paragraph with the inadvertently omitted line.
Following the execution of the October 1, 1988 contract, the relationship went forward and apparently, for a time, was considerably profitable to both parties. By 1992, however, Eyelematic began to have concerns about the amount of commissions required to be paid to Elliot since they had increased substantially because of her success and also because Eyelematic was experiencing economic pressures from increases in the price of aluminum, a critical raw material.
Thus, in the fall of 1992, Eyelematic considered terminating the contract, and Seeback instructed Velicka to take steps to do so. In October 5, 1992, Velicka notified Elliot that the contract was terminated effective October 5, 1992. After being notified of the termination, Seeback and Elliot met to discuss the matter. After those discussions, the termination was rescinded when Elliot agreed to reduce her commission rate. Apparently Elliot did not raise at that time her claim that the termination had been attempted on a date which was not proper under her understanding of the agreement.
Later in November, 1994, Eyelematic apparently made a decision to cease, or at least reduce, its reliance on outside sales representatives and to move the work in-house. At that time, Velicka notified Elliot that her contract would be terminated and offered her a full-time sales position at an annual fixed salary plus expenses and various fringe benefits. From this time in November through mid-December 1994, Elliot, Seeback and Velicka had various discussions concerning the termination. Basically, Elliot was resistant to the notion of accepting a fixed salary in lieu of her lucrative commission arrangement. By letter dated December 19, 1994, Velicka confirmed that the arrangement between the parties would be terminated.
On December 20, 1994, Elliot responded to the termination letter claiming that it did not comply with the October 1988 contract. Elliot argued that the contract could only be terminated as of October 1 on 30 days written notice. She contends, therefore, that under paragraph 7 the contract could only be -- and thus was -- terminated as of October 1, 1995, and not as of December 19, 1994. Eyelematic contends that this claim surfaced for the first time in late December and had not been raised during any prior contract discussions.
A threshold issue is the governing law. The agreement was negotiated, drafted and executed in Connecticut. Eyelematic is a Connecticut corporation and manufactures its products in Connecticut. Although the contract was performable by Elliot at various locations, the commissions were payable from Connecticut. Most of the dealings between Elliot, Velicka and Seeback occurred in Connecticut. Thus, the Court concludes that Connecticut has the greater nexus of contacts and Connecticut law applies.
See Win. Passalacqua Builders v. Resnick Developers, 933 F.2d 131, 137 (2d Cir. 1991) ("the law of the jurisdiction having the greatest interest controls") (internal quotation and citation omitted).
Paragraph 7 is ambiguous. The ambiguity is whether the contract can be terminated only at the "original date" upon 30 days written notice or whether the contract can be terminated at some date subsequent to the original date upon 30 days notice. Under Connecticut law, where there is an ambiguity in a contract, parole evidence may be considered. See Shawmut Bank Connecticut N.A. v. Connecticut Limousine Service Inc., 40 Conn. App. 268, 275, 670 A.2d 880 (1996). The parole evidence rule prohibits the use of extrinsic evidence to vary or contradict the terms of a written, interpreted contract, but does not bar extrinsic evidence to facilitate the understanding of uncertain contract language. As the Court noted in Schwab v. Schwab, 1996 Conn. Super. LEXIS 472, 1996 WL 97398 (Conn. Super. *2) it is "fundamental that when words used in contracts are uncertain or ambiguous, parole evidence of conversation between the parties or other circumstances antedating the contract may be used as an aid in determining the intent of the parties which was expressed by the written word." Equally important, where two interpretations of a contractual provision are possible, the preferable interpretation is the more equitable and rational of the two. See Schwab, 1996 Conn. Super. LEXIS 472, 1996 WL 97398 at *2; Saturn Construction Co. v. State of Connecticut, 1994 Conn. Super. LEXIS 2639, 1994 WL 590604 (Conn. Super. *6).
The interpretation pressed by Elliot is that the contract was only subject to cancellation at "the original date upon 30 days written notice." The "original date" is not defined in the contract, but the contract was signed October 1, 1988. Assuming October 1, 1988 to be the "original date," Elliot's interpretation tying cancellation to this date would make paragraph 7 unintelligible. Both parties agree that it is clear that the contract could not be cancelled during its first year. But it is then equally clear that the contract could never be terminated on October 1, 1988 -- the "original date."
Plaintiff's variation of this argument is that the Court should construe the term "original date" to mean "anniversary date" and conclude that the contract can only be terminated after a year has passed, and in such event, only on October 1 of each succeeding year with 30 days notice. The contract as well as the parole evidence adduced at trial, however, do not support this interpretation. There is simply no credible evidence that when the contract was entered either party understood "original date" to mean "anniversary date."
The interpretation supported by the evidence and adopted by the Court is that the parties intended that the contract be subject to cancellation on 30 days notice after the initial year had expired. See Goodyear v. Orsatti, 1990 Conn. Super. LEXIS 1316, 1990 WL 277470 (Conn. Super. 1990) ("A contract is construed according to what may be assumed to have been the understanding and intention of the parties.") (citations omitted). This is so for several reasons. First, both parties testified that Elliot was concerned with securing contractual protection for commissions payable post termination. This was not, however, what paragraph 7 was intended to accomplish. This contingency was treated elsewhere in the contract, namely, in paragraph 8 which permitted Elliot to collect commissions on all residual business for a period of six months after termination. This interpretation accommodates both paragraphs 7 and 8 while plaintiff's interpretation would render paragraph 8 superfluous. Under Connecticut law, the "rules of construction dictate giving effect to all the provisions of a contract, construing it as a whole and reconciling its clauses. . . . Where two clauses which are apparently inconsistent may be reconciled by a reasonable construction, that construction must be given, because it cannot be assumed that the parties intended to insert inconsistent and repugnant provisions." Shawmut Bank, 40 Conn. App. at 272, (internal quotation and citations omitted).
For the foregoing reasons, the Court concludes that the termination of Elliot on December 20, 1994, did not violate the termination provisions of the October contract between the parties.
Dated: White Plains, NY
July 10, 1996
BARRINGTON D. PARKER, JR., U.S.D.J.