Transnational Insurance Company v. Rosenlund
| Citation | 261 F. Supp. 12 |
| Decision Date | 16 August 1966 |
| Docket Number | 64-315.,Civ. No. 64-351 |
| Parties | TRANSNATIONAL INSURANCE COMPANY, a corporation, Plaintiff, v. Ralph E. ROSENLUND, Robert M. MacTarnahan and Foremost Insurance Company, a corporation, Defendants. MACLUND, INC., an Oregon corporation, Plaintiff, v. TRANSNATIONAL INSURANCE COMPANY, a corporation, and Budget Finance Plan, a corporation, Defendants. |
| Court | U.S. District Court — District of Oregon |
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Donald Pearlman, Keane, Haessler, Bauman & Harper, Portland, Or., for Transnational Insurance Company and Budget Finance Plan.
Robert Leedy, Portland, Or., for Ralph E. Rosenlund, Robert M. MacTarnahan and Maclund, Inc.
John Gordon Gearin, McColloch, Dezendorf & Spears, Portland, Or., for Foremost Ins. Co.
Based upon the pleadings, certain answers to interrogatories, depositions and affidavits, the plaintiff in 64-351 has moved for summary judgments against defendants Ralph E. Rosenlund and Robert M. MacTarnahan on the first cause of action and against said defendants on the third cause of action in the same cause, insofar as said third cause of action is based on the issues and allegations set forth in the first cause of action in said case.
As the defendant in 64-315, Transnational Insurance Company (Transnational), on the issue of liability alone, moved for a summary judgment against the plaintiff Maclund on the fourth defense to plaintiff's first cause; on the third defense to plaintiff's second cause insofar as the defense is based on the issues and allegations set forth in the fourth defense; in favor of defendant and against Maclund on the first counterclaim, in favor of defendant and against Maclund on the eighth counterclaim, insofar as the eighth counterclaim is based on the issues and allegations in the fourth defense; in favor of plaintiff and against Maclund on the ninth counterclaim, insofar as the ninth counterclaim is based on the issues and allegations set forth in the first counterclaim; in favor of plaintiff and against Maclund on the eleventh counterclaim, insofar as the eleventh counterclaim is based on the issues set forth in the first counterclaim.
On December 1, 1962, Maclund became the "sole general agent" in Washington and Oregon for Transnational "for the purpose of soliciting, underwriting and servicing" various types of insurance, including mobile-home insurance. Said agreement is attached as an exhibit to the First Amended Complaint in 64-351 and to Transnational's Answer-Counter-claims in 64-315. The term of the agreement was three years, beginning December 1, 1962. Maclund was obliged thereunder to:
Maclund further agreed:
"* * * that it will not represent other specialty companies in the territory defined, writing lines of insurance in a similar manner, from similar sources as the Transnational Insurance Company." Art. II, Para. 5.
and further agreed:
"* * * for itself and its personnel that they shall conduct themselves as not to affect adversely the position, good standing or reputation of themselves or the Company." Art. V, Para. 6.
The agreement was negotiated by Transnational to afford it a sales force to sell and service mobile home insurance, as its "specialty". Until January of 1963, Maclund engaged in servicing the "runoff" of policies it had previously placed with Stuyvesant Insurance Company. There is some dispute as to whether this was necessitated by Transnational's lack of a "suitable" mobile-home policy; both sides agree that this activity of Maclund was in the interests of both parties, as preservative of Maclund's good reputation. It is not in issue here.
From then, until May of 1964, Maclund was the sole available conduit in the two states for the "production" of mobile-home business for Transnational. The source was a group of dealer-agents with whom Rosenlund, acting for Maclund, had established contacts. These dealers produced the great bulk, though not the entirety, of the Transnational-Maclund mobile-home business. Maclund solicited the business; calculated the premiums; rated risks; prepared policies; distributed policies and daily reports to the home office, producing agents and persons insured; collected premiums; oversaw the handling of claims by adjusters; filed rates with Insurance Commissioners, receiving approval thereof; processed cancellations; and advised dealers of renewals.
In 1963, Maclund found that its mobile-home business was waning, and decided to try to sell its agency plant for that business. Its "plant" consisted of small local agents, banks, finance companies and mobile home dealers. Except for four major sub-agents and except one Otto Spindler (counter-signing agent for Washington), none were under any contractual obligations to Maclund. "Sale" of the plant, then, was akin to a sale of "good will", and this type of transaction does not appear to be uncommon. Discussions of the proposed transaction were had with representatives of Foremost, Transnational, Central National and Stuyvesant Insurance Companies. In March of 1964, Foremost made a second offer, the first (in 1963) having been fruitless. Transnational was informed of the offer, although not of its particulars, and asked that Maclund delay decision until Transnational could decide whether it should make a purchase. Subsequently, Transnational decided not to purchase.
On May 4, 1964, the Foremost agreement was concluded. Maclund, Inc., Rosenlund and MacTarnahan were all parties to it, MacTarnahan signing both for himself and for Maclund. These three agreed:
"1. * * * to work diligently with Foremost and to use their best efforts, individually and collectively, for a period of four years from and after the effective date of this agreement April 1, 1964, to persuade all existing accounts (as set forth in Exhibit "A") to write all future business of this type mobile home business with Foremost. * * *" (Bracketed material supplied.)
They further agreed that they would not:
The consideration was $1.00 to Maclund and MacTarnahan, plus an assured compensation for Rosenlund according to a formula set forth in the agreement, Rosenlund being the person who would service the Foremost accounts with the dealer-agents. Also, on May 4, 1964, Maclund assigned to Rosenlund, in exchange for all of his capital stock in the company, the entirety of Maclund's mobile-home insurance business, granting him the right to commit Maclund not to compete with any purchaser to whom he should sell. This apparently included all of its business, by the language of the assignment, not only the dealership-relations which Maclund had established. Maclund views this as a sale to Foremost, taking the form of an agreement with Foremost and assignment to Rosenlund only for tax purposes. Rosenlund, however, became the owner of the mobile-home plant, and was committed to Foremost's service only for four years. He signed the Foremost agreement only as himself, not as a representative of Maclund. Further, it is to be noted that MacTarnahan individually profited by this deal, becoming the sole owner of Maclund.
Rosenlund and Mr. Eardly, Foremost's Northwest Production Manager, visited a number of mobile-home dealers with whom Maclund had contracts "to advise agents that Maclund was now representing Foremost." Rosenlund admits telling them that "we were no longer—that Maclund was no longer writing mobile-home business through dealers." The record contains several affidavits from dealers, saying that they were told that Maclund had switched its business from Transnational to Foremost; that Transnational did not write policies directly nor would Maclund represent Transnational henceforth, but that Foremost would write policies directly; and so forth.
Gross premiums reported to Transnational by Maclund, for mobile home insurance produced by dealers, were $16,237.24 (March, 1964); $14,251.77 (April); $357.50 (May); $325.00 (June); and $53.00 (July). After July, Maclund did not represent Transnational at all.
In a letter dated April 21, 1964, Transnational's Executive Vice-President, E. B. Crittenden, made it clear that he considered the "sale" of Maclund's "dealership plant" a breach of the Transnational agreement. He spoke of the sale as an accomplished fact, discussed the probability of terminating the agreement as soon as a "revised program in the Northwest" could be negotiated. Crittenden twice requested a copy of the "sale" contract. He had apparently been informed that the transaction had already been concluded. Transnational did not know, as of the date of this letter, what...
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