Thacher v. HC Baldwin Agency, Inc., 12962.

• Decision Date: 16 December 1960
• Docket Number: No. 12962.,12962.
• Citation: 283 F.2d 857
• Parties: Thomas THACHER, Superintendent of Insurance for the State of New York as Statutory Liquidator of The Preferred Accident Insurance Company of New York, Plaintiff-Appellee, v. H. C. BALDWIN AGENCY, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

283 F.2d 857 (1960)

Thomas THACHER, Superintendent of Insurance for the State of New York as Statutory Liquidator of The Preferred Accident Insurance Company of New York, Plaintiff-Appellee, v. H. C. BALDWIN AGENCY, INC., Defendant-Appellant.

No. 12962.

United States Court of Appeals Seventh Circuit.

November 10, 1960.

Rehearing Denied December 16, 1960.

Thomas L. Davis, R. Bruce Townsend, Indianapolis, Ind., Robert E. Magley, Indianapolis, Ind., Magley & Davis, Indianapolis, Ind., of counsel, for appellant.

Irvin Waldman, New York City, William H. Vobach, Indianapolis, Ind., for appellee.

Before HASTINGS, Chief Judge, and DUFFY and KNOCH, Circuit Judges.

KNOCH, Circuit Judge.

The Preferred Accident Insurance Company of New York, a New York insurance corporation licensed to carry on business in the State of Indiana, was adjudicated insolvent in proceedings instituted by the Superintendent of Insurance in New York, pursuant to the New York Insurance Law. The Supreme Court of New York State entered an order April 30, 1951, dissolving Preferred, placing it in liquidation, and annulling its corporate charter. The New York Court vested title to Preferred's assets in the Superintendent of Insurance of the State of New York, plaintiff herein, as Liquidator and Domiciliary Receiver. The New York Court further directed that notice be given to file claims not later than October 31, 1951; enjoined assertion of claims except in the liquidation proceedings; and enjoined interference with the assets or with the administration of the liquidation.

Preferred had an agency contract with defendant, H. C. Baldwin, Inc., an Indiana corporation and licensed insurance agent. This contract was terminable at will by either party on written notice. The District Court made the following findings with respect to this contract, all of which are well supported by the record:

"4. On November 12, 1947, the Company and defendant entered into a written contract entitled `Agency Agreement\' to take effect the 1st day of January 1948, whereby defendant was appointed agent of the Company and authorized and granted authority to receive and accept proposals for such contracts of insurance covering risks located in Indiana and vicinity as the Company was authorized lawfully to make. The Agreement, among other things, provided as follows:

"(1) Agent has full power and authority to receive and accept proposals for insurance covering such classes of risks as the Company may, from time to time, authorize to be insured; to collect, receive and receipt for premiums on insurance tendered by the Agent and accepted by the Company and to retain out of premiums collected, as full compensation on business so placed with the Company, commissions at the following rates, viz.: * * *

"It is a condition of this Agreement that the Agent shall refund ratably to the Company, on business heretofore or hereafter written, commissions on cancelled liability and on reduction in premiums at the same rate at which such commissions were originally retained. * *

"(7) This Agreement supersedes all previous agreements, whether oral or written, between the Company and the Agent and may be terminated by either party at any time upon written notice to the other.

"5. On or about January 1, 1948 the Company and the defendant entered into two written instruments, each entitled `Addendum to Contract,\' and a further instrument effective October 1, 1949 making changes in or increasing the commissions of defendant.

"6. On or about the 12th day of November, 1948, the Company and the defendant entered into a `Contingent Agreement\' effective the 1st day of January, 1948, whereby the Company agreed to pay 10 per cent of the net profits on the Company\'s business with defendant\'s agency, based on a minimum volume of $50,000.00 in premiums written per calendar year, the net profits to be calculated for each calendar year according to the following formula and otherwise provided, as follows:

"Credits.

"1. Unearned premiums at beginning of year.

"2. Outstanding losses at beginning of year.

"3. Net premiums written during current year.

"Debits.

"1. Unearned premiums at close of year.

"2. Losses outstanding at close of year.

"3. Losses and Loss Expenses paid during current year.

"4. Commissions and allowances on Credit Item 3.

"5. Twenty per cent of Credit Item 3 for Home Office Expense including Inspections and Taxes, etc.

"6. Net Loss, if any, in previous year and subject to only one calendar year under this contract.

"The excess of credits over debits shall be the net profits on which this contingent is computed.

"The certificate of the Treasurer (or the Secretary) of the Company to be accepted as final and conclusive.

"In the event that this agreement is terminated by either party prior to the completion of a full calendar year, the payment of the contingent shall be subject to the following:

"1. Payment of account in full.

"2. A minimum of $10,000.00 within the calendar year up to date of termination.

"3. No payment of the contingent agreement until all policies have expired.

"7. Prior to March 5, 1951, the Company advised defendant that it intended to cancel the existing agency arrangement and replace it with a new one which would limit the authority of the defendant to the writing of Accident and Health insurance; and thereafter on March 5, 1951, the Company and defendant entered into a written agreement entitled `Agency Agreement\' which limited and restricted the agency of the defendant to the writing of Accident and Health insurance, and further provided:

"(7) This Agreement supersedes all previous agreements, whether oral or written, between the Company and the Agent, and may be terminated by either party at any time upon written notice to the other.

"8. After the making of the Agency Agreement effective January 1, 1948, defendant, pursuant to said contract and addenda, through its agents, sub-agents, and employees, issued for and on behalf of the said Company policies of insurance and other related contracts written or authorized to be written by the said Company in the normal course of business to various persons, firms, associations and corporations, and delivered such policies to and collected from such persons, firms, associations, and corporations, the premiums in payment for such policies of insurance and other contracts, for transmittal to the said Company.

"9. Defendant from time to time prior to April 30, 1951, settled its accounts with the Company on an accounts current basis, and once or twice a month prepared a statement setting forth the premiums which it was remitting after deducting therefrom the commissions which it was entitled to retain from such premiums, and return premiums remitted to policyholders.

"10. At no time prior to April 30, 1951 in the settlement of its premium accounts with the Company did defendant deduct anything other than the commissions which it was entitled to retain under the Agency Agreement and return premiums which it had remitted to policy-holders. * * *

"12. There was no excess of credits over debits for the calendar years 1947, 1948, 1949 and 1950 and no net profits under the `Contingent Agreement\' between the Company and the defendant.

"13. Defendant never made payment of its account in full to the Company or to the plaintiff herein, or any of his predecessors.

"14. Defendant did not write a minimum of $10,000.00 within the calendar year 1951 up to the date of termination of the Agency Agreement.

"15. The

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