Atlantic Mut. Ins. Co. v. Ole English Ins. Agency, Inc.

• Decision Date: 20 January 1987
• Citation: 136 Wis.2d 557,402 N.W.2d 390
• Parties: NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. ATLANTIC MUTUAL INSURANCE CO., Plaintiff-Appellant, v. OLE ENGLISH INSURANCE AGENCY, INC., and A. J. TRANTER, Defendants-Respondents. 86-0444.
• Court: Wisconsin Court of Appeals

Page 390

402 N.W.2d 390

136 Wis.2d 557

NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES.

ATLANTIC MUTUAL INSURANCE CO., Plaintiff-Appellant, v. OLE ENGLISH INSURANCE AGENCY, INC., and A. J. TRANTER Defendants-Respondents.

86-0444.

Court of Appeals of Wisconsin.

Jan. 20, 1987.

Circuit Court, Outagamie County

Affirmed in part, reversed in part, and cause remanded with directions

Appeal from a judgment of the circuit court for Outagamie county: Harold V. Froehlich, Judge.

Before CANE, P.J., LaROCQUE and MYSE, JJ.

MYSE, Judge.

Atlantic Mutual Insurance Company appeals a judgment setting aside a jury verdict that A.J. Tranter had converted to his own use premiums totaling $79,136.84 that were Atlantic's property. Atlantic argues that the trial court erred by concluding that the evidence was insufficient to support the jury's finding of conversion or to 'pierce the corporate veil' so as to hold Tranter personally liable for his alleged misappropriation of the premiums. We conclude that the trial court properly dismissed the conversion action because Atlantic had no possessory right to the unpaid premiums. However, because the court erroneously concluded that there was no conversion of Ole English's funds and the court should have pierced Ole English's corporate veil, we reverse.

In July, 1983, Atlantic Mutual Insurance Company entered into an agency agreement with Ole English Insurance Agency, Inc. Pursuant to this agreement, Ole English represented Atlantic in northeast Wisconsin and solicited potential customers and sold its insurance policies. Ole English was to collect the insurance premiums and reimburse Atlantic for the cost of the policies.

By late 1983, Ole English had become delinquent in the premiums it owed to Atlantic. As a result, Atlantic terminated the agency agreement in July, 1984.

In December, 1984, Atlantic commenced this action against Ole English based on the agency agreement for the amount of the unpaid premiums. As part of this action, Atlantic also claimed that Tranter was personally liable for the unpaid premiums. Atlantic alleged that Tranter dominated and controlled the activities of Ole English, was the alter ego of the corporation, and had converted to his own use premiums intended for Atlantic.

At the trial, Atlantic demonstrated that A.J. Tranter was the principal officer, and he and his wife were the sole shareholders of Ole English. ^1. Ole English had received $79,136.84 in premiums owed but not remitted to Atlantic. Ole English owed a similar indebtedness to other insurance companies including approximately $200,000 to U.S. Fidelity and Guaranty, $65,000 to American National Agencies, $37,400 to Zurich American Insurance, $37,500 to Great Western Casualty Insurance, $14,750 to Pekin Insurance, $14,000 to Sheboygan Falls Mutual Insurance, and $14,000 to Kantor-Foster Company. Atlantic also demonstrated that Tranter's intermediary insurance agency license had been revoked for failing to properly maintain business records and acquiring a debt of $600,000 to $700,000 without assets to pay this indebtedness. An Atlantic representative testified that Tranter had falsely told him that Ole English had not received premiums totaling approximately $30,000 when in fact it had.

Evidence also demonstrated that Tranter was involved in another corporate entity, Kassland Investors, Inc., and that in 1984, deposits totaling approximately $164,000 were made to Kassland. Tranter testified that these deposits represented bank loans, but was unable to substantiate this claim.

Atlantic requested that the trial court instruct the jury on piercing the corporate veil in order to hold Tranter personally liable for Ole English's debt to Atlantic. The trial court concluded that the evidence did not support such a theory and refused to give the requested instruction.

The court found that Ole English owed Atlantic $79,136.84 for unpaid premiums. ^2. The jury found that Tranter had converted to his own use premiums intended for Atlantic. ^4.

The trial court determined that the evidence was insufficient to prove that Atlantic had a possessory right to the unpaid premiums or that Tranter had converted Ole English's funds. We agree that the evidence is insufficient to find that Atlantic had a possessory right to the unpaid premiums. However, we conclude that there is adequate evidence to sustain the jury's finding that Tranter had converted Ole English's funds to his own use.

The proper test to be applied in determining whether a jury's findings should be changed, either in whole or in part, is whether there is credible evidence to support its findings. Giese v. Montgomery Ward, Inc., 111 Wis.2d 392, 408-09, 331 N.W.2d 585, 593-94 (1983). Evidence is to be viewed in a light most favorable to the verdict. Finken v. Milwaukee County, 120 Wis.2d 69, 76, 353 N.W.2d 827, 831 (Ct. App. 1984).

Here, no credible evidence was presented to support Atlantic's claim that it had a possessory right to the premiums collected by Ole English. Atlantic could only succeed on a theory of conversion if the premiums allegedly converted were Atlantic's property or were being held in trust for Atlantic by Tranter. See PCA v. Equity Coop Livestock Sales Ass'n, 82 Wis.2d 5, 10, 261 N.W.2d 127, 129 (1978); Wis. JI--Civil 2200 (1986). The evidence does not demonstrate that either of these conditions existed.

An action for conversion is founded upon a tortious interference with possessory rights. PCA, 82 Wis.2d at 10, 261 N.W.2d at 129. Here, Ole English was a debtor owing to Atlantic the costs of the policies issued. The premiums collected from the insureds were the property of Ole English to be applied to the cost of doing business including the cost of the insurance issued by Atlantic. Consequently, there was between Ole English and Atlantic a simple debtor-creditor relationship and, as such, Atlantic had no possessory rights in the premiums collected. ^4. Therefore, the trial court properly concluded that Atlantic's property had not been converted.

There was sufficient evidence, however, to sustain the jury's finding that Tranter had converted Ole English's funds to his own personal use. The evidence demonstrated that Ole English owed various sums to several insurance companies, including Atlantic, for policies issued. Premiums were collected, but payment was not remitted to the insurance companies that had issued the policies. Atlantic demonstrated that Tranter had falsely denied that Ole English had received certain premiums when in fact it had. During this time, deposits totaling approximately $164,000 were made into a separate corporate entity, Kassland Investors, Inc., of which Tranter was a principal officer and shareholder. Tranter testified that the source of these deposits arose from bank loans made to Kassland, but was unable to substantiate this claim. From this evidence, the jury could reasonably infer that Tranter was diverting large sums from Ole English to Kassland.

In light of the jury's determination that Tranter had converted substantial sums of Ole English's assets to his personal use, we conclude that the trial court erred by failing to consider Atlantic's claim that Tranter was personally liable for the unpaid premiums. We also conclude that there is sufficient evidence to support this...