Worthen Bank & Trust Co. v. Franklin Life Insurance Co.
| Decision Date | 28 December 1966 |
| Docket Number | No. 18403.,18403. |
| Citation | 370 F.2d 97 |
| Parties | WORTHEN BANK & TRUST COMPANY, Appellant, v. The FRANKLIN LIFE INSURANCE COMPANY, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Edward L. Wright, of Wright, Lindsey & Jennings, Little Rock, Ark., for appellant.
Austin McCaskill, of Barber, Henry, Thurman, McCaskill & Amsler, Little Rock, Ark., for appellee.
Before VOGEL, Chief Judge, MATTHES, Circuit Judge, and DUNCAN, Senior District Judge.
By this diversity action plaintiff-appellant, Worthen Bank and Trust Company, sought to recover from The Franklin Life Insurance Company, defendant-appellee, the sum of $11,842.44, together with interest, on the basis of an assignment to it of life insurance renewal commissions due in the future from the defendant, Franklin, to one Rea C. Coulter, its soliciting agent. Coulter had requested Franklin to provide him with an estimate of the value of his future renewal commissions. On February 13, 1964, Franklin wrote to Coulter and after disclosing the amount of renewal earnings in the past, stated as follows:
Coulter presented the letter regarding his renewal commissions to the Worthen Bank and Trust Company, with whom he was a stranger, and asked to borrow $15,000 on the basis thereof. Worthen thereupon wrote to Franklin, advising that Coulter desired to borrow $15,000 and assign his renewal commissions from Franklin as security therefor. Worthen asked Franklin to "confirm" the letter regarding renewal commissions and for information with reference to a satisfactory assignment form. Franklin replied to Worthen's letter, sending three copies of an assignment form which would be satisfactory to Franklin, instructions with reference to their execution, and stating as follows:
The assignment, which was duly executed, contained the following statement:
"It is expressly agreed that said Assignment is subject to the right of the said Franklin Life Insurance Company, under the terms of said agency contracts and supplements and amendments thereto to deduct from said renewal commissions any and all indebtedness (except indebtedness for future loans and advances hereafter voluntarily made to the Undersigned by The Franklin Life Insurance Company) now due or which may hereafter become due from the Undersigned to The Franklin Life Insurance Company, and it is further agreed that said Assignment is subject to the terms of said agency contracts and supplements and amendments thereto."
The Consent to Assignment executed by Franklin provided, inter alia:
"* * * This consent to assignment is subject to and reserving to the Undersigned and its successor or assigns, the right, under the terms of said agency contracts and any and all supplements and amendments thereto, to deduct from said renewal commissions any and all indebtedness (except indebtedness for future loans and advances hereafter voluntarily made to the Assignor by the Undersigned), now due or which may hereafter become due from the Assignor to the Undersigned, and said Consent to Assignment is expressly made subject to the terms of said agency contracts and any and all supplements and amendments thereto."
The agency contract between Coulter and Franklin referred to in the foregoing contained the following:
Franklin paid Coulter's renewal commissions to Worthen until July 30, 1964, by which time the principal indebtedness of Coulter to Worthen had been reduced to $11,842.44. Thereafter, on August 5, 1964, Franklin wrote Worthen, advising that it would make no further payments to Worthen under the assignment for the reason that Coulter was short in his accounts with Franklin.
During the period prior to the discovery of Coulter's shortages, Franklin carried a blanket bond covering any financial shortage of Coulter with Franklin in the amount of $100,000 and executed by National Surety Corporation as surety. A claim in the amount of $30,591.49, the amount of Coulter's defalcation with Franklin, was the subject of a suit between Franklin and National Surety Corporation. Such suit was settled by National paying the amount of Coulter's defalcation. Upon receipt of such payment, Franklin began paying Coulter's renewal commissions, as they became due, to National Surety, and refused to continue their payment to Worthen. Thereupon Worthen, unable to collect from Coulter, first commenced suit directly against Coulter in which it received as added security an Equitable Life Assurance Society of the United States policy on Coulter's life, and then Worthen brought the instant action against Franklin.
The District Court, the Honorable J. Smith Henley, in a carefully written and well-considered opinion published as Worthen Bank & Trust Co. v. Franklin Life Ins. Co., D.C.Ark.1...
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