Aldrich v. New York Life Ins. Co.

• Decision Date: 06 March 1923
• Citation: 235 N.Y. 214,139 N.E. 245
• Parties: ALDRICH v. NEW YORK LIFE INS. CO.
• Court: New York Court of Appeals Court of Appeals

235 N.Y. 214

139 N.E. 245

ALDRICH

v.NEW YORK LIFE INS. CO. ^*

Court of Appeals of New York.

March 6, 1923.

Action by Llewellyn M. Aldrich against the New York Life Insurance Company. Judgment for plaintiff was reversed, and the complaint was dismissed upon the merits by the Appellate Division (201 App. Div. 677,194 N. Y. Supp. 711), and the plaintiff appeals.

Judgment of Appellate Division reversed, and that of trial court affirmed.

Hiscock, C. J., and Cardozo and McLaughlin, JJ., dissenting.

Appeal from Supreme Court, Appellate Division, First Department.

Samuel Fleischman and Percy L. Klock, both of New York City, for appellant.

Louis H. Cooke, of New York City, for respondent.

CRANE, J.

The plaintiff and defendant made a contract in writing, dated February 28, 1898, whereby the plaintiff was employed as an agent to procure insurance in the state of New Hampshire. He was to be paid according to the following clauses:

‘(21) It is agreed that said party of the second part shall be allowed, under this agreement, the following compensation only, unless otherwise expressly stipulated in writing, namely: A commission on the original or renewal cash premiums which shall, during his continuance as said agent of said party of the first part, be obtained, collected, paid to, and received by said party of the first part up to and including the sixth year of assurance (should his agency continue so long) on policies of insurance effected with said party of the first part, by or through said party of the second part, which commission shall be at and after the following rates.’

Then follows a list of twelve different kinds of policies with a statement of terms or allowances figured in percentages. By the twenty-third clause, compensation was again provided for, based upon the conditions therein stated:

‘(23) It is agreed that if said party of the second part shall secure, during the first twelve calendar months of the continuance of this agreement, new insurance on the plans designated in section 21 hereof (excepting adjustable accumulation business) subject to all the terms and conditions of said section, amounting to the sum of one hundred thousand ($100,000) dollars, upon which the original cash premiums for the first year of assurance shall have, ultimately, been paid to and received in said party of the first part in due course of business, the renewal commissions provided in section 21 hereof shall be extended to include the seventh year of assurance, and for each additional twenty-five thousand ($25,000) dollars insurance procured as aforesaid, said renewal shall be extended to include an additional year of assurance, not, in all, to extend beyond the eleventh year of assurance.’

The plaintiff entered upon the performance of his contract and, in the year ending February 27, 1902, wrote $233,500 of new business. The defendant thereupon wrote him, under date of April 27, 1903, the following letter:

‘Mr. L. M. Aldrich, c/o Watertown Branch. Dear Sir: Referring to your agreement with this company, dated February 28, 1898, and subject to all its terms and conditions, I beg to advise you that the comptroller has checked a statement of the business paid for by you during the year ending February 27, 1902, and finds that said business, under the conditions of said agreement, and for the purposes of this letter, amount to $233,500.

‘You will therefore be entitled to a renewal commission of 5 per cent. on the premiums of so much of said business as may renew for the seventh, eighth, ninth, tenth, and eleventh years of assurance, subject to all the terms and conditions of said agreement. Please accept this letter in duplicate, and return both copies for execution by the company.

‘This letter shall take effect, if duly signed by you, and in facsimile by the fourth vice president of this company, and is further countersigned on behalf of the company by its contract registrar at the home office of the company.

Yours truly

‘Thos. A. Buckner, 4th Vice President.

‘L. M. Aldrich, Agent.

‘ C. A. Lewis, Contract Registrar.’

The plaintiff continued to do business for the defendant until July 16, 1903, when he was dismissed by letter informing him that his agreement was terminated because he was not producing business. This because is brought to recover the plaintiff's commissions on renewal premiums paid for eleven years after the termination of the agreement. The defense is that the contract states that he is to get no commission on renewals after his agency ends. The defendant claims that the agreement clearly states that, if the plaintiff, during twelve calendar months, secure new insurance amounting to $100,000, the defendant promises to pay the renewal commissions as percentaged in section 21 for an additional term specified, but that it may discharge him at any time and end the obligation. I do not think that this agreement is as clear as the defendant would now like to make it, and that the plaintiff had every reason to believe that he was engaged on no such basis. The agreement was drawn by the defendant, and, as the main portion of it is a printed form, it is reasonable to suppose that it was well thought out and considered by the defendant's agents before being stereotyped. The defendant's interpretation could have been made very clear and explicit if such were the intention of the defendant. Let me analyze this agreement. Under section 21, above quoted, the plaintiff is entitled to a commission on the original or renewal cash premiums which shall be paid during his continuance as said agent up to and including the sixth year of assurance ‘should his agency continue so long.’ The company thought it necessary to put in parentheses the words ‘should his agency continue so long.’ Why was this? In order that there might be no doubt whatever as to the termination of his right to commissions on renewal cash premiums on the termination of his contract or service. Under this phraseology it was quite clear and distinct that the plaintiff was entitled to commissions on renewal premiums only during the continuance of his agency. But this provision in the printed form also stated that other arrangements might be made or other compensation paid. The terms of section 21 applied, ‘unless otherwise expressly stipulated in writing.’ There was another provision expressly stipulated in writing, typewritten into this contract. It was contained in section 23 above quoted. The provisions of section 21 were not sufficient. Plaintiff was to be paid something more. It depended upon the amount of business he got, and a new agreement or additional agreement was made or expressly stipulated in writing. It was this: If the plaintiff, during the twelve calendar months, secured insuranceon the plans designated in section 21 amounting to the sum of $100,000 he was promised that the renewal commissions provided in that section should be extended to include the seventh year and an additional year for every $25,000 of insurance procured, not to exceed in all eleven years. Let us take the exact phraseology of this clause, eliminating such part as is unnecessary:

‘It is agreed that if the said party of the second part shall secure * * * new insurance on the plans designated in section 21 hereof * * * subject to all the terms and conditions of said section, amounting to the sum of one hundred thousand ($100,000) dollars * * * the renewal commissions provided in section 21 hereof shall be extended to include the seventh year of assurance, and for each additional twenty-five thousand ($25,000) dollars insurance procuredas aforesaid, said renewals shall be extended to include an additional year of assurance, not, in all, to extend beyond the eleventh year of assurance.’

The plans designated in section 21 were the twelve different kinds of policies enumerated in that section, with the different percentages stated opposite each class of policy. When, therefore, it is stated that the new insurance is to be upon the plans designated, subject to all the terms and conditions of said section, it must mean, or can reasonably be taken to mean, subject to the terms and conditions regarding the class of policy and the percentages allowed as specified in section 21. In fact we so held in Hevn v. New York Life Ins. Co., 192 N. Y. 1, 84 N. E. 725. The words ‘subject to all the terms and conditions of said section’ did not mean that the commissions should only be allowed during the continuance of the plaintiff as agent. Not only have we so held, but we properly so held when we come to consider a very material omission in section 23. The company thought it necessary not only to say, in section 21, that the party of the second part should be allowed a commission on renewal cash premiums during his continuance as agent up to and including the sixth year, but, in order to have no misunderstanding, put in parentheses the words ‘should his agency continue so long.’ When in section 23 it was provided that the renewal commissions provided in section 21, i. e., the amount of commissions as therein provided should be extended to include the seventh year and up to the eleventh year according to the amount, the words ‘should his agency continue so long‘ were omitted. Why this omission? Why should there not be the same clear statement if this were the intention in section 23 as in section 21? To my mind the words were omitted because the company intended to have its agents believe, and by this omission they were led to believe, that a new arrangement was made for the payment of commissions upon a large amount of business, and the new arrangement was to be this, that for insurance written over $100,000 in any one year on plans designated and according to the terms and conditions of said plans, the agent would have the premiums on renewals according to the amount specified in section 21 up to and including the eleventh year as the amount might be. We had this same point...