Opinion
March 6, 1950 —
April 5, 1950.
APPEAL from a judgment of the circuit court for Marathon county: GERALD J. BOILEAU, Circuit Judge. Reversed.
For the appellant there was a brief by Smith, Okoneski, Puchner Tinkham of Wausau, and oral argument by Richard P. Tinkham.
For the respondent there was a brief by Genrich Terwilliger, attorneys, and Walter H. Piehler and Emil A. Wakeen of counsel, all of Wausau, and oral argument by Herbert Terwilliger.
The action was begun October 1, 1948, by Aero Motive Sales Corporation against the Wausau Motor Parts Company to recover commissions on sales made by the plaintiff. From a judgment in favor of the defendant, plaintiff appeals.
The plaintiff alleges that from March 18, 1946, to December 31, 1946, plaintiff was a distributor of defendant's products; and further alleges that by virtue of the services performed under the terms of the contract plaintiff earned and was entitled to payment by defendant on December 31, 1946, the sum of $3,311.42; that thereafter certain credits were to be allowed, reducing the amount to $2,674.67; that plaintiff on November 14, 1947, made written demand upon the defendant for payment in cash of the balance due; that defendant has refused to make the payment; and judgment is demanded for the amount claimed to be due. The defendant's answer places in issue the terms of the payment, alleging that the plaintiff at no time had any right to a cash refund but was bound to take his payment in merchandise.
The terms of the contract are set forth in the following letter:
"After I left Pittsburgh, I went to Washington and while there, discussed the subject I told you I would discuss, and also have taken it up with our own auditor. And, under the circumstances, there seems reasonable justification for quarterly payment of volume compensation.
"We will therefore credit your account quarterly on the basis of volume compensation earned for the quarter, prorated and extended to determine the proper rebate bracket and it's understood that an adjustment will be made at the end of each year, either way. If an overpayment has been made there will be a charge back to you; if an underpayment has been made, there will be additional credit issue to cover.
"Below are listed the volume compensation classifications as they are paid:
"Percentage of credit for volume compensation shall be paid to jobber stocking Wausau rings in one store on the following schedule; and shall be based on existing net jobber published price arrangements, and shall not prejudice or be prejudiced by any future price alterations. Marathon ring sales shall be computed and included for volume compensation. However, the volume bracket is established only on sales of Wausau brand piston rings, and volume bracket may not be advanced by sales of Marathon brand piston rings. It is understood that only the months' sales which are paid for within the thirty-day period shall be counted in volume computations. That is, any month's billing that falls past due will not be included in volume computations.
$ 1,200 net piston ring billing to jobber per 12 month period 2% 1,500 " " " " " " " " " " " 3% 1,800 " " " " " " " " " " " 4% 2,500 " " " " " " " " " " " 5% 3,500 " " " " " " " " " " " 7% 4,500 " " " " " " " " " " " 9% 6,000 " " " " " " " " " " " 11% 8,000 " " " " " " " " " " " 13% 10,000 " " " " " " " " " " " 15% 12,000 " " " " " " " " " " " 17% 15,000 " " " " " " " " " " " 19% 20,000 " " " " " " " " " " " 21% 25,000 " " " " " " " " " " " 23% 40,000 " " " " " " " " " " " 25% 2% 10th Prox. is the cash discount. Shipments going forward in 100# lots or more will be shipped prepaid from the factory."On motion for summary judgment, the trial court in its memorandum opinion said:
"The contract in question was made through correspondence, the agreement having been set forth in defendant's Letter of March 4, 1946, and accepted by plaintiff's letter dated March 18, 1946. These letters provided an effective contract for the year 1946, the parties having entered into another written contract, using the printed form of the defendants, for the year 1947.
"The contracts provided that plaintiff should become sales distributor for the defendant's products in the Pittsburgh, Pa., area.
"The question presented is whether or not plaintiff is entitled to be paid in cash or merchandise credits.
"The 1946 agreement provided for volume compensation on a quarterly basis. At no time, however, while the 1946 contract was in effect, did the plaintiff demand cash payment. It is reasonable to assume that in March, 1946, the parties contemplated that their business relations would continue over an extended period, and the plaintiff was content, therefore, to be given credit for its commissions against future purchases.
"On the first of the next year, however, a different form of contract was entered into which provided for payments either in cash or credit under certain circumstances. This was more in line with accepted business practices and undoubtedly was upon the theory that so long as contracts were to be renewed annually some provisions should be made for a time when business relations would ultimately be broken off. Such breaking off of business relations was not contemplated in the negotiations and correspondence that resulted in the 1946 contract, and that is, undoubtedly, the reason why no provision was made for payment of commissions in cash; and this also, undoubtedly, accounts for the fact that no demand for quarterly payment in cash was made by the plaintiff until November, 1947.
"The court is of the opinion that the 1946 contract did not provide for cash payment. For that reason plaintiff's motion for summary judgment should be denied."
But the court did grant a summary judgment in favor of defendant dismissing the plaintiff's complaint.
A contract is conceded to exist. It is also conceded that the respondent is indebted to the appellant. The question presented on this appeal is: Do the terms of that contract preclude the appellant from having payment of the balance due him in cash?
The trial court ruled "that the contract did not provide for cash payment," thus limiting the appellant's right to satisfy his claim by the purchase of merchandise from the respondent. The contract, as made up by the letters referred to in the statement of facts, permits the appellant to take its compensation either in cash or in merchandise. There is nothing in the contract itself which excludes the appellant from the right to his payment in cash. Every agreement ought to receive a reasonable construction, and the true intent of the parties is to be carried into effect. The contract contains a provision under which the appellant was to have the right to insist upon quarterly adjustments or payment based on "volume compensation." The appellant was the distributor of the respondent's merchandise. It was understood that the purchasing or distributing by it of a certain quantity of respondent's material under the table providing for volume compensation entitled the appellant to advantages in price, and under conditions described in the contract fixed the terms on which the credit was to be based. There were to be quarterly adjustments.
The word "payment" is used, the word "credit" is used, and in the respondent's letter, which is a part of the contract, there appears the following: "And, under the circumstances, there seems reasonable justification for quarterly payment of volume compensation. We will therefore credit your account quarterly on the basis of volume compensation earned for the quarter, prorated and extended to determine the proper rebate bracket and it's understood that an adjustment will be made at the end of each year, either way. If an overpayment has been made there will be a charge back to you; if an underpayment has been made, there will be additional credit issued to cover." The foregoing includes the idea of payment, credit, debit. The word "payment" and the words "quarterly payment" and "volume compensation" are of consequence if interpretation is necessary, for they indicate the intention of the parties. The words "payment," "credit," etc., with time fixed for ascertaining amounts due, lead to a reasonable approach to a fair construction of the written agreement.
The contract certainly was intended to express the idea of payment, whether the credit was in the favor of the distributor or in favor of the manufacturer. If at an intermediate quarterly period for settlement between the parties the distributor was indebted to the manufacturer, it would seem that a reasonable construction would require the distributor to account in cash if the manufacturer so elected. The fact that the account was to be credited quarterly on basis of "compensation earned for the quarter, prorated and extended to determine the proper rebate bracket" does not exclude the idea of payment in cash. We have quoted enough of the agreement to show the possibilities of requirements of adjustment between the parties.
The respondent advances the argument that, by using credit and not having demanded cash prior to the end of the year, a practical construction has come into being and the doctrine of estoppel, by adopting a course of conduct, must be given weight. However, one who transacts his business with another in manner permissible under and consistent with the terms of the contract does not create an alteration of the controlling stipulations nor limit the terms to a single method of payment. There was no element of chance, no misleading of respondent. The ascertainment of the amounts due at different times was provided for and fixed. The words "credit," "charge back" do not cancel out the provisions in the contract for payment, nor the method by which the time and payment are to be determined. Payment, under the circumstances existing here, in its full significance is not overcome by anything, of course, chargeable to the appellant in or under the contract.
An agreement between the parties that payments falling due and the amount thereof having been arrived at, providing that credit be extended to whichever party the balance is in favor of quarterly, would fall under the general doctrine which would permit the appellant to recover the amount due it.
We recognize the fact that contracts have been made providing for payment in specific articles or "in kind." It will generally be found in those cases that a precise provision limiting the payment in merchandise is set forth. However, this agreement, fixing the time of payment or allowing credit, stands as an agreement to satisfy the claim of the appellant in the manner he may demand. After the time for quarterly payment mentioned in the agreement has come about, the provision runs into money and ought to be considered as an obligation for the payment of money. It is then a fixed and determined amount. We have the certainty, then, of a contract term the time for adjustment having been determined and the amount due fixed. It is not a contract specially constructed for payment by delivery of goods. The one in whose favor the balance is, has become entitled to recover the amount due.
The action appears to be based on the contract of 1946. This contract reached its period of completion with the balance in favor of the appellant. As stated upon the argument, a new contract was entered into in 1947. This leaves the parties to adjust their differences under the terms of the 1946 contract and under the terms of that agreement the appellant is entitled to recover his commissions fixed by the table of volume compensation. That amount does not appear to be in dispute. It was earned by the appellant as the sales distributor of the respondent's products during 1946.
It was stated during the argument that the parties to the agreement were still transacting business with each other to some extent, and that by reason thereof certain credits have been created which are in favor of the respondent. Those items, of course, must be taken into consideration upon the case being returned to the circuit court.
The judgment of the trial court is reversed for the reason of misconstruction of the contract, and the cause is to be remanded with direction to enter judgment in favor of the appellant pursuant to its motion for summary judgment, making due allowance for such claims as have come into existence since the action was begun.
By the Court. — Judgment reversed, cause remanded, with direction to set aside the judgment in defendant's favor and grant judgment to plaintiff in accordance with this opinion.