Reed v. Kurdziel

• Decision Date: 14 April 1958
• Docket Number: No. 36,36
• Citation: 89 N.W.2d 479,352 Mich. 287
• Parties: Hilda W. REED, Executrix of the Estate of Milford B. Reed, Deceased, Palintiff and Appellee, v. Walter F. KURDZIEL and Stella Kurdziel, copartners, d/b/a White Iron Foundry, Defendants and Appellants.
• Court: Michigan Supreme Court

Page 479

89 N.W.2d 479

352 Mich. 287

Hilda W. REED, Executrix of the Estate of Milford B. Reed Deceased, Palintiff and Appellee, v. Walter F. KURDZIEL and Stella Kurdziel, copartners, d/b/a White Iron Foundry, Defendants and Appellants.

No. 36.

Supreme Court of Michigan.

April 14, 1958.

Hinds & Sikkenga, Shelby, and Poppen, Street & Sorensen, Muskegon, for appellants.

Rosenburg, Painter & Stanton, Lawrence L. Bullen, Jackson, for appellee.

Before the Entire Bench.

KAVANAGH, Justice.

Plaintiff-appellee herein is Hilda W. Reed, the executrix of the estate of Milford B. Reed, deceased. The plaintiff at the time of the trial was Milford B. Reed. Mr. Reed has died since the trial of this case in the circuit court and his executrix has been substituted as plaintiff-appellee herein. When the word 'plaintiff' is used throughout this opinion reference is being made to the deceased, Milford B. Reed.

Plaintiff was engaged in the business of selling for 38 years. Since 1940, he was a manufacturer's agent in the foundry supply field.

The defendant White Iron Foundry was a copartnership consisting of Walter Kurdziel and his wife, Stella Kurdziel. The foundry is located in Rothbury, Michigan, and has been operated by the copartnership since 1939. The White Iron Foundry is engaged in the manufacture of foundry cleaning 'Mill Stars'--a type of pointed casting used in the cleaning of other foundry castings. Prior to 1949 Walter F. Kurdziel acted as the sole salesman for the White Iron Foundry. After 1949 he devoted his entire efforts to the manufacturing end of the business.

In April of 1950 Mr. Reed contacted appellant Walter F. kurdziel and discussed with him the possibility of selling White Iron Foundry 'Mill Stars.' Mr. Reed was at that time the representative of Huffer Foundry, another manufacturer of foundry stars. Eventually an oral agreement was made whereby Mr. Reed was to sell defendants' 'Mill Stars' to the users of said 'Mill Stars.' The agreement further provided that Mr. Reed was to receive as a commission whatever amount he was able to obtain for the foundry 'Mill Stars' over and above a certain basic price which was to be established by the defendants. That such a contract was entered into is admitted by both parties. The disagreement between the parties, which is the basis of this law suit, has to do with 2 points.

Plaintiff claims that under the terms of the contract all customers for White Iron Foundry products obtained by the plaintiff were to be the plaintiff's exclusive customers; that he would receive commissions, not only on the original orders taken from the customers he had obtained for White Iron Foundry, but would receive commissions on all reorders from such customers.

Defendant claim plaintiff was to receive his commissions only upon written orders which were obtained by him and transmitted by plaintiff to the defendant, on which written orders he would compute and specify his commission or at least furnish such information that the commission could be readily computed.

The original agreement contemplated sales only to ultimate users of the 'Mill Stars.' A later agreement was reached as to 'distributor accounts.' The 'distributor' customers purchased in larger lots and resold to the ultimate users.

The original agreement relative to distributor accounts was that plaintiff would receive a flat commission of $5 a ton. The parties were informed that the adding of the commission to the basic price by the defendants probably created a violation of the regulations of the office of price stabilization. Since additional bookkeeping was required to answer these objections, that revised their original agreement. It was agreed on revision that on all orders that were received from distributors appellants would bill the distributors at the basic price and plaintiff would bill the distributors direct for his commission. Plaintiff wrote to each of his distributor accounts on or about May 16, 1951, advising them of the new arrangement. The only exception to the original arrangement had to do with what is referred to as the 'Studebacker account.'

Plaintiff's first contact with defendants and appellants was in April, 1950. In May, 1950, he obtained an order from Studebaker. Subsequent orders were obtained in August, 1950, and the commissions were duly paid. At that time plaintiff was associated with Mr. William E. Hunt and doing business under the corporate name of Jackson Supply, Inc. On August 19, 1950, plaintiff wrote appellants, indicating that he and Mr. Hunt had dissolved their business relationship and that he was allowing Mr. Hunt the Studebaker account.

On September 11, 1950, plaintiff again wrote defendants, indicating that he was to have an overriding on the 'Mill Stars' sold to Studebaker corporation. He also indicated that the company should make the commission check for Studebaker sales to Jackson Supply, Inc., as formerly. Commissions were subsequently paid on all orders secured by William E. Hunt through March, 1951. No further commissions were paid after that date. Subsequently Jackson Supply, Inc., was dissolved and plaintiff took an assignment from the corporation and from Hunt and wife for any claims they might have against the White Iron Foundry for commissions due as a result of this Studebaker account.

Apparently plaintiff did an excellent job of selling. The arrangement appears to have been a financial success for both plaintiff and defendants until April 19, 1954, when plaintiff wrote the following letter to defendant-appellant Walter Kurdziel:

'Mr. Walter Kurdziel, President.

White Iron Foundry Company, Rothbury, Michigan.

'Dear Sir:

'I have just completed a long selling trip.

'Imagine my surprise when, on some calls, I found out that you were still shipping to customers whom I obtained for you originally, but upon which no commissions have been paid to me.

'In a couple of instances I found that this situation is of long standing, and my total commissions over that period of time would amount into the thousands of dollars.

'I am sure you would want to be fair and honest about this situation.

'Have you any objection to my bringing up a Certified Public Accountant to go over your books so that I can receive commissions which are due me?

'Very truly yours,

M. B. Reed.'

The above letter brought the following reply on April 21, 1954:

'M. B. Reed

1413 Gilletts Lake Road

Jackson, Michigan

'Dear Sir:

'In reply of your letter of April 19th, I find going through my books, that we do not owe no commissions whatsoever.

'The last order we received from you was in February from International Harvester Company. Commission of $111.67 was paid you in (on) March 18th.

'This is also to advise you that you can just forget the White Iron Foundry Company. We do not care to receive any more orders from you. You are the only one man of all the people we do business with, have most trouble with.

'Very truly yours,

'White Iron Foundry Co.

(s) W. Kurdziel'

This letter obviously had the effect of terminating the services of agent Reed and resulted in the present litigation.

Plaintiff filed a bill of complaint on December 27, 1954. Trial resulted in an opinion for plaintiff in the amount of $3,923.76, consisting of $2,962.51 claimed as commissions on the so-called 'user' accounts and $961.25 on the so-called 'distributor' accounts and included all repeat orders from buyers from whom plaintiff had obtained an order for appellants up to the time of trial. Decree was subsequently entered in the amount of $3,873.76. We are governed here by the amount set forth in the decree.

Defendants made their appeal to this Court, claiming: (1) that the lower court erred in finding that plaintiff's version of the agreement was the correct one contrary to what appellants contend was the great weight of the evidence; (2) that the lower court erred in allowing commissions on an account which had been abandoned by plaintiff; (3) that the lower court erred in allowing commissions on sales made to such customers after plaintiff's agency was terminated in April, 1954; (4) that the court erred in holding appellants liable for commissions on subsequent sales to such distributor accounts, by which plaintiff indicated that he would bill the distributors directly for his commissions.

An examination of the law with reference to commissions allowed agents or brokers seems to indicate that it is difficult to determine a set line of decisions, particularly with reference to the right of an agent with an exclusive agency to recover commissions on sales made where he is the procuring cause. However, when they are viewed as a whole and brought into proper focus, they disclose the law applicable to the question is well settled and that the seeming confusion results from the application of that law to the particular facts of the specific cases in question. Vol. 12 A.L.R.2d 1363 states as follows:

'The relationship between agent or broker and principal being a contractual one, it is immediately apparent that whether an agent or broker employed to sell personalty on commission is entitled to commissions on sales made or consummated by his principal or by another agent depends upon the intention of the parties and the interpretation of the contract of employment, and that, as in other cases involving interpretation, all the circumstances must be considered. * * * This rule is recognized and stated in the American Law Institute, Restatement, Agency § 449 Comment a.'

It would appear that underlying all the decisions is the basic principle of fair dealing, preventing a principal from unfairly taking the benefit of the agents or broker's services without compensation and imposing upon the principal, regardless of the type of agency or contract, liability to the agent or broker for commissions for sales upon which the agent or broker was the procuring cause,...