Hager v. Paul Revere Life Ins. Co., CIV-2-76-135.

• Decision Date: 06 October 1977
• Docket Number: No. CIV-2-76-135.,CIV-2-76-135.
• Citation: 489 F. Supp. 317
• Parties: C. Leon HAGER, Plaintiff, v. The PAUL REVERE LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Tennessee

489 F. Supp. 317

C. Leon HAGER, Plaintiff, v. The PAUL REVERE LIFE INSURANCE COMPANY, Defendant.

No. CIV-2-76-135.

United States District Court, E. D. Tennessee, Northeastern Division.

September 8, 1977.

On Motion For New Trial October 6, 1977.

Wendal D. Jackson, Slaughter, Jackson, Cooper & Watson, Bristol, Tenn., for plaintiff.

James H. Epps, III, and Ferdinand Powell, Jr., Powell & Epps, Johnson City, Tenn., for defendant.

MEMORANDUM OPINION

NEESE, District Judge.

This is a diversity action against the defendant The Paul Revere Life Insurance Company (Revere) by its former agent, the plaintiff Mr. C. Leon Hager, for damages for the breach of the contract of employment between the parties. The respective parties are deemed citizens of different states, and the amount in controversy exceeds the sum or value of $10,000, exclusive of interests and costs. 28 U.S.C. § 1332(a)(1), (c). A bench trial was conducted by the Court on June 6, 1977, and the respective parties' proposed findings of fact and conclusions of law were amended and supplemented posttrial.

Mr. Hager became by contract an agent of Revere in 1961. This initial agreement of the parties was supplemented thereafter periodically. The agreement of the parties, which is operative for the purposes of this lawsuit, was entered into between Mr. Hager and Revere on November 4, 1969. That agreement was amended or supplemented on two subsequent occasions.

Under the agreement of the parties, either party could terminate it by giving 30 days' written notice to the other party. Revere gave written notice to Mr. Hager on March 10, 1976 that such agreement was terminated two days thereafter.¹

Revere paid Mr. Hager after such termination $9,077.82, representing the latter's contribution to Revere's retirement fund, with accrued interest. Subsequent to such payment, it was discovered that Revere had erred in computing such contribution and interest, and Revere concedes it owes Mr. Hager an additional sum thereon of $490.16. It is stipulated further that, when Mr. Hager attains his 65th birthday, he will be entitled to receive from Revere's retirement fund a monthly payment of $81.55 for the duration of his life. The gravamen of the dispute between the parties relates to any entitlement of Mr. Hager to receive now and in futuro commissions on the renewal premiums which have been, and may be, paid by Revere's policyholders on policies of insurance with that company which were negotiated initially by Mr. Hager.

"* * * It is a well-established general rule that the right of an insurance agent to commissions on renewal premiums depends upon the contract existing between the agent and the insurance company. * * *" Anno: Insurance agent's right to commissions on renewal premiums, 79 A.L.R. 475, I, citing, inter alia, Ensworth v. New York L. Ins. Co. (1868), 1 Flipp. 92, Fed.Cas. no. 4,496; Masden v. Travelers Ins. Co., C.C.A. 8th (1931), 52 F.(2d) 75, 79 A.L.R. 469; Chicago L. Ins. Co. v. Tiernan, C.C.A. 8th (1920), 263 F. 325; Yowell v. Union Cent. L. Ins. Co. (1918), 141 Tenn. 70, 206 S.W. 334. "* * * `It is so well settled as not to require the citation of authority that even onerous agreements will be enforced according to their plain meaning where fairly entered into.' * * *" United States v. Easement and Right-of-Way, D.C.Tenn. (1966), 271 F.Supp. 55, 587, n. 1, quoting from Scott v. Columbia Gas Transmission Company, (1965), 56 Tenn.App. 258, 405 S.W.2d 784, 7882, certiorari denied (1965), rehearing denied (1966).

The amended and supplemented agreement of the parties provided that Revere would pay to Mr. Hager in percentage amounts specified commissions on first-year and renewal premiums received by Revere as set forth in respective schedules relating to: individual health insurance, ordinary life insurance and annuity policies, and group insurance policies Revere issued and placed on applications produced personally by Mr. Hager, "* * * as full compensation for the services² * * *" which Mr. Hager performed for Revere for "* * * as long as the parties' agreement was in force. * * *" It was agreed that, upon the termination of the parties' agreement,

first-year commissions as provided therein on business then in force will be payable as provided therein, but no further renewal commissions, supplementary commissions, allowances or other remuneration will be payable, except as may be otherwise provided by paragraph 4(c) of such agreement. * * *

It was provided therein also that, if Revere or its affiliated companies had made any loans or advances to Mr. Hager against future commissions he might earn,

no commissions shall thereafter be payable to him except to the extent that the aggregate commissions payable shall exceed such advances.

The aforementioned paragraph 4(c) of the parties' agreement related to a death benefit for Mr. Hager prior to his retirement and provided also inter alia that, if while it was in effect and before Mr. Hager retired pursuant to Revere's retirement plan, he became totally disabled, the renewal commissions relating to individual health insurance and ordinary life insurance and annuity policies

will continue to be paid during the continuance of such total disability irrespective of whether * * * such agreement is terminated in accordance with its terms. * * *

It was agreed that Revere would determine what constituted Mr. Hager's "total disability" within the meaning of that provision of the contract of the parties.

Revere made no determination that, while the agreement of the parties was in effect and before any retirement by Mr. Hager, he had become totally disabled. Thus, in accordance with the plain provisions of the parties' contract, Mr. Hager enjoyed no right to further commissions on renewal premiums after 30 days had expired from March 10, 1976.

Mr. Hager contended, however, that the agreement of the parties which was operative on the immediate aforementioned date was not entered into fairly; that Revere failed in its obligation to deal fairly and in good faith with him, Hammond v. Herbert Hood Co., (1949), 31 Tenn.App. 683, 70112, 221 S.W.2d 98; and that the Court should intercede with equitable relief to estop Revere from relying on the provisions of its agreement with him and from being unjustly enriched by retention of commissions on renewal premiums which were designed to be paid to its agents. This argument focuses upon Revere's offering to qualifying agents of a "career commission plan".

An official of Revere advised Mr. Hager on March 27, 1972 that the company had determined "* * * to provide greater recognition and compensation to its veteran sales consultants i. e., insurance agents who produce the major portion of the business which is most profitable to * * *" Revere. That official declared Mr. Hager was qualified for the benefits of this plan "* * * which will pay you extra commissions as described in the attached amendment to your agent agreement. * * *" (Emphases supplied.)

The attached amendment, which Mr. Hager executed, provided inter alia for the payment by Revere of higher commissions on premiums received by Revere for policy years subsequent to the first year thereof on individual health policies issued and placed on applications written personally by Mr. Hager. Revere retained the right to terminate such amendment immediately without terminating Mr. Hager's basic agreement and keep control over the conditions and standards which Mr. Hager must have maintained in order to continue to be qualified for the extra compensation for which the amendment provided. Mr. Hager did not meet these standards, and this deficiency precipitated the termination of all relations between the parties hereto.

The Court FINDS no overreaching on the part of the defendant's personnel from these facts which would justify the interposition of equitable relief favoring the plaintiff. It is only

whenever advantage is taken of a party under circumstances which mislead, confuse, or disturb the just result of his judgment, and thus expose him to be the victim of the artful, the importunate, and the cunning, where proper time is not allowed to the party and he acts improvidently, or if he is importunately pressed, if those in whom he places confidence make use of strong persuasions, if he is

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