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Ralph v. Karr Manufacturing Co.

JUNE 7, 1974.

RICHARD S. RALPH, D/B/A RICHARD S. RALPH & ASSOCIATES, PLAINTIFF-APPELLEE,

v.

KARR MANUFACTURING CO., DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. GEORGE J. SCHALLER, Judge, presiding.

MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied July 25, 1974.

Defendant appeals from a verdict and a judgment entered thereon in plaintiff's favor for commissions owed pursuant to the terms of a sales and marketing agreement.

Defendant is a manufacturer of metal stampings and plaintiff was a marketing and management consultant. On February 17, 1967, the parties entered into an agreement entitled, "Sales Management and Marketing Consultant Agreement" ("agreement"), which contemplated that plaintiff, using his best efforts, was to manage and increase defendant's sales program by and through the retention of a sales force comprised of manufacturers' representatives. As consideration for this effort, plaintiff was to receive a $100 monthly retainer for 3 years and a 3 percent commission on defendant's sales to non-house accounts. The term of the agreement was to run until January 31, 1970.

On February 28, 1969, plaintiff was dismissed by defendant and thereafter filed this suit to recover unpaid monthly retainers and past and future commissions as provided for in the agreement. Specifically, plaintiff sought to recover the monthly retainers from November, 1968, through January, 1970, $2,700; commissions for the period from November, 1968 through February, 1969, $6,390 and 3 percent of what the sales would have been for the period February, 1969 through January, 1971.

At trial, the following testimony was adduced. Plaintiff testified that after the formation of the agreement, he undertook to fulfill his duties (as provided for in the agreement) in the following manner: He established and cooordinated a sales force of independent manufacturers' representatives; he assisted in the preparation of a brochure advertising defendant's services; he instituted a sales control program comprised of several component parts; he conducted what he termed to be "marketing surveys" and established a multi-tier quotation system. In addition, he introduced a stipulation entered into between the parties which reflected that the total sales of defendant, exclusive of house accounts, from December, 1968, through November, 1969, were $626,677.11; from December, 1969, through January, 1970, were $117,461.64; and from February, 1970, through January, 1971, were $1,167,320.33.

Plaintiff called Stan Karr, president of defendant company, under section 60, and elicited that prior to the formation date of the agreement, defendant did no business with Honeywell and Mallory, who later became defendant's biggest customers. Karr could not recall whether Honeywill and Mallory became and continued to be defendant's customers through plaintiff or his sales force's efforts.

In his section 60 examination, plaintiff testified that three-quarters of the representatives hired by him did not bring in a single sale and further, that he had performed no services for Honeywell and, after one meeting in April, 1969, he had no contact with Mallory. Sales to those two companies generated 90 percent of his commissions.

Steven Murray, director of engineering for Mallory, testified on behalf of defendant that he was involved with every Mallory order sent to defendant from February, 1967, through February, 1969, and that the decision to place orders with defendant was not the result of plaintiff's efforts. However, on cross-examination, Murray acknowledged that plaintiff's representative met with him prior to any orders being placed with defendant. In addition, he admitted that he had no knowledge of whether plaintiff's representative had contact with the other employees in Mallory's purchasing department.

Michael Ondoe, supervisor of buyers for Honeywell, testified on defendant's behalf and stated that he never had any contact with plaintiff or any of his representatives and that all of his dealings with defendant were through Stan Karr. On cross-examination, Ondoe admitted the authenticity of an order from Honeywell through plaintiff's representative prior to any order Ondoe placed directly with Karr.

The jury returned a verdict for $66,284.84. Defendant appeals from this verdict and the judgment entered thereon.

OPINION

Defendant first contends that plaintiff did not sustain his burden of proof in establishing that defendant's sales increased as the result of his efforts. To sustain this contention, defendant points to section 2 of the agreement, which provides in part that plaintiff shall "put forth his best efforts and to diligently provide the management of Karr's sales and marketing program and with such efforts to increase Karr's sales * * *." Defendant argues that plaintiff was required to but failed to establish that the increase in defendant's sales were a direct result of his efforts.

Plaintiff, contrariwise, argues that in conformance with the provisions of the agreement, he formed a sales organization comprised of manufacturer's representatives, established certain procedures which facilitated the operation of this sales organization, and, in general, performed those functions necessary to the promotion and growth of defendant. Testimony relating to the fulfillment of these tasks, as well as figures representing an appreciable increase in the sales ...


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