Union Casualty & Surety Co. v. Gray

• Decision Date: 20 February 1902
• Docket Number: 18.
• Parties: UNION CASUALTY & SURETY CO. v. GRAY.
• Court: U.S. Court of Appeals — Third Circuit

114 F. 422

UNION CASUALTY & SURETY CO. v. GRAY.

No. 18.

United States Court of Appeals, Third Circuit.

February 20, 1902

Samuel B. Huey, for plaintiff in error.

John G Johnson, for defendant in error.

Before ACHESON, DALLAS, and GRAY, Circuit Judges.

GRAY Circuit Judge.

The record brought before us by this writ of error, discloses a suit instituted in the court below by Delbert B. Gray plaintiff below, defendant in error here, against the Union Casualty & Surety Company, defendant below, plaintiff in error here. The cause of action, as set out in the statement of claim, was the alleged breach of a contract contained in a certain agreement in writing, executed on the 2d day of September, 1893, between David Black, general agent for the Middle states of the Union Casualty & Surety Company, of St Louis, Mo., and Edward P. Carpenter, Delbert B. Gray and George A. Hincken, partners under the firm name of Carpenter Gray & Hincken, of Philadelphia. By this agreement, it is alleged, said firm entered into contractual relations with the said company, by which they were to act as its subagents, for a term of five years, in certain territory comprised within eastern Pennsylvania, New Jersey, and Delaware, covenanting that they, on the one hand, would perform certain designated services as agents, or subagents, for the said company, in the insurance business; the said company on the other hand, becoming bound that opportunity for the performance of such services should be continued for said term of five years, at and for the compensation stipulated, by way of commissions, in said articles of agreement.

By assignments from his partners, the said Gray became vested with all the rights and responsibilities created by this contract, and has been recognized as standing for said partnership, by the defendant below, throughout this litigation. He will be spoken of hereafter as sole subagent under the contract. The plaintiff below alleged in said suit, and contends here, that a breach of this contract, as construed by him, was made by the defendant below, by refusing to recognize his right to act as agent for said company, for the remainder of the term of five years, after the discharge of David Black, its general agent, from its employment, and by discharging him, Gray, from its service within the term aforesaid. The defendant below, on the other hand, contends, that it was not privy to any contract with plaintiff below, and that the contract, the breach of which is stated as the cause of action in the said suit, was a contract with David Black, its general agent, and bound him, and not it, by its stipulations and covenants. The parts of the said contract pertinent to our present inquiry, are substantially as follows:

'This agreement made and entered into this second day of September, 1893, by and between David Black, general agent for Middle states of the Union Casualty and Surety Company of St. Louis, Mo., hereinafter designated 'Said General Agent' of New York, party of the first part, and Edward P. Carpenter, Delbert B. Gray and Geo. A. Hincken, partners under the firm name and style of Carpenter, Gray and Hincken, hereinafter designated 'Said Agents,' parties of the second part. It is understood and agreed that the Union Casualty and Surety Company of St. Louis, Mo., will be designated throughout this agreement as 'Said Company.' That upon the terms and conditions, and in consideration of the several covenants and agreements to be kept and performed by said agents, parties of the second part, hereinafter set forth, said general agent, party of the first part, has this day appointed, and does by these presents make, constitute and appoint said parties of the second part agents of said company for the procuring of business for the said company in the following described territory, that is to say: Eastern Pennsylvania, southern New Jersey and Delaware, said territory being more particularly defined in a map filed in each of the offices of the parties to these presents. The term of the agency hereby created, the said agents faithfully performing their duties hereunder, shall be and continue for five years from the date thereof, to wit, until the second day of September, A.D. 1898. Said agents, parties of the second part, are and shall be authorized and empowered, but only upon the terms and conditions and fulfilling the agreements on their part hereinafter set forth, to issue and countersign all descriptions of policies of insurance procured by them within the territory above mentioned which are now or may during said term be issued by said company and to make necessary and proper indorsements upon the same, provided that the insurance of all such policies and all indorsements made thereon shall be subject to the approval of said general agent, and said agents, keeping and performing their said agreements, shall be authorized as such, during said term to collect, for the benefit of said general agent, the premiums paid upon and for all policies issued by them, said agents, and to give proper receipts for the same. In consideration of, and as full compensation for all services rendered and disbursements made by them under and pursuant to this contract during said term upon policies for the several kinds or classes of insurance procured and issued by said agents during said term, which commissions may be deducted by said agents from said premiums collected by them at the following rates or percentage thereon respectively, that is to say: * * * Said general agent will from time to time, furnish said agents, for the purpose aforesaid, with such forms of policies of insurance and such manuals as may be requisite for the use of said agents in securing business and procuring the issue of policies of insurance such as herein contemplated, and with such other documents and supplies as said general agent shall deem necessary for the proper transaction by said agents of the business of said company within said territory.'

Said Gray agrees that he will make prompt collection of all premiums, and duly account for the same to the said general agent, and keep books and accounts showing all premiums collected by him 'subject to full and convenient inspection by said general agent whenever required. ' He also agrees that he, and all his subagents employed by him, will make to the said general agent, from day to day, true and complete daily reports of all policies issued, etc., and on the 1st day of each month, will render to him, the general agent, a true and complete statement, in form such as the part of the first part may require, showing the number, description and amount of all policies written or issued by authority of said Gray during the preceding month, and that on the 12th day of each month, will pay or remit to the said general agent, the balance of all premiums collected by him during the last preceding month. By a provision, identical in language with one contained in the contract between said general agent and the said company, which will hereafter be referred to, it is stipulated, that the said Gray may appoint and employ, subject to the rules and regulations prescribed by said general agent, any and all subagents reasonably necessary for the proper transaction of the business contemplated by the contract, and for the fulfillment of his agreement thereunder; but it is expressly understood and agreed, that said Gray shall be directly accountable to the said general agent, for all policies issued and moneys collected under the provisions of said contract, and shall be directly liable to said general agent, for the acts and doings of said subagents in and about the transaction of said business, and that all salaries and commissions and compensation earned by such subagents, shall be paid by said Gray, and that 'said general agent shall, under no circumstances, nor in any manner, be liable for the same of any part thereof. ' Said agreement further provides that, in default of the performance by said Gray, of the conditions and agreements in said contract set forth, the 'said general agent, party of the first part, shall have the right, without further demand or notice, to cancel the contract and terminate the agency hereby created. ' And as the close, it is stipulated as follows:

'It is a further expressed condition of this contract that said agents, parties of the second part, shall and they hereby jointly and severally agree that they will within thirty days from the date hereof deliver to said general agent at his office in New York a bond in the penal sum of ($5,000) five thousand dollars, duly executed by said agents and by the American Surety Company or other good and sufficient surety or sureties, and containing such conditions for the payment of said penal sum to said party of the first part as obligee therein as shall be satisfactory to the said general agent, party of the first part,' etc.

To this contention of the defendant company, that the contract sued upon was res inter alios acta, the plaintiff below replies that the contract was made by Black, as general agent of the company, by authority and in behalf of the said company, and created such contractual relations between the said plaintiff below and said company, as to make the stipulations as to term of service and compensation, obligatory upon said company. In support of his position, he refers to the provision of the contract between the said company and its general agent, Black, with reference to the prospective appointment by Black, of subagents. This contract, which was dated September 2, 1893, both in form and general provisions, is almost identical with that between Black and the plaintiff below, as above set forth. The authorization referred to and...