United States District Court, Northern District of Illinois, E.D
June 10, 1982
DAHLY TOOL COMPANY, PLAINTIFF,
VERMONT TAP AND DIE COMPANY, DEFENDANT.
The opinion of the court was delivered by: Grady, District Judge.
This cause of action arises out of a manufacturer's
representative agreement between plaintiff and defendant.
Plaintiff filed a two-count complaint alleging unjust
enrichment and requesting an accounting for monies due. Before
the court is defendant's motion for summary judgment. The
motion is denied.
For approximately 28 years, plaintiff, pursuant to an oral
agreement with defendant, acted as the sales representative
for defendant's tap and die manufacturing business. The
agreement was of indefinite duration. Plaintiff was
compensated on a commission basis. On October 1, 1979,
representatives of the parties met and plaintiff was advised
that defendant was terminating the relationship effective
December 31, 1979. This termination was confirmed by a letter
dated October 11, 1979, which stated that ". . . Dahly Tool
will continue to receive the same commission rates on all
shipments made in their territory through December 31,
1979. . . ." Exhibit A to Plaintiff's Complaint.
At issue is whether plaintiff's employment was terminable at
will. Secondly, there is a dispute as to whether plaintiff is
entitled to commissions on sales it made prior to December 31,
1979, even though the goods may not have been shipped by that
date. See Lemmon v. Cedar Point, Inc., 406 F.2d 94, 97 (6th
Cir. 1969) (narrow construction given to any provision which
forfeiture of important rights almost earned by rendering of
substantial service); Coleman v. Graybar Elec. Co.,
195 F.2d 374 (5th Cir. 1952) (if services of salesman were terminated
arbitrarily, commission was not forfeited); Zimmer v. Wells
Mgmt. Corp., 348 F. Supp. 540 (S.D.N.Y. 1972) (no reasonable
party would place himself in a position forfeiting his valuable
rights); see also Corbin, Contracts § 153, which discusses the
principle that an employer's offer to pay a bonus, commission,
or other compensation, to an employee who continues to serve
for a stated period becomes irrevocable by the employee's
rendering substantial service; Fortune v. National Cash
Register, 373 Mass. 96, 364 N.E.2d 1251, 1257 (Mass. 1977).
Every agreement includes an implied promise that the duties
of the parties will be performed in good faith and that each
will deal fairly with the other in their performance. See,
e.g., Foster Enterprises, Inc. v. Germania Fed. Sav. & Loan
Assoc., 97 Ill. App.3d 22, 52 Ill.Dec. 303, 421 N.E.2d 1375 (3d
Dist. 1981); Zimmer v. Wells Mgmt. Corp., 348 F. Supp. 540
(S.D.N.Y. 1972). The plaintiff, who worked for defendant for
about 28 years, may be able to show from the relevant facts
surrounding its services that its claims are justified. See
Foley v. Community Oil Co., 64 F.R.D. 561 (D.N.H. 1974)
(long-term employment may not be terminated at will, even
though no notice is required under the agreement, when
employer's motives are not in good faith); Fortune v. National
Cash Register, 373 Mass. 96, 364 N.E.2d 1251 (Mass. 1977)
(where a party to an implied contract devotes substantial time
and investment, there is an implied duty of good faith and fair
dealing which is breached upon a termination not made in good
faith). The nature and terms of a contract are questions of
fact to be derived from all circumstances of the case. Uproar
v. National Broadcasting Co., 81 F.2d 373 (1st Cir. 1936),
cert. denied, 298 U.S. 670, 56 S.Ct. 835, 80 L.Ed. 1393 (1936).
Agreements may be supplemented by implied promises from "the
promisor's words and conduct in light of the surrounding
circumstances." Corbin, Contracts, § 562; see Foley v.
Community Oil Co., 64 F.R.D. 561 (D.N.H. 1974).
In light of these considerations, we cannot construe the
employment agreement between the parties as a matter of law.
Defendant's motion for summary judgment is denied.
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