Estrada v. Darling-Crose Machine Co.

TAYLOR, J. Defendant, Darling-Crose Machine Company, appeals from a money judgment in favor of plaintiff, Richard Estrada, contending that the court erroneously applied the parol evidence rule to exclude evidence of custom.

The facts are not in dispute. Defendant is a distributor of machine tools for whom plaintiff acted as a, sales engineer or sales representative between mid-1963 and December 31, 1965. On or about July 1,1963, plaintiff and defendant entered into a letter agreement to formalize two points of their understanding concerning plaintiff’s employment: 1) that plaintiff’s commission would be “35% of the net commission on the sale (i.e. 35% of the net amount of sale)”; 2) the expenses to which he would be entitled. The letter was not intended to be a comprehensive, contract but merely to confirm the parties’ understanding with respect to the limited points covered.

On December 31, 1965, plaintiff resigned as an employee of defendant. Prior thereto, plaintiff had solicited certain orders for machinery to be purchased from defendant. This machinery was not delivered to defendant’s customers until nine months after plaintiff had left defendant’s employ. The single issue in controversy is the amount of the commission that plaintiff was entitled to receive for these orders.

Plaintiff contends that he is entitled to his full normal commission of 35 percent of defendant’s net profit, as set forth in the letter; defendant contends that pursuant to industry custom, plaintiff is entitled to receive only one-half of this amount since the machinery was not delivered until after termination of plaintiff’s employment. The parties stipulated that the amount in controversy, i.e., 50 percent of the normal 35 percent commission, was $4,860.45, and this was the amount of judgment entered for plaintiff.

At the trial, defendant offered evidence of a custom and practice in the machine tool industry to pay only one-half of the normal commission where orders were solicited by the sales engineer while in the employ of the distributor but there was not delivery to the customers until after the termination of the employment. The reason given for this practice is that there are important and time-consuming functions that are [683]normally performed by the sales engineer after the machinery has been delivered to the premises of the customer, such as installation and adjustment.

Plaintiff testified that while he was aware of the fact that this was a practice in some parts of the machine tool industry and that, in fact, he had been previously employed under such an arrangement, he was not aware of any such uniform industry-wide custom and practice. He testified that his previous employment on that basis was based on a written agreement with his prior employer and that one of his reasons for coming to work for defendant was that defendant offered the better deal of a 35 percent commission. Plaintiff also testified that he knew of some distributors in the machine tool industry who pay 100 percent commission where delivery is subsequent to the salesman’s employment.