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Parenti v. Wytmar & Co.

OPINION FILED MAY 9, 1977.

TERRY D. PARENTI ET AL., PLAINTIFFS-APPELLEES AND CROSS-APPELLANTS,

v.

WYTMAR & COMPANY, INC., DEFENDANT-APPELLANT AND CROSS-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. BENJAMIN NELSON, Judge, presiding.

MR. JUSTICE SIMON DELIVERED THE OPINION OF THE COURT:

Mr. JUSTICE SIMON delivered the opinion of the court:

The plaintiffs, Parenti and Jacobs, are former employees of the defendant, Wytmar & Company, Inc. (Wytmar Co.). Each filed a separate action against Wytmar Co. claiming compensation owed for their 1970 services, and in case of Parenti, payment for his vested interest in a profit-sharing plan. The actions were consolidated for trial. The circuit court entered judgment in favor of both plaintiffs for compensation for their services, but in a smaller amount than claimed by each plaintiff. It did not credit each plaintiff's annual guaranteed salary against the compensation it awarded them, as Wytmar Co. contended should have been done. It allowed Parenti his interest in Wytmar Co.'s profit-sharing plan, and awarded both plaintiffs prejudgment statutory interest on the compensation for their services. Wytmar Co. appeals from the judgments awarded plaintiffs, and plaintiffs cross-appeal contending that the judgments relating to their 1970 compensation were insufficient in amount.

Each plaintiff had a written employment agreement with Wytmar Co. Parenti's employment commenced October 1, 1964, and his employment agreement was executed on December 17, 1964. Jacobs' employment agreement was executed on March 2, 1970, the day his employment began. Each agreement stipulated it contained the entire agreement of the parties and could be changed only by a written agreement signed by the party against whom the change was sought.

Wytmar Co. was a "headhunter" or executive search firm; it located people to fill its clients' executive and management positions. Most of Wytmar Co.'s clients were industrial organizations, although businesses, educational institutions and governments could also use Wytmar Co.'s services. Parenti and Jacobs, Phillip Conway and George Hall, whom Jacobs replaced, all performed search and recruiting assignments for Wytmar Co.

In January 1966, while Parenti was an employee of Wytmar Co., but more than 4 years before Jacobs' employment commenced, Wytmar Co. initiated a "Compensation Plan" providing that each recruiter receive a guaranteed salary (base salary) and be credited with a commission of 25 percent of the fee collected by Wytmar Co. on each of his completed search assignments. At the end of the year, he would be paid the amount by which such commissions exceeded his base salary.

In 1969, Wytmar Co. entered into its first government contract with the Office of Economic Opportunity (OEO). Wytmar Co. was obligated to complete between 72 and 90 personnel searches to fill positions with community-action agencies throughout the country, to provide these agencies with training and technical assistance and to develop a manual. Wytmar Co. was not compensated on the basis of a percentage of the guaranteed first-year compensation for the positions filled as in its commercial business. Instead, the OEO contract was set up on a cost-plus-profit basis, and compensated Wytmar Co. with a single lump-sum figure. Wytmar Co.'s compensation was not contingent on placement of individual employees.

The OEO contract provided for a $143,220 total payment to Wytmar Co., and it contained a schedule showing how the figure of $143,220 was arrived at. This figure included compensation of $54,000 for "professional staff for two staff members." This latter amount is the principal basis for the controversy before us.

Parenti testified that Richard J. Wytmar, the corporation's president and sole stockholder, told him that the $54,000 would be set aside as further compensation for the three staff recruiters (at that time Parenti, Conway and Hall), and that the compensation for OEO searches would be in addition to the total commissions the staff would receive for commercial assignments. Mr. Wytmar denied making such statements. In any event, each staff recruiter, including Parenti, was paid $600 for each OEO search he conducted in 1969. This figure was reached by dividing the maximum number of searches required under the OEO contract, 90, into the $54,000 "professional staff" allocation. The $600 payments to the staff were reflected in the 1969 year-end compensation recaps Wytmar Co. prepared and gave to Parenti, Conway and Hall. At this time, $6,600 of the $54,000 was paid to Parenti, Conway and Hall, leaving an undistributed balance of $47,400.

Parenti and Jacobs contended that late in 1970, after Hall had left the company and 68 searches had been completed, they recommended to Mr. Wytmar that he divide the $47,400 among them and Conway. Their recommendation was a division based on the number of searches each conducted. They also recommended reserving $10,332 to compensate Hall for 12 searches he conducted in 1970 and setting aside a fund of $3,444 to cover four searches necessary to reach the minimum figure of 72 required by the OEO contract. This meant the compensation for each search after 1969 would be $861. They further recommended that if Hall did not receive the funds earmarked for him, these funds should be split equally among the three. Mr. Wytmar rejected this suggestion. The substance of plaintiffs' testimony was that in various 1970 meetings Mr. Wytmar acknowledged that the $47,400 amount was to be divided among the recruiters, while Mr. Wytmar denied telling anyone they were entitled to the entire fund.

In early January 1971, Parenti, Jacobs and Conway resigned because of disagreement with Wytmar Co. over the compensation for their OEO searches. Shortly thereafter, Wytmar Co. gave Parenti and Jacobs work sheets listing their 1970 earnings. These sheets showed compensation of $600 for each OEO search plus commercial commissions, and their base salary was subtracted from that total. Plaintiffs rejected them as inaccurate and unacceptable because the work sheets: (i) did not allocate all remaining OEO staff funds among the recruiters on the basis of the number of searches they conducted; (ii) applied the base salary deduction to the total of the OEO commissions and sums due for commercial searches instead of adding the OEO commissions to the base salary; (iii) credited Jacobs and Parenti with 16 and 10 OEO searches respectively rather than the 18 and 11 they claimed.

Some time before trial, Conway compromised his claim against Wytmar Co., accepting $9,786 as compensation for his OEO searches. Plaintiffs claimed this left $37,614 in the fund ($47,400 minus $9,786). Apparently because nothing has been paid to Hall, plaintiffs claimed at trial that they were entitled to have the entire remaining fund, $37,614, allocated between them on the basis of the number of searches each completed, or $1,297.03 per search. The circuit court found that they were entitled to $600 per completed OEO search, and that Jacobs had completed 18 and Parenti 11.

In computing the amounts owing to Parenti and Jacobs for OEO searches, the circuit court did not set them off against their base salaries, as Wytmar Co. contends the Compensation Plan required. The evidence relating to this set-off or credit introduced by defendant established that Jacobs prepared a written tabulation computing his 1970 earnings which he presented to Mr. Wytmar. It added his commissions for commercial searches to the compensation he claimed for OEO work and credited his base salary for 1970 against that sum. The recaps furnished by Wytmar Co. to Parenti, Conway and Hall for their 1969 earnings also were computed in this fashion. Mr. Wytmar testified that the amounts a recruiter received for OEO searches were to be added to his other earnings and set off against the base salary.

Jacobs testified that both before and after his written employment agreement was executed, Mr. Wytmar several times told him he would be paid for any OEO work he did. Mr. Wytmar acknowledged that when Jacobs accepted employment he told Jacobs he would receive a $2,000 guaranteed annual bonus. Jacobs' written employment agreement referred neither to this bonus, nor to compensation for OEO searches.

Parenti was a participant in Wytmar Co.'s noncontributory profit-sharing plan. When he resigned his interest in the plan was $4,625.94 plus accrued interest. The plan provided that if within 3 years following an employee's termination for reasons other than by retirement, he was employed by a competitor of the company or performed any other action in competition with or detrimental to the business of the company, the balance in his profit-sharing account would be subject to forfeiture.

After Parenti and Jacobs left Wytmar Co., they formed their own search firm. Mr. Wytmar testified that 70 to 80 percent of Wytmar Co.'s clients were in Cook, Du Page and Lake Counties, Illinois, and that Wytmar Co. conducted searches for Wabash Magnetics and Millprint Inc. during Parenti's employment. Parenti testified that the search firm he and Jacobs owned was similar to Wytmar Co., and that it was located in the counties Wytmar Co. named as the major source of its business. He stated that in the year after leaving Wytmar Co., he and Jacobs conducted searches for subsidiaries of Wabash Magnetics and Millprint Inc. Wytmar Co. contends that Parenti engaged in competition with Wytmar Co. within 3 years following termination of his employment and so forfeited all his interest in the profit-sharing plan. The circuit court entered judgment for Parenti for his share in Wytmar Co.'s profit-sharing plan, and accrued interest, a total of $4,848.

The circuit court awarded plaintiffs' prejudgment statutory interest on their claims for breach of Wytmar Co.'s agreement to pay commissions for the OEO searches. Plaintiffs contended they were entitled to interest because Wytmar Co. unreasonably and vexatiously delayed payment of their compensation for these searches and also because this compensation was money due in liquidated amounts on a settlement of account. Ill. Rev. Stat. 1975, ch. 74, par. 2.

The issues presented by this appeal and plaintiffs' cross appeal contending they were entitled to compensation of $1,297.03 for each OEO search are whether: (i) the court's holding fixing plaintiffs' recovery at $600 per OEO search was against the manifest weight of the evidence; (ii) the court erred in computing the amounts owing to plaintiffs for OEO searches by failing to add such amounts to other commissions earned by plaintiffs and deducting their respective base salaries from the total; (iii) the parol evidence rule barred Jacobs from claiming compensation for OEO searches; (iv) ...


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