Case Name: Robert G. McGann, Plaintiff, v. Ruggles-Coles Engineering Company, Defendant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1914-11-06
Citations: 164 A.D. 253
Docket Number: 
Parties: Robert G. McGann, Plaintiff, v. Ruggles-Coles Engineering Company, Defendant.
Judges: 
Reporter: Appellate Division Reports
Volume: 164
Pages: 253–259

Head Matter:
Robert G. McGann, Plaintiff, v. Ruggles-Coles Engineering Company, Defendant.
First Department,
November 6, 1914.
Principal and agent — contract appointing salesagent and giving exclusive territory — when agent entitled to commissions.
A contract between principal and agent gave the latter the exclusive right to sell, in certain specified territory, machinery manufactured by the principal, and any sales made in that territory directly by the principal were deemed to have been made by the agent so as to entitle him to commissions. Contract of agency construed, and held, that the agent was not entitled to commissions on a sale made directly by the principal to a person within the agent’s territory, where the machinery was to be erected in territory not covered by the contract with the agent. This, because the contract entitled the agent to commissions only upon such machinery sold as was to be erected within his exclusive territory.
The contract aforesaid was afterwards supplemented by an agreement providing that the agent might sell to a person or corporation whose main office was within his territory, but whose works were within the territory of the principal, and in such case should receive commissions, and it was further provided that when machines were sold by the principal to parties having a main office within the principal’s territory, but the machinery was shipped into the agent’s territory and the sale was made without the assistance of the agent, he, nevertheless, was to receive certain specified commissions.
Held, that' the agent was entitled to commissions on a sale made by the principal to a corporation within the agent’s territory of machinery for erection at a place outside of said territory and that the principal should have forwarded the original inquiries of said purchaser to the agent as required by the terms of contract.
Held, further, that the agent was not entitled to commissions on a sale made to a corporation whose main office was outside the agent’s territory, although it had an office within the agent’s territory and negotiations respecting the sale had taken place at the latter office.
Held, further, that the agent was entitled to commissions where he was the procuring cause of a sale to a corporation whose main office was within his exclusive territory although the machinery was to be erected outside that territory.
Held, further, that the agent was not entitled to commissions upon a sale made to a corporation whose main office was outside his exclusive territory where the machinery was likewise installed outside said territory.
Held, further, that the agent was entitled to commissions on a sale initiated by him to a company within his exclusive territory where the company bought and paid for the machinery, even though it was intended for erection in the plant of another company for which the purchasers were general contractors and engineers.
Submission of a controversy upon an agreed statement of facts pursuant to section 1279 of the Code of Civil Procedure.
Henry M. Earle, for the plaintiff.
Charles L. Kingsley, for the defendant.

Opinion:
Dowling, J.:
On January 25, 1906, plaintiff entered into an agreement with the defendant whereby the former, then resident in the city of Chicago, was employed by the latter, a corporation whose principal office was in the city of New Y ork, to act on its behalf, and was appointed by it its exclusive sales agent for the sale of dryers, drying machinery and other special machinery in the States of Michigan, Ohio, Kentucky, Tennessee, Mississippi, and all territory lying to the west of said States to and including the States of Montana, Wyoming, Colorado and the Territory of New Mexico, with certain other territory, for a period of five years from January 1, 1906. Plaintiff was to faithfully and diligently represent the defendant, give prompt attention to its business, and not to sell any other dryers or drying machinery, save those built by defendant. Defendant agreed that it would forward to plaintiff all inquiries and information received by it from plaintiff's above-described territory relative to dryers, drying machinery and other special machinery, and plaintiff in like manner was to forward to the defendant all inquiries and information received by bim from sections of the United States and the countries lying without the above-described territory relative to said machinery, or any information which might be of interest to defendant. It was further provided that plaintiff should have full power and authority to contract for the sale of the machinery in question within the said territory at such prices and terms of payment as it might deem advisable, provided that they were not below the previously estimated cost thereof. Plaintiff was also to act as collector for defendant on moneys due on contract for work done, or machinery or supplies furnished, within the said territory. He was to receive all necessary traveling and hotel expenses, either while procuring contracts, superintending the erection of machinery, or attending to the collection of accounts. It was further stipulated that all sales of the dryers made by the defendant for delivery and erection within the said territory should be deemed to have been made by the plaintiff, and the profit therefrom was to be divided according to the terms of the contract.
One of the first questions presented by the controversy is whether plaintiff was entitled to a commission on a certain contract made with the Toltec Portland Cement Company, a Kansas corporation, for the erection of machinery at Tula, in the Bepublic of Mexico. Kansas was within the plaintiff's exclusive territory;.Mexico was not. Plaintiff contends that because the cement company was a Kansas corporation, and the sale effected within plaintiff's territory (in Kansas), and the contract made therein, he was entitled to the commission thereupon. A careful examination and comparison of the various provisions of the contract between the parties satisfies us that the true intent and meaning thereof was that plaintiff should receive commission only upon such machinery sold by him as was erected within his exclusive territory. The sale was made directly between the defendant and the Toltec Company, and plaintiff's sole contention for his right to commission on this transaction is based on his allegation of the location of the main office of the buyer within his territory. Hot only are we satisfied that a reasonable interpretation of this agreement was to restrict plaintiff, as has been said, to a commission upon machinery sold for erection within his exclusive territory, but that interpretation is confirmed by the second agreement between the parties, made January 1, 1911, immediately preceding the expiration of the first agreement, which second agreement, likewise for a period of five years, constituted plaintiff the exclusive salesagent of defendant for the sale of the same machinery in practically the same territory, but included a new provision, numbered 7th as follows: "The agent may sell one or more dryers to any person or corporation whose main office is within his territory but whose works are within the territory of the principal, receiving the same profit as specified in clause six." Paragraph 8 provided: "When one or more dryers are sold by the principal to party having main office within the principal's territory, but the dryer is shipped into the territory of the agent, and such sale is made without the assistance of the agent, then the agent is to receive the same profit as specified in clause six, except that the first $1,000 on the first sale or sales each year which would otherwise be paid him as specified in clause six shall be retained and held by the principal."
The remaining questions arise under the second agreement. The first of these has to do with a contract made by defendant for the sale of a dryer to the same Toltec Portland Cement Company (whose main office was at Stafford, Kans.), within the plaintiff's territory, for erection at Tula,. in the Republic of Mexico, without the plaintiff's territory. As this sale was made by defendant directly to the Toltec Company, as the result of correspondence with its general manager in Mexico and with the general offices of the corporation in Kansas, plaintiff bases his right to a commission on the agreement of defendant contained in the contract between them that the defendant would forward to the plaintiff all inquiries and information received by it from the plaintiff's territory. When the dryers had been shipped they were paid for by a sight draft with bill of lading attached drawn by defendant upon the cement company at Stafford, Kans. The draft was paid there. All the correspondence (save two letters) was had by the defendant with the cement company's office at Stafford, Kans. We think the defendant failed in its contractual duty to the plaintiff by not notifying him and forwarding to him the original inquiry as well as the later ones which had come from his exclusive territory, and that the sale is one which is expressly covered by the provisions heretofore cited, which established his rights to commission on sales to corporations whose main office was within his territory but whose works were outside the same. We think, therefore, that he is entitled to a commission upon the second transaction with the Toltec Portland Cement Company, amounting to $1,145.50, with interest from April 3, 1912.
Plaintiff el aims a commission upon a sale made to the H. W. Johns-Manville Company upon a dryer sold to it by the defend ant and erected at Manville, N. J. Plaintiff bases his claim, upon the fact that he initiated the negotiations for the sale of the dryer to said company at Milwaukee, in the State of Wisconsin, which was within the plaintiff's exclusive territory; that numerous negotiations were had there by plaintiff and by the defendant's president, acting in conjunction, and that although the sale was ultimately made in the State of New York, as the Johns-Manville Company had an office in Wisconsin, in which State they also maintained a plant, the commission was due him under the agreement. Plaintiff has not brought this transaction within the terms of his contract, for although the purchaser had an office and plant within his territory, the main office of said company was in New York city, and, therefore, he is not entitled to a commission under the 7th clause of the second agreement heretofore quoted.
Plaintiff claims a commission upon a transaction had with the National Malleable Castings Company, whose main office was in the State of Ohio, within the plaintiff's territory, and which also maintains an office in Chicago, 111., and plants in Illinois and Pennsylvania. Plaintiff initiated negotiations with the president of the company at the offices in Chicago, 111., which is within his territory, and reported his operations to the defendant. Thereafter the office of said Malleable Castings Company at Sharon, Penn., wrote to the defendant for catalogues and prices, which were furnished, and plaintiff, who was still continuing his efforts to sell machinery to the same company for the defendant for use in its western plants, telegraphed defendant's president, asking his help in the sale of dryers to the eastern plant of the casting company at Sharon, Penn. Thereupon the president of the defendant went to Sharon, Penn., and plaintiff procured the approval of the president'of the casting company to the purchase there proposed, as a result of which a dryer was sold to the casting company's Sharon, Penn., plant. Later, through the activity of plaintiff and defendant's president, another dryer was sold for installation in the casting company's Illinois plant. Plaintiff has been paid his commission on the latter transaction, which was within his territory, but not for the Sharon sale, which was outside his' territory. In this transaction the plaintiff was the procuring cause of the sale to a corporation whose main office was within his exclusive territory, and while the machinery was to be erected outside that territory, the case is covered by the 7th paragraph heretofore quoted, and plaintiff is, therefore, entitled to a commission upon the sale in the sum •' of $688.11, with interest from June 1, 1913.
Plaintiff further claims a commission upon a sale made to the American Steel Foundries, a corporation whose main office is in Chicago, 111., within the plaintiff's exclusive territory, upon the ground of a sale made to the Quigley Furnace Company, with which said foundries company had a contract for the erection of a coal pulverizing plant at Sharon, Perm., which contract included therein the installation of the dryer made by defendant. The plaintiff is not entitled to a commission upon this transaction for the reason that the sale was not made to the foundries company but to the Quigley Construction Company, whose main office is at Springfield, in the State of Massachusetts, which is outside of the plaintiff's exclusive territory, and as the machinery was likewise installed outside his territory, under no reasonable interpretation of the contract can he claim a commission thereupon.
Plaintiff further claims a commission upon a sale made to Butterworth & Lowe of Grand Eapids, Mich., the machinery in question having been installed upon the plant of the Moapa Gypsum Company at Moapa, Nev. The negotiations for this sale were initiated directly between the plaintiff and Butter-worth & Lowe, but plaintiff being at the time in the New York office of the defendant, referred the same to the president of defendant, who carried on the correspondence which resulted in the sale of the dryer in question. It is claimed that inasmuch as the machinery was to be installed in Nevada, which was outside the plaintiff's territory, no commission is payable. But. Butterworth & Lowe were residents within the limits of plaintiff's exclusive territory, and they personally bought and paid for the machinery in question, even though it was intended for erection upon the plant of the gypsum company, for which they were general contractors and engineers. Under these circumstances we think the transaction should be treated as a, sale made to a buyer whose main office was within the plaintiff's exclusive territory, even though the machinery was to be erected elsewhere, and that plaintiff is, therefore, entitled to his commission upon said sale, amounting to $530.37, with interest from October 1, 1913.
It follows, therefore, that plaintiff is entitled to judgment against the defendant in the sum of $2,363.98, with interest on $1,145.50 thereof from April 3, 1912; on $688.11 thereof from June 1, 1913, and on $530.37 thereof from October 1, 1913, together with the costs and disbursements of the submission.
Ingraham, P. J., Clarke, Scott and Hotchkiss, JJ., concurred.
Judgment ordered for plaintiff as directed in opinion, with costs. Order to be settled on notice.