Northwestern Mut. Life Ins. Co. v. Tone
| Decision Date | 07 February 1939 |
| Citation | 4 A.2d 640,125 Conn. 183 |
| Court | Connecticut Supreme Court |
| Parties | NORTHWESTERN MUT. LIFE INS. CO. v. TONE et al.[*] |
Case Reserved from Superior Court, Hartford County; Patrick B O'Sullivan, Judge.
Action by the Northwestern Mutual Life Insurance Company against Joseph M. Tone and others, state officers charged with administration of the Unemployment Compensation Act, for a declaratory judgment as to whether plaintiff's agents residing and doing business in state, are plaintiff's employees within such act. Reserved by the Superior Court for advice of the Supreme Court of Errors.
Judgment declaring that such agents are not plaintiff's employees or servants within such act and that administrator thereof erred in ruling that they were.
Charles Welles Gross and Reese H. Harris, Jr., both of Hartford, for plaintiff.
Harry Silverstone, Sp. Asst. Atty. Gen., and Dennis P O'Connor, Atty. Gen., for defendants.
Argued before MALTBIE, C.J., and HINMAN, AVERY, BROWN, and JENNINGS, JJ.
The plaintiff is a mutual life insurance company organized and existing under the laws of Wisconsin and having its principal office and place of business in Milwaukee. The defendants are officers of this state, charged with the administration of the unemployment compensation law. General Statutes Supp.1937, Chap. 280a. The complaint seeks a determination by way of a declaratory judgment of the question whether the agents of the plaintiff or any of them, residents of and operating within this state, are within the scope of the act so as to impose upon it obligations under its terms. The act defines ‘ employment’ as used in it to mean, so far as germane to the issues before us, ‘ any service, including service in interstate commerce, performed under any express or implied contract of hire creating the relationship of master and servant.’ Section 803d. The question before us may be restated in this way: Does the relationship of master and servant exist between the plaintiff and its agents or any of them?
The salient facts stated in the stipulation for reservation are as follows: The plaintiff carries on its business under a plan by which it enters into written contracts only with general agents, whereby each such agent has an exclusive right to solicit applications for insurance and annuity contracts within a specified territory. The general agent, under authority in his contract, enters into contracts with district agents or special agents for the development of various portions of the territory specified in the agreement with the general agent. Any district or special agent, under the terms of his contract, may in turn contract with one or more soliciting agents to operate within a certain territory. Agency contracts are frequently made with partnerships. The plaintiff has entered into a contract with a general agent who has exclusive authority to solicit applications within the entire state of Connecticut. When the suit was started there was no district agent in the state but there were thirty-six full-time special agenst and ten part-time special agents operating under him; but by contract effective June 1, 1938, the general agent had appointed one district agent for a certain specified territory in the state, the latter had made contracts with various soliciting agents under him within that territory, and some of the special agents formerly operating under the general agent have become soliciting agents under the district agent.
Full-time agents are not required to devote their entire time or any specified part of it to life underwriting, and while they are not permitted to engage in other business activities except by consent, it is the practice of the plaintiff to permit them to engage in such activities where they do not interfere with their underwriting activities, and they do in fact engage in them. Part-time agents are regularly engaged in some established business or occupation, not involving life underwriting, which is their major or primary business activity; and they engage in life underwriting only as a side line. Many full-time agents operate under more than one general agent and all general agents have contracts with other companies under which they place applications with them under certain circumstances.
The plaintiff has no liability for the rent or incidental expenses connected with the conduct of the business in this state or for clerical help, nor has the general agent or any other agent any authority to incur any liability on behalf of the plaintiff incidental to soliciting applications except the payment of the license fee required by the state for agents and the expense of the medical examination of applicants. Each general agent maintains an office and conducts his activities entirely at his own expense, although the name of the company usually appears on the door of his office, placed there by the agent. The income of the general agent comes from two sources: commissions, which are fixed percentages of premiums collected for a limited number of years on applications secured by the general agent or agents operating under him, and collection fees, a fixed percentage of premiums collected in certain cases where he is not entitled to a commission. The income of other agents consists entirely of commissions based upon the policy contracts secured by them. Except where an agency contract has terminated, the plaintiff does not pay the commissions, but they are deducted before the general agent accounts to the company for moneys received. Such commissions are received by the agents at irregular intervals and in varied amounts, depending upon the applications secured and the payments of the premiums for the issuance of the policies. The company recognizes no obligation as to the distribution of commissions among the various agents who share therein, regarding such commissions as matter of private interest only between the contracting parties. Where the contract of a general agent is terminated and a new general agent has been appointed, he has no interest in the business of the former general agent and pays over renewal premiums received by him to the plaintiff and it distributes the commissions due thereon to the agents entitled to them. The plaintiff furnishes the general agents various information in the shape of documents and books relating to the method of conducting its business and certain advertising matter and stationery, but other advertising matter may be bought by the general agent for his use and the use of the agents operating under him. The plaintiff does not exercise supervision or control over any of its agents with respect to the place and manner in which they conduct their business operations or the time they devote to them, but the company has an interest in the development of territory, and if any agent neglects his territory to the injury of the company's business, the only remedy of the company is to terminate the contract.
The contract made by the plaintiff with its general agents contain the following provisions: ; ‘ General Agent shall endeavor to promote the interests of the Company as contemplated by this contract, and shall so conduct himself as not to affect adversely the business, good standing or reputation of himself or The Company.’ The contracts also provide that they may be terminated by the agent upon not less than thirty nor more than sixty days' written notice or by the company in certain events and for certain causes, among them, the failure of the general agent to comply with or perform any of their requirements, or without assigning any cause upon not less than sixty days' written notice. Similar provisions are contained in the contracts of other agents. The company issues to the agents a book of ‘ Rules and Instructions,’ which defines in detail the requirements of the plaintiff as regards policies to be issued by it, but which contains no provisions as to the manner in which the agent shall make contact with applicants for policies, the time he shall devote to the work or how he shall conduct himself in the performance of that work.
The Connecticut act was adopted as the result of the enactment of the federal social security acts; 42 U.S.C.A. §§ 501, 901, 1001; 49 Stat. at Large, pp. 626, 635, 636; many other states have adopted similar acts; and the federal and state statutes represent ‘ a cooperative legislative effort by state and national governments, for carrying out a public purpose common to both, which neither could fully achieve without the cooperation of the other.’ Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 526, 57 S.Ct. 868, 880 81 L.Ed. 1245, 109 A.L.R. 1327; Steward Machine Co. v. Davis, 301 U.S. 548, 588, 57 S.Ct. 883, 81 L.Ed. 1279, 109 A.L.R. 1293. We would hesitate to adopt a construction of our statute which would in any way interfere with the harmonious operation of the plan as a whole. However, the stipulation for reservation states that in twenty-nine of the states and the District of Columbia, where statutes similar to ours have been adopted, either by specific statutory exemption or administrative ruling life...
To continue reading
Request your trial