Townsley v. Niagara Life Ins. Co.

• Decision Date: 09 May 1916
• Citation: 112 N.E. 924,218 N.Y. 228
• Parties: TOWNSLEY v. NIAGARA LIFE INS. CO.
• Court: New York Court of Appeals Court of Appeals

218 N.Y. 228

112 N.E. 924

TOWNSLEY

v.NIAGARA LIFE INS. CO.

Court of Appeals of New York.

May 9, 1916.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Henry P. Townsley against the Niagara Life Insurance Company. From a judgment of the Appellate Division (160 App. Div. 177,145 N. Y. Supp. 209) affirming a judgment of Trial Term entered upon a verdict directed by the court in favor of the defendant, plaintiff appeals. Reversed, and a new trial granted.

Chase, Cuddeback, and Cardozo, JJ., dissenting.

H. N. Selvage, of New York City, for appellant.

Gilbert E. Roe, of New York City, for respondent.

POUND, J.

The question is whether this action is barred by a former judgment. The defendant was originally the Bank Clerks' Mutual Benefit Association of the city of New York. In June, 1894, its name was changed to Bankers' Life Insurance Company of the city of New York, and in September, 1911, its name was again changed to Niagara Life Insurance Company. The action is brought to recover a percentage of renewal premiums on life insurance policies issued by the defendant under the management of the plaintiff, and is based on a contract dated July 20, 1893, between the Bank Clerks' Mutual Benefit Association and the plaintiff whereby plaintiff was employed as general manager to solicit new insurance ‘during the faithful performance of his duties * * * unless sooner terminated by mutual consent.’ He was entitled to commissions on renewals on the 31st of December in each year while the contract was in force based on the business obtained by him then in force. It was further provided that, ‘should this contract be terminated otherwise than by mutual consent, then the renewal commissions aforesaid on all the insurance established at the date of said termination shall be payable as aforesaid * * * during the next ten years following said termination, at which time all his interest therein shall cease.’

On August 20, 1896, the board of directors of the Bankers' Life Insurance Company passed a resolution purporting to abrogate and cancel this contract on the ground that plaintiff had unreasonably absented himself from duty without leave. A dispute arose between the parties as to the rights of the company to terminate the contract and they made a new contract on October 1, 1896, continuing plaintiff's employment on different terms. This agreement recites that the company claimed to annul the former contract, and that plaintiff insisted that their action in that respect was inoperative and then provides, among other things, as follows:

‘That all business done by the company and all insurance written by it up to and including September 30, 1896, shall be governed by and subject to the terms of the said contract of July 20, 1893, and that all sums of money due or to grow due to said Townsley under said contract of July 20, 1893, shall be paid to him or his legal representatives in all respects as in said contract provided, and that the said contract, except as to the business done thereunder as aforesaid, and except as to deferred first year's premiums, and except as to renewals written up to and including September 30, 1896, is wholly canceled.’

‘All new business written from and after October, 1, 1896, shall be under the terms and conditions of the present contract.’

The second contract provides for renewal commissions on all insurance renewed during its term, not to be paid, however, after the first ten years of the life of each policy, and by its terms is to continue for ten years from its date unless sooner terminated by mutual consent. The words ‘except as to renewals written up to and including September 30, 1896,’ mean clearly that renewal commissions on insurance established at the termination of the old contract shall be payable as provided thereby for ten years from September 30, 1896, and not as provided by the new contract for the first ten years of the life of each policy.

Plaintiff continued to perform his duties under the new contract until March 26, 1897, when he was discharged. On April 22, 1897, he brought an action against defendant to recover damages for a wrongful discharge, and on June 9, 1903, he recovered judgment therein for $10,821, which has been paid. This action was brought on December 29, 1910, to recover on the first contract for commissions for the years 1093-06, on renewals of policies which had been written up to and including September 30, 1896, based on the insurance which was still in force at the end of each year respectively. The courts below have held that the judgment in the first action was a bar to this action; that the contract of 1893 was entirely abrogated; that the only right of plaintiff was to recover under the contract of 1896 damages for the abrogation of that contract; that he has recovered such damages, and therefore he cannot recover in this action.

[1] The rule against splitting causes of action has become familiar by reiteration.

‘The law, to prevent vexatious or oppressive litigation, forbids the splitting up of one...