McMahon v. Monarch Life Ins. Co.

• Decision Date: 21 December 1962
• Citation: 345 Mass. 261,186 N.E.2d 827
• Parties: Thomas A. McMAHON v. MONARCH LIFE INSURANCE COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 827

186 N.E.2d 827

345 Mass. 261

Thomas A. McMAHON v. MONARCH LIFE INSURANCE COMPANY.

Supreme Judicial Court of Massachusetts, Hampden.

Argued Nov. 5, 1962.

Decided Dec. 21, 1962.

Harry M. Ehrlich, Springfield (Matthew J. Ryan, Jr., Springfield, with him), for plaintiff.

William C. Giles, Jr., Springfield, for defendant.

Before WILKINS, C. J., and SPALDING, WHITTEMORE, CUTTER, KIRK and SPIEGEL, JJ.

KIRK, Justice.

The plaintiff (McMahon), pursuant to the provisions of G.L. c. 231A, seeks an adjudication of his right to termination commissions under an agent's contract with the defendant Monarch Life Insurance Company (Monarch). Monarch contends that McMahon has violated the post-employment terms of his contract and consequently has lost his right to termination commissions. After trial, a decree was entered adjudging that McMahon had not violated the contract and ordering Monarch to pay termination commissions in the sum of $3,451.38 with interest. Monarch appealed.

The case comes to us with a report of all the evidence. There is no report of material facts under G.L. c. 214, § 23. In his order for decree the trial judge incorporated a brief statement of facts found by him and his interpretation of the paragraph in the contract relating to termination commissions. Nothing in the form or content of the order for decree suggests that the judge intended that the facts stated therein should have, or could be considered by us to have, the same effect as a report of material facts under c. 214, § 23. Birnbaum v. Pamoukis, 301 Mass. 559, 561, 562, 17 N.E.2d 885. The entry of the decree for the plaintiff, however, imports a finding of every fact essential to sustain it within the scope of the pleadings and supported by the evidence. Cardullo v. Landau, 329 Mass. 5, 6, 105 N.E.2d 843.

Monarch contends that the evidence does not support the findings of the judge or the decree. The evidence consists of oral testimony and more than forty exhibits. In these circumstances it is our duty to examine the evidence and arrive at our own conclusions on questions of fact and of law, but not to reverse the findings of the judge, express or implied, unless we are satisfied that they are plainly wrong. Warner v. Selectmen of Amherst, 326 Mass. 435, 436, 95 N.E.2d 180; Hosken, Inc. v. Hingham Management Corp., 328 Mass. 588, 589, 105 N.E.2d 232; Young v. Paquette, 341 Mass. 67, 69-70, 167 N.E.2d 308.

We first mention evidence which is not disputed. On July 16, 1948, the plaintiff entered the employ of Monarch as an agent to sell policies of accident and health insurance and policies of life insurance. The terms of employment were set forth in a printed contract signed by McMahon and the general agent of Monarch. In the spring of 1959 while still in the employ of Monarch, McMahon entered into negotiations with the Loyal Protective Life Insurance Company (Loyal) for a general agency contract. The contract with Loyal was executed on April 30, 1959. It provided for a gross payment of a fixed sum annually to McMahon for the first three years, subject to adjustments contingent upon lapses of policies and quota sales of policies. McMahon gave due notice to Monarch that his agency contract would end on May 15, 1959. He commenced his duties as general agent for Loyal on May 18, 1959. Termination commissions were paid to McMahon through September, 1959. On November 19, 1959, Monarch notified him that his rights thereto had ceased because of a violation of his contract with Monarch.

The controversy between McMahon and Monarch centers on paragraph twelve of the contract executed by them on July 16, 1948. In pertinent part it reads: '12. Termination Commissions: * * * Should the Agent, after termination of this contract, in any way, directly or indirectly, induce a policyholder of this Company to lapse a policy, or should the Agent cause to be replaced with any other insurer any policy of Life or Health and Accident Insurance of this Company lapsed within six months before or after the date of replacement, his rights to termination commissions hereunder shall cease immediately.' ¹

In the preface to his order for decree the judge stated that the words 'induce' or 'cause,' in context, 'must mean doing something that initially causes a lapse or replacement.' He concluded that Monarch 'by this clause wished to eliminate the active initial solicitation of their policyholders to be replaced by policies then being sold by their former agents for another company.' He found on the evidence that McMahon as the general agent for Loyal 'was a conduit but not the initial cause or inducement for either the replacement or lapse of any policy.' Finally, impliedly ruling that the language was ambiguous, he ruled that the clause could not be held to mean 'specifically a prohibition against signing applications or doing anything in a conduit capacity as * * * [a general agent]' of Loyal.

It is our duty to construe the contract. Hiller v. Submarine Signal Co., 325 Mass. 546, 549-550, 91 N.E.2d 667; Forte v. Caruso, 336 Mass. 476, 481, 146 N.E.2d 501.

We think that the judge's construction of the quoted part of paragraph twelve was unduly narrow. In making our construction we are guided by recognized principles, one of which is that a contract is to be construed to give a reasonable effect to each of its provisions if possible. S. D. SHAW & SONS, INC. V. JOSEPH RUGO, INC., MASS., 180 N.E.2D 446² and cases cited. Another principle is that a contract should be construed so as to give it effect as a rational business instrument and in a manner which will carry out the intention of the parties. NEW YORK CENT. R. R. CO. V. NEW ENGLAND MERCHANTS...