Story Case

Richard Stewart was requested by Robert Weil, an insurance broker, to try to sell Northern Life Insurance stock for him. Stewart was successful in disposing of twenty-five shares for which Weil collected. Weil offered to give Stewart a five per cent commission, which he contended was sufficient, and a reasonable amount to pay. Weil demanded ten per cent, which his lawyer showed in court was the usual sub-agent's commission. How much should Weil receive?

Ruling Court Case. Garfield Vs. Peerless Motor Car Company, Volume 89 Massachusetts Reports, Page 395

The Peerless Motor Car Company was a manufacturer of automobiles, having its principal place of business in Boston. Garfield was engaged as an agent to sell their machines, and in the contract it was agreed, among other things, that he should have the exclusive right of sale in Worcester and vicinity. His compensation as provided by the contract was a fifteen per cent reduction from the retail price of each car.

The Peerless Motor Car Company itself made a sale to a person residing in Worcester. Garfield made a demand for his commission. The company refused and Garfield sued. The company contended that plaintiff could not recover, because he was entitled to commissions only when he made the sale himself. The plaintiff replied that he had the exclusive right to sell in his territory, and that there was a trade usage which gave him the right to compensation when a sale was made by another in exclusive territory.

Justice Metcalf delivered the opinion.

A contract of this kind gives the agent the right which excludes everyone, even his principal, from selling the article in question. The proof of the usage as contended for by the plaintiff in no way conflicted with their contract. Upon the basis of this usage the plaintiff is entitled to commission for the sale of the machine in question, even though the sale was actually made by the principal.

Ruling Law. Story Case Answer

As a general rule, an agent's right to compensation for service depends upon the agreement, express or implied. If an agent does work for another, and it is agreed that he shall be paid for his services but nothing is said about the amount, the agent is entitled to recover what his services were reasonably worth. So, if a person does work for another expecting compensation, with the latter's knowledge or acquiescence, the former may recover what his services were reasonably worth, even though nothing was ever said about compensation.

In the Story Case, the agent should receive ten per cent because that was the reasonable value of his services, as shown from the custom proved.