Hartwig Moss Ins. Agency, Ltd. v. Board of Com'rs of Port of New Orleans

• Decision Date: 26 June 1944
• Docket Number: 37336.
• Citation: 206 La. 395,19 So.2d 178
• Parties: HARTWIG MOSS INS. AGENCY, LIMITED, v. BOARD OF COM'RS OF PORT OF NEW ORLEANS.
• Court: Louisiana Supreme Court

19 So.2d 178

206 La. 395

HARTWIG MOSS INS. AGENCY, LIMITED, v. BOARD OF COM'RS OF PORT OF NEW ORLEANS.

No. 37336.

Supreme Court of Louisiana

June 26, 1944

Chaffe, McCall, Burns, Toler & Phillips, of New Orleans, for defendant-appellant.

Paul B. Habans, and Warren O. Coleman, both of New Orleans, for plaintiff-appellee.

ODOM Justice.

The plaintiff is a corporation, a licensed insurance agent or insurance broker engaged in business in the City of New Orleans. It alleged that on April 7, 1931, it entered into a written contract with the Board of Commissioners of the Port of New Orleans, known as the Dock Board, under which contract the Dock Board employed and appointed it as the Board's exclusive agent, for a term of five years from said date, to handle the writing and renewing of all the Board's insurance. It annexed to, and made part of, its petition a copy of the contract dated April 7, 1931.

It alleged that it diligently, promptly, and faithfully performed all of its duties and obligations under the said contract, and was always able, ready, and willing to carry out its promises and obligations thereunder. It further alleged that on June 12 1934, about three years and two months after the contract was executed, the Dock Board informed it in writing that it did not wish to renew certain insurance policies which would expire about August 31, 1934, and that it had arranged to place said insurance with another agency; that on December 12, 1934, the Dock Board wrote petitioner that it demanded immediate cancellation of all policies listed on an annexed document, 'and also demanded the immediate payment of fifty-six thousand, one hundred twenty-eight and 59/100 ($56,128.59) dollars, being the aggregate amount of return premiums', and that on December 29, 1934, the Dock Board informed petitioner in writing that petitioner's appointment as agent of the Board was terminated.

Plaintiff further alleged that, as a result of the Dock Board's cancelling the contract which it had with plaintiff and of the Dock Board's having its insurance cancelled and rewritten through another agency, plaintiff was damaged in the sum of $39,209.66. It brought the present suit against the Dock Board, praying for judgment for that amount alleging that the contract was cancelled without cause.

The Dock Board through counsel filed a number of exceptions, among these being an exception of no cause and no right of action. These exceptions were overruled, and defendant answered admiting that it had signed and executed the contract dated April 7, 1931, which plaintiff relied upon. It admitted that it had notified the plaintiff in writing on or about June 12 1934, that it did not care to renew certain insurance policies; that on December 12, 1934, it wrote plaintiff demanding cancellation of all policies and demanding the immediate payment of $56,128.59, the aggregate amount of return premiums; and admitted further that on December 29, 1934, it informed plaintiff in writing that plaintiff's appointment as agent of the Board was terminated.

The Dock Board in answer to plaintiff's demand denied that it owed plaintiff anything and set up the following defenses:

(1) That the instrument sued on does not constitute, and never constituted, a valid and legal contract between plaintiff and defendant, because the defendant is an agency of the State of Louisiana and is forbidden by the Constitution and laws of the state to enter into such an agreement; (2) that it had the right at any time it saw fit to cancel any of the policies at the customary short rate; (3) that defendant is a state agency which was created and has its existence under and by virtue of certain acts of the Legislature passed pursuant to the Constitution of the state, and that it performs only governmental functions of the State of Louisiana.

The Dock Board especially pleaded that the instrument sued on does not constitute, and never constituted, a valid and legal contract between it and the plaintiff 'because defendant was and is without authority under, and was and is forbidden by, the Constitution and laws of the State of Louisiana to enter into such an agreement as is set forth in said document 'Plaintiff's Exhibit No. 1', and said document, and the terms and provisions thereof are not and never have been binding upon defendant or upon plaintiff'.

The defendant especially alleged in its answer that each of the policies which were written through plaintiff as its agent and which were cancelled by defendant contained a provision 'giving to defendant the right, at any time it saw fit, to cancel said policies at what is known as the 'Customary Short Rate'; that defendant had previously paid the full premiums for the full term of each of said policies and that the $56,128.59 referred to in said Article XIII [of plaintiff's petition] represents the amount of returned premiums to which defendant was entitled, at customary short rate, on the cancellation of said policies'. It admitted that it subsequently placed all of its insurance with another insurance agency, and averred that it had a right to do so 'without thereby becoming liable to plaintiff in any amount whatsoever'.

In the alternative, and only in the event that the defenses set out above should be held invalid, the defendant especially averred that the instrument sued on 'never did constitute a valid and binding contract between plaintiff and defendant because there was no consideration therefor, in that all of the matters and things which, according to the language of said document, plaintiff bound and obligated itself to do and perform, were and are matters and things which were and are customarily performed by insurance agents and brokers or by insurance companies from which policies are obtained, without any charge or expense whatever to the insured'.

There was judgment in the district court in favor of plaintiff and against the defendant for $15,290.14, from which judgment the defendant appealed. The plaintiff answered the appeal, praying that the judgment be amended by increasing the amount of the award from $15,290.14 to $39,209.66. The agreement entered into between the plaintiff and the defendant on April 7, 1931, is evidenced by a written instrument which reads in full as follows:

'This agreement, made and entered into this seventh day of April, 1931, by and between Board of Commissioners of the Port of New Orleans, an agency of the State of Louisiana (Hereinafter sometimes referred to as the 'Board'), party of the first part, and the Hartwig Moss Insurance Agency, Ltd., a corporation organized and existing under and by virtue of the laws of the State of Louisiana, with its domicile in the City of New Orleans (Hereinafter sometimes referred to as the 'Agent'), party of the second part.

'WITNESSETH:

'1. The Board hereby appoints the Agent its agent to handle the writing and renewing of all its insurance, and to attend to such matter as may arise in connection with insurance during the term of the Agency. It shall be the duty of the Agent to endeavor to secure policies of insurance for the Board to the amounts and against the risks which the Board shall from time to time determine; to keep the Board fully advised at all times as to the amount of insurance coverage and risks covered thereby; to arrange for timely renewals of all expiring insurance, or else to notify the Board of expirations and of its inability to renew the same; to advise the Board with respect to all pertinent facts affecting its insurance and the rates thereof; to assist the Board in the adjustment of any losses under insurance and in the collection of all amounts due from insurance companies; and, generally, to perform such services as are usually performed by insurance brokers.

'2. That Agent agrees that during the term of its agency it will maintain an efficient, active inspection and engineering force, competent to fully advise the Board on such engineering questions as may arise affecting the Board's insurance or the rates thereof.

'3. All insurance procured by the Agent for the Board shall, as far as possible, be placed with companies authorized to do business in Louisiana and be subject to the approval of the Board. The Agent shall not be responsible for the solvency or default of any insurance companies, or for its failure to procure insurance requested by the Board, provided, however, that the Agent used reasonable care in procuring or in attempting to procure insurance, as the case may be. If at any time the Agent procures insurance in any company or under conditions not acceptable to the Board, and the Board so notifies the Agent, it shall be the duty of the Agent to cancel said insurance and, if possible procure other insurance in place thereof in companies and or with conditions, as the case may be, acceptable to the Board.

'4. The Board agrees that during the employment of the Agent all insurance written for account of the Board will be placed through the Agent.

'5. The agent shall receive no compensation from the Board for its services hereunder. The Agent shall, however, be entitled to retain for itself all commissions and payments which it may earn in placing the insurance of the Board, whether such insurance be placed by the Agent in companies directly represented by the Agent, or such insurance be placed by the Agent as a broker in other companies.

'6. The term of employment of the Agent hereunder shall be five (5) years from the date hereof.'

It has been repeatedly held by this court that the Board of Commissioners of the Port of New Orleans, ordinarily referred to as the Dock Board, is a state agency. Duffy v. City of New Orleans 49 La.Ann. 114, 21 So. 179; State ex rel. Tallant v. Board of Commissioners...