Leon Irwin & Co., Inc. v. Board of Com'rs of Port of New Orleans

• Decision Date: 28 November 1932
• Docket Number: 31937
• Citation: 176 La. 13,145 So. 123
• Parties: LEON IRWIN & CO., Inc., v. BOARD OF COM'RS OF PORT OF NEW ORLEANS
• Court: Louisiana Supreme Court

145 So. 123

176 La. 13

LEON IRWIN & CO., Inc., v. BOARD OF COM'RS OF PORT OF NEW ORLEANS

No. 31937

Supreme Court of Louisiana

November 28, 1932

Rehearing Denied January 3, 1933

Appeal from Civil District Court, Parish of Orleans; Hugh C. Cage Judge.

Suit by Leon Irwin & Co., Inc., against the Board of Commissioners of the Port of New Orleans. From a judgment in favor of plaintiff, defendant appeals.

Reversed, with directions.

Harold A. Moise, of New Orleans, for appellant.

Lemle Moreno & Lemle, of New Orleans, for appellee.

OPINION

ODOM, J.

Plaintiff is a corporation engaged as an insurance agent and broker in the city of New Orleans. Defendant, hereinafter referred to as the dock board, is a corporation duly incorporated by an act of the Legislature, is a state agency, and has charge and supervision of wharves, docks, freight sheds, and all other appurtenances at the port of New Orleans.

In the early part of February, 1929, the dock board advertised in the public press for bids on contracts to insure its property against loss by fire to the extent of $ 10,000,000, and at the same time sent out a printed form of proposals to the various insurance agents in New Orleans and elsewhere; its purpose being to get bids or proposals for the insurance required at the lowest rate possible. Plaintiff submitted its bid on $ 9,000,000 of the insurance, fixing a specified rate for one year's insurance and another rate for three years; the rate for three years being two and one-half times the rate for one year. Its bid for the three years' insurance was accepted, and it procured the issuance of the required policies written by various and sundry insurance companies throughout the country satisfactory to the dock board, and delivered the policies to the board, which paid the premiums for three years, amounting to $ 174,629.07.

The policies remained in force for two years and two months, at the end of which time the dock board exercised the option which it had under the terms stipulated in the policies of canceling them, and receiving back the unearned portion of the premiums amounting to $ 41,707.45. This amount was promptly paid by the insurance companies to the dock board.

The dock board was not obligated to pay, and did not pay, the plaintiff any fee or brokerage for obtaining the insurance, but plaintiff received its fee or compensation in the way of commissions paid by the various companies writing the insurance. The companies paid plaintiff's commissions based upon the total amount of premiums collected from the dock board, and accordingly, when the dock board canceled the policies and demanded the return of the unearned portion of the premiums, the insurance companies in turn charged back to plaintiff $ 9,250.93, being part of the commissions paid, which amount plaintiff would have been entitled to retain had the policies not been canceled. When the dock board canceled the policies, plaintiff offered to procure the issuance of other policies in lieu of those canceled and at the same rate. This proposal was refused by the board. Plaintiff now contends that this refusal was a breach of the contract which it had with the board, and it prosecutes the present suit for damages resulting from the alleged breach, amounting to $ 9,250.93, the amount of commissions lost.

There was judgment in the court below in favor of plaintiff for the full amount demanded, and the dock board appealed.

1. The dock board's acceptance of plaintiff's bid or proposal constituted a contract between it and plaintiff, and this controversy arises over the construction of that contract. Plaintiff's contention is that under the contract it was employed to furnish all the insurance required by the board for a period of three years, and that, when the board canceled the insurance at the end of two years and two months, the board was obligated to accept insurance procured by it in lieu of that canceled. In other words, under plaintiff's construction of the contract, it was given the right and privilege of rewriting the insurance needed to replace that which was canceled, in which event it could have recouped the loss it sustained by the cancellation of the original policies.

The dock board had the right to cancel the policies and to demand the return of the unearned portion of the premiums. That is conceded by plaintiff. The breach of contract of which plaintiff complains is the dock board's refusal to recognize its right to rewrite the insurance. The dock board contends, on the other hand, that plaintiff acted all through as the agent of the insurance companies from whom it received commissions; that by its proposal the board merely invited bids to furnish a certain amount of fire insurance on its property for a certain length of time; that plaintiff, as an insurance agent or broker, was the successful bidder; and that, when plaintiff produced and delivered the policies written by companies acceptable to the board and the premiums were paid, the entire transaction was closed, and it sustained no further contractual relations with plaintiff.

2. Both sides conceded that the entire contract between plaintiff and defendant, such as it was, is set forth in the written proposal or bid submitted by plaintiff and accepted by the board. The written proposal was prepared by the board and addressed to itself. It was intended to be signed by the agents or brokers proposing to procure the issuance of such policies of insurance as the board required. The proposal, in so far as the same need be quoted, reads as follows:

"I, or we, the undersigned, hereby propose to furnish the necessary policies in an incorporated insurance company or companies, said policy or policies to insure and/or indemnify the Board of Commissioners of the Port of New Orleans against loss or damage by fire and lightning to wharves, sheds and/or other structures located along the Mississippi River between Louisiana Avenue and Charbonet Street on the New Orleans side of the Mississippi River and on the banks of the Navigation Canal, New Orleans, Louisiana, for a period of one year and also for three years, from noon, February 16, 1929."

Then follow stipulations to the effect that a rate may be submitted on any one or all of the items included in the proposal; that the responsibility of the insurance company or companies, the form of policy or policies as well as the rates, will be taken into consideration in awarding the insurance; that the form of the policy and the names of the insuring companies proposed must be submitted with the bids; that the companies in which it is proposed to place the insurance must have a satisfactory rating; that, should more than one insurance company or agent bid the same rates and offer the same facilities of service, and these rates are acceptable, the board reserves the right to place the insurance with the successful bidders in whatever proportion the board deems advisable.

Then follows a stipulation providing that as a guaranty that the bidder would fulfill the conditions and agreements of the proposal "we hereby deposit the sum of one thousand dollars ($ 1,000.00) * * * which we will forfeit to the Board of Port Commissioners in the event of our failure to deliver policies as per our proposal."

3. The plaintiff company received a copy of the above proposal, and became interested. It sent a representative to New York and other places in an effort to induce leading fire insurance companies throughout the country authorized to write insurance in this state to write the policies required by the board. It succeeded in getting several of the companies to agree to assume the risk at a stipulated rate, the total amount of insurance to be distributed as the companies saw fit. When plaintiff made its arrangements with the companies, it submitted its proposal to the board, together with a list of the companies offered and the rate proposed. The board, after investigating the ratings of the companies, accepted the proposal. Whereupon plaintiff deposited with the board $ 1,000, which it agreed to forfeit in case it failed to carry out its proposal. The policies were delivered to the board, accepted, and the premiums paid. Some three or four days later, plaintiff requested the Board to return its deposit of $ 1,000, which was done.

4. After considering the terms of the written proposal and all the steps taken by the parties leading up to the completion of the contract and their conduct subsequent thereto, we are left in no doubt as to the intent and purpose of each. Manifestly what the dock board wanted, and what it intended to procure, was insurance on its property to protect it against loss by fire for a period of three years, at the best rate possible. There is nothing in the proposal to suggest, nor is there anything in all the negotiations to indicate, that the board intended to employ plaintiff as its agent or broker.

The dock...