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Zinn v. Parrish

decided: March 25, 1981.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 75 C 4235 -- James B. Moran, Judge .

Before Fairchild, Chief Judge, Swygert, Circuit Judge, and Bartels, Senior District Judge.*fn*

Author: Bartels

This is an appeal in a diversity action by Leo Zinn from a judgment of the District Court for the Northern District of Illinois, Eastern Division, wherein he sought to recover agent fees due him under a personal management contract between him and the defendant Lemar Parrish. In an earlier posture of the case, Parrish prevailed against Zinn on a motion for summary judgment on the ground that the contract was unenforceable because of Zinn's failure to obtain a license under the Illinois Private Employment Agency Act, Ill.Rev.Stat., ch. 48, § 197a et seq. ("the Employment Agency Act"). Zinn v. Parrish, 461 F. Supp. 11 (N.D.Ill.1977). This court reversed and remanded, concluding that certain unresolved issues of fact precluded an award of summary judgment. 582 F.2d 1282 (7th Cir. 1978).

On remand, the district court rendered a verdict in Parrish's favor following a bench trial, on the grounds that the contract was void for Zinn's failure to register under the Investment Advisers Act of 1940, 15 U.S.C. §§ 80b-1 et seq. ("the 1940 Act"), and that Zinn had failed to perform his own obligations under the contract. In this appeal Parrish renews his contention, rejected by the trial court, that the contract was unenforceable under the Employment Agency Act.


For over two decades the appellant Zinn had been engaged in the business of managing professional athletes. He stated that he was a pioneer in bringing to the attention of various pro-football teams the availability of talented players at small black colleges in the South. In the Spring of 1970, Parrish's coach at Lincoln University approached Zinn and informed him that Parrish had been picked by the Cincinnati Bengals in the annual National Football League draft of college seniors, and asked him if he would help Parrish in negotiating the contract.*fn1 After Zinn contacted Parrish, the latter signed a one-year "Professional Management Contract" with Zinn in the Spring of 1970, pursuant to which Zinn helped Parrish negotiate the terms of his rookie contract with the Bengals, receiving as his commission 10% of Parrish's $16,500 salary. On April 10, 1971 Parrish signed the contract at issue in this case, which differed from the 1970 contract only insofar as it was automatically renewed from year to year unless one of the parties terminated it by 30 days' written notice to the other party. There were no other restrictions placed on the power of either party to terminate the contract.

Under the 1971 contract, Zinn obligated himself to use "reasonable efforts" to procure pro-football employment for Parrish, and, at Parrish's request, to "act" in furtherance of Parrish's interest by: a) negotiating job contracts; b) furnishing advice on business investments; c) securing professional tax advice at no added cost; and d) obtaining endorsement contracts. It was further provided that Zinn's services would include, "at my request efforts to secure for me gainful off-season employment," for which Zinn would receive no additional compensation, "unless such employment (was) in the line of endorsements, marketing and the like," in which case Zinn would receive a 10% commission on the gross amount. If Parrish failed to pay Zinn amounts due under the contract, Parrish authorized "the club or clubs that are obligated to pay me to pay to you instead all monies and other considerations due me from which you can deduct your 10% and any other monies due you ...."

Over the course of Parrish's tenure with the Bengals, Zinn negotiated base salaries for him of $18,500 in 1971; $27,000 in 1972; $35,000 in 1973 (plus a $6,500 signing bonus); and a $250,000 series of contracts covering the four seasons commencing in 1974 (plus a $30,000 signing bonus). The 1974-77 contracts with the Bengals were signed at a time when efforts were being made by the newly-formed World Football League to persuade players in the NFL to "jump" to the WFL to play on one of its teams. By the end of 1973 season Parrish had become recognized as one of the more valuable players in the NFL. He was twice selected for the Pro Bowl game, and named by Sporting News as one of the best cornerbacks in the league. Towards the end of the 1973 season, the Bengals approached Parrish with an offer of better contract terms than he had earlier been receiving. By way of exploring alternatives in the WFL, Zinn entered into preliminary discussions with the Jacksonville Sharks in early 1974, but decided not to pursue the matter once he ascertained that the Sharks were in a shaky financial position. In retrospect, Zinn's and Parrish's decision to continue negotiating and finally sign with the Bengals was a sound one, for the Sharks and the rest of the WFL with them folded in 1975 due to a lack of funds.

Shortly after signing the 1974 series of contracts, Parrish informed Zinn by telephone that he "no longer needed his services." By letter dated October 16, 1975 Parrish reiterated this position, and added that he had no intention of paying Zinn a 10% commission on those contracts. In view of its disposition of the case, the district court made no specific fact finding as to the amounts Parrish earned during the 1974-77 seasons. Zinn claims that the total was at least $304,500 including bonus and performance clauses. The 1971 contract by its terms entitled Zinn to 10% of the total amount as each installment was paid, and Zinn claims that he has only received $4,300 of the amounts due him. Accordingly, this suit was filed to recover the balance, plus interest at the rate of 5% per annum for vexatious delay in payment, pursuant to Ill.Rev.Stat., ch. 74, § 2.

In addition to negotiating the Bengals contracts, Zinn performed a number of other services at Parrish's request. In 1972 he assisted him in purchasing a residence as well as a four-unit apartment building to be used for rental income; he also helped to manage the apartment building. That same year Zinn negotiated an endorsement contract for Parrish with All-Pro Graphics, Inc., under which Parrish received a percentage from the sales of "Lemar Parrish" t-shirts, sweat-shirts, beach towels, key chains, etc. The record shows that Zinn made a number of unsuccessful efforts at obtaining similar endorsement income from stores with which Parrish did business in Ohio. He also tried, unsuccessfully, to obtain an appearance for Parrish on the Mike Douglas Show. Zinn arranged for Parrish's taxes to be prepared each year by H & R Block.*fn2

The evidence showed that, despite his efforts, Zinn was unable to obtain off-season employment for Parrish. In this connection, however, it was Zinn's advice to Parrish that he return to school during the off-season months in order to finish his college degree, against the time when he would no longer be able to play football. With respect to Zinn's obligation to provide Parrish with advice on "business investments," he complied first, by assisting in the purchase of the apartment building; and second, by forwarding to Parrish the stock purchase recommendations of certain other individuals, after screening the suggestions himself. There was no evidence that Zinn ever forwarded such recommendations to any of his other clients; he testified that he only did so for Parrish. In summing up Zinn's performance under the contract, Parrish testified as follows:

Q: Did you ever ask Zinn to do anything for you, to your knowledge, that he didn't try to do?

A: I shall say ...

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