Equitable Life & Cas. Ins. Co. v. Rutledge
| Citation | 454 P.2d 869,9 Ariz.App. 551 |
| Decision Date | 22 May 1969 |
| Docket Number | No. 1,CA-CIV,1 |
| Parties | EQUITABLE LIFE & CASUALTY INSURANCE CO., Inc., a Utah corporation, Appellant, v. Gordon RUTLEDGE and Nancy Rutledge, his wife, et al., Appellees. 637. |
| Court | Court of Appeals of Arizona |
Fennemore, Craig, von Ammon & Udall, by Roger C. Mitten and Richard A. Miller, Phoenix, for appellant.
Standage & Allen, Mesa, and Evans, Kitchel & Jenckes, by Joseph S. Jenckes, Jr., Phoenix, for appellees, American Savings Life Ins. Co., and others.
Jennings, Strouss, Salmon & Trask, by Rex H. Moore and Thomas J. Trimble, Phoenix, for appellees, Rutledge and others.
Appellant, plaintiff in the trial court, brought an action for breach of contract and to recover certain monies loaned to the defendants, Rutledge, Willard and Insurance Mailing Associates, a partnership composed of Rutledge and Willard. The complaint also sought damages for the tortious inducement to breach the contract allegedly committed by defendants Stewart, Allen, Fuller, Porter and American Savings Life Insurance Company. In addition, a declaratory judgment was prayed for declaring the plaintiff was not indebted to the defendants Rutledge and Willard. Summary judgment was granted in favor of all the defendants stating that Equitable shall have and recover nothing by its complaint. From this judgment plaintiff appeals.
The facts surrounding the controversy are complicated by the number of parties involved and have been extensively outlined in the appellant's brief, but for the purpose of framing the issues on appeal, the salient facts can be concisely stated. Equitable and the defendants named in the breach-of-contract count entered into a 'Special Agents' Agreement' on December 31, 1963, whereby defendants were to use their knowledge and skill in the bulk-mailing business for solicitation of insurance for inductees into the armed forces. Equitable loaned the defendants $226,750.18 to finance their mailing operations, with the debt being considered a personal obligation of the defendants. The contract was to remain in effect for three years unless the five-day optional termination clause was exercised by either party. In addition, there was a nonsolicitation clause prohibiting solicitation by defendants for anyone other than Equitable while the contract was in force, and a forfeiture clause providing for the forfeiture of commissions in the event the special agents were to associate themselves directly or indirectly with any other insurance company for the purpose of soliciting insurance. It is these latter two clauses that have caused the principal disagreement and they will be considered in detail later.
On March 25, 1965, the defendants gave notice to Equitable that they were terminating the special agency contract, a privilege which, under the terms of the contract, they had every right to exercise at will. About nine days later these same defendants, along with the defendants Stewart, under the corporate name of Electro-Data, began mail solicitation of essentially an identical policy for American Savings. It is unquestioned, under the evidence presented at the time of summary judgment, that several weeks prior to the mailing of the notice of termination all the defendants had discussed the plan of Rutledge and Willard of breaking away from Equitable and soliciting for American Savings and that extensive preparation was made, without disclosure to Equitable, for solicitation to begin as soon after the break as possible. The preparation included the printing of policies by American Savings, preliminary negotiations of an agency contract, and the incorporation of Electro-Data by Stewart, Rutledge and Willard through which they were to conduct the solicitation business. It is also uncontested that actual solicitation did not commence until more than five days after the termination notice. The question we must decide is: Are these prior acts of association and preparation violative of the contract?
Section 1, Clause 3, of the special agency contract, which we call the noncompetition clause, reads:
'It is mutually understood and agreed by the parties hereto that during the term of this contract the Special Agent hereby agrees that he will not solicit, by use of the mails, any form of insurance for any other company nor perform any type of solicitation competitive to this agreement.'
Section 2, Clause 4, the forfeiture clause, provides:
'Commissions and renewals will be payable in accordance with the above except * * * should the Special Agent during the term of this agreement associate himself directly or indirectly with any other insurance company for the purpose of soliciting mail order business, all commissions and any other compensation that might otherwise be due the Special Agent will become nonpayable at the option of the company.'
Equitable argues that the forfeiture clause proscribes association leading to solicitation, as well as solicitation, and concludes that the defendants Rutledge and Willard breached the contract by their prior association and preparation. It also argues that Stewart, American Savings and the other defendants named were guilty of tortiously inducing the breach. On the other side, the defendants defend the position that the contract was intended to prevent only actual solicitation, thus there was no breach and, a fortiori, no inducement to breach. The Superior Court was of the opinion the defendants' argument was the more cogent. We must agree.
Here the decision rests on the interpretation of the contract. Although it obviously is true that the interpretation of the meaning of words is in essence a fact question, it is undisputed that the common law has delegated the process of interpretation of a writing to the courts. 4 Williston, Contracts, Sec. 616, Page 649, (3rd Ed. 1961). The rule has long been followed in Arizona. Simpson v. Securities Service Corp., 47 Ariz. 464, 56 P.2d 1044 (1936). In applying the process of judicial interpretation, an analysis of the instrument in question must yield the result which best answers the query--what is the intention of the parties? The Court must give meaning to all the words and clauses used by the parties and it is not within its province to alter, revise, modify, extend or rewrite or remake an agreement. Goodman v. Newzona Investment Co., 101 Ariz. 470, 421 P.2d 318 (1966). The courts are aided by rules of interpretation and they can be applied in this case to produce a clearer image of the intent of the parties.
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