Merchants' Life Ins. Co. v. Griswold

• Decision Date: 23 April 1919
• Docket Number: (No. 6007.)
• Citation: 212 S.W. 807
• Parties: MERCHANTS' LIFE INS. CO. v. GRISWOLD.
• Court: Texas Court of Appeals

Page 807

212 S.W. 807

MERCHANTS' LIFE INS. CO. v. GRISWOLD.

(No. 6007.)

Court of Civil Appeals of Texas.

April 23, 1919.

Rehearing Denied June 4, 1919.

Error from District Court, McLennan County; H. M. Richey, Special Judge.

Action by S. M. Griswold against Merchants' Life Insurance Company. Judgment for plaintiff, and defendant brings error. Judgment affirmed.

Locke & Locke, of Dallas, for plaintiff in error.

S. J. T. Smith, Alva Bryan, and J. N. Gallagher, all of Waco, for defendant in error.

Findings of Fact.

JENKINS, J.

Plaintiff in error, which will hereinafter be referred to as the company, is a life insurance company, chartered under the laws of Iowa, and doing business in Texas under a legal permit. Prior to February, 1915, it was an assessment association, legally doing business in Texas on the assessment plan, under the name of the Merchants' Life Association. On February 9, 1915, it amended its charter, whereby it changed from the assessment to the level premium, or old line, plan, and changed its name to Merchants' Life Insurance Company, preserving, however, its corporate identity, with authority to carry out its previous contracts.

On April 1, 1914, the insurance company entered into a written contract with the defendant in error, who will hereinafter be referred to as Griswold, which, as far as it goes, is correctly summarized in the company's brief as follows:

"(1) The plaintiff was given exclusive control of specified territory.

"(2) The plaintiff agreed to devote all his time and ability to the work of the agency.

"(3) `Subject to the provisions hereinafter contained, this contract shall continue for a period of five years.'

"(4) `It is understood and agreed that the said second party (the plaintiff) shall have the option at any time of terminating the agency by giving the first party (the defendant) ninety days' notice in writing of his intention to give up the agency hereby established.'

"(5) The continuance of the agency was conditioned upon the production of a specified amount of business in each contract year and in each quarter of each contract year.

"(6) `Should the second party (the plaintiff) fail to live up to and fully comply with the terms, agreements, and conditions of this contract, then the said contract, at the option of the first party (the defendant), may be terminated by the first party giving the second party ninety days' written notice of its desire to so terminate the said contract.'

"(7) `It is further understood and agreed by the parties hereto that should the laws of Texas be so amended hereafter, or should the party of the first part (the defendant) for any reason whatever deem it advisable to quit business in the said state of Texas during the life of this contract, then at and from the time the said association is no longer authorized to do business in the said state of Texas this contract shall be utterly null and void so far as any future business contemplated by the contract is concerned, but as to all the rights and liabilities of the several parties existing at the time of the said cessation of business the contract is to remain in full force and effect.'

"(8) `It is further agreed that the contracts made on the first day of April, 1912, the first day of July, 1912, and the first day of January, 1914, are hereby terminated, except that so long as the second party (the plaintiff) writes the amount of insurance provided for in this contract, and remains the agent of said company, he shall be entitled to receive the renewal commission provided for in said contracts hereby terminated, during the period and under the terms and conditions that the renewal was to be paid under the original contracts.'

The contracts of April 1, 1912, July 1, 1912, and January 1, 1914, were substantially the same as that of April 1, 1914, under which this suit was brought. There was some difference as to territory and commissions.

The ninth paragraph of the contract provided that Griswold should receive "75 per cent. of the initial payment, being the membership fee, as provided in the articles of incorporation, upon all accepted applications, which shall be in full conpensation of every kind and description which he or his subagents shall receive from said association, whether for commission, traveling or other expenses, except as hereinafter provided." This was afterwards increased to 80 per cent.

In a subsequent part of the contract it was provided that Griswold should have a renewal commission of 75 cents, for a period of five years, on each thousand dollars of insurance secured for, and accepted by, the company within the territory granted to him.

About February 15, 1915, the company notified Griswold to quit writing insurance on the assessment plan, and soon thereafter offered him a contract to write insurance for it under its changed or level premium plan. Griswold declined to sign said contract, and brought this suit for damages, alleging a breach of the contract of April 1, 1914, claiming as such damages the profits which he would have made under said contract, including his commissions on renewals but for such breach.

The cause was submitted to a jury on special issues; in response to which they found that the company was indebted to Griswold, on business actually written, $5,000, and for damages on lost profits as to future business, $20,000, and judgment was entered in accordance therewith. The evidence was sufficient to sustain these findings. Such other facts as are material to the issues here involved are stated in our opinion herein.

Opinion.

The first assignment of error herein is:

"The court erred in submitting to the jury its fourth special issue for reasons as follows:"

These reasons are subsequently set out in the company's brief as propositions and points thereunder, and need not be here stated.

The fourth special issue is as follows:

"Fourth Question: State in what amount, if any, plaintiff has been damaged by his inability to write new business under his new contract of April 1, 1914, and modified by supplemental contracts of December 30, 1914, and January 1, 1915, on and after the first day of March, 1915.

"In answering this question you may take into consideration the gross amount of commissions which, under all the facts and circumstances, you find the plaintiff might be reasonably expected to have received from business written or procured by him to be written under the terms of said contract and supplements, and any renewal commissions thereon, if any, less such expenses as you find he might reasonably have incurred in writing and procuring the writing of such business, and less such sums as you may find from the evidence he has received, and may reasonably be expected to receive, during the life of said contract as the result of other employment, after deducting therefrom the reasonable and necessary expenses incident to such employment.

"Answer to the fourth question: $20,000.00."

The company's contentions under this assignment may be summarized as follows:

(a) The company did not breach its contract for the reason it was provided therein that the company might withdraw from the state if for any reason it should deem it advisable to do so (b) The directors had the power to withdraw from the state, and thus terminate the contract, if, in their discretion, they deemed it to the interest of the company to do so.

(c) The contract was void for want of mutuality.

(d) The company offered to continue Griswold in its employment; and he refused to accept same.

(e) Griswold accepted a new contract with the company, which by its terms abrogated the contract herein sued on.

(f) The evidence was insufficient to form a basis for an answer to said fourth issue.

We will discuss these propositions in the order named:

(a) As will be seen from the seventh clause of the contract as set out in our statement of facts, it was provided that if the company "for any reason whatever should quit business in Texas the contract should thereafter be null and void."

It is the contention of Griswold that, under the doctrine of ejusdem generis, it should be held that the company was permitted to terminate the contract by quitting business in Texas, only in the event it was rendered necessary to do so by adverse legislation or ruling of the insurance department of the state; that at least the contract is ambiguous, and therefore oral testimony was admissible to show that this is the meaning that the parties intended; and that the oral testimony admitted by the court (over the company's objection) sustained this contention.

It is unnecessary that we should pass upon this matter for the reason the company did not quit business in Texas, but was continuing to do business in this state to the time of the trial.

(b) It is true that the directors of a corporation, subject to the limitations in its charter and by-laws, have as much control over the business affairs of a corporation as has an individual over his own business, but not more so. Neither an individual nor a corporation has the legal right to breach a contract for the reason that it may be to the financial interest of such party to do so. On the contrary, a party who breaches a contract is liable in damages therefor, even though such breach may have been occasioned by the act of God. Ins. Co. v. Watkins, 183 S. W. 437; Ry. Co. v. Boyce, 171 S. W. 1094.

The company cites, in support of its contention as to the right of its directors to change its plan of doing business, Ins. Co. v. Maclure, L. R. 5 Ch. App. 737 (an English case); Pellet v. Mfg. Co., 104 Fed. 502, 43 C. C. A. 669; Wolfe v. Ins. Co. (D. C.) 197 Fed. 188; Id., 207 Fed. 262, 124 C. C. A. 648; Ins. Co. v. Burman, 141 Fed. 835, 73 C. C. A. 69; Moore v. Ins. Co., 168 Fed. 496, 93 C. C. A. 652; and Wheeler v. Ins. Co., 227 Fed. 369. 142 C. C. A. 65.

The last three cases were contracts terminable at will, and therefore have no...