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12/15/95 TRI-TUBE v. OEM COMPONENTS

December 15, 1995

TRI-TUBE, INC.
v.
OEM COMPONENTS, INC.



Appeal from Morgan Circuit Court. (CV-89-350). Rudolph W. Slate, TRIAL JUDGE.

Released for Publication May 17, 1996.

Crawley, Judge. Robertson, P.j., and Thigpen, Yates, and Monroe, JJ., concur.

The opinion of the court was delivered by: Crawley

CRAWLEY, Judge

In September 1989, OEM Components, Inc., filed a complaint against Tri-Tube, Inc., seeking damages for breach of contract. Tri-Tube answered and counterclaimed, seeking damages for breach of contract. Following the presentation of oral testimony, the trial court entered a final judgment for OEM, awarding OEM damages for breach of contract and accrued interest. The trial court denied relief to Tri-Tube on its counterclaim. Tri-Tube filed a post-judgment motion, which was denied by operation of law. Tri-Tube appealed to the Supreme Court, which transferred the case to this court pursuant to Ala. Code 1975, § 12-2-7(6).

Tri-Tube argues three issues on appeal: (1) whether the trial court erred in interpreting the contract; (2) whether the trial court erred in awarding $112,622.35 damages to OEM and $34,765.41 prejudgment interest to OEM; and (3) whether the trial court erred in excluding certain evidence regarding OEM's contract with another party.

In November 1983, Tri-Tube and OEM entered a contract whereby OEM would act as an exclusive selling agent for Tri-Tube for a specific territory. The contract provided that Tri-Tube would pay OEM 5% of the net invoice price of "all products and services" sold by OEM. Tri-Tube agreed to pay half of that commission if "products and services are sold outside the territory but for shipment into the territory." The contract provided that either Tri-Tube or OEM could terminate the contract upon 90 days' notice. The contract further provided for post-termination commissions. Tri-Tube terminated the contract in October 1986.

Tri-Tube first argues that the trial court erred by applying the doctrine of "procuring cause" in its interpretation of the contract and thereby erred in awarding damages to OEM. Alabama courts have applied the doctrine to determine whether a real estate agent is entitled to a commission. See First Real Estate Corp. of Alabama v. Spiller, 603 So. 2d 954 (Ala. 1992). Tri-Tube argues that the doctrine of "procuring cause" is applicable only where the contract at issue does not expressly provide for post-termination commissions. See Willis v. Champlain Cable Corp., 109 Wash. 2d 747, 748 P.2d 621 (1988). In this case, the contract does expressly provide for post-termination commissions, and the contract provides the method of calculating those commissions; however, there is no evidence that the trial court applied the doctrine in reaching its judgment. Rather, as discussed below, the trial court interpreted the post-termination compensation provisions of the contract in awarding damages to OEM.

Tri-Tube further argues that the trial court erred in construing the compensation provisions of the contract and therefore erred in awarding OEM damages. These provisions are as follows:

"4. Representative's Compensation

"(a) The Company agrees to pay the Representative, as a commission, the percentage (as set forth on the attached Exhibit 'D') of the net invoice price of all products and services of the Company sold by Representative and covered by this Agreement from the date hereof until the 'effective date of termination' of this Agreement as that term is hereinafter defined. Such commission shall be deemed to have been earned upon the issuance by the customer to the Company for a purchase order, but such commission shall not [be] payable until the Company invoices the customer. Such commission shall be the only compensation, remuneration or payment due the Representative from the Company for all services rendered or to be rendered hereunder. Representative shall not be entitled to any reimbursement for costs or expenses incurred by him carrying out his duties under this Agreement.

"(b) 'Net invoice price' means the total price at which an order is invoiced to the customer but excluding tooling, freight, and shipping costs, taxes, insurance, discounts and allowances, rework and repair charges, field service charges, and labor consulting services, if any.

"(c) All orders obtained by Representative are subject to acceptance or rejection by an authorized officer of the Company at its home office and to approval by the Company's Credit Department, and Company shall be under no obligation to accept any such order for any reason it deems sufficient. Company shall be under no obligation to do anything with regard to potential business or orders obtained by the Representative, including, but not limited to, producing and submitting sample product, submitting financial data, or other information, making financial guarantees or otherwise doing anything to qualify to do business with or to satisfy any potential customer or governmental agency.

"(d) In cases where products or services are sold outside the territory but for shipment into the territory, or are sold in the territory but for shipment outside the territory, one half of the commission shall be paid to each ...


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