Gibson v. Agric. Life Ins. Co. of Am.

• Decision Date: 14 December 1937
• Docket Number: No. 100.,100.
• Parties: GIBSON v. AGRICULTURAL LIFE INS. CO. OF AMERICA.
• Court: Michigan Supreme Court

282 Mich. 282

276 N.W. 450

GIBSON

v.AGRICULTURAL LIFE INS. CO. OF AMERICA.

No. 100.

Supreme Court of Michigan.

Dec. 14, 1937.

Action by Jessie M. Gibson against the Agricultural Life Insurance Company of America. From a judgment of no cause of action, plaintiff appeals.

Affirmed.

Appeal from Circuit Court, Wayne County; Robert M. Toms, judge.

Argued before the Entire Bench.

Savery, McKenzie & Hamilton, of Detroit, for appellant.

Wilkinson, Lowther & O'Connell, of Detroit, for appellee.

CHANDLER, Justice.

On January 28, 1918, one George J. Gibson, now deceased, who was the husband of plaintiff, entered into a written contract of agency with the defendant company under which he was engaged to solicit applications for life insurance, and he continued in the employ of said insurance company under the contract until his death on November 15, 1927. The provisions of this contract deemed essential for consideration of the questions involved in this case are the following:

‘5. The renewal commission provided herein shall be vested in the Agent, his heirs or assigns, for the entire time provided in this contract.’

‘14. The Company shall have, and is hereby given a first lien upon any commissions or renewals as security for any claim due or to become due to the Company from said Agent.’

Mr. Gibson left a will which was probated in the probate court for the county of Wayne, and under the order of that court entered on November 6, 1929, the residue of his estate, including the agency contract herein referred to, was assigned to the plaintiff.

During the period that Mr. Gibson was operating under his contract with defendant, he engaged in real estate and quite extensive building operations, and in the course of financing his building operations he borrowed money from the defendant, and from time to time he and plaintiff executed real estate mortgages to the defendant, securing promissory notes executed by them to the company. At the time of his death there were seven of these mortgages outstanding and unpaid. The plaintiff acquired title under the will of her husband to the seven parcels of real estate covered by the above-mentioned mortgages.

At the death of Mr. Gibson he was indebted to the defendant, in addition to the note and mortgage indebtedness, for premiums on insurance in the amount of $3,000 or $4,000. His commissions on renewals at the time of his death averaged about $400 or $500 per month, and the defendant retained these commissions until the debt of Gibson to it for the premiums had been paid. Further renewal commissions were paid to the plaintiff, and the plaintiff within this period paid interest on the notes and mortgages in question to defendant. Some time prior to May 19, 1933, the plaintiff ceased making payments of interest on the notes and mortgages to defendant, and the defendant thereupon ceased paying renewals to plaintiff, insisting that it had a lien upon the said renewal commissions for any sum due it from Gibson. On May 19, 1933, plaintiff and the defendant entered into a certain agreement relative to the matters in controversy between them, which agreement is evidenced by a letter from defendant to plaintiff, reading as follows:

‘In connection with settlement between this company and yourself as of this date with reference to renewal commissions held here because of delinquent mortgage interest, the following memorandum sets forth our understanding of the terms of the arrangement we have just concluded with your representative, Mr. John A. Hamilton.

‘You are released from all claims on our part because of mortgages or notes executed by Mr. Gibson and yourself with the exception of three mortgages known as our Nos. 581, 669 and 711 covering 11334 Ward Ave., 9977 Ward Ave., and 9957-59 Ward Ave., respectively. On these three we have this date deducted from the renewals held here the amount necessary to reinstate the same as to delinquent interest. It is our understanding that you agree to keep up these three mortgages in the future as to interest and as to taxes to the extent that none of the three places should be allowed to go to tax sale. We agree, in connection with these three places, to not foreclose our mortgage on any of the three places before October 9, 1936, as long as the interest and taxes are taken care of under the same as above set forth.

‘It is agreed that furture renewals accruing to your credit will not be held by the company or used as a claim set-off for any mortgage interest or indebtedness except as against past due interest and taxes that have gone to sale on the three mortgages just above referred to.

‘In connection with the adjustment of matters between us of this date, you are deeding four properties to us in satisfaction of our mortgage Nos. 558, 613 and 691. Notwithstanding the date of these deeds, we agree that rents falling due from tenants on any of the properties involved shall not belong to us until after May 31, 1933.’

Pursuant to this agreement the four parcels of real estate mentioned therein were deeded by plaintiff to defendant, and plaintiff was released from the obligation on said four notes and mortgages, and defendant made application of sufficient of the renewal commissions to cure default in payment of interest and taxes on the three remaining mortgages, and paid to the plaintiff the difference between the amount of said renewal commissions and the amount due it for interest and taxes.

For some time subsequent to this agreement the plaintiff continued to make interest payments upon the three mortgages mentioned therein, and the defendant continued to remit to her renewal commissions as they fell due. Ultimately, the plaintiff ceased to make her interest payments on the mortgages, whereupon defendant ceased remitting renewal commissions to her. The plaintiff then brought this action to recover such commissions, and the defendant by its answer and testimony justified the withholding of such commissions upon the ground that it had a lawful lien upon them for the payment of sums due...