Furman v. Gulf Ins. Co. of Dallas

• Decision Date: 10 January 1946
• Docket Number: No. 12982.,12982.
• Citation: 152 F.2d 891
• Parties: FURMAN v. GULF INS. CO. OF DALLAS, TEX. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

152 F.2d 891 (1946)

FURMAN v. GULF INS. CO. OF DALLAS, TEX. et al.

No. 12982.

Circuit Court of Appeals, Eighth Circuit.

January 10, 1946.

Lee A. Hall, of St. Louis, Mo., for appellant.

Chelsea O. Inman, of St. Louis, Mo. (Wilbur C. Schwartz, of St. Louis, Mo., on the brief), for appellees.

Before SANBORN, WOODROUGH, and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

An agent sued two insurance companies in damages under Missouri law for the value of his agency and business in the city of St. Louis, which he claimed that through duress they had caused him to transfer to a third person without consideration. The trial court directed a verdict for the companies at the close of the agent's evidence, and the agent has appealed. The primary question is whether there was any submissible evidence of duress as the case stood at the time. A summary of the agent's evidence follows.

His agency had been a going business for 10 years and was producing a net annual income of around $10,000. It had a commercial value of $20,000-$25,000. He represented two other companies besides the defendants. His agency contract with defendants (which were affiliated companies, one fire and the other casualty) was made in 1934. At that time he was somewhat financially embarrassed, because in the three preceding years some other companies that he had been representing had failed and he had attempted to protect his policyholders by rewriting their policies and standing the unearned premiums which amounted to $6,000-$7,000. The defendants knew this situation when they appointed him as their agent. For the first three or four months of his contract, he made remittances currently to the defendants on the business he wrote, but then he began to get in arrears. By July 1936, his delinquencies amounted to $1,980, for which the defendants at that time took his note payable in monthly instalments. He continued to be delinquent in making payment of his premiums, and by October 1937 he was in arrears $5,488.44, in addition to the unpaid balance on his previous note. Up to that time the companies had not pressed him but had accepted his irregular remittances as they were made.

About that time the companies began to make complaint. The state agent told him that they were dissatisfied with the way he was remitting. In December 1937, he received a telephone call from the home office of the companies advising him that something would have to be done about the accumulated delinquencies. In January 1938, the state agent came to his office with a man named Fischer, an agent for the companies at Staunton, Illinois, and, after again voicing the companies' dissatisfaction with the situation, informed him that Fischer was willing to put some money into the business. He resented the attempt to make Fischer a part of his business and threatened to complain to the home office about the state agent's actions.

On February 1, 1938, the state agent called him by telephone and asked him to come to a room in one of the St. Louis hotels, where he met a vice-president of the companies. The vice-president inquired whether he was able to make any further payment on his delinquencies. When he answered that he was not, the vice-president stated, "Well, in that case I think you had better turn your business over to Mr. Fischer." He protested and a discussion followed. Finally, the vice-president jumped to his feet and shouted, "We are through." Fischer then came into the room, and the vice-president suggested that they have lunch together. The agent asked to be excused, but the vice-president replied, "No, that won't do"; that he (the vice-president) didn't have a lot of time to spend in St. Louis; that they would have lunch together; and that they would then return to the room. After lunch, they resumed their discussion. The meeting lasted until 5 o'clock P. M. The agent repeated that he did not want to turn over his business to Fischer. The vice-president finally declared, "I think, Mr. Furman, you had better turn your business over to Mr. Fischer." By that time the agent said, "All right, bring Mr. Fischer up to the office." They then adjourned, and the vice-president directed the agent to return the following morning.

Before going to the hotel the next day, the agent consulted a lawyer as to the possibility of getting 60 or 90 days further time. He arrived at the hotel about 10 o'clock A. M., and the vice-president was in a rage. The agent suggested that he ought not to be blamed for trying to save his business, whereupon the vice-president shouted: "You haven't got any business. The companies own your business, and if you don't consent to it being turned over to Mr. Fischer, we won't give you a clean bill of health." According to the agent's testimony, not-to-give-a-clean-bill-of-health is a technical expression in the insurance business that invariably means that a company will cancel out an agent's policies and then undertake to rewrite them direct (implying notice to the policyholder of the agent's failure to pay the premium as the cancellation reason).

When the vice-president stated that the companies would refuse to give him a clean bill of health, the agent became quite ill. He testified, "I just couldn't think." He sought to be excused from the conference, but the vice-president said: "Nothing doing. If you are too sick to remain here at the hotel room, we will go out to your home." The vice-president insisted, "You turn your business over to Mr. Fischer right now." According to the agent's testimony, "I just broke down and said, `I'll do it.'" The vice-president then undertook to dictate an agreement to some one over the telephone. The agent suggested that he be allowed to go after the document, but the vice-president replied: "No, you don't. If you want to get outside, Ed Fischer, you go with him." Fischer accompanied the agent and they returned with the agreement. The vice-president and the agent then both executed the instrument, after which the agent was excused until the following morning. At that time he turned his office and records over to Fischer, but, according to his testimony, he "was not all right mentally for several weeks."

The agreement itself is not in evidence. The agent was permitted to testify, without objection so far as the printed record indicates, that he signed the agreement and turned over his business without any consideration; that "there never was any agreement to take over my obligations to the defendants"; and that nothing was said in connection with the agreement "about forbearance by defendants in the collection of premiums due them." He admitted that Fischer gave him a job in the office at $150 per month, which he held for a period of 13 months, but he said that this arrangement was not part of the agreement and was made afterwards, with the implication that...