Pacific Nat. Life Assur. Co., In re, 7512
| Decision Date | 09 December 1949 |
| Docket Number | No. 7512,7512 |
| Citation | 212 P.2d 397,70 Idaho 98 |
| Parties | In re PACIFIC NAT. LIFE ASSUR. CO. |
| Court | Idaho Supreme Court |
J. L. Eberle, Boise, T. H. Eberle, Boise, B. S. Varian, Boise, Dale O. Morgan, Boise, for appellant.
Robert E. Smylie, Atty. Gen., John W. Gunn, Asst. Atty. Gen., James E. Bruce, Jr., Boise, for respondent.
At the hearing before the Industrial Accident Board the testimony of the general agent and four soliciting agents of the appellant company was heard, and written evidence, consisting of a copy of the company's Rules, Regulations and Underwriting Practices, Rate Book, and the contracts of the general and soliciting agents, was admitted. The respondent, Employment Security Agency, produced the testimony of only one witness, who testified that the appellant's name was printed or lettered on the door of the general agency office below that of the name of the agency but in larger letters. From this the Board made findings of fact and rulings of law as follows:
'Findings of Fact
I
'The Pacific National Life Assurance Company is and was during all of the times involved herein a corporation engaged in the business of life insurance in the State of Idaho. The company operates under what can be classified as the general agency system. Under this system the company enters into contracts with certain individuals who act as general agents of the company to handle the company's business for and in a certain specified territory. The general agent, in order to further the company's business, in turn contacts other individuals to act as the agents of the company, subject to the company's approval of these individuals. The said agents then enter into written agreement with the general agent and with the company. The general agent maintains an office in his territory and acts as a clearing house for the agents. All agents are paid by commission.
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III
'The agreements direct and control the general agent and the agents in the execution of the company's business of selling insurance and contain among other provisions, such elements of direction and control as follows (emphasis ours):
'(1) The said general agent and the agents within the territory assigned to them is (are) granted the authority and powers and is (are) subject to the terms, conditions, and limitations herein particularly set forth.
'(2) The general agent and the agents agree to devote their entire time to the performance of their duties hereunder.
'(3) The general agents and the agents shall have no power and authority other than herein expressly granted, and no other or greater powers shall be implied from the granting or denial of powers specifically mentioned herein.
'(4) The territory assigned to the general agents and the agents embraces: (Blank for filling). The above territory is not assigned exclusively nor is the general agent or the agents authorized to solicit in other territory without written permission of the company.
'(5) No circular, advertisement, or other matter shall be printed, published, or used in any way by the general agent or agents unless the same shall first have been approved by the company in writing.
'(6) In consideration of the renewal commissions mentioned, the general agents and the agents agree to do everything within their power to maintain the business of the company in force within the territory in which they operate; and they further agree that if they, at any time, take or attempt to induce any agent or agents of the company to discontinue writing insurance for the company, or attempt to induce policyholders to relinquish their policies in the company, or upon the termination of the contract engage in the service of any other life insurance company in any capacity in the territory in which they have represented the company, or conduct themselves in any other manner so as to injure directly or indirectly, the business of the company, then and in any such event the renewal commissions due or payable and any renewal commissions that might subsequently accrue, and all rights of the general agent or agents under this contract shall be forfeited.
'(7) Violation by the general agent or agents of any law, rule, or regulation of any state department having charge of the business of insurance in the territory assigned, or of the rules and regulations prescribed by the company, or default in or violation of the terms and condition of the agreement shall constitute due cause for termination of the agreement at once and without notice; and the agreement may also be terminated by either party by a notice in writing, delivered personally, or mailed by registered mail to the other party at the last known address, at least thirty days before the date fixed in such notice for such termination.
IV
'The agreements further provide that both the general agent and the agents, in order to keep the agreement in force, must produce a certain minimum amount of insurance sales during each quarter of the year.
V
'From the oral testimony of the witnesses, the Board finds the following facts: The company supplies free of charge both the general agent and the agents with all of the necessary forms and stationery used in their business. The company owns a part of the office equipment in the general agency. The approved advertising material used by the agents is paid for by the Pacific National Life Assurance Company and the title and slogan of the company is prominently displayed. In actual practice the general agent and the agents are limited to the territory assigned by the company and cannot solicit insurance in any other territory without approval by the company. The company pays all of the expenses incurred by the general agent and other agents in attending annual conventions of the company, at which time they are informed of new policies and rules of the company. The general agent receives, in addition to his commissions, a sum of money from the company to be used as reimbursement for office expenses incurred in the maintenance of an office for the general agency.
VI
'As an ultimate fact from the foregoing findings and from the whole record, the Board finds that the Pacific National Life Assurance Company does in fact exercise such direction and control over its general and other agents in Idaho as to constitute their employment covered within the meaning of the Employment Security Law.
'The Board makes the following:
'Rulings of Law
'The appellant has failed under Chapter 269, Session Laws of 1947, Section 16(d), to sustain its burden of showing that the general agent and other agents have been and will continue to be free from control and direction by the Pacific National Life Assurance Company over the performance of their services both under their contract and in fact.
'Under the terms of the agreements in evidence, the appellant has the right to exercise such control and direction over the general agent and the agents as to bring them within the statutory classification of covered employees.' (The italics is by the Board.)
With respect to finding V, it appears from the evidence on which the finding is based that at the annual conventions the agents are informed of new policies and rates, not rules. As to rules, the agents testified that they had received no rules or instructions, oral or written, additional to the rule book during the period of their contracts (which were of five, four, three and two years' standing at the time of the hearing) either from the company or the general agent. This finding should also be corrected with regard to the statement that 'The general agent receives, in addition to his commissions, a sum of money from the company to be used as reimbursement for office expenses.' The general agent, the only one who testified on this point, while he made a statement that the additional sum was used by him for office expense or the development of the agency, he made it clear by his further testimony on the subject that the additional sum was a bonus dependent entirely upon whether his agency qualified for the bonus by producing a sufficient volume of business for the company, and that he paid all of his office and other expenses. In other words, finding V is not supported by the evidence in these particulars.
It is also to be noted that the Board makes no finding with respect to the freedom of the agents from control and direction in connection with the performance of the services they are required to render under their contracts. The evidence is without conflict to the effect that: They are not required to, and do not, make reports to the company or the general agent; they furnish their own means of transportation; pay their own expenses; no moneys are advanced to them; they work on days and hours suitable to themselves; within their allotted territory they go where and when and contact whom they please; if they accept notes for premium payments they do so upon their own judgment and at their own risk; they keep their own books of account and pay their own taxes; and if they employ help they pay their own social security, unemployment contributions, and withholding taxes; no part of their commissions are withheld under the Internal Revenue Act; they are not given any direction nor are they subject to any control as to the manner or method used by them in soliciting applications for insurance; and there is no supervision provided for or exercised over these agents either by the company or the general agent. The foregoing also applies to the activities of the general agent. He is not supervised by the company, and is not required to make reports. He may maintain an office or not as he chooses. None of the agents are required to attend the annual conventions.
It must also be remembered that life insurance agents are subject to licensing and other regulatory provisions of the state law. In this connection, it is noted that a portion of the...
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