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Keller v. .

February 20, 1946


Author: Sparks

Before SPARKS and KERNER, Circuit Judges, and BALTZELL, District Judge.

SPARKS, Circuit Judge.

This is an action for an accounting and judgment to recover commissions in the sum of $15,000, alleged to be due plaintiff under a written contract. The defendant by answer denied all material allegations, and filed a counterclaim in which he sought a recovery of $717.36 and costs. The court made findings of fact, entered its conclusions of law thereon, and on June 2, 1945, rendered judgment thereon for plaintiff for $1,962.16 and for costs in the sum of $117.35. Both parties appeal from this judgment.

In this record plaintiff is sometimes referred to as Keller, President of Keller Engineering Company, and the contract herein relied upon was signed on behalf of defendant as Reliable Tool and Machine Works, per J. R. Baumgartner, Owner. As we understand from the record, these names are merely trade names, and neither was incorporated. We shall refer to the parties by their personal names.

The following facts are supported by substantial evidence:

During the times herein referred to, Keller was a resident of Chicago, and was engaged in the engineering and sales service business. Baumgartner was a resident of Milwaukee, Wisconsin, and was a sole trader doing business at that place under the name of Reliable Tool and Machine Works, and was engaged in the manufacture of tools and machinery and in the machine tool business.

In the spring 1943, defendant replied to Keller's circular letter, and on August 17, 1943, Keller called at the defendant's plant and, as a result thereof, the parties entered into a contract which Keller had prepared.It was in the form of a letter directed to Keller and was signed by Baumgartner, and accepted in writing by Keller. It was entitled "Engineering Service Agreement" and among other matters it contained the following pertinent paragraphs:

"We hereby retain your services and authorize you to represent us in connection with such services as we elect to make available to you.

"We may want your assistance regarding sub-contracting, shop practice, procuring materials and such other services as you customarily render.

"It is understood that any service which we make available to you will be figured at prices in which we will eliminate our usual customary selling cost.

"We agree to pay you, and you agree to accept, as full compensation for your services, a service fee equal to 10% of the gross billing on orders secured directly or indirectly through your efforts, in the absence of some other predetermined basis for specific service.

"Subsequent orders, from the same sources, shall carry the same service fee unless it is mutually agreed that a change in rate is to be made in any instance."

At that time Keller advised Baumgartner of his intention to try to obtain business from the Pullman Standard Car Manufacturing Company and advised Baumgartner that he had dealt with Pullman for several years on behalf of other manufacturers. Previous to that time Pullman had been on Baumgartner's mailing list, and in the spring of 1943, Pullman contacted defendant with respect to certain router bits. Defendant's director of sales called on Pullman and discussed the matter, and samples were forwarded by Pullman as late as August 30, 1943.

Immediately after making the contract, Keller visited Pullman and contacted its production manager whom he had known for some years. He was later introduced to Mr. Bradley who was in charge of sub-contracting for Pullman at its Hammond plant. Keller told Bradley that he represented Baumgartner and other machine tool companies as direct factory representative on a commission basis. Baumgartner gave Keller several prints and specifications relating to elevator screw parts for a gun carriage so that Baumgartner might bid on the work. Keller sent these prints and specifications to Baumgartner, who submitted bids thereon through Keller to Pullman, for one tool and two screw contracts. The bids on the screw parts were rejected as being too high. Keller then submitted lower bids for the same work on behalf of another company and he made personal visits to the Pullman plant at least once or twice each week.

In the period following the signing of the contract, Keller sent out about 50,000 circulars advertising Baumgartner's facilities to a mailing list of 15,000 persons. He expanded his organization and employed on a commission basis three salesmen in Chicago, one in Detroit, and two full-time secretaries. Although he represented other concerns, Keller devoted 90% of his time to representing Baumgartner. His total operating expenses during this period were $12,000 to $15,000.

On October 27, 1943, Keller wrote a letter to Bradley suggesting that he visit Baumgartner's plant in Milwaukee. Bradley did so on November 2, 1943, and at the same time he visited other Milwaukee plants. He visited the defendant's plant for the purpose of determining whether its facilities could handle Pullman's sub-contracting work.

Prior to making this visit, Bradley inquired by phone of Baumgartner's production manager as to Keller's status, and when he was told that Keller was on a commission basis, he stated that he would have nothing to do with Keller and would place no orders with Baumgartner if Keller were connected with them. He repeated this statement to Baumgartner upon his visit to the plant. Bradley was Pullman's representative for sub-contracting, and orders for sub-contracts were issued by its purchasing department on instructions of Bradley.

On November 17, 1943, Baumgartner told Keller by phone to stay out of Pullman, and wrote him saying: "The Pullman Company pointed out to us some while back that they would not deal through any jobber and we therefore ask that you do not represent us with this firm since you cannot possibly represent us where it is contrary to the wishes of the customer." However, Keller at all times contended that he was entitled to a commission on any Pullman business and advised Baumgartner that he would hold him to a commission on all orders from Pullman.

The first two Pullman orders received by Baumgartner are dated November 18, 1943, and the third order is dated November 23, 1943. These three orders were secured by Baumgartner directly or indirectly through Keller's services. The first two orders were cancelled, but Reliable commenced shipments and billings under the third order. Keller was paid his commission on certain billings made under these first three orders, although all but a nominal amount of the first two orders were cancelled. Baumgartner did not send Keller copies of invoices or otherwise notify him that these Pullman orders had been received.

On December 4, 1943, January 11, 1944, and July 19, 1944, Baumgartner received three additional orders from Pullman amounting respectively to $98,943.02, $53,550, and $16,040, no notice of which was given to Keller by Baumgartner.

Keller frequently complained to Baumgartner of his failure to furnish copies of inquiries, orders and invoices. On January 20, 1944, he instituted suit against Baumgartner in the Circuit Court of Milwaukee County, Wisconsin, for an accounting under the contract, for $15,000, which he alleged was due him for commissions. At defendant's invitation, Keller, with his attorney and accountant, came to the Reliable plant. At the accountant's request he was shown defendant's open order file from witch, together with the invoice billing register, a statement was prepared purporting to show the total merchandise invoice to Keller's accounts and also the amounts still on order. This statement failed to reveal any amounts still on order with the Pullman Company. No information was given Keller or his accountant concerning two large orders that had been received from Pullman. The statement contained a computation of the commissions owing to plaintiff. ...

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