Vanston v. Connecticut General Life Insurance Co., 72-2670.

• Decision Date: 03 July 1973
• Docket Number: No. 72-2670.,72-2670.
• Citation: 482 F.2d 337
• Parties: Ed F. VANSTON, Plaintiff-Appellee, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

482 F.2d 337 (1973)

Ed F. VANSTON, Plaintiff-Appellee, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendant-Appellant.

No. 72-2670.

United States Court of Appeals, Fifth Circuit.

May 17, 1973.

Rehearing Denied July 3, 1973.

COPYRIGHT MATERIAL OMITTED

Larry M. Lesh, Dallas, Tex., for defendant-appellant.

Ivan Irwin, Jr., Dallas, Tex., for plaintiff-appellee.

Before AINSWORTH, GODBOLD and CLARK, Circuit Judges.

CLARK, Circuit Judge:

Ed F. Vanston brought this action for damages against Connecticut General Life Insurance Company (Connecticut General), alleging breach of contract as well as wrongful interference with and improper competition against Vanston's efforts to promote and sell insurance-related retirement programs to various companies and associations in the moving industry. In response to special issues submitted, the jury found that Connecticut General and Puritan Life Insurance Company, an almost wholly-owned subsidiary of Connecticut General, agreed with Vanston that neither would compete for group insurance business in the mass markets developed by Vanston. The jury further found Connecticut General did interfere and compete in such a market and that but for this interference Vanston would have in reasonable probability secured a sponsorship of his retirement program from Allied Van Lines, Inc. In addition, the jury concluded Connecticut General, which did underwrite this account, would not have obtained Allied Van Lines' group pension business independently of the efforts made by Vanston. The jury found four separate money verdicts for Vanston in the total sum of 915,000 dollars. The judge rendered judgment notwithstanding the verdict in favor of Connecticut General on one of these damage issues, and awarded Vanston a total of 315,000 dollars in actual damages plus 500,000 dollars as exemplary damages. This appeal ensued. We find that the trial court erred in admitting into evidence crucial out-of-court statements of a deposed witness and vacate and remand for further proceedings. In addition, it is appropriate to dispose of other issues presented on the instant appeal which are likely to recur on remand.

The Parol Evidence Rule

The first defense asserted by Connecticut General was that the Texas parol evidence rule¹ precluded a finding that any oral agreement between Connecticut General, Puritan, and Vanston provided that the insurance companies would not compete in the markets developed by Vanston. The company points to a written agreement between the parties which provides in part:

AGENCY FORCE. The General Agent may organize, train, and maintain an agency force in the territory in which he is authorized from time to time to represent the Puritan Life, which territory shall not be assigned exclusively to the General Agent . . . . Emphasis added by Connecticut General.

In addition, the agreement contains the following integration clause:

PRIOR AGREEMENTS. This Agreement shall supersede any prior Agreement between the Puritan Life and the General Agent in relation to policies issued through the General Agent after this Agreement becomes effective. . . .

This argument, however, falls under the weight of testimony by Connecticut General's own employees that the Puritan general agency contract was not intended to integrate the tripartite agreement relative to market development. According to the testimony, Vanston, in the terminology customarily used by Connecticut General, was a "business partner" who did considerably more than a normal general agent. Connecticut General's agreements with such business partners ordinarily were not in written form, and the written contract with Puritan "covered only that portion of the relationship which could be called the general agency relationship." The agreement not to enter into competition with Vanston in the mass markets which he undertook to develop, and more specifically as to the accounts or sponsorships which he sought to secure, is not inconsistent with the provisions of the written agency contract providing that no exclusive territory, i.e., geographical region, would be assigned to him.

The result we reach is not precluded by the "prior agreements" language of the contract, set out supra. The principle was stated in Ragland v. Curtis Mathes Sales Co., 446 S.W.2d 577 (Tex.Civ.App.1969):

The parol or extrinsic evidence rule "is particularly applicable where the writing contains a recital that it contains the entire agreement between the parties" . . . . 30 Am.Jur. 2d, Evidence, Sec. 1019, p. 155.

This sound principle, however, does not reach beyond the scope of the integration clause contained in the contract. For example, an integration clause providing that "this writing contains the full agreement of the parties as to A" does not preclude the proof of additional consistent terms relating to B. The language in this contract does not purport to integrate into the written contract all agreements between the parties, but only those agreements concerning the issuance of policies by Vanston as a general agent. As Connecticut General's own witnesses testified, the duties of a general agent were not the same as those which Vanston undertook in developing the moving industry market. Moreover, if the question be deemed a close one, we think it significant to note that the form agreement signed by Vanston was prepared by Connecticut General and thus any ambiguities should be resolved against it. In these circumstances the parol evidence rule does not prevent Vanston from proving additional contract terms which were not inconsistent with those embodied in the written agreement. See, e.g., Aboussie v. Aboussie, 441 F.2d 150 (5th Cir. 1971); Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30 (1958); Don Drum Real Estate Co. v. Hudson, 465 S.W.2d 409 (Tex.Civ.App.1971); Conner v. May, 444 S.W.2d 948 (Tex.Civ.App. 1969), error ref. n.r.e.

The Statute of Frauds

Connecticut General next raised the argument that the contract found by the jury was unenforceable because it was not to be performed within one year, and thus was within the Texas Statute of Frauds.² Vanston argued in reply that, since the contracts specified no definite period of duration, under Texas law it was outside the ambit of the Statute. This point is well taken with respect to Vanston's obligations under the contract, since there was no proof that he could not have performed within one year even though the parties may have anticipated a more substantial period of business accord. See Bratcher v. Dozier, 162 Tex. 319, 346 S.W.2d 795 (1961); Eisenbeck v. Buttgen, 450 S. W.2d 696 (Tex.Civ.App.1970); Irwin v. Prestressed Structures, Inc., 442 S.W.2d 406 (Tex.Civ.App.1969), error ref. n.r.e.; Sapphire Royalty Co. v. Davenport, 306 S.W.2d 202 (Tex.Civ.App.1957) error ref. n.r.e. This explanation, however, looks only to one-half of the contractual equation.³ Connecticut General contends that under Vanston's interpretation of its agreement it was obligated to refrain from competition in the protected markets even after the termination of its business relationship with Vanston and certainly for a period of more than one year. Vanston testified, however, that the non-competition agreement would survive only so long as the business relationship continued. Connecticut General points to no persuasive evidence that the term of the non-competition agreement was to be any more extended or any less indeterminate than the underlying business relationship between the parties. Thus, at least this portion of Connecticut General's contractual obligation falls within the general rule of Texas law that where no period of performance is stated the statute is inapplicable.

Connecticut General relies upon Hall v. Hall, 158 Tex. 95, 308 S.W.2d 12 (1957), but that case is inapposite here because it stands for the rule that a contract which could not possibly be fully performed within the period of one year is within the Statute even though no period of time is specified by the contract. See Bratcher v. Dozier, supra. Moreover, in Hall the plaintiff attempted to adopt the inconsistent positions (1) that the absence of any stated time for performance placed the contract without the Statute, and (2) that his damages should be computed on the basis that the contemplated complete performance would necessarily require several years.

It appears that at least one of the obligations of Connecticut General as found by the jury (i.e., the agreement not to use the information obtained from Vanston to compete with him) would extend beyond the life of the joint venture and thus could not have been performed within one year. That fact is immaterial in this action predicated solely upon breach of obligations which could have been performed within one year. If the contract is severable—that is, susceptible of division and apportionment, having two or more parts not necessarily dependent on each other—the fact that one obligation is unenforceable does not prevent a recovery as to the other. Upson v. Fitzgerald, 129 Tex. 211, 103 S.W.2d 147 (1937). Here the obligation sued upon, the agreement not to compete so long as the business venture continued, is clearly severable from Connecticut General's promise not to use Vanston's trade secrets. Since Vanston fully performed his obligation, he is entitled to recover for breach of this divisible and enforceable contractual obligation. See 3 S. Williston, Law of Contracts § 532, at 766 (3d ed. Jaeger 1960). Thus, the Statute of Frauds is no bar to Vanston's recovery.

Actual Damages

In response to the special issues submitted, the jury made three separate findings as to Vanston's actual damages, totalling 415,000 dollars.⁴ The court granted Connecticut General a judgment notwithstanding the verdict of the jury on Special Issue No. 11, and rendered judgment for Vanston on Special Issues Nos. 12 and 16. Special Issue No. 12 required the jury to determine the amount of...