Crowell v. Northwestern National Life Insurance Company
| Decision Date | 07 September 1906 |
| Docket Number | 14,714 - (105) |
| Citation | 108 N.W. 962,99 Minn. 214 |
| Parties | EMMET J. CROWELL and Another v. NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY |
| Court | Minnesota Supreme Court |
Appeal by defendant, Northwestern National Life Insurance Company from an order of the district court for Hennepin county, John Day Smith, J., overruling a general demurrer to each of two causes of action stated in the complaint. Affirmed.
Insurance -- Agency Contract -- Sale of Company.
A life insurance company sold and transferred to another company all its business and assets and went out of business. The latter company assumed and agreed to pay all valid outstanding contractual liabilities of the former company. Certain agents of the original company had an outstanding valid contract of employment with the company, under which they were to receive a certain percentage of the amount of premium notes given by persons from whom they had solicited insurance, when the notes were paid. A large number of these notes were not due when the company went out of business. In an action for damages by the agents against the assuming company, on demurrer to the complaint, it is held that:
(a) The effect of the sale and transfer of the business of the insurance company was to render the outstanding policies of insurance and the notes given therefor, voidable at the election of the insured.
(b) The premium notes given for such policies were no longer absolute, but became conditional obligations of the makers.
(c) The presumption is that the makers of the premium notes were solvent.
(d) The complaint states a cause of action by allegations which show that the original company broke the contract of employment by placing it out of its power to continue its business, and keep its contracts with its policy holders, thus making the premium notes uncollectible.
(e) The liability of the original company for damages occasioned by the breach of the contract with its agents was assumed by the agreement of the purchasing company to pay all valid outstanding contractual liabilities of the selling company.
(f) As affecting the amount of recovery the burden is upon the defendant to plead and prove the facts with reference to the election of the policy holders to continue the policies with the defendant company.
Koon Whelan & Bennett, for appellant.
M. H. Boutelle, N. H. Chase, and Jay W. Crane, for respondents.
Appeal from an order overruling a general demurrer to each of two causes of action stated in the complaint. The pleading, with the exhibits which are made a part thereof, is quite long; but a brief summary will enable us to understand the issues presented by the demurrer:
For a first cause of action it is alleged: That on or about February 14, 1901, the respondents, as copartners, entered into a written agreement with the Northwestern Life & Savings Company, an Iowa corporation, hereinafter called the "Iowa Company," under which they became its general agents in certain territory in the state of Minnesota, for the purpose of carrying on the business of said company in respect to the solicitation and procuring of contracts of life insurance. This contract secured to the respondents, as commission, a percentage of the first annual premium or part thereof when paid to the company in cash on each and every policy procured through their agency. On August 23, 1901, a new contract was made between the parties, which embodied the terms of the original contract, and in addition contained a stipulation by which the company agreed to pay the respondents a commission during the continuance of the agency, based upon a percentage of each and every renewal premium paid the company on certain designated policies, and a further stipulation extending the exclusive territory of respondents so as to cover and embrace the entire states of Minnesota and North Dakota. On the execution of the original contract, the respondents forthwith entered upon the performance of their duties thereunder, and continued under the original and subsequent contracts to act as the general agents of the Iowa Company until the unlawful termination of said employment by the Iowa Company on August 23, 1903. On the last-mentioned date, while the contracts were in full force and effect, and respondents were engaged in the performance of their duties thereunder, the Iowa Company wholly ceased and abandoned the transaction of its corporate business, and sold and transferred all of its corporate properties, assets, and business to appellant herein, the Northwestern National Life Insurance Company, a Minnesota corporation. That by the terms of the agreement between the said Iowa and Minnesota corporations the Iowa Company agreed to cease the further conduct of its corporate business, and the further writing or issuance of policies of insurance of any class or character whatever. That in and by the terms of the agreement between the two insurance companies the Minnesota Company, the appellant herein, agreed to assume, and did assume, the payment of all valid, legal outstanding contractual liabilities of the Iowa Company. That the said contract between the two companies was carried out and consummated, and the assignment and transfer alleged duly accepted by the defendant, and from and since the date of said transfer, the said Iowa Company has conducted no business whatsoever. That at the time of the transfer and assignment last hereinbefore alleged, the agreements hereinbefore stated between the plaintiffs and the said Northwestern Life & Savings Company were in full force and effect. That these plaintiffs had fully complied with, and performed, all and several the terms and conditions of said agreements and each of them. That by, and as a result of, the transfer and assignment hereinbefore alleged, and the cessation of business by the said Northwestern Life & Savings Company the plaintiffs were prevented from proceeding with the carrying on of the business of the said agency, or with the performance of the terms of the contracts in that behalf provided, and the business of said agency was by, and as a result thereof, and without any fault on the part of these plaintiffs, wholly destroyed. That during the term of their employment, the respondents, in reliance on the terms of their agreement, had expended upwards of $10,000 in building up and extending their agency, and in placing solicitors in...
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