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Laundry Supply Co. v. Colgate-Palmolive-Peet Co.

January 5, 1940


Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; Philip L. Sullivan, Judge.

Author: Sparks

Before EVANS, SPARKS, and MAJOR, Circuit Judges.

SPARKS, Circuit Judge.

By this action appellee sought to recover from appellant upon an oral contract for commissions. The case was tried before the court without a jury, and upon a finding of the issues favorable to appellee, the judgment was entered from which this appeal is taken.

There is substantial evidence to support the following facts: George J. Bergman was president and treasurer of appellee, the Laundry Supply Company, and acted in its behalf in the transactions here involved. From March, 1934, to October 21, 1935, appellee was the distributor of the products of appellant under certain written contracts. This first was executed in March 1934. This was superseded by another dated April 23, 1934, which was executed lby Bergman in behalf of appellee, and by F. C. Ward as Manager of Industrial Sales for appellant. It provided for the appointment of appellee to market and distribute appellant's products for a commission of 85› per hundred weight on all items. It ran for one year from date and was subject to termination after sixty days' notice by either party. On December 14, 1934, the latter contract was modified in writing by the same parties to allow appellee an additional commission of 2 1/2› per hundred weight on shipments to certain clubs, and to provide that appellant would invoice all members of these clubs directly.

At the time the first written contract was entered into, the general offices of appellant, and of Ward, were located in Chicago, but shortly thereafter they were moved to Jersey City, New Jersey. Prior to this removal, Bergman visited appellant's general offices in Chicago and there transacted business with Ward and one Burkhardt, the latter holding an inferior office to that of Ward. At one of these visits in Chicago, manager Ward had instructed Burkhardt and Bergman to work together from that time on.

After the general offices were moved to New Jersey, appellee transacted all its business with appellant through Burkhardt. There was correspondence between them, and the letters from Burkhardt to appellee were written on letterheads of appellant, signed by Burkhardt as appellant's Manager, Chicago Industrial Sales, Industrial Territorial Manager, or Chicago Industrial Manager. Appellant also sent telegrams in its name, signed by Burkhardt, to appellee relative to price instructions. During this time Burkhardt also visited Bergman's office frequently and on behalf of appellant informed him of price changes; and all matters with respect to the subject matter of the written contract, including disputes relative to deliveries, were referred to and adjusted by Burkhardt. Subsequently Ward died and A. F. Danz succeeded him as appellant's manager of Industrial Sales throughout the United States, with offices at Jersey City.

Appellee had its place of business in the Union Stcok Yards, at Chicago, in a rented building adjacent to a side track on which carload freight destined to appellee was delivered. On August 20, 1935, Danz, in writing*fn1 notified appellee of appellant's election to terminate the written contract. The cancellation was to be effective on October 21, 1935, and a copy of the notice was sent to Burkhardt at appellant's Chicago office. Within a week after the receipt of this letter, Danz and Burkhardt called at appellee's office and had a conversation with Bergman in which Danz told him that he had done a fine job and that appellant was well satisfied, and that the cancellation was due only to the fact that appellant's competitors had threatened to compete for its coast business if appellant did not terminate its business if appellant with appellee; that he hoped this situation would clear up and that appellant and appellee would be to continue their pleasant relations again; and remarked that in the meantime appellee had sufficient soap to supply its customers.

The following week Burkhardt called upon Bergman and told him in substance that he was entirely in accord with the sentiments expressed by Danz the week previously, and that by the time appellee needed more soap the situation would be adjusted and that appellee would again be marketing soap for appellant. He further told Bergman at that time that when he needed soap Bergman should see him; and in answer to Bergman's inquiry as to commissions Burkhardt stated that the matter of commissions would be taken care of.

During all the time referred to herein, there were in existence in the laundry industry in Chicago three groups of laundries known as Midwest Purchasing Club, the A.B.C. Club and the Clean Clothes Club, affiliated for the purpose of purchasing soap and other materials. Bergman had been selling soap to these clubs and the laundry trade generally since 1926, and in behalf of appellant since their first contract in 1934. From August, 1935, to April, 1936, Burkhardt frequently called upon Bergman and discussed with him the importance of Bergman's keeping in contract with these customers.In April, 1936, Bergman informed Burkhardt that appellee needed more soap, to which Burkhardt replied that appellant would provide appellee with a car of soap but the transaction would be secret. Thereupon Burkhardt arranged to have to Benner Chemical Comapny sell appellee 425 bags of appellant's soap, and this was subsequently received by appellee. Shortly thereafter, Burkhardt called at appellee's office and suggested to Bergman that it was about time for the Clubs to but soap and that Bergman should begin to solicit orders from them. Burkhardt stated that the sales would be transacted secretly because appellant was still in difficulty with other soap manufacturers; that Bergman should first solicit orders from members of the Clubs and make all arrangements for the purchase of appellant's soap, and Burkhardt would then call upon the club members and write the orders so that the purchases would appear to be directly with appellant. Thereupon Bergman asked about appellee's commissions, to which Burkhardt replied that appellee would receive its commissions and appellant would take care of them, and that appellee should sell every bag of soap possible and not permit any sales to be lost.

Burkhardt further told Bergman that the price of soap would be increased on a certain date and before that time, whereupon club orders before that time, whereupon Bergman spoke to many of the men in the Clubs, both purchasing men and other men of influence, and it was arranged in advance that the orders were to be taken by Burkhardt after Bergman told him the number of bags of soap the Clubs desired to purchase. After obtaining the soap requirements from the members of the Clubs, Bergman at his office gave Burkhardt a list from which Burkhardt copied the orders to be signed by the customers, and a record of the same was made on appellee's books.

Thereafter, on or about June 20, 1936, at appellee's office, Burkhardt stated to Bergman that some laundries would not purchase appellant's soap unless appellee would store the soap in its warehouse and deliver the same as they needed it. Thereupon Bergman agreed to store the soap in appellee's warehouse and to deliver the same to the laundries.Burkhardt further told Bergman that he would have as many laundries as possible take the soap directly, and he later informed Bergman which laundries were to have the soap delivered directly, whereupon Bergman made a written memorandum of the direct deliveries and had the same entered upon his records.

About the same time, Bergman had another conversation with Burkhardt after the Midwest Club and the Clean Clothes Club had given their orders to Burkhardt, and after Bergman had secured an order of the soap the A.B.C. Club desired to purchase, of which order he had informed Burkhardt. Burkhardt then told Bergman that he had bad news from the East to the effect that appellant was afraid of its competitors and would not pay appellee's commissions.

Thereupon Bergman told Burkhardt that he would insist upon the payment of the commissions to appellee on the soap that it sold; that the club members favored him with orders and the appellee was selling the A.B.C. Club all of its soap requirements, and was selling individual members of other clubs part of their requirements. Thereafter, appellee made deliveries of appellant's soap, which had been stored with it, the first being on or about August 15, 1936, and the remainder thereof during 1936 and 1937. On September 16, 1936, appellee through Bergman wrote a letter to appellant*fn2 relative to the payment of a commission. Then followed ...

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