O'Gorman & Young, Inc. v. Phcenix Assur. Co., Ltd.

• Decision Date: 20 May 1929
• Docket Number: Nos. 112, 113.,s. 112, 113.
• Citation: 146 A. 370
• Parties: O'GORMAN & YOUNG, Inc., v. PHCENIX ASSUR. CO., LIMITED, OF LONDON, ENGLAND. SAME v. HARTFORD FIRE INS. CO. OF HARTFORD.
• Court: New Jersey Supreme Court

146 A. 370

O'GORMAN & YOUNG, Inc.,

v. PHCENIX ASSUR. CO., LIMITED, OF LONDON, ENGLAND.

SAME

v. HARTFORD FIRE INS. CO. OF HARTFORD.

Nos. 112, 113.

Court of Errors and Appeals of New Jersey.

May 20, 1929.

Campbell, Lloyd, Case, Van Buskirk, Hetfield, and Dear, JJ., dissenting.

Appeal from Circuit Court, Essex County.

Actions by O'Gorman & Young, Inc., against the Phoenix Assurance Company, Limited, of London, England and the Hartford Fire Insurance Company of Hartford, Conn. Plaintiff's motion to strike the answers was denied, and plaintiff appeals. Affirmed.

This was an action at law in the Essex circuit court for damages for breach of a contract for negotiating and selling policies of fire insurance. Motion was made before Hon. Nelson Y. Dungan, circuit court judge, to strike out the answers filed by the defendants, for the alleged reason that they did not set up a legal defense. At the conclusion of the argument, the judge declined to strike the answers, delivering the following opinion；:

"Separate suits were instituted by the plaintiff against the Hartford Fire Insurance Company of Hartford, Connecticut, hereinafter designated as Hartford, and against the Phoenix Assurance Company, Ltd., of London, hereinafter designated as Phoenix, to recover a balance of commissions due to it as agent for those respective fire insurance companies.

"There was a contract between the plaintiff and Hartford at a stated commission which was renewed March 29th, 1928, with an agreement to pay to the plaintiff a reasonable sum for its agency efforts, which reasonable sum was fixed at twenty-five per cent.

"On that date (March 29, 1928) there was a subsisting contract between the plaintiff and Phoenix, then in full force and effect, to act as its agent, which theretofore, under the agreement, had borne compensation at the rate of twenty-five per cent.

"By an act of the Legislature of the State of New Jersey, approved on that date, March 29, 1928 (P. L. p. 257), and which took effect immediately, it was provided that it should he unlawful for insurers against hazards by fire to pay or allow any commissions or compensation in excess of a reasonable amount to any of its agents, nor to pay or allow to any local agent any commissions or compensation in excess of that paid or allowed to any one of its local agents in this State.

"Plaintiff was a local agent in the City of Newark, and it appears that the rate of commissions paid to one or more of the local agents of the defendants in this State was twenty per cent.

"Both defendants, therefore, paid to the plaintiff twenty per cent. commissions on business done by it for them after March 29, 1928, and refused to pay the additional five per cent. which, before that date, they had paid to it. Thereupon plaintiff brought these suits against them to recover the additional amount, claiming that twenty-five per cent. was a reasonable compensation for the agency services.

"The defendants by their answers admit the material allegations in the complaint, but plead as a defense the Act of March 29, 1928.

"A motion is now made on behalf of the plaintiff to strike out these answers on the ground that the act is not applicable to the contracts in controversy, as contravening the 14th Amendment of the Federal Constitution, which provides that no state shall deprive any person of property without due process of law, and as a violation of the United States and New Jersey Constitutions (Const. U. S. art 1, § 10; Const N. J. art. 4, § 7, par. 3) which prohibit the passage of any law impairing the obligation of contracts.

"As to the contention that the constitutional provisions relating to the impairment of contracts is violated by the Legislative enactment in question, it may be noted that the Hartford contract with the plaintiff apparently expired on the very day the 1928 Law became effective, and was renewed on that date,...