reed as its exclusive representative for the sale of its products in the designated territory (para. 1);

(b) Kaydon agrees to pay Reed the scheduled commission on all orders 'which are shipped into said territory and on all orders for such products shipped outside said territory which were obtained solely through the efforts of Representative acting in said territory, unless such orders were obtained solely through the efforts of any other representative of Kaydon.' (para. 4);

(c) Commissions will be computed 'on all orders shipped after the effective date of this agreement and prior to termination of this agreement as hereinafter provided, without regard to the date of solicitation, acceptance, or invoice.' (para. 7);

(d) The contract may be terminated by either party forthwith for cause and 'without cause by thirty days' written notice delivered to the opposite party.' (para. 17).

The effective date of the contract was January 1, 1964. It was terminated by Kaydon as of October 31, 1966, by notice of termination sent to Reed September 29, 1966.

Kaydon obtained a summary judgment. Reed appeals.

We reject Reed's contention that there is an ambiguity in the language of the contract which should be resolved in his favor. It is altogether clear, reading the separate paragraphs of the contract as a whole, that commissions are required to be paid only on orders shipped before the effective date of any termination of the contract and that either party has the right to terminate without assigning cause on thirty days' notice.

There may, however, be merit in Reed's alternative contention that the contractual language relieving Kaydon of the obligation to pay commissions on orders not shipped before Kaydon's unilateral termination of the contract is unconscionable and should be denied enforcement.

We need not decide whether, as claimed by Reed, the Uniform Commercial Code provisions concerning unconscionable contracts or clauses apply to this contract. The concept that substantively unreasonable contractual provisions will not be enforced is part of our jurisprudence independently of the Uniform Commercial Code. See Allen v. Michigan Bell Telephone Co., 18 Mich.App. 632, 638, 171 N.W.2d 689 (1969).

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