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HERBERT E. HAZELL v. SERVOMATION CORPORATION (01/19/82)

filed: January 19, 1982.

HERBERT E. HAZELL
v.
SERVOMATION CORPORATION, APPELLANT



No. 35 Harrisburg, 1980, Appeal from Judgment August 15, 1979 of the Court of Common Pleas, Civil Division, of York County, No. 331 August Term, 1975.

COUNSEL

David P. Baker, York, for appellant.

Carl H. Cordes, York, for appellee.

Price, Wieand and Lipez, JJ. Price, J., did not participate in the consideration or decision of this case.

Author: Wieand

[ 294 Pa. Super. Page 466]

This is an appeal from a judgment entered following a non-jury trial which resulted in a verdict for appellee in his action to recover commissions earned pursuant to a compensation agreement. At issue is how much of a guaranteed annual draw is to be deducted from commissions to determine the net compensation to which an employee is entitled

[ 294 Pa. Super. Page 467]

    upon termination of his employment. The court en banc held that only a pro-rated portion was deductible from earned commissions in order to determine compensation at the time of terminating employment. We agree and affirm.

Herbert E. Hazell, the appellee, was employed by the appellant, Servomation Corporation, as an executive sales representative. The sales incentive compensation plan, by which appellee's compensation was determined, provided for the payment of commissions and a guaranteed draw. Specifically, the agreement provided in paragraph III-C as follows:

"Compensation due will be determined by totaling commissions due at any pre-determined point in time and deducting the amount of annual draw. For the purposes of calculation, and to prevent disproportionate commission payments, the total annual draw of the sales representative will be assessed against his commission payments in one lump sum of [sic] the beginning of each calendar year. If a sales representative begins employment after the start of the calendar year, his draw will be computed in ratio to the unexpired portion of the year."

With respect to the termination of employment, the agreement, in paragraph III-I, provided specifically as follows:

"In the event the Executive Representative leaves the Division or territory to which he is assigned for any reason (termination, transfer, promotion, death, etc.) prior to December 31, employee will be paid earned incentive [commissions] only if it exceeds his guaranteed draw as of his final date of employment." (Italics added.)

Hazell's "annual draw" in 1974 had been established at $13,500. He terminated his employment on July 14, 1974, having earned commissions that year which the trial court found to be in the amount of $18,516. At the time of terminating his employment, appellee had been paid a draw of $7,216.88. Appellant contended in the trial court that the full annual draw of $13,500 had to be deducted from appellee's earned commissions in order to determine the amount of ...


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