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AMERICAN BROADCASTING COMPANIES v. CLIMATE CONTROL

September 30, 1981

AMERICAN BROADCASTING COMPANIES, INC., PLAINTIFF,
v.
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 denied.

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 commercials.

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
  pay WLS-TV?

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 ...


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