Cantor v. Berkshire Life Ins. Co.
| Decision Date | 28 December 1960 |
| Docket Number | No. 36497,36497 |
| Citation | 171 N.E.2d 518,171 Ohio St. 405 |
| Parties | , 14 O.O.2d 157 CANTOR, Appellant, v. BERKSHIRE LIFE INS. CO. et al., Appellees. |
| Court | Ohio Supreme Court |
Syllabus by the Court
Where an employee has complied with all the conditions of his employment contract relating to retirement benefits and has reached the retirement age specified in the contract, his retirement rights become vested, and an employer cannot, in the absence of one of the specified causes set forth in the contract for the divestiture of retirement benefits, divest him of such rights by the exercise of a provision in the contract allowing termination thereof without cause.
Plaintiff, appellant herein, was a life insurance agent on a commission basis for defendant Berkshire Life Insurance Company, an appellee herein, through its general agent, defendant Walter C. Doll, also an appellee herein.
In 1947, Berkshire inaugurated a new agency contract designated as a 'career contract.' Among other things, this new contract redefined and changed the rates commission agents were to receive for the sale of insurance and created a new class of remuneration designated as 'personal continuity credits.' Personal continuity credits emphasized career service, were commissions paid in the event a certain rate of production was maintained and were payable to some extent over the life of the policy rather than for the limited period during which ordinary renewal commissions were paid.
The contract provided further that either party could terminate it by giving 30 days written notice, and that, in the event of termination, only regular commissions would be paid the agent, thus indirectly terminating all rights to any payments under the 'personal continuity credits' which the agent might have accumulated.
Although not designated as such, a retirement system was created under this contract which provided in part as follows:
'At any time after the agent shall have been a full-time agent for at least 10 consecutive years and shall have reached his 60th but not his 65th birthday, he may request the general agent that, for all future calendar years, all production requirements under section 2-A, above, be waived absolutely; and, if such request be approved by the company, then, as to business paid for under this contract prior to such waiver, in no such year thereafter, during which the agent shall not engage in the business of life insurance with any other company, will the sum payable be less than the sum of the following percentages of income from renewal commissions and personal continuity credits from such business in the first calendar year after such waiver:
'(a) 40% increased by 20% for each full year from the agent's 60th birthday to date of such waiver, plus,
'(b) 1% for each consecutive year as a full-time agent prior to such waiver.'
In 1947, plaintiff, then an agent of Berkshire, entered into this contract with the latter. In September 1956, plaintiff, having reached the agreed retirement age and having fulfilled all the other conditions required under the contract, requested permission to establish his retirement or specifically to waive his life insurance production requirements, which request was granted effective January 17, 1957.
Thus under the contract plaintiff's retirement rights would be determined from the payments he received in 1958 both from commissions and from 'personal continuity credits.' However, shortly after plaintiff's retirement was granted in 1957 and after the agreed date of his retirement, Berkshire attempted to cancel his contract, the effect of which would be to destroy his right to receive personal continuity credit commissions, thus lowering the minimum amount plaintiff would receive under his retirement. There is no dispute that plaintiff has the right to receive his ordinary commissions; the controversy arises over the 'personal continuity credits commissions.' Both lower courts held that Berkshire had the right to terminate the contract and thus destroy the right to receive personal continuity credit commissions. This court sustained a motion to certify the record.
Goodman & Goodman, Cincinnati, for appellant.
Cors, Hair, Hartsock & Schneider, Cincinnati, for appellees.
The single question raised in this appeal is whether the rights of an employee in a noncontributory retirement system established by an employer may be divested by the employer after the employee has fulfilled all the conditions relating to his right to retirement benefits.
There is no dispute in the present case as to the fact that plaintiff had fulfilled all the necessary conditions entitling him to retirement rights. That is, he had produced the required amount of business, served the necessary number of years with the company and attained the retirement age designated in the contract.
It should be noted at this point that it is of no importance that the termination of the contract affected only a part of plaintiff's retirement benefits. The principle is the same whether all or a part is affected. The question is, can the employer destroy such rights?
Berkshire urges, and was supported therein by the lower courts, the proposition that under the termination clause incorporated in the contract signed by the plaintiff such rights were reserved to Berkshire, and it could thus cancel the contract and destroy such retirement benefits even though the reasons therefor were purely inconsequential. Berkshire's argument is based on section 9 of the contract, which reads in part as follows:
'This agreement will automatically terminate upon the death of the agent, or upon change of his status to that of an employee of a general agent or of the company or to that of general agent, and may also be terminated by mutual consent, or by either party hereto upon giving the other party...
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