Fox v. Inter-State Assur. Co.

• Decision Date: 02 June 1980
• Docket Number: No. 79-414,INTER-STATE,79-414
• Citation: 405 N.E.2d 873,84 Ill.App.3d 512,39 Ill.Dec. 894
• Parties: , 39 Ill.Dec. 894 William G. FOX, Plaintiff-Appellant, v.ASSURANCE COMPANY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 873

405 N.E.2d 873

84 Ill.App.3d 512, 39 Ill.Dec. 894

William G. FOX, Plaintiff-Appellant, v. INTER-STATE ASSURANCE COMPANY, Defendant-Appellee.

No. 79-414.

Appellate Court of Illinois, Second District.

June 2, 1980.

Brady, McQueen, Martin, Callahan & Collins, Alfred Y. Kirkland, Elgin, for plaintiff-appellant.

Geister, Schnell, Richards & Brown, Van R. Richards, Jr., Elgin, for defendant-appellee.

VAN DEUSEN, Justice:

Plaintiff, William G. Fox, appeals from an order of the trial court vacating a judgment entered in his favor and entering in its place, a judgment in favor of the defendant, Inter-State Assurance Company.

In September 1966, plaintiff entered into a general agent contract with defendant, Inter-State Assurance Company, whereby he was appointed a general agent of said company for the purpose of organizing and managing an agency and procuring applications for life and health insurance. The contract was a standard agency contract prepared by the defendant. The contract provided, among other things, that commissions for the second through tenth years on renewals of insurance contracts sold by plaintiff would be paid to him, subject to certain exceptions, even if the agency contract terminated. Under circumstances which would trigger the exceptions, plaintiff would forfeit his right to renewal commissions that he would otherwise be entitled to by the terms of the contract. On March 30, 1976, defendant terminated plaintiff's agency contract. On February 1, 1977, defendant stopped paying renewal commissions to plaintiff, claiming that plaintiff had committed certain acts which, under the agency contract, caused a forfeiture of his rights to those commissions. This suit followed.

Pertinent to this appeal was the defense raised by defendant that, pursuant to the terms of section 5(B)(2) of the agency contract, plaintiff had forfeited his right to renewal commissions by failing to comply with "provisions of state laws governing insurance," in that plaintiff had violated Illinois Department of Insurance Rule 9.17.

Upon completion of a bench trial, the trial court found that, while plaintiff had violated Illinois Department of Insurance Rule 9.17, such conduct did not constitute a violation of or failure to comply with the provisions of state laws governing insurance, and therefore he had not breached the terms of section 5(B)(2) of the agency contract. On October 30, 1970, in accordance with these findings, and other findings not pertinent to this appeal, the trial court entered its judgment in favor of plaintiff.

On post-trial motion of the defendant and based upon Goetz v. Country Mutual Insurance Co. (1975), 28 Ill.App.3d 154, 328 N.E.2d 109 and Margolin v. Public Mutual Fire Insurance Co. (1972), 4 Ill.App.3d 661, 281 N.E.2d 728, the court reversed itself and found, in effect, that the phrase, "provisions of state laws governing insurance" did include within its meaning, the rules and regulations of the Department of Insurance and therefore plaintiff had breached the terms of section 5(B)(2) of his agency contract. By its order of March 27, 1979 the trial court, therefore, vacated the judgment order of October 30, 1978 in favor of plaintiff, declared a forfeiture of plaintiff's right to renewal commissions and entered judgment in favor of defendant and against plaintiff.

The critical issue on appeal is whether the parties intended that the phrase "provisions of state laws governing insurance," as set forth in section 5(B) (2) of the agency contract, would include the rules and regulations of the Illinois Department of Insurance. Because this is the key issue, we set forth section 5(B) of the agency contract in full:

"B. General Agent shall have no right to any future renewal commission in event of any of the circumstances enumerated below:

1). If General Agent shall twist any business of Company or shall influence any agent of Company to terminate his agent's Contract,

2). If General Agent shall fail to pay over money belonging to Company, or to comply with Company's rules and regulations and the provisions of state laws governing insurance or shall conduct himself in such a way as to prejudice the interest of Company,

3). If at any future time the renewal premium of business in force under this Contract shall within any period of twelve consecutive months be less than $2000. " (Emphasis added.)

As has been stated many times by the courts, in the construction of any contract, the court is seeking to ascertain the intent of the parties. The intention of the parties must be ascertained, if possible from the contract itself. (Bowler v. Metropolitan Sanitary District of Greater Chicago (1969), 117 Ill.App.2d 237, 242, 254 N.E.2d 144.) If, from the language of the contract, the meaning is plain and unambiguous, the court has no necessity to resort to rules of construction to assist it. (Nerone v. Boehler (1976), 34 Ill.App.3d 888, 891, 340 N.E.2d 534.) However, when an ambiguity exists in the contract, the court will use rules of construction, and evidence of prior and contemporaneous transactions and other extrinsic facts may be introduced by the parties and considered by the court in ascertaining the true meaning of the contract. 34 Ill.App.3d at 891, 340 N.E.2d 534; Arthur Rubloff & Co. v. Comco Corp. (1978), 63 Ill.App.3d 362, 367, 20 Ill.Dec. 338, 380 N.E.2d 15; Public Relations Board, Inc. v. United Van Lines, Inc. (1978), 57 Ill.App.3d 832, 833, 15 Ill.Dec. 381, 373 N.E.2d 727; see, Baird & Warner, Inc. v. Ruud (1976), 45 Ill.App.3d 223, 229, 3 Ill.Dec. 886, 359 N.E.2d 745.

We find no...