McNabb v. Kansas City Life Ins. Co., 12601.

• Decision Date: 28 December 1943
• Docket Number: No. 12601.,12601.
• Parties: McNABB v. KANSAS CITY LIFE INS. CO.
• Court: U.S. Court of Appeals — Eighth Circuit

139 F.2d 591 (1943)

McNABB v. KANSAS CITY LIFE INS. CO.

No. 12601.

Circuit Court of Appeals, Eighth Circuit.

December 28, 1943.

Max Putnam, of Des Moines, Iowa (C. C. Putnam and F. S. Fillmore, both of Des Moines, Iowa, on the brief), for appellant.

Phineas M. Henry, of Des Moines, Iowa (Ray B. Lucas, of Kansas City, Mo., on the brief), for appellee.

Before WOODROUGH, THOMAS, and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

A life insurance agent sued the company for wrongful termination of his general agency contract. On a trial without a jury, the court held, among other things, that the termination was by mutual consent and agreement, and that there accordingly had been no breach. The agent has appealed.

The contract was made at the home office of the company in Missouri. The agency territory was the State of Iowa. The effective date of the relationship was January 2, 1939. The duration period was not specified. The compensation was to consist of graded commissions on initial and renewal premiums from insurance written personally or by local agents.

The agent moved to Iowa from Missouri and began work under the contract. From the start and during the whole time that the contract was in force, he was obliged to ask the company for loans or advances to help finance his operations. He complained on several occasions to the company's superintendent of agencies of his difficulty in meeting personal obligations.

Approximately two years went by. Then the company wrote him a letter which is the basis of this suit. This letter, dated December 30, 1940, declared: "The management has decided to discontinue general agency contracts in force two years or longer that have failed to meet volume requirements. * * * Your issued business for the year to date is * * * less than half the required amount. We will accept your resignation as general agent effective January 2, 1941. * * * We will be pleased to have you continue your connection with the company for the writing of personal business, and, until a general agent is appointed for that territory, we would allow you the same commissions and renewals you are now receiving under your general agency contract. When a general agency appointment is made, that arrangement would be discontinued and you would then receive 70% graded first year commissions and 9 renewals at 5%. While I regret that you have not been able to secure the results you expected as a general agent, I am confident you would meet with success if you would devote your entire attention to the writing of personal business. I trust you will decide to retain your connection with the company." A terse and more formal letter was also sent stating: "Your general agency contract dated January 2, 1939, will be discontinued January 2, 1941, for failure to meet the volume requirements provided for in your contract."

The agent contended, in instituting suit, that the volume provision did not constitute a contractual condition; that it was intended and had been represented as a mere quota-aim or "something to shoot at"; that, in any event, as a termination reason, it was wholly subterfuge and bad faith, because the company did not take a similar step as to other general agents in the same situation; and that the cancellation was not otherwise justifiable, because the contract had a lifetime tenure and was not subject to being terminated at will.

What the legal duration of the contract was originally intended to be — from its language, by the company's representations, or as a matter of mutual interpretation — it is unnecessary to consider. Nor is it material whether the notice of intended termination on January 2, 1941, rested upon a valid or justifiable ground. The record clearly establishes that the agent, without any regard to these questions, legally consented and agreed to the termination of the general agency contract, and he therefore cannot claim to have a right of action for general breach, on either of these bases.

The company's letters of December 30, 1940, were received by the agent on December 31, 1940. On the same day, he wrote the company as follows: "Your letter of December 30th with reference to my production in Iowa for the past year has been received and you may accept this letter as my resignation effective January 2, 1941. I want to thank you for your offer of allowing my contract to remain on the 80% basis if I decide to stay on as one of your agents."

Thereafter, on January 22, 1941, the company and the agent executed a joint memorandum which, after reciting that it was to be "attached to and forming part of the contract dated January 2, 1939," provided that "It is mutually agreed that the first year commissions recited in this contract shall be reduced to a regular 70% contract basis whenever the Company appoints a new general agent for the State of Iowa, and that renewal commissions will be reduced to a 5% basis." The execution of this memorandum plainly constituted a further confirmation of the agent's assent to the termination of his general agency relationship, which he had already expressed in his letter of December 31, 1940, and to the conversion of his status to one of personal production only, except that the previous commission scale was to be allowed to continue until his successor had been duly appointed.

The agent, however, calls attention to the fact that from the time the letters of December 30, 1940, were received, he never undertook to write any further business for the company. Had he done so after January 2, 1941, this would perhaps have added still further confirmation of his assent; but the fact that, after transmitting his letter of December 31, 1940, and after executing the memorandum of January 22, 1941, he decided to have nothing further to do with the company could hardly operate as a nullification of the legal effect of these instruments.

But, in a further effort to escape the situation, the agent contends that his letter of "resignation" was sent upon the condition and understanding that "they were going to settle up with him on his agency". He offered to prove that, before sending in his letter of December 31, 1940, he talked with the company's supervisor over the telephone and was told "not to get excited, that he should...