Huff v. Fidelity Union Life Ins. Co.

• Decision Date: 16 April 1958
• Docket Number: No. A-6546,A-6546
• Citation: 312 S.W.2d 493,158 Tex. 433
• Parties: Leslie HUFF, Petitioner, v. FIDELITY UNION LIFE INSURANCE COMPANY, Respondent.
• Court: Texas Supreme Court

Page 493

312 S.W.2d 493

158 Tex. 433

Leslie HUFF, Petitioner, v. FIDELITY UNION LIFE INSURANCE COMPANY, Respondent.

No. A-6546.

Supreme Court of Texas.

April 16, 1958.

Rehearing Denied May 14, 1958.

Bryan, Maxwell, Bryan & Wilson, Waco, Thompson, Knight, Wright & Simmons, W. H. Neary, M. J. Wise and David M. Kendall, Jr., Dallas, for petitioner.

H. B. Houston, Dallas, for respondent.

GRIFFIN, Justice.

This cause originated in a district court of Dallas County, Texas, and is a suit by petitioner, Huff, as plaintiff against respondent, Insurance Company, as defendant. The plaintiff sued for renewal commissions as agent and renewal overwriting commissions as branch manager which he claimed defendant owed to him by virtue of certain written instruments, the material portions of which will be hereinafter set out. The cause was tried by the trial court without a jury. At the end of the case the trial court rendered judgment for plaintiff for a total of some $11,242.50, total commissions due on April 30, 1956, and for renewal and overwriting commissions for a definite period not to exceed a total of nine years. On appeal the Court of Civil Appeals reversed and remanded the cause. 305 S.W.2d 209.

On April 15, 1937, the defendant employed the plaintiff as its agent for the sale of its insurance contracts. This employment was by virtue of a certain printed contract form with the appropriate insertion of necessary and material information. This contract was signed by the agency manager, the president of defendant Company and by the plaintiff. It consisted of some three pages of printed matter, and, among other things, it provided for the remuneration which plaintiff was to receive for his services in selling defendant's policies of insurance.

The employment as branch manager was by means of a letter dated April 15, 1937 and signed by a vice president of the Company and addressed to plaintiff. This letter set out the compensation which plaintiff was to receive for his services as branch manager. The material parts of the letter are as follows:

'It is further agreed that you are to receive 2 1/2 per cent renewal overwriting commission on all renewal premiums on business written by and through your agency, upon plans upon which the Company regularly pays renewal commissions.'

'You may attach this letter to your regular contract to become a part of it and subject to its terms and provisions.'

Defendant claims that the following provisions of the agency contract control the amount of money which it owes to plaintiff.

'9. (e) It is further agreed that no renewal commission shall be payable on the business produced during any contract year not fully completed by the agent while in the service of the Company, any volume of insurance written during such year and paid for in cash notwithstanding.'

And a portion of paragraph 12, as follows:

'12. * * * In the event of the termination of this contract under conditions that provide for the payment of renewal commissions, such renewal commissions shall be subject to a collection fee of 2 per cent of the renewal premiums * * *.'

Plaintiff continued in the service of defendant until March 24, 1951 when he voluntarily resigned and left the Company's employ, thus lacking some twenty-odd days before completing the contract year which began April 15, 1950. Plaintiff contends that he is entitled to renewal overwriting commissions of 2 1/2 per cent on all business produced by his agency up to March 24, 1951, while it is defendant's contention that he is entitled to such renewal overwriting commissions only up to April 15, 1950. Plaintiff further contends that such renewal overwriting commissions which he claims are not to be charged with the 2 per cent collection fee set out in paragraph 12. Defendant contends that the collection fee applies. No complaint is made of the trial court's judgment allowing renewal commissions to plaintiff as an agent for the Company on business produced up to April 15, 1950, nor to the charging of 2 per cent collection fee against such renewal commissions.

As the case reaches this Court it has resolved itself to a contest over (1) whether renewal overwriting commissions are payable on the production of the branch agency from April 15, 1950 to March 24, 1951, and (2) whether a 2 per cent collection fee should be charged against any renewal overwriting commissions. No authority has been cited that is of any assistance in the construction of the contract. It is the contention of both parties that the contract is unambiguous, although plaintiff has an alternate contention in the event we should hold the contract to be ambiguous. We have concluded that the contract, as set forth by the two instruments, is not ambiguous. The language 'plans upon which the Company regularly pays renewal commissions' found in the paragraph of the branch agency letter refers to the 24 different policies set out in the first page of the agency contract under the heading 'Schedule of Commissions'. The word 'plan' is used in this sense in paragraphs 3, 6, 7, 8 and 14 of the agency contract. We find that no renewal commissions are to be paid on seven of such plans. Three of these plans are term plans and four are single premium plans.

We shall first take up the contention that the 2 per cent collection fee set out in paragraph 12 above applies to the renewal overwriting commissions paid after the termination of the agency contract. The two instruments were prepared and signed the same day and by the same parties. The agency contract alone bears the approval of defendant's president. The provision of the branch agency contract that it is to become a part of the agency contract and subject to its terms and provisions can only mean that both instruments must be construed together so as to make one consistent and enforcible contract. They will not be construed so as to cause a conflict between the provisions of the two instruments.

It is apparent that every provision of the agency contract cannot be made applicable to the branch agency letter. For instance, paragraph 2 of the agency contract provides for renewal commissions on various plans of insurance for the second year, ranging from zero to 10% of the renewal premiums. For the third and subsequent policy years, the renewal commissions are from zero to 5% of renewal premiums. To construe these provisions as governing the letter employing plaintiff as branch manager is to set aside the plain and definite language that for his services as branch manager plaintiff is to receive 2 1/2 per cent renewal overwriting commission on all renewal premiums on business written by and through that agency. It is admitted by both sides that this gave plaintiff an extra 2 1/2 per cent commission on business personally written by him. Therefore, renewal commissions and renewal overwriting commissions on his own business must, of necessity, be two entirely separate and distinct subjects. Paragraph 3 of the agency contract does not apply to the branch contract letter for paragraph 3 covers only the commission on first year premiums and the method of increasing these; therefore, it has to do only with plaintiff as an agent. Paragraph 4 has to do with renewal commissions to be paid plaintiff as agent and provides that these commissions may be increased by 5% in certain designated instances. Paragraphs 6, 7 and 9-31, inclusive, all contain matters pertaining to the 'agent', as contrasted to branch manager. The word 'agent' is found in each and every one of the above paragraphs, and the language shows that the reference is to the selling agent and not to the branch manager. This leaves only paragraphs 1, 5, 8, 32 and 33 of the contract. Paragraph 1 is the formal opening and designation of parties paragraph and designates plaintiff as 'agent.' Paragraph 5 has to do with first year premiums, except it is provided no commission shall be paid on the premiums for a policy on the guaranteed coupon plan. Paragraph 8 provides that the Company shall determine the commission to be paid on any form of policy not specifically set out in the contract. This can govern the branch manager letter. Paragraphs 32 and 33 make no mention of agent or branch manager and will govern the branch manager letter. The agency contract refers only to renewal commissions and nowhere are the words 'renewal overwriting commissions' found. The branch manager agency letter refers only to 'renewal overwriting commissions' and nowhere is there a reference to only 'renewal commissions.' From a reading of the two instruments it is clear that the provisions in the agency contract with regard to the rights, duties and liabilities of the 'agent' are separate and distinct from the duties that devolve upon the branch manager.

It is clear that the parties contracted with reference to the plaintiff in two separate and distinct capacities-first, as an agent, and, second, as branch manager of the Temple office. There are elaborate provisions in the agency contract as to duties of the agent to deliver policies, collect first and renewal premiums and render other assistance to the Company. Paragraph 12 provides for a collection fee of 2 per cent on renewal premiums after the contract has been terminated. This is a reasonable provision as applied to plaintiff as agent because he may be earning as much as 10% renewal premiums on the business produced by him as such agent. This collection fee is to reimburse the Company for the expenses in performing the services which plaintiff, as agent, has agreed to perform. As applied to the 2 1/2 per cent renewal overwriting commissions paid to plaintiff as branch manager, the 2 per cent collection fee is unreasonable. As such branch manager, plaintiff had not agreed to collect any renewal premiums. The Company had the right to charge the 2 per cent collection fee to the agent who wrote the business and who had agreed to assist in the collection of the...