Petition — EHRET CO. v. EATON YALE & TOWNE, INC. (No. 75-1133)

—— Court, U. &

FILLED

FEB 10 1976

MICHAEL RODAK, JR., CLERK

IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1975.

No = #5 - 1133

EHRET COMPANY, A CORPORATION,

Petitioner,

vs.

EATON YALE & TOWNE, INC., A CORPORATION,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT.

D. KENDALL GRIFFITH,

DENNIS J. HORAN,

JEROME A. FRAZEL, JR.,

69 West Washington Street,

Chicago, Illinois 60602,

Counsel of Reeord for Petitioner.

Gunthorp-Warren Printing Company, Chicago e Financial 6-6565

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INDEX.

PAGE

SR IE so obec tb esboceccsccecesotesoesegeee 1

EEE a Ee a ee 2

Ne a wan ee obese ehene uae 2

EE occ be ccedeceretieecncesous 2

oe cas cusaneetbecesesoees 2

Reasons for Granting the Writ..............-....... 4

ele e ee een eee yee abheneee 10

Appendix

I, co cc cenesceccessceneecs Al

Se Oe Be Gs 50 66 cnc becvcweseecces A9

CITATIONS.

Dorin v. Equitable, 282 F. 2d 73...........2sce0eee. 9

Fairmount Glass Works v. Cub Fork Co., 287 U.S. 474.. 8

Mooney v. Henderson Portion Pack Co., 334 F.2d 7.... 9

Ortman v. Stanray Corporation, 437 F. 2d 231......... 6

Tennant v. Peoria & Pekin Union R. Co., 321 U.S.29.. 5

United States v. 1,160 Acres, 432 F. 2d 910.......... 9

.-

Supreme Court of the Auited States

OcToBER TERM, 1975.

No.

EHRET COMPANY, A CORPORATION,

Petitioner,

vs.

EATON YALE & TOWNE, INC., A CORPORATION,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT.

Petitioner prays that a Writ of Certiorari issue to review

the judgment of the United States Court of Appeals for the

Seventh Circuit entered in the above-entitled case on September

11, 1975. (Petition for Rehearing denied on November 12,

1975)

The opinion of the United States Court of Appeals for the

Seventh Circuit (App. A9-A17) is reported in 523 Fed. 2d

280. The opinion of the United States District for the Northern

District of Illinois, Eastern Division (App. Al-A8) was not re-

ported.

JURISDICTION.

The judgment of the Circuit Court of Appeals was entered

on September 11, 1975. Rehearing was denied on November 12,

1975. The jurisdiction of this court is invoked under 28 U. S. C.

§ 1254(1).

QUESTIONS PRESENTED.

1. In passing on a motion for new trial does the trial court's

erroneous exclusion from his consideration of evidence which

was considered by the jury deprive a litigant of its right to trial

by jury?

2. Should this court exercise its supervisory power to pre-

serve the right to trial by jury when a trial court passing on mo-

tion for new trial has excluded evidence which it acknowledges

supports the verdict and the Court of Appeals has ignored the

issue of the propriety of that exclusion?

3. Whether an order of remittitur should be appealable

without the necessity of a second trial. The Circuits are in con-

flict on this point.

CONSTITUTIONAL PROVISION.

The Seventh Amendment of the United States Constitution

reads:

In Suits at common law, where the value in controversy

shall exceed twenty dollars, the right of trial by jury shall

be preserved, and no fact tried by a jury, shall be other-

wise re-examined in any Court of the United States, than

according to the rules of the common law.

STATEMENT OF THE CASE.

The facts contained in the opinion of the Court of Appeals

(App. A9-A17) are correctly stated and to avoid repetition

are not repeated here.

3

Petitioner Ehret Company, an Illinois Corporation, filed this

action against respondent Eaton Yale & Towne, Inc., an Ohio

corporation, seeking to recover from Eaton all commissions due

Ehret Company under certain sales agreements between the

parties. The suit was filed in the United States District Court

on the basis of diversity of citizenship.

Before trial, on motion for partial summary judgment, the

District Court initially held that “extremely fair treatment”

consisted of commissions on orders shipped within one year

after cancellation. On reconsideration the court concluded that

that issue was a question of fact for the jury.

Neither Eaton or the court attempted to restrict the evidence

which the jury could consider in determining the meaning of

“extremely fair treatment.” Nor was any instruction tendered

regarding the relative importance of the evidence offered to

prove the meaning of that phrase.

At both trials the court instructed the jury:

The law does not say what extremely fair treatment

means. That is for you to decide based on all the evidence

which you find has a bearing on determining the intent

of the parties. (T 1. 648, T 2. 608)

In ordering the remittitur the court found no trial error and

concluded that the verdict was not based on passion and preju-

dice. The trial court said:

When the words “extremely fair treatment” are con-

sidered by themselves, there is room for reasonable per-

sons to reach the verdict rendered . . . When the phrase

is viewed in the totality of circumstances surrounding the

party’s business relationship the verdict is also supportable:

the contract provides for development commission; there

was evidence as to the length of time required to develop

sales; etc. However, the totality of circumstances is not

considered until the language is measured against the

of the contract and, when this is done, the

finds that the verdict is excessive. (App. 75).

‘it

4

The “extremely fair treatment” clause does create a ques-

tion of fact as to the length of time during which commis-

sions were to be received following termination. However,

the evidence does not support a finding that the parties

intended more than a one year time span. (App. A6)

Ehret Company did not consent to the remittur, but petitioned

the Court of Appeals for the Seventh Circuit for a writ of

certiorari. This was denied and the second trial resulted in a

verdict in favor of Ehret Company for $120,000.00.

On appeal Ehret Company raised two points regarding the

remittitur:

1. The trial court’s error of law in failing to consider the

surrounding circumstances when passing on the motion

for new trial; and

2. The abuse of discretion in ordering a remittitur.

The Seventh Circuit’s opinion (App. A9-A17) states:

The plaintiffs (Ehret) contention on its appeal is that

the trial judge abused his discretion by offering a remittur

and granting a new trial. (App. Al5-A16)

The court then concludes that there was no abuse of discre-

tion. (App. Al6) The opinion does not discuss the propriety _

of the District Court’s exclusion of the evidence of surrounding

circumstances when passing on the motion for new trial. Yet

when passing on Eaton’s appeal from the second verdict the

court held that extrinsic evidence was properly admitted. (App.

Al4)

REASONS FOR GRANTING THE WRIT.

I.

Plaintiff Has Been Deprived of Its Right to a Jury Trial in

Violation of the Seventh Amendment.

In this case the trial court re-examined the evidence con-

sidered by the jury and concluded that it supported the verdict

of $546,000.

5

The court then excluded certain evidence that the jury had

considered and upon examining the remaining evidence con-

cluded that Ehret Company was entitled to only $182,000.

It is well established that a trial court’s re-examination of

the facts when passing on a motion for new trial is in accordance

with the rules of the common law and, therefore, does not violate

the right of trial by jury contained in the Seventh Amendment

to the United States Constitution.

However, it is fundamental that the trial court must re-exam-

ine all of the facts which were presented to the jury. Because

the jury utilized all the facts in reaching its conclusion, any

evaluation of that conclusion must be made in light of those

same facts,

In the instant case the trial court did not consider the same

facts which the jury considered.

Extensive evidence of the circumstances surrounding the

parties’ business relationship was presented to the jury. The

trial court held that when these circumstances were considered

the jury’s verdict was supportable. (App. A5)

But the trial court then ruled that these circumstances are

not to be considered and found that when the circumstances were

excluded the verdict was excessive. (App. AS)

Even when the trial judge has considered the same evidence as

the jury did, he may not substitute his judgment for that of the

jury merely because the jury could have drawn different infer-

ences or conclusions or because he feels another result more rea-

sonable. Tennant v. Peoria & Pekin Union R. Co., 321 U. S.

29, 35 (1944).

In this case the trial judge has done more than substitute his

judgment for that of the jury. He has decided the proper amount

of Ehret Company’s recovery on the basis of an entirely different

set of facts.

Instead of re-examining the evidence the trial judge gave the

parties a new trial based on different evidence. But the new

6

trial was a bench trial when the parties had requested a jury

trial.

Most important, the evidence which the trial judge excluded

from his consideration was proper evidence. The law is that the

previous agreements, negotiations and circumstances may be

considered in determining the meaning of specific words and

clauses in written instruments. Ortman v. Stanray Corporation,

7 Cir., 1971, 437 F. 2d 231, 234-236. Ironically, the Court of

Appeals held that such evidence was properly admitted at the

second trial. (App. Al4)

Even the trial judge found the verdict supportable if the

circumstances surrounding the parties’ business relationship

were considered. Such circumstances were proper evidence and

were considered by the jury.

By ordering the remitter the trial judge forced the plaintiff

to accept the results of a de novo bench trial on different evi-

dence or submit to a second jury triai. This constitutes a depriva-

tion of plaintiff's right to trial by jury.

Il.

The Combined Conduct of the District Court and the Court of |

Appeals Calls for an Exercise of This Courts Power of

Supervision.

The trial court found that when all the evidence, including

the surrounding circumstances, were considered the amount of

the verdict was supportable. (App. A5)

Then the trial court excluded the surrounding circumstances

and found the verdict was excessive and ordered a remittitur.

(App. A5)

The Court of Appeals held that extrinsic evidence was properly

admitted at the second trial. (App. Al4)

In determining whether the remittitur was an abuse of dis-

cretion, the Court of Appeals said great weight must be given

7

to the trial court’s opportunity to view the “living courtroom”.

(App. Al6)

If the extrinsic evidence was proper, if the trial court con-

cluded that when that evidence was considered the verdict was

supportable and if great weight is to be accorded the trial court’s

conclusions then the remittitur should have been reversed and

the first verdict reinstated.

Yet the Court of Appeals did just the opposite—it affirmed

the remittitur.

The trial court found no error in the first trial. It also found

that the first verdict was not the result of passion or prejudice.

(App. A7) According to the trial court the only “error” that

evidence of surrounding circumstances should not be considered

and when not considered Ehret was entitled to only one year of

development credit.

Thus, the trial court used the exclusion of evidence as a

vehicle to conform the verdict to its own prejudgment of damages

at the time of the partial summary judgment.

However, the evidence of surrounding circumstances had

been admitted without objection and, without objection, the

court had instructed the jury to consider “all the evidence.”

More significant is the fact that at the second trial neither

Eaton or the court attempted to exclude or limit evidence of

surrounding circumstances and again, without objection, the

jury was told to consider “all the evidence.” (T2 608) By not

correcting the “error” at the second trial all that was accom-

plished was to give Eaton two bites of the apple.

The need for supervision is obvious. Ehret was deprived

of a jury verdict on the sole ground that certain evidence should

not have been considered. Yet when Ehret refused the remit-

titur, that same evidence was admitted and the jury told they

could consider that evidence.

On appeal the Court of Appeals ignored Ehret’s primary

contention that it was an error of law for the trial court to

‘8

exclude evidence of surrounding circumstances when passing

on the motion for new trial. Instead the court considered only

Ehret’s alternative contention—that the trial court abused its

discretion in ordering a remittitur.

To make matters worse, in its consideration of the abuse of

discretion issue the Court of Appeals either mistakenly thought

the trial court had considered the surrounding circumstances

when it found the verdict excessive or it inconsistently held such

evidence improper at the first trial and proper at the second.

Neither could have occurred if the reviewing court had squarely

faced the primary issue presented to it by Ehret.

Any verdict can be set aside if the trial court may refuse

to consider that evidence which supports the verdict. The ruling

to exclude evidence on a motion for new trial is one of law and

subject to review. Fairmount Glass Works v. Cub Fork Co.,

287 U. S. 474, 482-483 (1933). If such rulings are not reviewed

a trial court would always be free to become the trier of fact.

The right guaranteed by the Seventh Amendment cannot sur-

vive if trial courts are free to ignore evidence which allowed a

jury to reach a verdict contrary to the result the Court would have

reached in a bench trial. The only safeguard against infringement _

of the right to jury trial by this method is review. If the review-

ing court is free to ignore such conduct when it is specifically

called to its attention then no safeguard exists at all. Unless,

of course, this court exercises its supervisory function and issues

a writ of certiorari.

IM.

The Conflict Among the Circuits Should Be Resolved in Favor

of Allowing an Appeal from a Remittitur Order.

There is no Federal Rule of Civil Procedure governing remit-

titur. The Circuits are in conflict regarding appeals from such

orders.

9

The Seventh Circuit does not allow an appeal unless the re-

mittitur is refused and a new trial held. Dorin v. Equitable,

7 Cir., 1967, 282 F. 2d 73.

The Sixth Circuit follows the State rule under the Erie Doc-

trine. Mooney v. Henderson Portion Pack Co., 6 Cir. 1964,

334 F. 2d 7.

The Fifth Circuit allows the remittitur to be tested on appeal

when the plaintiff agrees to the remittitur under protest. United

States v. 1,160 Acres, § Cir., 1970, 432 F. 2d 910.

The trial court’s ordering such an outrageously large remit-

titur ($408,119.25) not only deprived the plaintiff of trial by

jury, but, in addition, placed the plaintiff in the difficult situa-

tion of being unable to seek review of the trial court’s remittitur

order under the rule of the Seventh Circuit unless willing first

to try the case a second time.

The use of the remittitur order in mandatory conjunction with

the order for a new trial violates every standard of fairness

ordinarily applied to litigants. It allows the trial court to im-

pose its view of the evidence without fear of review until the

case is retried. Even then if the result does not conform to the

trial court’s view of the case, finality and consequently review

can be withheld by the use of a second remittitur order.

Such unfairness is especially harsh in the instant case where

the trial court agreed that the verdict was not the result of pas-

sion or prejudice, but based the order on a ruling of law which

is reviewable. When such rulings are erroneous, as this one was,

a second trial is a waste of judicial effort and an unnecessary ex-

pense to litigants.

This court in its supervisory capacity of Federal District

Courts and Courts of Appeal ought to grant this petition for

Writ of Certiorari to review the use of remittitur in the trial

courts, which is presently not governed by the Federal Rules of

Civil Procedure. Fundamental fairness requires that at a mini-

mum a remittitur order should be reviewable by the courts of

appeal even if accepted by the plaintiff.

10

The rules of both the Fifth and Seventh Circuit are overly

harsh and are an example of anachronistic common law pro-

cedures which have no place in the modern complex litigation

that is typical of today’s Federal courts. The Rules should

help the disposition of cases, not impede their progress by re-

quiring two trials before finality can be obtained.

The Federal Rules themselves should be amended and we

have proposed this amendment to Rule 59, which would add a

new section on remittitur:

(f) Remittitur. Consenting to a remittitur as a condition to

a denial of a new trial does not preclude the consenting

party from asserting on appeal or cross-appeal that

the amount of the verdict was proper.”

Such a rule would modernize the remittitur practice and pre-

vent injustice.

CONCLUSION.

For the foregoing reasons this Petition should be granted.

Respectfully submitted,

D. KENDALL GRIFFITH,

DENNIS J. HORAN,

JEROME A. FRAZEL, JR.,

69 West Washington Street,

Chicago, Illinois 60602,

Counsel of Record for Petitioner.

Al

APPENDIX.

MEMORANDUM OPINION AND ORDER

OF THE DISTRICT COURT

[Filed February 26, 1974]

This action for damages on the termination of a sales com-

mission arrangement was tried by a jury and resulted in a verdict

for plaintiff in the amount of $546,000. The matter is now before

the Court on defendant’s motion for judgment notwithstanding

the verdict, or in the alternative for a new trial and on plaintiff's

motion to amend the complaint. The motions are granted in part

and denied in part.

The amended complaint is offered on the theory that it brings

the pleadings into conformity with the evidence. The proposed

changes primarily relate to the Milwaukee territory which is

the subject matter of Count III. The original complaint alleged

that plaintiff acted as defendant’s exclusive sales representative

in the Milwaukee territory pursuant to an informal agreement.

Count III of the proposed amended complaint incorporates by

reference paragraphs 7 and 8 of Count I wherein it is alleged

that plaintiffs predecessor, on April 30, 1965, entered into

sales agreements with certain of defendant’s divisions—Exhibits

A, B, C and D—and entered into another agreement on March

31, 1966 which was necessitated by defendant’s change of

name. In short, the proposed amended complaint apparently is

an attempt to bring the Milwaukee territory within the written

agreements.

The written sales agreements refer only to portions of Illinois,

Indiana and Iowa. The case was tried on the theory that it was

a question of fact as to whether defendant's promise of “ex-

tremely fair treatment” in the event of cancellation of the written

agreement applied to the Milwaukee territory and the jury was

A2

instructed on that theory. The evidence does not support the

proposed amendment and the motion to amend is accordingly

denied.

In the original motion for a judgment n.o.v. or new trial,

eight grounds were presented in support of the motion for

judgment n.o.v. and five grounds were presented in support of

the alternative motion for a new trial. Certain of these points

are not discussed in the subsequently filed supporting memo-

randum and those points not discussed are deemed to have

been waived.

The case centers on whether Ehret Company (“Ehret”), a

sales representative for defendant, received the payments to

which it was entitled upon the termination of the sales agree-

ment existing between it and Eaton Yale & Towne, Inc.

(“Eaton”). The contract drafted by Eaton and submitted to

Ehret for acceptance provided for payment of commissions on

orders received prior to termination and shipped within three

months thereafter. Upon Ehret’s objections to this provision,

Eaton’s general sales manager, Mr. L. O. Witzenburg, sent a

letter to Mr. E. J. Ehret which outlined the “normal procedure”

and stated that “in the very unlikely event of cancellation, you

will have to rely on receiving extremely fair treatment.” In an -

opinion dated September 6, 1972 the Court held that Eaton was

estopped from repudiating that letter, said letter being part

of the existing agreement.

The jury was instructed that the “extremely fair treatment”

clause applied to the Chicago-Davenport territory and, as noted

above, it was left to the jury to decide whether the clause also

applied to the Milwaukee territory.’ The questions of the intent

of the parties regarding the “extremely fair treatment” clause

and the extent of damages, if any, were also submitted to the

jury. The jury returned a verdict in favor of the plaintiff in the

1. Plaintiff contends that defense counsel conceded in opening

argument that the clause applied to the Milwaukee territory and that

defendant is bound by this statement. It is unnecessary to decide

this point here, however.

A3

amount of $409,500.00 as to the Chicago-Davenport territory

and $136,500 as to the Milwaukee territory.

Eaton argues in support of its motion for judgment n.o.v. that

Ehret should be estopped from denying its construction of the

“extremely fair treatment” clause. It relies on four letters written

by Ehret’s president which suggest that his understanding was

that commissions were to be paid on orders placed prior to

termination on September 30, 1968, but shipped within three

months? to one year® thereafter.

These letters are certainly relevant evidence of the praties’

intent and were properly before the jury on that issue. The

Court is of the opinion, however, that such letters do not bind

Ehret to a particular position on the theory of equitable

estoppel.*

For the doctrine of equitable estoppel to apply, there must be

a change of position based upon statements or conduct of the

party to be estopped. Dill v. Widman, 413 Ill. 448, 109 N. E.

2d 765 (1952), as modified on denial of rehearing (1953).

There were extended negotiations between the parties and posi-

tions changed during that period. The evidence does not prove,

however, that these letters were the basis for Eaton’s ultimate

position.

Furthermore, Mr. Dingle’s letter of August 26, 1968 indicates

that as early as August 16, 1968 Eaton had agreed to consider

some payment to Ehret for long standing orders that were not

shipped within three months of termination. In short, even

before Mr. Ehret wrote the letters upon which Eaton relies to

establish estoppel, Eaton was considering payment for orders

2. Letter to John R. Dingle dated August 21, 1968.

3. Letter to Joseph A. Reising dated October 22, 1968.

4. Plaintiff contends that defendant actually raises the defense of

accord and satisfaction. It further contends that accord and satis-

faction and estoppel are affirmative defenses which must be pleaded,

Fed.R.Civ.P. 8(c), and since such matters were not alleged, the issue

cannot be asserted at this time. Because the Court finds the defend-

ant’s t to be without merit, the points shall not be con-

sidered here.

A4

with long-term delivery dates. During the early stages of

the negotiations, its position was thus not as hardened as it

eventually became. Under these circumstances it is virtually

impossible to determine what changes in position, if any, were

made in reliance on statements of a particular person. It may

very well be that Eaton arrived at its settlement offer out of

fear that Ehret intended to enlarge its demand and sue thereon.

Defendant contends that it is entitled to judgment n.o.v. be-

cause there was no evidence to support plaintiff's interpretation

of the “extremely fair treatment” clause. Defendant's position

is that all the relevant evidence suggests that the parties intended

that the clause apply only to orders received by Eaton prior to

termination.

The standards to be applied in construing a written contract

are set forth in Southwest Forest Inds., Inc. v. Sharfstein, 482

F, 2d 915, 919 (7th Cir. 1972):

“It is elementary, of course, that the keystone of contract

interpretation is to ascertain the intention of the parties

from the language they used. The meaning of the words

which the parties employed is found by focusing on the

words themselves and then drawing back and testing that

meaning in the context of the entire contract or, as here, in

the combined context of the stock agreement and employ-

ment contracts. This test must finally be read against the

background of the circumstances and situation with which

the parties were dealing.”

In order to establish a basis in the record for the jury’s ver-

dict, plaintiff argues that it equates to the development commis-

sion in the two territories for a three year period. Plaintiff's

closing argument urged that these development commissions

were the proper measure of damages. Such an explanation is

plausible and for purposes of this motion it shall be assumed

arguendo that the jury based its decision on development com-

missions.

On a motion for judgment n.o.v. the standard is whether

reasonable persons, drawing all reasonable inferences from the

AS

evidence when viewed in the light most favorable to the oppo-

nent of the motion, may reach different conclusions in a fair

and impartial exercise of their judgment. Hannigan v. Sears,

Roebuck & Co., 410 F. 2d 285, 287-88, cert. denied, 396 U. S.

902 (1969); Continental Air Lines vy. Wagner-Morehouse, Inc.,

401 F. 2d 23, 27 (7th Cir. 1968); Funk v. Franklin Life Ins.

Co., 392 F. 2d 912, 915 (7th Cir. 1968).

According to Southwest Forest Inds. Inc. v. Sharfstein, supra,

three elements are involved in determining the intent of the

parties: (1) the words by themselves; (2) the words in the

context of the entire contract; and (3) the totality of circum-

stances in which the parties acted.

When the words “extremely fair treatment” are considered by

themselves, there is room for reasonable persons to reach the

verdict rendered. in fact, those words are so ambiguous that

taken by themselves they are of little assistance in arriving at

intent. When the phrase is viewed in the totality of circumstances

surrounding the parties’ business relationship the verdict is also

supportable: the contract provides for development commissions;

there was evidence as to the length of time required to develop

certain sales; etc. However, the totality of circumstances is

not considered until the language is measured against the

remainder of the contract and, when this is done, the Court finds

that the verdict is excessive.

In Mr. Ehret’s letter objecting to the termination provision in

the tendered contract he raised three issues: (1) his obligation

tc his partner, Mr. Kinzie; (2) the fact that preliminary work

may have been done, but an order might not be received for a

period of time; and (3) once an order is received, the delivery

of the merchandise may be delayed. It was in response to this

that the “extremely fair treatment” letter was written. In that

letter Witzenburg stated that Eaton had “always been much more

liberal than provided for in the contract” and he referred to two

cases in which the delivery period qualifying for commissions

was as long as one year.

A6é

The “extremely fair treatment” clause does create a question

of fact as to the length of time during which commissions were

to be received following termination. However, the evidence

does not support a finding that the parties intended more than

a one year time span. Assuming arguendo that development

credit is the proper measure, the verdict is clearly excessive in

that approximately three years’ credit was awarded. (In this

connection, also, it should be borne in mind that the bulk of

Ehret’s customers were already Eaton customers when Ehret,

et al. were Eaton employees, prior to their becoming manufac-

turers’ representatives. )

On the other hand, defendant's motion for judgment n.o.v.

in the amount of $7,222.16 must be denied since it seeks to

limit commissions to those orders received prior to termination.

In the “extremely fair treatment” letter Witzenburg stated that

“[t]he normal procedure is to allow full credit for all orders

received within 30 days after final cancellation date. . . .” In

short, reasonable persons could infer from the Witzenburg letter

that commissions would be paid on orders received for a period

of time after termination.

Because the Court is convinced that the verdict is excessive,

it feels compelled to grant defendant’s motion for a new trial

in the event plaintiff does not agree to a remittitur as set forth

below.

Plaintiff contends that since defendant did not move for a

remittitur within ten days of judgment, remittitur is unavailable.

Defendant did move for a new trial within the specified period,

however, and it appears that remittiturs may be considered on

such a motion. 6A Moore’s Federal Practice, ¢ 59.05[3] at

3737.

Defendant contends that remittitur is not appropriate here

since the verdict was the result of appeals to passion and preju-

dice in plaintiff counsel's closing argument. Defendant relies on

dicta in Dorin v. Equitable Life Assurance Soc., 382 F. 2d 73,

77 (7th Cir. 1967). That dicta was based on Minneapolis,

A7

St. Paul & Sault Ste. Marie Ry. Co. v. Moquin, 283 U. S. 520,

$22 (1931).

It would certainly be im, : to grant plaintiff the option

of remittitur if the finding of ability resulted from passion or

prejudice. Here the Court held that the “extremely fair treat-

ment” clause applied to the Chicago-Davenport territory and

there is sufficient basis in the record for the jury to have found

that it also applied to the Milwaukee territory. Passion or

prejudice cannot, therefore, be said to account for that aspect

of the verdict.

Neither is passion or prejudice a necessary explanation for

other aspects of the verdict. Granted that plaintiffs counsel

came close to the boundaries of permissible argument, the ver-

dict can be explained in terms of misapprehension of the evi-

dence with respect to the parties’ intent on the period of time

during which commissions were to be paid.

Various approaches have been taken in determining questions

of remittitur, 6A Moore’s Federal Practice ¢ 59.05[3]. This

Court is of the opinion that it is proper to have remittitur only

to such an extent that the verdict would no longer be excessive,

the theory being that the jury intended to award the maximum

amount possible and the plaintiff should be permitted to retain

what is not actually excessive. Furthermore, as long as the

excessiveness has been eliminated, such a solution does not work

an injustice on the defendant.

Accepting as true that the jury selected development credit

as the measure of “extremely fair treatment” and finding a basis

for this, the Court is of the opinion that the maximum period

of time justified by the evidence is one year rather than three.

Accordingly, should the plaintiff agree, the Court shall enter

judgment in the amount of $137,880.75.° Plaintiff shall have

5. The development credit figure for the five year period follow-

ing termination amounts to Pye | $910,000 or approximate!

$182,000 per year. From $182,000 is subtracted $44,119.25,

the amount already paid Chret as commissions following termination.

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twenty-one (21) days from the date of this opinion to file a

consent to the remittitur. In the event this is not done, a new

trial will be ordered.

ENTERED:

/s/ R. W. McLaren

United ‘States District Judge

Dated: February 26, 1974.

AY

OPINION OF THE COURT OF APPEALS

Before FAIRCHILD, Chief Judge, SwyGERT, Circuit Judge,

and CAMPBELL, Senior District Judge.*

FAIRCHILD, Chief Judge.

This appeal raises questions concerning the interpretation of

an exclusive sales contract and the application of the parol evi-

dence rule and promissory estoppel. It also raises the question

whether the trial judge abused his discretion by offering a

remittitur and granting a new trial. Jurisdiction is founded on

diversity. All parties to this appeal have accepted Illinois law as

controlling.

The plaintiff, Ehret Company, acted as a manufacturer’s sales

representative for the defendant, Eaton Company, in the Mil-

waukee and Chicago territories until the termination of their

1966 contract. This termination was effected by notice in com-

pliance with the “Duration of Agency” clause and took effect

on September 30, 1968.

There was evidence that the defendant’s products, worm

gears and lubricating systems, required the plaintiff to engage in

“Development Work” of up to ten years prior to the consum-

mation of a sale. It was necessary, during this presale de-

velopment, for the plaintiff to engineer, design and adapt the

defendant’s products into either the customers’ finished product

or into the customers’ own manufacturing equipment. Before

signing the 1965 contract, Mr. Ehret objected to the “Duration

of Agency” clause which reads:

12. Duration of Agency

trict of Illinois is sitting by designation.

and may be terminated by either of us upon thirty (30)

days’ notice in writing. In the event of cancellation of this

Agreement or abridgment of the territory herein covered,

* Senior District Judge William J. Campbell of the Northern Dis-

This Sales Agreement may be altered by our mutual consent

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no commission will be paid on any orders which have not

been properly received, in writing, and accepted by us in

writing before the termination of the Agreement or abridg-

ment of the territory, or on orders which purchasers will not

accept delivery of and pay for within three (3) months

from the date of cancellation of the Agreement or abridg-

ment of the territory.

His objections were raised in an April 28, 1965 letter to the

General Sales Manager of Eaton Company, Mr. Witzenburg.

Mr. Ehret showed concern for the possibility that Eaton Com-

pany could cancel the contract after Ehret Company had

expended considerable time and money in procuring a sale, but

before an order was placed, and also that orders placed prior

to termination may not be shipped within 90 days.

On April 29, 1965, Eaton Company responded, with a letter

from Mr. Witzenburg declining to change the contract, stating:

It is true in the event of cancellation by either party, our

company would not be obligated to pay a commission on

orders that were received before the date of final cancella-

tion but were not released for shipment three months after

cancellation. However, in those few cases where the con-

tract has been cancelled by us we have always been much

more liberal than provided for in the contract.

The normal procedure is to allow full credit for all orders ~

received within 30 days after final cancellation date, pro-

vided that they resulted from quotations made prior to the

date of cancellation and if released for shipment within five

months of the date of cancellation. In fact, in two cases, we

have extended that protection to orders received under the

same circumstances but shipped within a period of one year

after cancellation.

Neither you nor we expect that the new contracts will be

cancelled by either one of us, so that this discussion is

probably academic only. However, we cannot alter the

terms of the contract—the same contract must exist with

you as with all of our other representatives and in the very

unlikely event of cancellation, you will have to rely on

receiving extremely fair treatment.

All

After receiving Mr. Witzenburg’s letter, Ehret Company entered

into the Commission Sales Agreement containing the “Duration

of Agency” clause on April 30, 1965.

On March 31, 1966, Eaton, Yale and Towne, Inc., formerly

Eaton Company, sent a letter to the Ehret Company requesting

that a new contract be signed reflecting the defendant’s name

change. This new contract, signed and dated June 2, 1966,

contained the same “Duration of Agency” clause as the 1965

contract. In addition, the new contract contained an integration

clause which stated that, “Upon its receipt, it will constitute an

entire Agreement between us as of the date set forth above

{January 1, 1966.] This Agreement cancels all prior Sales

Agreements between us, including the latest one dated May 1,

1965.”

On August 28, 1968, Eaton, Yale and Towne, Inc. sent a

letter to Ehret Company terminating their 1966 agreement as

to both the Chicago and Milwaukee territories, effective Sep-

tember 30, 1968. In this letter the defendant expressed its intent

to construe literally the “Duration of Agency” clause stating,

“In effecting this cancellation, full credit will be given your office

for all acceptable orders dated September 30, 1968, and before,

provided they are shipped prior to December 31, 1968.” Later,

and after negotiation, Eaton, Yale and Towne, Inc. agreed to

pay Ehret Company on all orders received prior to termination

regardless of when shipped. Eaton tendered this amount,

$51,000.00, to Ehret Company, of which $44,000.00 was

accepted.

The plaintiff contends that it is entitled to better treatment

than described in the “Duration of Agency” clause, (and better

than Eaton actually extended) relying on Mr. Witzenburg’s

April 29, 1965 letter which stated that, “you [Ehret Company]

will have to rely on receiving extremely fair treatment.”

The defendant’s motion for summary judgment was denied.

The plaintiffs motion for partial summary judgment was

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granted, determining that defendant was estopped from assert-

ing the “Duration of Agency” clause of the contracts to limit

commissions. At trial, the defendant’s motion for directed verdict

was denied and the jury’s verdict awarded plaintiff $546,000.00.

The defendant’s motion for judgment N. O. V. was denied and

the defendant’s motion for a new trial was granted after the

plaintiff refused a remittitur of $408,119.25. The jury’s verdict

awarded $120,000.00 to the plaintiff in the second trial.

The plaintiff appeals challenging the order setting aside the

first jury verdict and the granting of a new trial. On its appeal

the defendant contends that the 1966 contract on its face is a

complete representation of the agreement between the parties,

and that in any event the plaintiff failed to prove damages based

on the meaning of the “extremely fair treatment” letter.

The trial judge correctly held, as a matter of law, that

the defendant was estopped from asserting the “Duration of

Agency” clause of the 1965 and 1966 contracts. As stated in

Dill v. Widman, 413 Ill. 448, 109 N. E. 2d 765, 769 (1952):

The general rule is that where a party by his statements or

conduct leads another to do something he would not have

done but for the statements or conduct of the other, the one

guilty of the expressions or conduct will not be allowed to

deny his utterances or acts to the loss or damage of the

other party. The party claiming the estoppel must have

relied upon the acts or representations of the other and have

had no knowledge or convenient means of knowing the true

facts. Fraud is a necessary element but it is not essential

that there be a fraudulent intent. It is sufficient if a

fraudulent effect would follow upon allowing a party to

set up a claim inconsistent with his former declarations.

All of the elements necessary to form an estoppel are

present in this case. The plaintiff was induced to sign the 1965

and 1966 contracts only in reliance on the defendant's repre-

sentation that it would not enforce the “Duration of Agency”

clause, but would give “extremely fair treatment” in the unlikely

event of termination. The plaintiff also relied on a letter, which

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preceded the 1966 contract, from Eaton Company stating that

a new contract must be signed to reflect Eaton Company’s name

change. If the defendant were allowed to disclaim its representa-

tions after receiving the benefits therefrom, this would have the

fraudulent effect that an estoppel was designed to prevent.

Usually the question of estoppel is for the jury except where, as

in this case, the facts presented leave but one inference; then it

becomes a question of law. Bituminous Casualty Cory. v. City

of Harrisburg, 315 Ill. App. 243, 42 N. E. 2d 971 (1942).

The Milwaukee territory was not mentioned in the written

contracts, but evidence was adduced that the parties understood

it to be covered by the same terms and conditions as the written

Chicago agreement. The question was submitted to the jury,

which found that the “extremely fair treatment” letter was also-

applicable to the Milwaukee contract and territory. This finding

was not contested on appeal; therefore both territories are treated

similarly for the purpose of this order.

The question of damages was submitted to the jury on

the theory of a possible breach of a contract to give the plaintiff

extremely fair treatment. Support for the treatment as an

enforcible promise of the promise which, as a result of plaintiff's

reliance, creates an estoppel is supported by Restatement, Con-

tracts, § 90 and Restatement 2d, Contracts, § 90 (Tent. Draft

No. 2, 1965). Following this view, admission of the “extremely

fair treatment” letter is not in conflict with the parol evidence

rule as the defendant contends. An estoppel is an equitable

remedy which has its own independent force.

We now turn to the interpretation of the contract, specifi-

cally the “Duration of Agency” clause, as modified by the

“extremely fair treatment” letter. The meaning of the term

“extremely fair treatment” is neither plain nor clear, but is

susceptible to numerous interpretations. Parol evidence is always

permitted to assist in determining the meaning and effect of a

contract term from the intent of the parties. Ortman v. Stanray

Corp., 437 F. 2d 231 (7th Cir. 1971). This is especially true

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where the words used, by their very nature, are ambiguous.

The trial court properly allowed the introduction of the extrinsic

evidence, not to vary or contradict the written contract, but to

explain a term which became part of the agreement by means

of an estoppel.

The quantum of damages was dependent on the jury’s deter-

mining the meaning of the phrase “extremely fair treatment,”

whether the plaintiff received “extremely fair treatment,” and if

not, what would compensate the plaintiff for commissions or

allowances it would have received if it had been given “extremely

fair treatment.” The defendant contends that there was no

evidence presented to support the jury’s verdict. We disagree.

There was sufficient evidence to establish that it took up to ten

years for the plaintiff to develop a customer prior to an order

being placed. It was this concern of the plaintiff that prompted

the defendant’s promise of “extremely fair treatment” and it was

on this basis that the jury awarded damages.

The defendant’s contention that the 1966 contract super-

seded its representation of “extremely fair treatment” we find

to be without merit under the circumstances because of defend-

ant’s representation of the limited purpose of the 1966 contract.

We recognize that there is authority in jurisdictions other .

than Illinois for the proposition that the promise which be-

comes the basis for the estoppel is not to be enforced as a

promise, and that damages, if awarded, “should be only such as

in the opinion of the court are necessary to prevent injustice.”

Hoffman v. Red Owl Store, Inc., 26 Wis. 2d 683, 701, 133

N. W. 2d 267, 276 (1964); see generally, 28 Am. Jur. 2d,

Estoppel and Waiver § 49 (1966). We think, however, that in

the circumstances of this case, this latter theory produces the

same result as determining damages under the contract. Giving

the estoppel only the effect of depriving defendant of its right to

limit commissions due after termination to those computed

according to the 1966 contract, and seeking only an amount of

damage needed to produce an equitable result, plaintiff would be

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entitled to compensation, reasonably determined, for the time

and effort it expended as the defendant’s sales agent without

being afforded sufficient opportunity to recoup from the

venture. Fargo Glass and Paint Co. v. Globe American Corp.,

161 F. 2d 811, 813 (7th Cir. 1947); Burton v. Hitachi Amer-

ica, Ltd., 504 F. 2d 721 (7th Cir. 1974).

The plaintiff's computation of damages is based on Eaton’s

sales figures for the five years after termination. Of this

amount Ehret contends that it is entitled to the “development

credit” portion of the commissions from customers that it had

serviced while acting as Eaton’s representative. The plaintiff

borrowed the term “development credit” from the defendant's

agreement which provided for the allocation of commission

where one representative worked on a project for which an order

was placed outside his territory. The representative who per-

formed the “development work,” described above, was entitled to

80% of the sales commission for the gear products and 60%

of the sales commission for the lubrication products. For the five

year period the portion of commissions equivalent to the

development credit is equal to $910,000.00. The jury’s verdict

in the first trial was three-fifths of this amount, or $546,000.00.

The trial judge held that a three year development credit was

excessive and offered a remittitur which would bring the figure

to less than one year over the commission already paid. Plaintiff

elected not to remit. The basis for the jury award at the second

trial is not readily apparent. It was less than the amount offered

by the court.

Under the circumstances, we find no fault in using the Eaton

Company’s sales figures and the “development credit” concept

for the years subsequent to the termination, to determine dam-

ages for the breach of defendant’s promise to give “extremely

fair treatment,” or alternatively, an allowance of an amount

necessary to prevent injustice.

The plaintiff's contention on this appeal is that the trial

judge abused his discretion by offering a remittitur and grant-

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ing a new trial. There is no doubt that the federal district

court has the power to offer a remittitur and, if refused, grant

a new trial. Dimick v. Schiedt, 293 U. S. 474, 55 S. Ct. 296,

79 L. Ed. 603 (1935). The standard for appellate review of a

trial judge’s order granting a new trial for an excessive verdict

has been explained in Taylor v. Washington Terminal Co., 133

U. S. App. D. C. 110, 409 F. 2d 145, 149 (1969), cert. denied,

396 U. S. 835, 90 S. Ct. 93, 24 L. Ed. 2d 85:

The trial judge’s view that a verdict is outside the proper

range deserves considerable deference. His exercise of dis-

cretion in granting the motion is reviewable only for abuse.

Thus we will reverse the grant of a new trial for excessive

verdict only where the quantum of damages found by the

jury was clearly within “the maximum limit of a reason-

able change (sic).” [Emphasis in original.]

See also, Gorsalitz v. Olin Mathieson Chemical Corp., 429 F.

2d 1033 (Sth Cir. 1970), cert. denied, 407 U. S. 921, 92 S.

Ct. 2463, 32 L. Ed. 2d 807 (1972); Brewer v. Uniroyal, Inc.,

498 F. 2d 973 (6th Cir. 1974). Since the damage issue in this

case is dependent upon the interpretation of a vague term, or, in

the alternative the determination of an amount or (sic) equitable

grounds, we cannot say that the first jury verdict was clearly

within this “reasonable range.” On appeal, the trial judge’s

opportunity to view the “living courtroom” must be given great

weight, especially when assessing the intent of the parties. We

can find no abuse of discretion and accordingly affirm the

judgment of the district court.

The Clerk of this court is directed to enter judgment affirm-

ing the judgment appealed from.

SwyYGERT, Circuit Judge (dissenting).

I cannot agree with the majority’s conclusion that it was

proper to give the jury free reign to decide what constitutes “ex-

tremely fair treatment.” I concur in the portion of the opinion

upholding the finding of equitable estoppel based on the letter

of April 29, 1975. But I do not understand why the majority

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concludes that the perimeters of this estoppel are to be based

only on a single phrase of that letter, viewed out of context.

Equitable estoppel has been invoked in this case to override

the written contract between these parties because it would be

unfair to allow the defendant to rely on that contract in light of

the April 29 letter. Yet, it seems to me, it is just as unfair to

ignore the very instrument that necessitates the use of the equi-

table estoppel doctrine. I believe this is what the majority has

done. We are concerned with a dispute arising in a commercial

context. Certainly, Eaton, Yale & Towne never agreed that in

case of cancellation plaintiff would receive whatever a jury

thought to be “extremely fair treatment.” In the same letter in

which this now seized upon phrase was used, the “normal pro-

cedure” was specifically spelled out: full credit for all orders

received within thirty days after final cancellation date and

shipped, at most, within one year after cancellation. I think that

the phrase “extremely fair treatment” must be read to refer to

this statement of the normal procedure. The phrase must be

given contours if we are to reach an equitable result and the

contours are those contained in the same letter. It is interesting

to note that to a considerable extent plaintiff, at one time,

agreed with my view of what is “equitable” since a letter was

written on October 22, 1968 requesting this “fair treatment”

which “would involve full payments for all orders booked before

October 1, 1968, regardless of when shipped.”

The majority approves the “legal” conclusion that equitable

estoppel must apply, but then relies on the “jury question”

rubric in regard to the issue of whai should fill the void created

by disregarding the contract. I do not think that we can inter-

fere with a contract in the name of equity and then ignore the

question of the “equitableness” of the outcome of that interfer-

ence. I would hold that Ehret is entitled to no more than that

which would be received under the most liberal interpretation

of Eaton's “normal procedure” as defined in the letter of April

29.