Appeal from the Circuit Court of Cook County. Honorable Aaron Jaffe, Judge Presiding.
The opinion of the court was delivered by: Theis
JUSTICE THEIS delivered the opinion of the court:
This case involves interpretation of certain commission contracts in which defendants-appellants, Michael Pavlick and Gregory Jansen, agreed to sell insurance for plaintiffs, two affiliated insurance companies known as Pennsylvania Life Insurance Company and Executive Fund Life Insurance Company (referred to collectively as the "Companies"). According to the compensation schedule included in defendants' Branch Manager Agreements with the Companies, commissions were to be calculated as a percentage of the net profits generated by certain business received by the Companies. Subsequent written amendments to the Agreements added "business codes" to which additional commissions would be paid, but these amendments lacked explicit language stating that commissions would be based on a percentage of net profits. Defendants filed a counterclaim against the Companies, seeking recovery of commissions based on a percentageof the business received by the Companies on certain insurance policies, or "premiums." The trial court granted the Companies' motion for summary judgment on the counterclaim, finding that the amendments were not ambiguous and that the amendments required payment of commissions based on a percentage of net profits.
The issue before this court is whether the commissions were to be calculated on the basis of net profits or on the basis of premiums. We agree with the trial court that the commissions were to be based upon net profits, and affirm.
Defendants Michael Pavlick and Gregory Jansen began working with Pennsylvania Life Insurance Company and Executive Fund Life Insurance Company as sales agents in 1978, and were promoted to the position of branch managers in the early 1980s. Upon becoming branch managers, Pavlick and Jansen individually executed Manager Agreements with each company. The Agreements authorized Pavlick and Jansen to recruit, appoint, and train sales agents to sell the Companies' policies. The Agreements consisted of printed contracts supplied by the Companies, customized with typed language inserted in the blanks.
The Agreements contained a compensation schedule describing how the Companies would calculate defendants' commissions. The Companies had divided their business into different regions, each of which corresponded to a numerical code. The compensation schedule identified those regions or codes for which a manager would receive commissions. Each printed compensation schedule contained blanks in which the parties could specify the commission percentages and applicable business codes:
"3. Manager shall receive percent ( %) of the profits, as defined below, of the business coded ."
After signing the Manager Agreements, the parties executed a series of written amendments to the Agreements. The amendments increased a manager's compensation by adding new codes upon which he or she would be paid commissions. Like the original Manager Agreements, these amendments consisted of printed forms signed by a representative of the Companies and either Jansen or Pavlick. Each of the one-page amendments contained a typewritten paragraph which specified the date when the amendment became effective and the percentage of commission due on a designated business code.
Between April 1983 and October 1984, Jansen and the Companies signed six amendments. One such amendment provided:
"Effective April 1, 1983 GREGORY JANSEN shall participate in TWENTY percent (20%) of the net profits, or loss, on business coded 004877 (Operation Share-Homewood, I1) in accordance with terms and conditions provided in Branch Manager Agreement."
Pavlick did not sign any amendments during this time period.
Between October 1984 and August 1988, Jansen and the Companies entered into 15 additional amendments. Pavlick signed two amendments in November 1988. Unlike the Manager Agreements and the first six amendments which Jansen signed, the post-October 1984 amendments did not explicitly state that commissions would be based on a percentage of net profits. Instead, these amendments provided that the commissions would be based on a ...