Lewis v. Minnesota Mut. Life Ins. Co.

Decision Date03 May 1949
Docket Number47319.
Citation37 N.W.2d 316,240 Iowa 1249
PartiesLEWIS v. MINNESOTA MUT. LIFE INS. CO. et al.
CourtIowa Supreme Court

Bradshaw Fowler, Proctor & Fairgrave, of Des Moines, for appellant.

Henry & Henry, of Des Moines, for appellees.

HALE, Chief Justice.

The original majority opinion in this case was filed December 14, 1948. There was a dissent, and later, on application, a rehearing was granted. We herein reaffirm the original opinion with supplemental comments, all of which are embodied in the present opinion. The original opinion is therefore withdrawn and this opinion is substituted for it.

Plaintiff seeks recovery of damages for claimed breach of a contract of agency entered into between the plaintiff and the defendants. It is his contention that the written contract which he had with the Minnesota Mutual Life Insurance Company and T. D Carnahan, its general agent, was modified by an oral contract by which the defendant company agreed to retain him as an agent for his lifetime. Plaintiff claims that this modified contract was terminated by the defendants without cause and that he was damaged thereby. The case was tried to a jury which returned a verdict in plaintiff's favor. Thereafter the trial court sustained defendants' motion for judgment notwithstanding the verdict on the ground that the evidence was not sufficient to show that the prior written contract of agency had been modified so as to provide for a lifetime agreement. Other grounds of the motion were overruled. Judgment was entered in defendants' favor and plaintiff has appealed.

The Minnesota Mutual Life Insurance Company has its home office in St Paul, Minnesota. It is licensed to do business in Iowa. T. D. Carnahan is a general agent of the defendant company with offices in Des Moines. He has a general agency contract with the company covering 35 counties in central Iowa.

On November 1, 1943, the plaintiff entered into an agency contract with T. D. Carnahan, the general agent, as a party of the second part, and the Minnesota Mutual Life Insurance Company as party of the third part. This contract provided that the agency '* * * shall continue during the will and pleasure of the parties hereto subject to termination by any party hereto at any time upon at least fifteen days written notice to the other party; provided, however, that termination for violation of the terms hereof may be made effective immediately upon notice. * * *' The contract further provided for renewal commissions on premiums paid on policies for the second to the tenth policy years inclusive. It also provided that if the agency agreement was terminated there should be deducted from the renewal commissions due the agent a collection fee of 2% of the 5% renewal commission. It also provided that in writing most of the different types of insurance there would be a 5% renewal commission on subsequent yearly premiums paid. By charging against the renewal premium 2% of the 5%, it is shown by the record and discussed in the briefs that the plaintiff was charged a collection fee of 40% on the renewal commissions due him. The defendant company does not deny liability for 60% of the renewal commissions due the plaintiff. The 40% collection charge against the agent's renewal commission is paid to the general agent for the resulting work and responsibility of collecting the premiums due.

The evidence relative to the purported oral modification of the written agency contract presented by the plaintiff discloses that by July, 1945, he was one of the company's leading producing agents, that at or about this time he had received offers of employment in other types of business and that because of this fact he communicated with Harold J. Cummings, vice-president and superintendent of agencies of the defendant company. He received a reply from this official of the company suggesting that he come to St. Paul and there confer with Mr. Cummings and Mr. Carnahan relative to the matters mentioned in plaintiff's letter and that they would spend some time in fishing. The plaintiff and Carnahan made the trip to St. Paul. During the time they were fishing Mr. Cummings, according to the plaintiff's testimony, discussed the other offers that had been made the plaintiff and is purported to have stated: '* * * Do you think it would be better for Hu Lewis in the long run than a lifetime contract with the Minnesota Mutual?' Lewis' testimony discloses that his reply in part was: '* * * I want to make a decision at my age once and for all. I want to know what my future is going to be for my life security.' Cummings is also purported to have later said to Lewis: '* * * It is up to you to make your own decision, that a lifetime arrangement with the Minnesota Mutual an with Carnahan would be to your advantage. There will be two or three reasons why it would be. One is that an insurance organization is a life organization. It goes on and on and on even after individuals replace themselves and you have got the security with this life association for your future. * * * Another thing is your renewals which you have asked about and which under your present contract would not be valid if you took one of these other offers immediately, because you have not been with the organization quite the minimum date that is required, * * * and a lifetime contract with the company, you would not need to worry about your renewals, they would be pyramiding and built up. * * * would talk to Tom (Carnahan) about the idea of a lifetime arrangement or contract with me and would also suggest that the company would immediately organize a training course * * * that would give me information that would be helpful along with the other type of information that he would suggest to Mr. Carnahan * * *.'

The plaintiff also testified that after his return to St. Paul from the fishing trip he had a conversation with Mr. Carnahan which was in part as follows: '* * * I said that Harold had mentioned that I should reject these other offers that I had received and make a lifetime contract with Minnesota Mutual and he said that was a good idea, or that was fine. * * *' It is further shown by the plaintiff's testimony that later that evening there was a social function at Mr. Cummings' home and while they were on the front porch Cummings is purported to have said to Lewis, '* * * Hu, have you reached any definite decision about our conversation regarding your future association about--as to a lifetime contract with the Minnesota Mutual Life Insurance Company?' Lewis replied: 'Yes I believe that I had, depending of course upon himself and upon what Mr. Carnahan's decision might be.' Cummings then said, according to Lewis' testimony: 'Tom, I suggest that Hu's possibility in the life insurance business is rather definite and rather permanent, and I think he should stay with us and work with us during his lifetime. I think he should forget these other offers or turn them down, and I think he should also--he also mentioned at that time that he should use our advertising and promotional facilities and things, and use his own judgment in any other thing that he might feel would be to advantage on the firing line to secure business * * * 'What do you think'?' According to plaintiff's testimony, Carnahan then said: 'Fine. He ought to lead the company in production.' Cummings then said: '* * * Is that agreeable with you, Hu?' Lewis then replied: 'It is, providing we are all agreed that it is a lifetime future and a lifetime association.' Cummings then replied: '* * * I am glad we are all agreed.' Carnahan during this conversation, according to the plaintiff, said: '* * * I am glad that Hu has decided to make a lifetime contract to work * * * He was glad that Hu had decided to work for us the rest of his life * * *. I don't remember the exact words.' Cummings denied that he said in Carnahan's presence that Lewis ought to stay with the company for his life. His testimony is that: 'If you take out the word 'lifetime contract' it is entirely likely though I don't remember talking to them in the swing distinctly at all.' He also testified:

'The term 'lifetime contract' is a novelty to me. It has never been in my mind that I had a right to make a lifetime contract and I have never made one. I don't recall using such a term such as lifetime. I did not use the words 'lifetime contract' in discussing Lewis' connection with the Minnesota Mutual. I have never used the word lifetime contract with any other agents in the higtory of the company. I did not tell Lewis that the advantage of a lifetime contract would be that the company would go on and his renewals would pile up and that with a lifetime contract he would have a continuous lifetime income. We have no lifetime contract with anybody inside or outside of the home office, never have had in all my years. I have explained to many an agent how his renewal income could pile up if he stayed with the business and worked on it, but that is quite another matter than talking about a lifetime job. I don't remember telling Lewis that I would talk to Carnahan about giving him a lifetime contract. I have never thought in terms of a lifetime contract with anybody, didn't think I had any right to do so.' Carnahan denied that he had ever been a party to any conversation with the plaintiff or Mr. Cummings wherein the question of a lifetime contract for Lewis was discussed.

There is testimony of a Mr. and Mrs. Charles R. Brookins that about the 15th of December, 1945, they were in the office of Mr Carnahan along with Mr. Lewis discussing the possibility of Brookins becoming associated with the Minnesota Mutual Life Insurance Company and that at that time Mr. Carnahan said that Brookins 'would have the same type of contract as Mr....

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