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07/16/97 BANKS ENGINEERING CO. v. MICHAEL POLONS

July 16, 1997

BANKS ENGINEERING CO., INC.
v.
MICHAEL POLONS AND DENISE POLONS, HIS WIFE, APPELLANTS



Appeal from the Judgment Entered October 3, 1996, in the Court of Common Pleas of Westmoreland County, Civil Division, No. 4936 OF 1994. Before LOUGHRAN, J.

Before: Tamilia, Ford Elliott, And Brosky, JJ. Opinion BY Ford Elliott, J.

The opinion of the court was delivered by: Elliott

OPINION BY FORD ELLIOTT, J.:

Filed July 16, 1997

In this appeal, we are asked to decide whether, absent a provision in an employment contract addressing the issue, an employee who is paid on a straight commission basis should be peremployment is terminated. Because we can find no meaningful distinction between the instant case and the decision of our supreme court in Snellenburg Clothing Co. v. Levitt, 282 Pa. 65, 127 A. 309 (1925), we are constrained to affirm.

The facts of this case can be briefly summarized. On July 1, 1992, appellant entered into a sales representative agreement ("Agreement") with Banks Engineering Company., Inc. and Ed Banks, its General Manager (collectively "Banks"). Under the terms of this agreement, appellant was to work as an independent sales representative for the company, and was to be compensated for his services by receiving a commission based upon a percentage of gross sales. The agreement also provided:

Article 7

Temporary Draw Against Commission

7.01. To compensate for low commission payments due to low initial sales, Banks will pay a draw against commission. This draw will continue until the commissions exceed the draw and this contract is in effect. Once the commissions exceed the draw the rate of payment will continue at the rate of the draw until the total amount of the draw is compensated for by commissions in excess of the draw or by other means. When the total draw has been compensated for by commissions earned or other means the full commission will be paid and the draw eliminated.

R.R. at 16a. The agreement set the amount of the draw at $2,800 per month. (Id.) Before Banks released the first check to appellant in August of 1992, however, appellant was required to sign a document which provided, inter alia :

It is understood that this draw is a non-interest loan and is to be paid back by commissions earned or by other means. In the event of termination of this contract any and all outstanding draw amounts will become due within ninety days. After ninety days any amounts still due will accrue interest at prime rate compounded annually.

R.R. at 145a.

Appellant worked for Banks for approximately twenty-one months, but with limited success: when appellant terminated his employment with Banks on April 10, 1994, Banks had paid appellant $34,556.45 in draws over and above commissions earned. As a result, Banks responded to appellant's notification of termination with a letter demanding reimbursement of the outstanding draw amounts within ninety days. When appellant failed to respond, Banks filed a complaint for breach of contract, seeking repayment of the $34,556.45 plus interest. (R.R. at 8a.) *fn1 A non-jury trial was held on May 30, 1996, at the close of which the court found in favor of Banks on the breach of contract claim. The court found, however, that the subsequent "agreement" between the parties failed for lack of consideration, and therefore refused to award interest. (Trial court opinion, 10/3/96 at 2, 4.) Post-trial motions were filed by both sides and denied, and the court entered final judgment in favor of Banks in the amount of $34,556.45. This timely appeal followed.

We note first our standard when reviewing a trial court's interpretation of a contract. "The interpretation of a contract is a question of law. In deciding an issue of law, an appellate court need not defer to the Conclusions of the trial court." Halpin v. LaSalle University, 432 Pa. Super. 476, 481, 639 A.2d 37, 39 (1994), allocatur denied, 542 Pa. 670, 668 A.2d 1133 (1995), citing American States Ins. ...


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