{ "id": 2681689, "name": "Transcon, Incorporated, Plaintiff and Counterdefendant, Appellee, v. Motion Incorporated, Defendant and Counterplaintiff, Appellant", "name_abbreviation": "Transcon, Inc. v. Motion Inc.", "decision_date": "1973-07-20", "docket_number": "No. 57036", "first_page": "61", "last_page": "67", "citations": [ { "type": "official", "cite": "14 Ill. App. 3d 61" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "375 U.S. 820", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11725761, 11725667, 11725893, 11725830, 11725717, 11725630 ], "opinion_index": 0, "case_paths": [ "/us/375/0820-04", "/us/375/0820-02", "/us/375/0820-06", "/us/375/0820-05", "/us/375/0820-03", "/us/375/0820-01" ] }, { "cite": "193 F.Supp. 711", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 456420 ], "year": 1961, "opinion_index": 0, "case_paths": [ "/f-supp/193/0711-01" ] }, { "cite": "41 N.E.2d 213", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "314 Ill. App. 315", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3389335 ], "pin_cites": [ { "page": "318" } ], "opinion_index": 0, "case_paths": [ "/ill-app/314/0315-01" ] }, { "cite": "257 Ill. 43", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 4717473 ], "pin_cites": [ { "page": "45" } ], "opinion_index": 0, "case_paths": [ "/ill/257/0043-01" ] }, { "cite": "216 N.E.2d 9", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "69 Ill. App.2d 169", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 2591253 ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/69/0169-01" ] }, { "cite": "230 Ill. App. 271", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 5494808 ], "pin_cites": [ { "page": "274" } ], "opinion_index": 0, "case_paths": [ "/ill-app/230/0271-01" ] }, { "cite": "186 N.E.2d 390", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "38 Ill.App.2d 38", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5255651 ], "pin_cites": [ { "page": "51" } ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/38/0038-01" ] } ], "analysis": { "cardinality": 672, "char_count": 14444, "ocr_confidence": 0.759, "pagerank": { "raw": 6.405471156330465e-08, "percentile": 0.39636210450879567 }, "sha256": "5329cf860cbd171133a4456764106cc88562408c7eb6b9542d66df2f48ed1ea7", "simhash": "1:2b04e4d80fa0986a", "word_count": 2246 }, "last_updated": "2023-07-14T18:15:06.021527+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Transcon, Incorporated, Plaintiff and Counterdefendant, Appellee, v. Motion Incorporated, Defendant and Counterplaintiff, Appellant." ], "opinions": [ { "text": "Mr. PRESIDING JUSTICE DRUCKER\ndelivered the opinion of the court:\nTranscon, Incorporated, (Transcon) filed an action against Motion Incorporated (Motion) to recover sums allegedly due it from sales to Motion. Motion filed a counterclaim against Transcon asking for damages for Transcon\u2019s alleged breach of an exclusive territorial sales representative contract with Motion. After a bench trial Transcon was awarded $5239 on its claim, and the court found against Motion on the counterclaim, Motion appeals only from that portion of the judgment denying it relief on the counterclaim.\nOn appeal Motion contends that as a matter of law Transcon breached its contract with Motion. Also, Motion asks this court to enter judgment in its favor for $28,147.38, the damages suffered by Motion assuming the existence of a breach.\nTranscon is a manufacturer of industrial conveyors. It was formed in 1959 by former employees of Mayfran Corporation (Mayfran). Both companies manufacture industrial conveyors. Motion is a sales representative for various metal handling equipment manufacturers. The other corporate entity involved is Industrial Specialties Corporation (Industrial). It was formed in 1966 by Gilbert Haggerty, an ex-Mayfran salesman who operated in Illinois during his last three years with Mayfran. Industrial is located in Barrington, Illinois. It does some manufacturing on its own premises and some by \u201cfabshops\u201d off the premises. It purchases conveyors from manufacturers and combines them into a complete industrial system.\nOn January 20, 1966, Transcon and Motion entered into a contract (drafted by Transcon) whereby Motion was to serve as Transcons exclusive sales representative in northern Illinois and western Iowa. This area was increased on February 9, 1966, to include three counties in northern Indiana. The contract provided that Motion would solicit orders for Transcon equipment in the aforementioned areas; that any orders were not to be deemed accepted until approval thereof was given by Transcon at its home office in Mentor, Ohio; and that the agreement would ran from year to year, but that either party could terminate upon 30 days written notice. The commission schedule under which Motion was to operate was also set forth.\nParagraph 7 of the contract which is the subject of the dispute provides in relevant part:\n\u201c(7) You [Motion] shall not receive commission on the following transactions except as special permission for handling the account and special commission has been arranged.\n(a) O.E.M. sales to original equipment manufacturers unless special permission has been granted to handle the account. * *\nThe term \u201cO.E.M.\u201d or original equipment manufacturers was not defined in the contract.\nWhen Gilbert Haggerty formed Industrial in June, 1966, he offered Industrial\u2019s service to Transcon. He was informed that Motion was Trans-con\u2019s sales representative in the relevant area. Haggerty told Transcon that Industrial was going to pinchase conveyors and not work as a sales representative. Transcon sold its first conveyor to Industrial in June, 1966. The conveyor was shipped directly to the ultimate user, i.e., Industrial\u2019s customer. Thereafter, until August 20, 1969, Industrial made 77 other sales of Transcon conveyors. All the sales were made to customers within Motion\u2019s selling territory; all conveyors were shipped directly from Transcon to Industrial\u2019s customer; and they all bore the name Transcon.\nIn selling its equipment systems, Industrial would inspect a customer\u2019s plant, take appropriate measurements and decide what equipment was needed. If Transcon equipment was required, Industrial would call Transcon and inform it of the dimensions and type of conveyor needed. Transcon would quote Industrial a price which Industrial then passed on to its customer. If the customer agreed to make the purchase, Industrial would forward a draft copy of the conveyor to Transcon and ask it to build it for the given sum. Transcon would then send Industrial a drawing of the conveyor and if approved by Industrial, a conveyor would be sent directly to the customer. Transcon would bill Industrial, and Industrial would bill its customer. Industrial assumed responsibility for the conveyor\u2019s performance after installation.\nMotion would solicit orders for Transcon conveyors. If such a conveyor was needed, a Motion salesman would take the necessary measurements and other information. A blueprint and data she\u00e9t were prepared by Motion' and \u00a1sent to Transcon for a price quotation. The quoted price would be related to the customer and if h\u00e9 accepted it, a purchase order was sent to Transcon. Delivery was made to the customer\u2019s plant. Motion would then inspect it to see that it complied with the specifications and assisted in the installation. Transcon would then pay it a commission. Motion was responsible for servicing the equipment it sold.\nFrom June, 1966, to August 20, 1969, (when Transcon cancelled the contract) Motion sold 14 Transcon'conveyors. During this period Motion had attempted, unsuccessfully, to sell Transcon conveyors to many comp\u00e1ni\u00e9s who, unbeknown to Motion, had bought them from Industrial.\nIn November, 1966, Transcon informed Motion that there were a total of 27 \u201cO.E.M. Machine Tool Builders\u201d or original equipment manufacturers; that the three in Motion\u2019s territory were East Chicago Machine Tool Company, Barnes Drill and Dahlstraum Machine Tool Company and that these companies constructed complete \u201cturn key\u201d systems in which the Transcon conveyor was only an integral part.\nMotion\u2019s contract with Transcon prohibited Motion from advertising without Transcon\u2019s permission. Such permission was granted and Motion advertised as Transcon\u2019s sales representative in the yellow pages of the telephone book. The same permission was also given to Industrial and in 1969 both Motion and Industrial were listed as Transcon sales representatives in the telephone book. Transcon distributed sales brochures to its sales representatives. Motion used this brochure in promoting Trans-con sales. On the back of the brochure was a space for the representative to place its name and address. Industrial received the same brochure which it used in promoting sales and placed its name and address on it as a distributor of Transcon equipment.\nMotion became aware of Industrial\u2019s activities when informed of such by a former Transcon sales manager and when a company asked Motion for replacement parts for Transcon equipment which Motion had not sold it. Motion then complained to Transcon about Industrial\u2019s sales within its territory and refused to make payment for Transcon equipment it held. Transcon cancelled the contract on August 20,1969, asserting that \u201csales to O.E.M. accounts are the only sales we have made in the area.\u201d\nThree persons testified as to what constituted an original equipment manufacturer (or an \u201cO.E.M.\u201d). Motion\u2019s president testified that an O.E.M. was a company that produced equipment, and the conveyor would only be part of the equipment sold to its customers. The Transcon conveyors sold by Industrial were installed without further manufacturing by Industrial and used as delivered to the customer. Transcon\u2019s president testified that an \u201cO.E.M.\u201d is a company which takes title to a piece of equipment, is billed by Transcon for the purchase price, does its own selling, takes responsibility for the equipment and does design work. A sales representative never does design work but merely takes measurements. The president of Hardy Corporation testified for Transcon and stated that he considered an \u201cO.E.M.\u201d to be one who designed industrial equipment systems. He believed that his company produced everything on \u201can O.E.M. basis\u201d even though it had no factory. All component parts in a system were shipped directly from the manufacturer to a Hardy customer. He considered the term \u201coriginal equipment manufacturer\u201d to be a misnomer since, as he stated, \u201cwe don\u2019t manufacture but purchase.\u201d\nIt is undisputed that if Motion was given credit for the 78 sales of Transcon conveyors by Industrial, its commission, as per its contract with Transcon, would total $28,147.38.\nOPINION\nMotion contends that as a matter of law Transcon breached the exclusive sales representative contract between the parties and therefore Motion is entitled to damages on its counterclaim.\nThe contract between Transcon and Motion provides that Motion is exclusively entitled to make sales in the pertinent geographical area except when Transcon makes a sale to an \u201coriginal equipment manufacturer,\u201d i.e., an \u201cO.E.M.\u201d Thus the pivotal issue is whether Industrial Specialties, which made 78 sales in Motion\u2019s area, is an \u201cO.E.M.\u201d If it is not, then Motion prevails, and if it is, Motion does not.\nIt is well established that each word in a contract should be given its plain and ordinary meaning. (State Toll Highway Com. v. Boyle & Co., 38 Ill.App.2d 38, 51, 186 N.E.2d 390.) Motion argues, and we agree, that in order for a company to be an \u201coriginal equipment manufacturer\u201d it must first be a \u201cmanufacturer.\u201d Any other interpretation given to the phrase would ignore the presence of the word \u201cmanufacturer\u201d and be contrary to fire accepted rule that no word in a contract is to be considered as mere surplusage and thus meaningless. (McPike v. Luer, 230 Ill. App. 271, 274; O\u2019Fallon Development Co. v. Reinbold, 69 Ill. App.2d 169, 216 N.E.2d 9.) We therefore turn to the definition of the word \u201cmanufacturer\u201d and determine whether Industrial\u2019s activities vis-avis its transactipns with Transcon place it within the meaning of the word.\nIn Dolese & Shephard Co. v. O\u2019Connell, 257 Ill. 43, 45, 100 N.E.235, the court defined the term \u201cmanufacturing\u201d as follows: See City of Chicago v. Reuter Bros. Iron Works, 314 Ill. App. 315, 318, 41 N.E.2d 213. A manufacturer would be one who performed the cited activities.\n\u2018Whenever labor is bestowed upon an article which results in its . assuming a new form, possessing new qualities or new combinations, the process of manufacturing has taken place, * *\nIt is clear from the record that Industrial bestowed no labor upon Transcon conveyors other than assisting in their installation and servicing them thereafter. These activities are of no consequence here in that they did not result in the conveyor \u201cassuming a new form\u201d or \u201cpossessing new qualities.\u201d (Dolese at 45.) In fact, Industrial\u2019s activities closely parallel those of Motion. Both companies would solicit orders, determine whether a Transcon conveyor was needed and inform Transcon as to the relevant data. Transcon would then quote each of them a price which each passed on to its customer. At this point in Industrial\u2019s sales procedure it would forward a draft copy of the desired conveyor to Transcon, and Transcon would then submit a drawing of the equipment for Industrial\u2019s approval. This was not done with Motion. But thereafter, in both cases, Transcon would ship the conveyor directly to the ultimate user. Both Motion and Industrial serviced the conveyors after installation. Motion and Industrial would use the same Transcon brochures to promote sales, and both were given permission to advertise as Transcon sales representatives in the yellow pages of the telephone book. It appears that the only substantive distinction between Motion and Industrial in their respective relationships with Transcon is that Industrial may have exercised more sophisticated engineering skills than Motion. But Industrial\u2019s activities took on nowhere near the complexity of that of the three corporations which Transcon stated were \u201coriginal equipment manufacturers\u201d in its letter to Motion in November 1966. We consider it highly significant that the first Transcon sale to Industrial occurred on June 15, 1966, and that the cited letter to Motion, dated about five months thereafter, did not refer to Industrial as an \u201cO.E.M.\u201d in the relevant territory.\nA somewhat analogous situation was presented in Rubinger v. International Telephone & Telegraph Corp., 193 F.Supp. 711 (S. D. N.Y. 1961), affd 310. F.2d 552 ( 2d Cir. 1962), cert. den. 375 U.S. 820. There an exclusive territorial distributor for a manufacturer of televisions, radios and stereo equipment sued the manufacturer for commissions allegedly due it prior to termination of the contract. As in the instant case, the contract provided that no commissions would be due the distributor if the manufacturer made sales to other manufacturers in the ar\u00e9a. Two sales were made to a company which placed the manufacturer\u2019s equipment in its own cabinets and sold them in combination. The court: held that this did not make the company a manufacturer within the terms of the contract and that commissions were thus due to the exclusive territorial distributor on the sales. In the instant case Industrial did not even make the modest combination of products evidenced in Rubinger.\nThe contract is unambiguous as to the fact that Transcon could make sales in Motion\u2019s territory (without being obligated to pay Motion the full commission) only to persons who performed a manufacturing function.\nWe therefore conclude that as a matter of law Industrial was not an \u201coriginal equipment manufacturer\u2019 and therefore Motion is entitled to a commission for the 78 sales of Transcon equipment made by Industrial.\nIt is undisputed that Motion would have received $28,147.38 in commissions if credited with the sales made by Industrial. This figure is based upon the commission schedule in the Transcon-Motion contract. It will therefore be unnecessary to remand the cause for a hearing on the issue of damages. See Ill. Rev. Stat. 1971, ch. 110A, par. 366(a)(5).\nIn conclusion, the judgment denying relief on the counterclaim is reversed and the cause is remanded with directions to enter judgment for Motion and against Transcon on the counterclaim in the sum of $28,147.38.\nReversed and remained with directions.\nENGLISH and SULLIVAN, JJ., concur.", "type": "majority", "author": "Mr. PRESIDING JUSTICE DRUCKER" } ], "attorneys": [ "David J. Gibbons and Juris Kins, both of Chicago, (Chadwell, Kayser, Ruggles, McGee, Hastings & McKinney, of counsel,) for appellant.", "Merrill B. Meyer atid Charles L. Wolberg, both of Chicago, (Rappaport, Clorfene & Rappaport, of counsel,) for appellee." ], "corrections": "", "head_matter": "Transcon, Incorporated, Plaintiff and Counterdefendant, Appellee, v. Motion Incorporated, Defendant and Counterplaintiff, Appellant.\nNo. 57036\nFirst District (5th Division)\nJuly 20, 1973.\nRehearing denied September 11, 1973.\nDavid J. Gibbons and Juris Kins, both of Chicago, (Chadwell, Kayser, Ruggles, McGee, Hastings & McKinney, of counsel,) for appellant.\nMerrill B. Meyer atid Charles L. Wolberg, both of Chicago, (Rappaport, Clorfene & Rappaport, of counsel,) for appellee." }, "file_name": "0061-01", "first_page_order": 83, "last_page_order": 89 }