United States District Court, Northern District of Illinois, E. D
September 30, 1981
AMERICAN BROADCASTING COMPANIES, INC., PLAINTIFF,
CLIMATE CONTROL CORPORATION, DEFENDANT.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff American Broadcasting Companies, Inc. ("ABC" or
"WLS-TV")*fn1 sues Climate Control Corporation ("Climate
Control") to recover the cost of certain advertising time.
Both parties have moved for summary judgment. For the reasons
stated in this memorandum opinion and order both motions are
Questions as to Agency
Climate Control is a local distributor for a national air
conditioning firm. In the spring of 1978 Climate Control
(which had done virtually no television advertising) decided
to run a commercial on local Chicago television stations.
Because it understood media representatives would not deal
directly with advertisers, so that it could not purchase air
time itself, Climate Control secured the services of an
advertising agency, Sander Rodkin/Hechtman/Glantz Advertising,
Ltd. ("Sander Rodkin"). Sander Rodkin recommended both the ABC
and CBS stations and June and July 1978 dates for running the
Sander Rodkin never discussed the terms of the billings with
Climate Control except to say that Sander Rodkin would bill
Climate Control, pay the media and receive a commission from
the media. Sander Rodkin told Climate Control that was
standard procedure in the advertising industry.
Unfortunately Sander Rodkin was in financial distress.
Although it received full payment from Climate Control
promptly after each billing, it was slow in honoring its
billings from WLS-TV. Moreover it did not designate the checks
it did remit to WLS-TV to reflect that they should be applied
to the invoices covering Climate Control commercials (some
checks designated other accounts, while others bore no
designation at all).
Thus when Sander Rodkin entered into an assignment for the
benefit of creditors on April 13, 1979 WLS-TV's accounts
showed $13,175 still unpaid for television air time used for
Climate Control commercials.*fn2 From Climate Control's point
of view, however, it had paid for the time in full — its final
payment of $15,000, designated as payment for WLS-TV air time,
had been made to Sander Rodkin August 28, 1978.*fn3
It was not until December 1979 that Climate Control was
notified ABC considered it liable for the unpaid balance, and
on its refusal to pay this action followed.
ABC and Climate Control were never in communication as to
purchase of the air time, which was accomplished by
negotiations between representatives of Sander Rodkin and
WLS-TV. Indeed Climate Control never saw the contract, which
was WLS-TV's printed form filled in by WLS-TV. Although WLS-TV
listed the "Advertiser" as "Climatrol, Inc." (sic), no
employee of Climate Control negotiated or signed the contract.
Instead the contract form, addressed by WLS-TV to Sander
Rodkin as the buying agency, was accepted "for Agency and/or
Advertiser" (again WLS-TV's form designation) by Debbie
Wright, a Sander Rodkin employee.
Thus the first question involved in this action is whether
Sander Rodkin was an agent for Climate Control with the power
to bind it to a contract to pay for the purchase of advertising
time.*fn4 If Sander Rodkin were indeed such an agent, Climate
Control, as a disclosed principal, is bound by the contract to
pay. But if Sander Rodkin were an independent contractor and
not Climate Control's agent for that purpose, WLS-TV has no
remedy against Climate.*fn5
Thus the undisputed facts must be sufficient to answer two
questions if summary judgment is to be entered:
(1) Was Sander Rodkin Climate Control's agent?
(2) If there were an agency relationship, did
it encompass the power to bind Climate Control to
Viewed in those terms, most of the parties' arguments on this
motion have been misdirected.*fn6
Agency is a "voluntary relationship . . . that . . . cannot
exist without the consent of both the principal and the
agent." 1 I.L.P. Agency § 4. It is the principal who
voluntarily empowers an agent to bind him to contracts with
third parties. 1 I.L.P. Agency § 12. Thus the considerations
relevant to determining whether Sander Rodkin was Climate
Control's agent are factors relating to the relationship
between Sander Rodkin and Climate Control, not between Sander
Rodkin and WLS-TV.*fn7
For example, the parties dispute at some length the effect
of a clause in the WLS-TV contract that might be argued to
liability on each of Sander Rodkin and Climate Control. That
language, wholly unknown as it was to Climate Control, cannot
affect the relationship between Climate Control and Sander
Rodkin. If Sander Rodkin were not authorized to bind Climate
Control to pay, its signing of a dual liability contract would
be outside its authority as agent and Climate Control would
not be liable.
Two types of actual authority are possible: express and
implied. Climate Control officials were admittedly unaware of
the contracts signed by Sander Rodkin and never expressly
authorized Sander Rodkin to bind Climate Control to make
payment to any television station. Express authority, then,
was clearly lacking.
However, "the relationship of agency does not depend on an
express appointment and acceptance thereof, but it may be
implied from the circumstances of the particular case. . . ."
1 I.L.P. Agency § 13. Thus the case reduces to the question
whether the actions taken by Climate Control impliedly
empowered Sander Rodkin to bind Climate Control to pay the
television station for time purchased.
Seen from that perspective it is plain that summary judgment
cannot be granted either party. Questions of implied agency
are rarely susceptible to summary judgment because such agency
must be inferred from actions by a principal, and those
actions seldom permit of a single inference. This case
presents a typical example. While each party does not dispute
the truth of the facts advanced by the other, conflicting
inferences can be drawn from the identical set of facts.
Because such conflicting inferences are possible, summary
judgment is inappropriate. United States v. Diebold, Inc.,
369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962).
WLS-TV's form contract itself permits two possible
interpretations. Its caption reads:
Television facilities contract between WLS-TV an
owned television station of the American
Broadcasting Company, a Division of American
Broadcasting Companies, Inc. and Advertiser as
That statement, coupled with WLS-TV's insertion of "Climatrol,
Inc." in the blank space opposite the word "Advertiser," might
indicate that the contract was intended to be between WLS-TV
and Climate Control (but see n. 4).
But a closer reading of the contract reveals that an
opposite inference is permissible. Paragraph (1) on the
reverse side of the contract, which deals with payment,
consistently refers to "the Agency and/or Advertiser. . . ."
Paragraph (1)(f) then states (emphasis added):
If this contract is between Company [WLS-TV] and an
Advertiser, references to the "Agency" shall apply
to the Advertiser, except that no agency commission
will be allowed to Advertiser.
Unless it were contemplated that the contract may be between
WLS-TV and someone other than an advertiser, there would of
course be no occasion for the "if" clause — or for Paragraph
1(f) at all. That provision, coupled with the contract's
consistent use of the "and/or" locution, certainly permits the
inference that the contract may be between (1) WLS-TV and an
advertising agency or (2) WLS-TV and an advertiser or (3)
WLS-TV and both agency and advertiser. To precisely the same
effect, on the face of the contract under the caption "For
Agency and/or Advertiser" there are two lines for the
signatures reflecting acceptance.
Because Paragraph 1 thus indicates that WLS-TV is willing to
enter into a contract with either the agency or the advertiser
or both, it may be inferred from the existence of two places
for acceptance signatures that the contract is between WLS-TV
and whatever entity or entities signs or sign the
acceptance.*fn8 Here the contract was signed only by a Sander
Rodkin employee, so it is
possible to infer that the contract bound only Sander Rodkin.
Facts apart from the contract itself similarly look in two
directions. ABC points to facts that might indicate the
existence of an agent-principal relationship between Sander
Rodkin and Climate Control (but see n. 6):
(1) Sander Rodkin never purchased advertising
time without first seeking approval from Climate
(2) WLS-TV's claimed dual liability advertising
contract (neither party considered the contract
construction argument just discussed in this
opinion) was widely publicized.*fn9
(3) Climate Control had the ability to veto any
action Sander Rodkin might have taken. Whether
Climate Control actually exercised that power is
irrelevant because it is the ability to control,
whether exercised or unexercised, that indicates
an agency relationship. Reith v. General Telephone
Co. of Illinois, 22 Ill.App.3d 337, 339,
317 N.E.2d 369, 372 (5th Dist. 1974).
Climate Control counters with several facts weighing against
the existence of an agency relationship (or an agency to bind
Climate Control to pay):
(1) Sander Rodkin's recommendations approved by
Climate Control were very general. They did not
indicate the exact time or shows for which
advertising time would be purchased. Sander
Rodkin had complete discretion as to the details
of purchasing advertising time.
(2) WLS-TV dealt only with Sander Rodkin.
WLS-TV billed Sander Rodkin, which in turn billed
(3) Sander Rodkin received a commission from
WLS-TV, not Climate Control.*fn10
(4) Climate Control was unaware that Sander
Rodkin was signing a contract that could in any
way bind it to pay WLS-TV.
(5) WLS-TV maintained its account receivable in
the Sander Rodkin name. Sander Rodkin's checks to
WLS-TV were often used to cancel any debts that
Sander Rodkin owed to WLS-TV.
(6) In the advertising industry the custom and
practice is that the advertising agency is solely
liable to the advertising medium.*fn11
Only one conclusion is possible: The agency question in this
case cannot be decided via summary judgment. Indeed the case
relied on so heavily by both parties involved a remand for
trial of a question very similar to that posed in this case.
Columbia Broadcasting System, Inc. v. Stokely Van Camp, Inc.,
522 F.2d 369
, 376-77, 379 (2d Cir. 1975).
As the Court stated in Tansey v. Robinson, 24 Ill.App.2d 227,
233-34, 164 N.E.2d 272, 275 (1st Dist. 1960):
[The agency question] depends upon the actual
practice followed by the parties and, as a
general rule, becomes a mixed question of law and
fact to be submitted upon proper instructions to
a jury. Determination
of the question of whether the relationship of
employer and employee, principal and agent, or
owner and independent contractor exists depends
upon such facts as the matter of hiring, the
right to discharge, the manner and direction of
servants, the right to terminate the
relationship, and the character of the
supervision of the work done. . . . Unless those
facts clearly appear, the relationship cannot
become purely a question of law.
Climate Control contends in its cross-motion for summary
judgment that (1) WLS-TV had knowledge of Sander Rodkin's
shaky financial condition and (2) having failed to advise
Climate Control of that fact, WLS-TV is estopped to demand
payment from Climate Control. Once again the facts are simply
not clear enough to permit summary judgment. Estoppel would
require WLS-TV to have been aware, and to have failed to
inform Climate Control, that Sander Rodkin would soon fold. On
that score the facts are not yet clear.
Climate relies on documents reflecting that:
(1) WLS-TV was aware that Sander Rodkin was a
"slow pay" agency; and
(2) WLS-TV was considering pulling Sander
Rodkin's clients off the air if they did not
erase a large debt.
While those facts certainly indicate WLS-TV had knowledge of
Sander Rodkin's difficulties, it is quite possible that WLS-TV
was entirely unaware those difficulties would soon lead to
Sander Rodkin's demise. Conflicting inferences are again
possible from the evidence, and summary judgment is
Numerous issues of material fact remain unresolved. Neither
party is entitled to entry of summary judgment. Both their
motions are denied.