__________

Nos. 95-2460 and 95-2462

__________

S. Michael McKay, *

*

Appellant/Cross-Appellee, *

*

v. * Appeal from the United States

* District Court for the

WilTel Communication Systems, * Eastern District of Missouri

Inc., a Delaware corporation, *

*

Appellee/Cross-Appellant. *

__________

Submitted: February 12, 1996

Filed: June 28, 1996

__________

Before MAGILL, HEANEY, and MURPHY, Circuit Judges.

__________

MURPHY, Circuit Judge.

Michael McKay sued his former employer, WilTel Communication Systems,

Inc. (WilTel), to collect additional commissions on a large phone system

sold by an affiliated company. The jury awarded McKay $119,215. McKay

appeals from the judgment entered by the district court in his favor,

arguing he should have also received statutory damages and attorney fees.

WilTel cross-appeals to challenge the sufficiency of the evidence and

several rulings by the district court on jury instructions and evidence.

We affirm in part and reverse in part.
 The $30,439 commission was based on McKay's compensation 1

agreement, which provided for one percent on the first $3 million

of a major sale and two percent on the balance. This figure was

revised later, and the record suggests that McKay received a

total of either $30,877.42 or $31,000.72. McKay does not dispute

that he received the latter amount, but to avoid confusion we

will refer simply to a $30,000 commission.

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I.

McKay joined a predecessor of WilTel as a salesperson in 1977 and

soon became its sales manager for Arkansas. Except for a brief period in

1980-81, McKay continued to work for WilTel through 1990, when he resigned.

WilTel is an unregulated vendor of telecommunications equipment. During

the relevant period, it was a subsidiary of Centel Corporation,

headquartered in Chicago. Centel was also the parent company of Central

Telephone Company of Florida (Florida Central), which is a regulated

provider of telephone service with its headquarters in Tallahassee.

The dispute here revolves around a sale in which McKay helped sell

a multi-million dollar phone system, including both equipment and service,

to Florida State University (FSU). The university considered a proposal

to buy the system from WilTel, but decided to purchase from Florida Central

because the latter could offer a purchase agreement using periodic tariff

payments.

FSU agreed to pay Florida Central roughly $6 million during the five

year contract term and $6 million more if it exercised its option to extend

for another five years. Florida Central purchased equipment valued at

about $2.5 million from WilTel and then resold it to FSU as part of the

sales and service package. WilTel added a hypothetical profit to the price

it charged Florida Central and paid McKay approximately $30,000 as a

1

commission based on the equipment sale. McKay argued he should receive a

commission on the entire value of the FSU transaction because of his role

in it, but he cashed the commission check after informing WilTel management
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that he was protesting the amount.

The Florida Central sale took two years to complete, and McKay's role

was significant. He had been assigned the account in late 1985 when a

senior WilTel manager learned of FSU's plan to replace its existing system.

McKay visited FSU some fifteen times, and the evidence suggests that he was

the employee from the Centel entities most significantly and consistently

involved in the sale efforts.

It became clear in 1986 that FSU's financial situation would not

allow a cash sale, so McKay devised a joint approach for the Centel

entities, including WilTel and Florida Central. Because Florida Central

was regulated, it could offer a tariffed sale proposal while WilTel could

not. Ultimately Centel presented three options to FSU in one proposal on

Centel letterhead. Centel prevailed over several competitors, and FSU

selected an option involving both WilTel and Florida Central. Equipment

from WilTel would allow FSU to run its own switching facility and provide

service directly to students. It would also provide the advanced

technology necessary for FSU's expanding computer operations. The package

apparently also included local service from Florida Central. All payments

were to be made to Florida Central according to the tariffed rate over five

or ten years. Florida Central then purchased the equipment from WilTel for

resale to FSU.

McKay discussed his compensation with his superiors several times

during the process. In early 1987, he asked his immediate manager, Lynn

McKee, how his commission would be computed. After McKee checked with more

senior executives, he told McKay he would receive his normal commission

even if the tariff option were chosen. McKay testified that he felt it

unnecessary to obtain a precise definition of "normal" at that point

because the sale was still speculative, a cash sale to FSU was still a

possibility, and he had always been treated fairly by the company. As a

tariffed
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sale became more likely, however, it became clear that the vast majority

of the proceeds from the sale would pass through Florida Central accounts

rather than WilTel's. McKay was concerned that he would not be compensated

fairly and wrote a series of memoranda to McKee and other WilTel executives

in late 1987 and early 1988.

After WilTel paid McKay the $30,000 commission check cashed under

protest, he argued in another series of memoranda that he was entitled to

a commission on the entire transaction between Florida Central and FSU, not

just the transfer between the two subsidiaries. The commission issue was

still not resolved when McKay resigned in 1990 to accept another position.

McKay brought suit in state court in 1992, alleging that WilTel had

breached the compensation agreement and had been unjustly enriched by not

paying him a commission on the full value of the FSU transaction. McKay

also alleged he was entitled to statutory damages under R.M. § 407.913,

which provides for additional payment if commissions are not paid as due

when a salesperson is terminated. The first complaint also contained

breach of contract and unjust enrichment claims against WilTel based on a

sale to McDonnell Douglas, Inc. WilTel removed the case to federal court

based on diversity of citizenship.

The district court granted summary judgment in favor of WilTel on

both counts relating to McDonnell Douglas and on the breach of contract

claim regarding FSU. The court concluded that McKay had received all

commissions due him on the McDonnell Douglas sale and that the compensation

plan was inapplicable to the FSU transaction because WilTel had not made

a sale to FSU.

McKay then was granted leave to file an amended complaint in which

he alleged that "the sum of $30,439 does not represent the reasonable value

of the services performed by plaintiff" in the FSU transaction and that

WilTel was unjustly enriched. He again
 Article I, § 13 of the Missouri Constitution states that 2

"no law . . . retrospective in its operation . . . can be

enacted."

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included the statutory claim under Mo. Rev. Stat. § 407.913, but the

district court ruled before the case was submitted to the jury that the

statute could not be applied. The jury returned a verdict after trial in

favor of McKay for $119,215, plus interest and costs. WilTel's motions for

judgment as a matter of law, for remittitur, and for a new trial were

denied, and this appeal and cross-appeal followed.

II.

McKay raises only one issue on appeal: that the district court erred

by concluding that Mo. Rev. Stat. § 407.913 could not be applied in this

case. The district court concluded that use of the statute would be an

unconstitutional retroactive application because the FSU sale had occurred

more than a year before the statute's enactment. Mo. Rev. Stat. Const.

Art. I, § 13.2

Section 407.913 was enacted in 1989 and reads:

Any principal who fails to timely pay the sales representative

commissions earned by such sales representative shall be liable

to the sales representative in a civil action for the actual

damages sustained by the sales representative, an additional

amount as if the sales representative were still earning

commissions calculated on an annualized pro rata basis from the

date of termination to the date of payment. In addition the

court may award reasonable attorney's fees and costs to the

prevailing party.

McKay claimed throughout this litigation that he is entitled to both the

statutory damages, which he computed to be some $300 per day, and attorney

fees. 

WilTel responds first that the statute does not apply because McKay's

cause of action regarding any additional commissions
 Similarly, we need not address the arguments raised by 3

WilTel regarding the constitutionality of retroactive application

of the statute or by McKay regarding WilTel's late amendment of

its answer to include its affirmative defense on the

constitutional issue.

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accrued before the effective date of the statute and it cannot be applied

retroactively. WilTel's position is that the right to sue accrued in the

spring of 1988, more than a year before the statute's enactment (July 1989)

and its effective date (no earlier than October 1989). McKay argues that

his right to sue accrued when he left the company in 1990, but that the

statute could be applied retroactively even if the correct date were 1988

because it only creates an additional remedy, not a new cause of action.

Under Missouri law procedural statutes may be applied retroactively, but

substantive ones, often defined as those affecting vested rights, may not.

See, e.g., Doe v. Roman Catholic Diocese of Jefferson City, 862 S.W.2d 338,

340-42 (Mo. 1993) (en banc). We do not need to decide when a cause of

action accrues under § 407.913 or whether the statute is procedural or

substantive because the section is inapplicable for other reasons.3

The parties also disagree whether the commissions McKay seeks are

covered by § 407.913. WilTel argues that they are not because McKay

received all commissions due under his contract when it paid him the

$30,000 in 1988. McKay argues that the statute applies because he seeks

additional commissions on the FSU sale which were due and owing when he

left WilTel. Our review of legal questions is de novo, and we may affirm

on any basis supported by the record. Monterey Development Corp. v.

Lawyer's Title Insurance Corp., 4 F.3d 605, 608 (8th Cir. 1993).

The statute, and the other sections enacted with it, focus on the

timely payment of sales commissions earned by a sales representative under

contract with a principal. See Mo. Rev. Stat. §§ 407.911-.915. Section

407.913 provides for actual damages, plus an additional amount for the

period between the date a salesperson
 Monetary awards are "calculated on an annualized pro rata 4

basis from the date of termination to the date of payment." Mo.

Rev. Stat § 407.913.

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is terminated and the date the commission is ultimately paid. In

determining when, and impliedly if, a sales commission becomes due, the

contract between the sales representative and the principal "shall

control." Rev. Stat. Mo. § 407.912.1(1). McKay now concedes that he

received all he was due under his written contract, and it is the

extracontractual nature of his efforts on the FSU transaction that makes

recovery in quantum meruit possible. 

Recovery of commissions on a quantum meruit basis rather than on a

compensation plan or contract appears to be outside the intended scope of

the statute. McKay's breach of contract claim was dismissed before trial,

and he has not appealed that decision. McKay also testified that he left

WilTel voluntarily to pursue another business opportunity, but the statute

appears designed to prevent loss of commissions because of discharge from

employment. Since WilTel paid McKay his contractual commission and he was 4

never terminated, McKay's situation is not covered by § 407.913. The

district court did not err in declining to permit application of the

statute.

III.

On its cross appeal, WilTel challenges the admission of some

evidence, several jury instructions, and other questions of law. All of

its arguments were properly preserved in its motions for judgment as a

matter of law.

WilTel argues that McKay presented no evidence that it gained a

direct economic benefit from the transfer of the equipment to Central

Florida or from the total sale to FSU. A benefit retained by the defendant

is required by Missouri law under an unjust
 This language was not included in the original complaint, 5

which apparently claimed only unjust enrichment.

 "All pleadings shall be so construed as to do substantial 6

justice." Fed.R.Civ.Proc. 8(f).

-8-

enrichment theory. See Koepke Construction, Inc. v. Woodsage Construction

Co., 844 S.W.2d 508 (Mo.App. 1992). WilTel therefore contends that the

district court erred by refusing to instruct the jury that a benefit must

be proven and by denying WilTel's motions for judgment as a matter of law

or for a new trial.

The amended complaint included a claim that the $30,000 commission

paid does not "represent the reasonable value of the services performed by

plaintiff." While the amended complaint also claims that WilTel was

5

unjustly enriched, the relief requested was the reasonable value of McKay's

services, not the amount by which WilTel was allegedly unjustly enriched.

The district court interpreted this claim as one in quantum meruit, or

implied contract, and concluded that any economic benefit to WilTel was

irrelevant. E.g., Excerpts from the Transcript for March 2, 1995 at 4, 13.

It therefore instructed the jury that:

Your verdict must be for [McKay] and against [WilTel] if you

believe first: [McKay] furnished services to [WilTel] with

respect to the Florida State University transaction mentioned

in the evidence; and second, [WilTel] accepted such services

for which [McKay] was not fully compensated by [WilTel].

If a proper objection is made, jury instructions are reviewed as a

whole to insure that they fairly and adequately state the substantive law

on the issue raised. American Business Interiors, Inc. v. Haworth, Inc.,

798 F.2d 1135, 1139 (8th Cir. 1986). If the objecting party can also

demonstrate that it was prejudiced, a new trial is necessary. See Fink v.

Foley-Belsaw Co, 983 F.2d 111, 113-14 (8th Cir. 1993). The district

court's instruction is consistent with the pleadings and appears to be a 6

faithful
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application of Missouri Approved Jury Instruction § 4.04 on quantum meruit.

The district court's interpretation of this claim should not be disturbed.

Recovery under quantum meruit or implied contract does not require

proof that the defendant made a profit or received some economic benefit,

only that the plaintiff performed services and that the defendant accepted

them. Johnson Group, Inc. v. Beecham Inc., 952 F.2d 1005, 1007 (8th Cir.

1991) (Missouri law); Jorritsma v. Tymac Controls Corp., 864 F.2d 597, 599

(8th Cir. 1988) (Missouri law); Missouri Approved Jury Instructions § 4.04.

WilTel requested that McKay pursue the FSU sale using a joint approach with

Florida Central. He performed the requested services, and Florida Central

made the sale. The district court did not err in denying the motions for

judgment as a matter of law and for a new trial or in refusing to instruct

the jury on a benefit to WilTel. Holland v. Tandem Computers Inc., 49 F.3d

1287, 1288 (8th Cir. 1995) (denial of motion for judgment as matter of law

reviewed de novo with evidence viewed in light most favorable to nonmoving

party); Norton v. Caremark, Inc., 20 F.3d 330, 334, 340 (8th Cir. 1994)

(denial of motion for new trial reviewed for clear abuse of discretion).

WilTel also argues that McKay failed to prove that his work on the

FSU sale was sufficiently different from his work under his compensation

agreement to warrant equitable damages. Under Missouri law, quantum meruit

damages are available from an employer only if the services are "outside

the scope of the contract." H.H. Robertson Co., Cupples Products Div. v.

V.S. DiCarlo General Contractors, Inc., 950 F.2d 572, 577-78 (8th Cir.

1991) (Missouri law); St. Louis Testing Laboratories, Inc. v. Mississippi

Valley Structural Steel Co., 254 F.Supp. 47, 55-56 (E.D.Mo. 1966), aff'd

375 F.2d 565 (8th Cir. 1967). The evidence must be viewed in the light

most favorable to McKay as we review WilTel's argument. McBryde v. Carey

Lumber Co., 819 F.2d 185, 188 (8th Cir. 1987).
 Because there was evidence from which the jury could 7

conclude that WilTel's $30,000 payment did not satisfy its

obligations to McKay, the district court did not err in refusing

WilTel's requested instruction to the contrary.

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There is no dispute that McKay's compensation agreement did not cover

tariff sales made by Florida Central but arranged by McKay. WilTel

witnesses indicated that the structure of the FSU sale was highly unusual,

and it is undisputed that WilTel agreed to pay McKay a "normal" commission

on a tariff sale. The evidence also would support a finding that his

superiors urged him to pursue a joint approach to the sale, including the

tariff option which he apparently proposed and which only Florida Central

could offer. There was substantial evidence from which the jury could find

that McKay provided services outside the scope of his contract that made

a successful sale possible, and denial of the motions for judgment as a

matter of law was proper. Hastings v. Boston Mutual Life Insurance Co.,

7

975 F.2d 506, 509 (8th Cir. 1992).

WilTel also argues that McKay waived his claim to additional

commissions by continuing to work for the company for over two years after

the FSU sale. As the many memoranda from McKay to various superiors and

his cashing the commission check under protest demonstrate, however, McKay

made clear his dissatisfaction with WilTel's resolution of the matter.

The cases relied upon by WilTel are not on point because in them a

party continued to accept payments under a contract after becoming aware

of a breach of that contract. See, e.g., Barker v. SAC Osage Electric

Cooperative, Inc., 857 F.2d 486 (8th Cir. 1988) (Missouri law); Long v.

Huffman, 557 S.W.2d 911 (Mo. App. 1977); Chemical Fireproofing Corp. v.

Bronska, 542 S.W.2d 74 (Mo. App. 1976). While waiver of a breach was found

under those circumstances, McKay's situation differs. His acceptance of

the commission for that part of the sale which fit under his compensation

agreement cannot be interpreted as acquiescence in
 For similar reasons WilTel's argument that the district 8

court should have given an affirmative defense instruction based

on waiver and estoppel is without merit.

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WilTel's decision to pay him only that amount for the FSU sale. The cited

cases do not speak to the situation where a sale is beyond a written

contract and a claim is made for additional compensation under a quantum

meruit theory.8

Likewise, McKay's cashing of the check under protest was not an

accord and satisfaction under Missouri law. The doctrine of accord and

satisfaction does not apply unless the payor indicates its intent that

acceptance of the check will settle all claims between the parties. McKee

Construction Co. v. Stanley Plumbing & Heating Co., 828 S.W.2d 700, 701

(Mo. App. 1992). Because there was no evidence that WilTel expressed such

an intent, the district court did not err in denying WilTel's motions for

judgment as a matter of law on this basis.

WilTel argues that the jury should have been instructed that McKay's

compensation agreement would have limited his commission to $100,000 had

the complete sale to FSU been made directly by WilTel. The jury was

instructed that:

In determining the reasonable value of the services rendered by

Plaintiff to Defendant, with respect to the Florida State

University transaction mentioned in the evidence, you may

consider all of the evidence adduced during trial, including

the provision of the 1987 Compensation Plan mentioned in the

evidence. However, the Court has ruled as a matter of law,

that that plan does not provide a maximum value for Plaintiff's

services.

(emphasis added).

We conclude as a matter of law that McKay could not have reasonably

expected to make more than a $100,000 commission on the sale and that that

jury instruction was therefore erroneous. McKay
 Having reached this conclusion, we need not address 9

WilTel's argument that it was error to exclude McKay's responses

to interrogatories in which he acknowledged the $100,000 limit.

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was told he would be paid on a normal basis. His compensation plan read

"[t]he maximum allowable commission on any one sale shall be $100,000 on

SL-100's . . . . Exceptions for large PBX networks may be appropriate but

must be approved in writing by the President in advance of the proposal."

His commission therefore would have been limited to $100,000 had WilTel

made the sale directly. Just as WilTel, or other Centel entities, should

not have received essentially free services from McKay because FSU chose

the tariff option rather than a purchase straight from WilTel, McKay should

not receive more than the contract maximum. In reaching this conclusion,

we also note that McKay himself assumed the $100,000 limit would apply

throughout his unsuccessful negotiations with WilTel for additional

commissions and during the first stages of this litigation.

The district court therefore erred in not granting WilTel's motion

for remittitur. The damages awarded to McKay should be reduced so that his

total recovery before interest and costs is $100,000 (but deducting the

commissions already paid on the FSU transaction). A new trial is

9

unnecessary because there is a clear standard that can be applied in a

reliable manner to reduce the jury's verdict to the contractual $100,000

limit. Cf. Hicks v. Capitol American Life Insurance Co., 943 F.2d 891, 895

(8th Cir. 1991) (case remanded for new trial where evidentiary record

needed to be redeveloped).

WilTel argues that the jury should have been instructed to reduce the

value of the Central Florida-FSU transaction to its present value before

computing McKay's commission. Under Missouri law, damages based on future

payments should be reduced to their present value. Mattan v. Hoover Co.,

166 S.W.2d 557 (Mo. 1942). 
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While the better course would have been to instruct the jury on present

value, WilTel's closing argument stressed that the present value of damages

should be calculated. It pointed to a September 1987 memorandum prepared

by McKay in which he consistently used the present value to arrive at the

commission he believed was due. Because the jury was aware of the

relevance of present value as it considered the reasonable value of McKay's

services, WilTel has not made a sufficient showing of prejudice to require

a new trial. 

WilTel also argues that the district court should have instructed the

jury that there is a presumption under Missouri law that services performed

for an employer are not "extra work" subject to additional compensation.

Henderson v. Brown Electrical Supply Co., 555 S.W.2d 635, 639 (Mo. App.

1977). The evidence is clear, however, that McKay's efforts related to the

FSU transaction were out of the ordinary. It was apparently the first time

a joint approach was taken by WilTel with a sister subsidiary phone

company, and this situation was not contemplated by the compensation plan.

McKay was assigned and encouraged to do the work normally necessary to

consummate a sale but to make available to FSU purchase options which would

preclude commissions under the contract. He was told he would receive a

normal commission on any resulting sale. A conclusion that his efforts

fell outside his normal duties is implicit in the jury's decision that the

reasonable value of his services was more than he was paid. In light of

the evidence, WilTel has failed to demonstrate that it was prejudiced by

any failure to instruct on the presumption.

WilTel also challenges the admission of evidence relating to the

reasonable value of McKay's services. The district court admitted

testimony and documents related to the commissions paid by Regional Bell

Operating Companies to sales agencies who sold phone services for them.

Evidence was also admitted showing that WilTel paid a twenty percent

commission to its sales representatives on
 WilTel contends that this commission rate also should not 10

have been admitted because it was not adopted on a national basis

until 1993 and would not have been applicable to the FSU

transaction in any event. The rate was relevant to the

determination of the reasonable value of McKay's services,

however, because it tends to show how WilTel valued the efforts

of its sales representatives in situations similar to the FSU

sale.

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its share of sales made on behalf of Bell companies. The evidence shows 10

that the Bell agency commission rates were presented to the jury as being

analogous, but not directly applicable, to the FSU transaction. WilTel had

the opportunity to point out any defects in the analogy to the jury. Based

on the evidence, these Bell agreements covered situations sufficiently

similar to the FSU sale to make them useful to the jury in determining the

reasonable value of McKay's services, and WilTel has not shown that any

prejudice outweighed their probative value, and their admission was not an

abuse of discretion. Cummings v. Malone, 995 F.2d 817 (8th Cir. 1993).

Finally, WilTel argues that the district court should not have

admitted evidence showing how WilTel sales representatives were compensated

in other unusual transactions. It suggests the evidence was irrelevant

because the sales involved neither McKay nor WilTel. Again, the district

court did not abuse its discretion because these transactions were

sufficiently similar to the FSU sale to aid the jury in determining the

reasonable value of McKay's services.

IV.

In conclusion, we affirm on all issues except for the amount of

damages which is reversed, and the case is remanded to the district court

for further proceedings consistent with this opinion.
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A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.