Appeal from the United States Court of Appeals for the Northern District of Illinois, Eastern Division. No. 78 C 1506 -- Joseph Sam Perry, Judge.
Cudahy, Circuit Judge, Weick, Senior Circuit Judge*fn* and Posner, Circuit Judge.
Plaintiff-appellant Publishers Resource, Inc. ("Publishers Resource") appeals from a judgment determining that it had breached an advertising contract (the "Contract") between itself and defendant-appellee Walker-Davis Publications, Inc. ("Walker-Davis") and was thus entitled to recover only $7,640.18 in restitution for services rendered prior to termination of the contract by Walker-Davis. This case is before us under our diversity jurisdiction. The parties agree that Illinois law governs the substantive questions. We reverse and remand for a determination of damages consistent with this opinion.
Appellant Publishers Resource is an independent publisher's representative incorporated in Illinois. A publisher's representative is retained by magazine publishers to sell advertising space in magazines, usually within an assigned territory. Appellee Walker-Davis is a Pennsylvania corporation which publishes controlled circulation specialty trade magazines. Walker-Davis sends such magazines to selected recipients free of charge and derives revenue wholly from the sale of advertising. Walker-Davis also sends packets of direct response postcards to subscribers, who then mail them directly to the advertiser.
In the summer of 1973 Publishers Resource began to solicit advertising on behalf of one of Walker-Davis' publications, Plant and Industrial Engineers' Digest. On April 1, 1974, Publishers Resource and Walker-Davis entered into the Contract, under which Publishers Resource undertook to solicit and service advertising for Walker-Davis within an exclusive territory in the Midwest. The Contract thus provided that Walker-Davis was precluded from selling directly or through other representatives within that territory. Publishers Resource was compensated on a monthly commission basis, as follows:
The Publisher will pay the Representative commission on all net advertising revenues produced by its publication in the Representative's territory after deduction of 15% agency and 2% cash discounts. Representative's commissions will be paid according to the following schedule:
20% on all advertising in Industrial Products & Equipment and Safety & Security News Osha-Cards.
20% on the first ninety (90) units sold into a given issue of PLANT ENGINEER'S DIGEST (a unit being equivalent to 1/9th page of space).
22% on the next thirty (30) units in that issue.
25% on all units in the issue in excess of 120 units.
In addition, the Publisher will pay the Representative a 15% commission on all direct mail revenues from ...