Stier v. Imperial Life Ins. Co.

• Decision Date: 05 June 1893
• Parties: STIER v. IMPERIAL LIFE INS. CO.
• Court: U.S. District Court — Western District of Missouri

58 F. 843

STIER v. IMPERIAL LIFE INS. CO.

United States Circuit Court, W.D. Missouri, Western Division.

June 5, 1893

The other facts fully appear in the following statement by PHILIPS, District Judge:

This is an action founded on contract of agency. The defendant, an insurance company, in 1889 employed the plaintiff, by written contract, as agent to solicit policies, stipulating for certain commission on premiums collected, and for certain commission on renewal premiums. Among the classes of policies was what is known as 'Natural Premium Policies' and 'Level Premium Policies.' The principal business done by the company was in the natural premium line. After the plaintiff had acted as such agent for a year or more after the execution of the contract, the company concluded, from experience, that it was more advantageous to its interest to turn its attention more especially to the prosecution of the level premium plan, and so advised the plaintiff, and withdrew its efforts to advance further the natural premium plan. As the latter was more profitable to the agent, he declined to accept the change; and after much correspondence and negotiations the plaintiff withdrew, and took employment in a rival insurance company, and brought this suit, as for a breach of contract, and predicated his damages of what he claims is the customary mode of admeasuring damages on such breach. By consent of the parties the cause was referred to L. E. Wyne, Esq., to take the evidence and make a finding of the facts and damages. To his report, finding for the plaintiff, and assessing his damages at $3,198, both parties have filed exceptions.

Gates &amp Wallace, for plaintiff.

Karnes Holmes & Krauthoff, for defendant.

PHILIPS District Judge, (after stating the facts.)

It is more important than usual, in the consideration of this case to keep in mind the character of the action and the state of the pleadings. The action throughout is predicated upon a contract, and proceeds for breaches thereof. The contract is set out in substance, and it is then averred that the plaintiff kept and performed the same on his part, and that the defendant broke and failed to keep the same. The petition alleges that the contract was to continue in force until the same was terminated by the neglect or refusal on the part of plaintiff to account for moneys belonging to defendant by the terms and conditions of the contract, or until there was dishonesty or noncompliance with the rules and instructions of said contract on the part of the plaintiff. It is also averred that, if he should fail to furnish to the defendant company an average of $20,000 per month taken and paid for in three consecutive months, the company might cancel said contract without notice; that defendant bound itself to issue policies known as the 'Natural Premium Renewal Term Policies,' the 'Natural Premium Annuity Bonds,' 'Five-Year Renewable Term Policies,' 'Ten-Year Renewable Term 'Policies,' and 'Monthly Life and Savings Policies;' also, 'Participating and Nonparticipating Level Premium Policies,' and 'Survivor's Endowment Policies,'--and to allow plaintiff on each of said policies a certain compensation set out in the contract. It is also averred that defendant bound itself to pay plaintiff a renewal commission on adjusted natural premium policies and natural premium yearly renewable term policies, and life and savings policies, for the first year, $1.80, the second, $1.60, and $1.40 the fourth and subsequent years.

The breaches of the contract assigned are that in 1891 the defendant refused and ceased to issue any natural renewable term policies, etc., and refused to permit plaintiff to solicit or take any applications for the policies mentioned in the contract, and made an entire change in the kind of policies issued, and substituted new and different policies therefor, which substituted policies were not so advantageous to plaintiff as those provided for; and afterwards made no effort to collect the renewal premiums on policies issued under applications taken by defendant, but used every means to discourage, and did discourage, parties holding such policies from paying renewal premiums, thereby depriving plaintiff of his commissions, etc. It is to be observed that it is nowhere averred that defendant discharged the plaintiff from his agency, nor is it averted that the plaintiff secured an average of $20,000 insurance per month for three consecutive months, as provided by the contract.

The answer, after tendering the general issue, avers that the plaintiff discontinued acting under said contract long prior to the institution of the suit, without notice to defendant, and engaged in soliciting insurance for another insurance company, a rival in business to the defendant; and it avers that in the months of May, June, and July, November, and December, 1890, the plaintiff did not procure and furnish to defendant an average of $20,000 of insurance per month taken and paid for, by reason of which the right accrued to defendant to cancel said contract of agency without notice to plaintiff; that it was under no obligation to plaintiff to make any effort to collect renewal premiums on its policies; and avers that plaintiff voluntarily abandoned the further performance of said contract on his part, and that by mutual consent said contract was annulled and surrendered.

No reply was filed, and no denials made to the new matter thus set up in the answer, and under the Code of Practice these matters stand admitted by the pleadings. If the plaintiff discontinued acting under said contract, and engaged in soliciting insurance for another rival insurance company of the defendant, and 'he voluntarily abandoned the further performance of said contract on his part, and by mutual consent said contract was annulled and surrendered,' it is not perceived that there is any foundation for the finding of the referee that defendant could not terminate the contract at its pleasure. Nor am I satisfied, as a matter of law, that defendant did not have the power to terminate the agency. In the absence of an agreement of employment for a definite period of time, the agency is one at will, determinable at the pleasure of the principal, unless the agency is coupled with an interest in the subject-matter. This is fundamental. Mechem on Agency (section 204) says:

'The authority of the agent to represent the principal depends upon the will and license of the latter. It is the act of the principal which creates the authority; * * * and unless the agent has acquired, with the authority, an interest in the subject-matter, it is in the principal's interest alone that the authority is to be exercised. * * * It is the general rule of law, therefore, that as between the agent and his principal the authority of the agent may be revoked by the principal at his will at any time, with or without giving reason therefor, except in those cases where the authority is coupled with a sufficient interest in the agent; and this is true, even though the authority be in express terms declared to be exclusive or irrevocable. But, though the principal has the power thus to revoke the authority, he may subject himself to a claim for damages if he exercises it contrary to his express or implied agreement in the matter.'

Chief Justice Marshall, in Hunt v. Rousmanier, 8 Wheat. 203, with characteristic aptness defines a power coupled with an interest. He says:

'What is meant by the expression 'a power coupled with an interest?' Is it an interest in the subject on which the power is to be exercised, or is it an interest in that which is produced by the exercise of the power? We hold it to be clear that the interest which can protect a power * * * must be an interest in the thing itself. In other words, the power must be ingrafted on an estate in the thing. The words themselves seem to import this meaning. A power coupled with an interest is a power which accompanies or is connected with an interest. The power and the interest are united in the same person. But, if we are to understand, by the word 'interest,' an interest in that which is to be produced by the exercise of the power, them they are never united.'

Clearly, therefore, the plaintiff had no such interest in the subject-matter of the contract as would take away the customary option of the principal to terminate the agency. But it is claimed by the plaintiff, on account of article 18 of the contract in question, that the implication was that the power of dismissal is denied, except for the causes therein specified. This article is as follows:

'This contract may be terminated upon the neglect or refusal of the said George H. Stier to account for all moneys belonging to the company according to rule 7, or for

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