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Barrows v. Maco

OPINION FILED APRIL 6, 1981.

BRIAN BARROWS, PLAINTIFF-APPELLEE,

v.

MACO, INC., ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. JOHN J. HOBAN, Judge, presiding.

MR. JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:

Plaintiff Brian Barrows sued defendants Maco, Inc., and Maco Coatings, Inc. (collectively, Maco), for sales commissions alleged to be due under a written contract. Defendants counterclaimed for a setoff for commissions alleged to have been prepaid. After a bench trial, judgment for $12,750.64 was entered for plaintiff on the complaint and against defendants on their counterclaim. Defendants' post-trial motion was denied and they appeal.

Maco, Inc., and Maco Coatings, Inc., are the same corporation except for a name change. Maco was incorporated in 1972 and is in the cold roofing business. Richard Yohe and Dennis Yohe are the sole shareholders. Richard Yohe is the president and sole director. Dennis Yohe is a vice president.

Engineered Roofing Service, Inc. (ERS), was formed in 1975 to do hot roofing work as a subcontractor for Maco. Richard and Dennis Yohe each held 40 percent of the stock, with Allen Dresden holding the other 20 percent. Max Ortiz was its president. Maco and ERS had the same accounting department. ERS ceased doing business on or about December 15, 1977. While in existence, Maco subcontracted more than $1 million of work to it.

Richard and Dennis Yohe were partners in a partnership known as R & D Leasing, which owned and leased certain office and warehouse space to ERS in 1976 and 1977. Each participated in loans to ERS in 1975 totaling $31,051.

Richard and Dennis Yohe were also the sole shareholders and directors of Gravel-Vac, whose business was to remove gravel from roofing systems.

On January 27, 1976, plaintiff entered into a sales agreement with Maco. He had had no prior experience in the roofing business. He received two to three weeks of in-class chemical engineering analysis training and field training with senior salesmen. His responsibilities under the contract were to work a territory securing contracts and do general public relations work with the customers.

With reference to salesman's commissions, section six of the agreement provided:

"A. Basic Commission on Jobs: Salesman is to receive a commission of 26% of the net profit, as determined in accordance with the job cost sheet attached hereto and marked Exhibit `B.' To qualify for payment of the commission, the Salesman must sell and supervise the job; the job must be completed and paid for; and the Salesman must have been in the continuous employment of the Company during the aforementioned period.

In such case that Salesman's employment shall be terminated for any reason prior to the complete supervision and installation of a job, the Salesman shall not be entitled to and shall not receive credit for any commission on the said job.

C. Sub-Contract Work: Salesman is to receive a commission of 50% of the net profit of the sub-contract work performed by non-company crews or employees.

D. Consulting Work: * * * All commissions payable under A and D above are payable and due only upon payment to Company from customer.

F. All commissions due to Salesman on accepted jobs are due and payable only after the job is paid in full by the customer. All funds advanced to Salesman by Company, on any job or contract, not paid at the end of the fiscal year of the Company shall be charged back by the Company to the account of the Salesman. * * *

G. It is understood that although commissions are not due and payable to Salesman on jobs sold until the terms set forth in Paragraph A have been complied with, the commission shall be credited to Salesman's commission account at the time the customer is invoiced for the job. Company shall provide Salesman, monthly, a statement of his commission account, showing paid and unpaid job accounts and commissions thereon, plus other charges and credits and draws, recorded against Salesman's commission account.

H. Company will furnish Salesman with a current list of prices and base costs on all products, merchandise, and services, based upon current `suggested retail' prices as determined by present general competition."

In July 1977, plaintiff, on behalf of Maco, executed a contract in the amount of $129,603.58 with the Board of Education, Cook County School District #65, for certain roof repairs and masonry restoration to the Haven School in Evanston, Illinois. The amount was subsequently reduced to $108,831.23 by a change order. Maco had done business with School District #65 for many years prior to this contract.

The contract called for 60 percent of the roof to be torn off and replaced. The remaining 40 percent of the roof was to be resaturated. The tear-off and replacement job was "hot roof work" and could not be done by Maco. Prior to this contract, plaintiff had procured other contracts needing hot roof subcontractors and in each instance he had to use ERS. He was not given any choice as to who was going to do hot roof work. The names of ERS and Gravel-Vac were printed in the standard contract form used by Maco salesmen.

Plaintiff prepared the Maco "Contract Form." Under it, ERS was to do all of the work described in the plans and specifications, except for the plumbing, tuckpointing and flashing work. Maco was to perform the flashing work for $1,064, the figure determined by plaintiff and Dennis Yohe. Dennis Yohe told plaintiff to use D & D Plumbing for the plumbing work and Anderson Tuckpointing for the tuckpointing work.

Ortiz, president of ERS, supplied the price of $65,619.08 to plaintiff, which was inserted in the contract form. Plaintiff had gone over the plans and specifications of the tear-off and replacement job with Ortiz, who assured him that he could handle everything except the plumbing and tuckpointing work.

Dennis Yohe had to approve the contract forms completed by the salesmen. Prior to submitting his bid, plaintiff discussed the prices furnished him from ERS, D & D Plumbing and Anderson Tuckpointing with Richard and Dennis Yohe and Bob Cefala, comptroller of Maco. On August 4, 1977, Richard Yohe, on behalf of Maco, executed a performance bond in the amount of $108,831.23.

Plaintiff was instructed by Cefala to insert the term "guaranteed commission $26,146.15" in the contract form. This figure was arrived at by deducting the prices of ERS, D & D Plumbing and Maco from the contract amount of $108,831.23. This $26,146.15 was the net profit that Maco would have made on the tear-off and replacement work had each subcontractor properly performed its work and been paid the prices listed on the contract form. According to the terms of his employment agreement, plaintiff would receive one-half of the $26,146.15 as his commission.

Plaintiff testified that he was present at the job site 60 to 90 times during the period from August 1977 through January 1978. It was his job to explain exactly what was ...


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