Massachusetts Mut. L. Ins. Co. v. Central Penn Nat. Bank, Civ. A. No. 43188.

• Decision Date: 12 February 1974
• Docket Number: Civ. A. No. 43188.
• Citation: 372 F. Supp. 1027
• Parties: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY v. CENTRAL PENN NATIONAL BANK et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

372 F. Supp. 1027

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY v. CENTRAL PENN NATIONAL BANK et al.

Civ. A. No. 43188.

United States District Court, E. D. Pennsylvania.

February 12, 1974.

William J. Kennedy, Philadelphia, Pa., for Massachusetts Mutual Life Ins. Co.

Richard M. Shusterman, Philadelphia, Pa., for Central Penn National Bank.

Harry A. Dower, Allentown, Pa., for Industrial Valley Bank.

Peter C. Paul, Philadelphia, Pa., for Mercantile Financial Corp.

Raymond T. Cullen, Jr., Philadelphia, Pa., for Federation Bank and Trust Co. (now Franklin Bank).

Stanley Schlesinger, Philadelphia, Pa., for Marine Midland Grace Trust Co. (MacNair Assignee).

Morris M. Shuster, Philadelphia, Pa., for Isadore Mokrin and Dorothy Mokrin.

Lester H. Novack, Philadelphia, Pa., for Gordon S. Miller.

SUR PLEADINGS AND PROOF

LUONGO, District Judge.

Massachusetts Mutual Life Insurance Company (Mass. Mutual) filed this interpleader proceeding on July 24, 1967 after a number of claims and attachments had been asserted against it for moneys due and to become due from Mass. Mutual to one Gordon S. Miller (Miller) under a General Agency contract. Upon the filing of the interpleader, Mass. Mutual paid into the registry of the Court all sums it claimed were then due and payable to Miller under the contract.

At an earlier stage of this proceeding, certain questions of law were resolved by Judge (now Senior Judge) C. William Kraft, Jr., acting pursuant to Rule 56(d), F.R.Civ.P. He ruled that wages, commissions and salaries are assignable under Pennsylvania law; that joinder of a wife in such an assignment is not necessary; that attachments made in Massachusetts under Massachusetts law are valid (with an exemption of $50 for wages) and are enforceable under Pennsylvania law. He ruled further, and ordered, inter alia, (Paragraph 4 of Order dated June 30, 1969, Document No. 122) 300 F.Supp. 1217, 1220:

"4. The exact status of Miller whether employee or independent contractor under his contract with Massachusetts Mutual is a material question of fact which requires a trial."

I have regarded those rulings by Judge Kraft as the law of the case and have applied them accordingly. Messinger v. Anderson, 225 U.S. 436, 32 S.Ct. 739, 56 L.Ed. 1152 (1912); Antonioli v. Lehigh Coal & Nav. Co., 451 F.2d 1171 (3d Cir. 1971), cert. denied, 406 U.S. 906, 92 S. Ct. 1608, 31 L.Ed.2d 816 (1972).

Throughout these proceedings there has been a dispute over whether Mass. Mutual has paid the full amount of the fund into court as required under 28 U. S.C. § 1335. The dispute stems from a provision in the contract between Mass. Mutual and Miller which provides for reduction in the rates of renewal commissions payable to Miller upon termination of his General Agency contract for any reason other than Miller's death. Mass. Mutual had terminated Miller's contract on July 7, 1966. The fund paid into court, and the amounts paid thereafter, have reflected payment of renewal commissions at the reduced rates. The issue as to the scope of interpleader was briefed and argued before me. By opinion and order dated August 30, 1973 (Document No. 195), 362 F.Supp. 1398, I ruled that this interpleader proceeding would be limited to determining whether Mass. Mutual has made payments to the fund in accordance with the terms of the agreement between it and Miller as expressed on the face thereof; a determination of the amounts and priority of claims to the fund paid and to be paid; a resolution of Mass. Mutual's right to withhold and set off certain amounts from payments due Miller; and assessment of proper charges and counsel fees against the fund. It was further noted in the Opinion (362 F.Supp. at 1405):

"With the proceedings so limited, the interpleading party, Mass. Mutual, will be discharged from liability only to the extent of the amounts paid and to be paid, and Miller and any claimant will be free to assert any other claims they have against Mass. Mutual in an appropriate forum."

In fact, Miller had already filed a separate suit in this court (Gordon S. Miller v. Massachusetts Mutual Insurance Company, Civil Action No. 72-1185, assigned to the individual calendar of Ditter, J.) seeking damages from Mass. Mutual for alleged wrongful termination of his contract. In this interpleader proceeding, I have accepted the fact of termination of the contract by Mass. Mutual and have expressly ruled that whether such termination by Mass. Mutual gives rise to a claim for damages is beyond the scope of this proceeding. The findings hereinafter made, therefore, must be viewed in light of the limited scope of this proceeding.

Of the original claimants named as defendants, two, Curtiss National Bank and Pioneer Leasing Corp., have withdrawn their claims with prejudice, leaving as claimants to the fund Central Penn National Bank, Industrial Valley Bank, Franklin National Bank, Mercantile Financial Corporation, Marine Midland Grace Trust Company, and Isadore and Dorothy Mokrin. Also named as defendants in these proceedings were Gordon S. and Frances Miller, his wife. No claim has been filed by them, but it has been stipulated that if anything is left in the fund after the satisfaction of all claims, it is the property of Gordon S. Miller.

After the institution of this suit, two Florida attorneys, Guilmartin and Bartel, were permitted, by stipulation, to intervene as defendants, but when the case was called for trial, their claim was dismissed for lack of prosecution.

The matter was tried on October 3, 4, 9, 10 and 11, 1973. At the conclusion of the presentation of evidence, and after summations by counsel, certain oral findings of fact were delivered from the bench for the guidance of counsel in their submissions of additional requests for findings of fact and conclusions of law. To the extent that the written findings hereinafter set forth differ from the oral findings, the written findings supercede and replace the oral findings, the court having since had the benefit of further review of exhibits, the requests and briefs of the parties, and the transcript of the trial testimony.

Prior to and during the trial numerous references were made to the need for or desirability of a further audit or a more detailed accounting by Mass. Mutual. The parties have since stipulated, however, (Document No. 214) that they do not contest the factual or mathematical accuracy or the accounting methods of Mass. Mutual's accounting to the court for the various amounts paid by it into the registry of the court or to Central Penn and have waived the right to any further audit or detailed accounting.

Upon pleadings and proof, the court makes the following

FINDINGS OF FACT

Relationship between Mass. Mutual and Miller

1. Massachusetts Mutual Life Insurance Company (Mass. Mutual) is a Massachusetts corporation with its principal office in Springfield, Massachusetts.

2. Gordon S. Miller (Miller) is an individual who resides in Delaware County, Pennsylvania.

3. Under date of April 1, 1951, Mass. Mutual and Miller entered into a General Agency contract under the terms of which Miller was designated to maintain and operate a General Agency for Mass. Mutual in Philadelphia, Pennsylvania, for a territory covering parts of Pennsylvania and New Jersey and the entire state of Delaware. On the date of execution the contract contained several letters of amendment, and from time to time thereafter additional letters of amendment were executed. The contract consists of Exhibits P-1 and CP-1, 2 and 3.

4. From and after his appointment as General Agent, Miller maintained his office for the transaction of the business of the General Agency in Philadelphia, Pennsylvania.

5. Under the General Agency contract, Mass. Mutual agreed to provide an office for the General Agency and to pay the rent therefor. Miller undertook and agreed to run the General Agency and to be responsible for, or to perform, inter alia, the following:

(a) Recruiting, hiring, training and supervising agents to sell Mass. Mutual's policies of insurance.

(b) Hiring, supervision, and responsibility for the acts of office and clerical employees of the General Agency.

(c) Receipt and forwarding to Mass. Mutual of premiums and renewal premiums collected by and through the General Agency.

(d) Responsibility for the expenses of operating the General Agency, including the expenses for clerical personnel furnished by Mass. Mutual.

6. In carrying on the business of the General Agency, Miller's relationship with Mass. Mutual was that of an independent contractor, not an employee. This ultimate finding is based upon the following underlying findings:

(a) A General Agency performs two essential functions: the first, and more important, is the solicitation of business; the second is the servicing of policies and processing of premiums and commissions.

(b) The servicing of policies and the processing of premiums and commissions at Miller's Agency was handled by clerical personnel who were hired by, and were employees of, Mass. Mutual, but the salaries, social security and unemployment insurance taxes, and costs of participation in pension plans for such employees were charged to Miller's account by Mass. Mutual. Mass. Mutual exercised control over the hours of work of clerical employees.

(c) Mass. Mutual did not supervise or control the method by which Miller conducted the solicitation of insurance business.

(i) Except for financed agents, Miller was free to hire and discharge agents, district managers and non-clerical assistants without approval of or interference by Mass. Mutual.

(ii) Mass. Mutual reserved the right to approve financed agents before they were hired. Financed agents are those to whom, for a period of time, a specified salary is paid in lieu of commissions. Under such arrangements, Mass. Mutual undertook to be responsible for a portion of the loss resulting from the amount by which such salary exceeds earned commissions.

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