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12/11/89 Gary R. Schackleton, v. Federal Signal Corporation

December 11, 1989

GARY R. SCHACKLETON, PLAINTIFF-APPELLEE AND CROSS-APPELLANT

v.

FEDERAL SIGNAL CORPORATION, DEFENDANT-APPELLANT AND CROSS-APPELLEE



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

554 N.E.2d 244, 196 Ill. App. 3d 437, 143 Ill. Dec. 309 1989.IL.1923

Appeal from the Circuit Court of Cook County; the Hon. Alfred T. Walsh, Judge, presiding.

APPELLATE Judges:

JUSTICE BUCKLEY delivered the opinion of the court. MANNING, P.J., and CAMPBELL, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BUCKLEY

Gary R. Schackleton (plaintiff), employed as a commission salesman by Federal Signal Corporation (defendant), a nationwide company engaged in the manufacture, installation and maintenance of illuminated identification signs, brought this action in the circuit court of Cook County to recover unpaid sales commissions earned prior to his termination from his employment with defendant. Following a bench trial, the trial court entered judgment in favor of plaintiff in the amount of $18,160.94, plus interest and costs, but denied plaintiff's request for attorney fees. The following issues are presented on defendant's appeal: (1) whether plaintiff's at-will employment status bars his breach of contract claim for unpaid commissions; and (2) whether the trial court's judgment was against the manifest weight of the evidence. On cross-appeal, plaintiff raises the issue of whether the circuit court erred in denying his request for attorney fees. For the reasons that follow, we affirm in part, reverse in part and remand.

Plaintiff commenced employment with defendant in December 1974, as an inside sales coordinator. Between May 1977 and the date of his termination on August 5, 1983, plaintiff was employed as a commission salesman in defendant's Chicago district. His duties included the sale and leasing of signs to businesses in his territory, the sale of maintenance contracts for signs, and assisting in the design and installation of signs.

On August 5, 1983, John Walsh, vice-president and regional manager of the Great Lakes region of defendant, terminated plaintiff's employment. Walsh testified at trial that he intended to meet with all the sales people in the Chicago district to obtain their input as to whether the upcoming sales projections for 1984 were realistic goals. During his interview with plaintiff, Walsh informed plaintiff of his proposed sales quota for 1984 and they discussed how he planned to achieve this goal. Plaintiff stated that the proposed quota was unrealistic, providing numerous reasons as bases for his assertion. When asked for solutions, plaintiff did not offer any suggestions for improvement. Walsh became frustrated and reached an "emotional point" during the conversation, at which time he terminated plaintiff's employment. Walsh testified that plaintiff was terminated solely on what transpired during the meeting and that plaintiff's most recent 1983 performance evaluation had not been considered.

Michael Costello, defendant's district manager and plaintiff's immediate supervisor, testified at trial that he was neither consulted nor permitted to offer any input into the termination decision. He stated that plaintiff had never been cited for disciplinary action and the official reason given for plaintiff's termination was "inadequate performance." Plaintiff testified at trial that he never received a copy of his 1983 performance evaluation, while defendant testified that efforts were made to locate the document, but it was never found.

At the time of plaintiff's termination, he had acquired the third highest sales production of the eight salesmen in the Chicago district. Only two salesmen, both employed for a longer duration than plaintiff, had achieved greater sales volume. In 1983, prior to his termination, plaintiff had a total sales volume of $198,970. Salesmen with identical 1983 quotas as plaintiff had much lower sales volume than plaintiff yet they were not terminated from their employment. One of these salesmen was promoted from an account executive to a sales manager or district manager for the St. Louis district.

While employed, plaintiff received sales commissions as compensation through a structured payment plan, dependent upon the type of sale contract involved. In the case of an outright sale, he received one-half of his commission when the contract was accepted by defendant and the balance after the sign was installed and the customer billed. Lease and maintenance contract commissions were paid as follows: "Commission on the lease sale portion of the contract [was] earned and payable on approximately the 15th of the month following acceptance of the contract by the company. . . . Commission on the service portion of the contract [was] earned and payable monthly over the life of the contract." As to renewal and maintenance contracts, "[o]ne-half (1/2) of [the] commission [was] earned and payable on approximately the 15th of the month after [the] contract [went] into service," and the "[r]emaining one-half (1/2) [was] earned and payable monthly over the life of the contract."

This structured plan was contained in defendant's 1978 written "Pricing and Commission Policy," which was in effect on the date of plaintiff's employment termination. Also contained in the policy was a section related to terminated salesmen and their entitlement to unpaid commissions, which provided:

" Change in Status of Salespersons

Commissions earned over the life of the contract or at the time payment is received from the customer are considered earned at that time, because continued contract between salesperson and customer further assures that the customer will receive and be satisfied with the products and services he has contracted for from [defendant]. Further, this continued contact will promote good-will with the customer and hopefully result in [defendant] being considered for future signage needs of the customer. Therefore, if there is some change in status of the salesperson and he or she is no longer employed by [defendant] or not employed as a salesperson, he or she will not be entitled to commissions earned during the remaining life of the contract . . .."

At trial, plaintiff testified that the terms of the policy regarding a former salesperson's commissions were disseminated to him, but were never discussed with him. Brian Madden, a former salesman and district manager for defendant's Chicago district, testified at trial that the 1978 policy had been drafted by the company vice-president, Bob Stolmeier. After Madden inquired of Stolmeier the effect of the policy on pending commissions owed to salespersons, Stolmeier advised Madden not to be concerned because the policy was designed solely for salesmen who were "in the red" or who otherwise owed defendant money at the time of their termination.

Plaintiff further testified at trial that his understanding of the policy was that it was designed to deal with changes in status such as retirement, promotion, transfer or death. He never understood the policy as intending to cover terminated salesmen, and at trial defendant had never indicated otherwise. Plaintiff and Madden testified at trial that salesmen were not required to "service" their accounts as a condition of receiving their commissions.

In 1979, defendant distributed an "addition" to its 1978 policy to clarify its terms regarding terminated sales persons. The "addition" to ...


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