Wabash Life Ins. Co. v. Hacker, 19124

• Decision Date: 24 February 1960
• Docket Number: No. 19124,No. 2,19124,2
• Parties: , 78 A.L.R.2d 755 WABASH LIFE INSURANCE COMPANY, Appellant, v. Eugene HACKER, Appellee
• Court: Indiana Appellate Court

Page 666

164 N.E.2d 666

130 Ind.App. 342, 78 A.L.R.2d 755

WABASH LIFE INSURANCE COMPANY, Appellant, v. Eugene HACKER, Appellee.

No. 19124.

Appellate Court of Indiana, Division No. 2.

Feb. 24, 1960.

Clinton H. Givan and Richard M. Givan Indianapolis, for appellant.

Gerald C. Purdy, Indianapolis, for appellee.

SMITH, Judge.

This is an appeal from a declaratory judgment construing certain provisions of a brokerage contract.

The issues were formed by the filing of appellee's complaint for declaratory judgment. The cause was submitted to the trial court by stipulation, whereby it was stipulated by and between the parties that the complaint filed by the appellee contained and recited an accurate copy of the contract in question, the contract being the only evidence presented in this case.

The complaint alleges that in the process of carrying out the provisions of the contract, a controversy arose between the parties as to the meaning of certain language used in the sixth paragraph of the contract. The following is the sixth paragraph of the brokerage agreement:

'This Agreement may be cancelled by either Party hereto upon thirty (30) days' written notice to the other. Termination under this paragraph: In the event of termination of this Agreement and after this Agreement has been in force for twelve (12) full months renewal commissions shall be payable as follows: Provided this Agreement is in force for one (1) year renewal commissions shall be payable for two (2) full years following termination--two (2) full years' renewal commissions are payable for two (2) years; three (3) full years' renewal commissions are payable for three (3) years; four (4) full years' renewal commissions are payable for four (4) years; five (5) full years' renewal commissions are payable for five (5) years. Under no circumstances are the renewal commissions payable for more than five (5) years after termination date. Renewal commissions, as provided in this paragraph, apply to business specifically issued under the policy name, Union Labor Group. If renewal commissions are payable after termination of this Agreement, the Company is entitled to and shall withhold five per cent (5%) from the renewal commissions provided herein as a service and collection fee.' (Our emphasis.)

The controversy between the parties is over the interpretation of the words 'the Company is entitled to and shall withhold five per cent (5%) from the renewal commissions provided herein as a service and collection fee.' The trial court found that the phrase in question should be construed to mean five per cent (5%) of the renewal commissions to be paid from the renewal commissions and does not mean five per cent of the renewal premiums to be paid from the renewal commissions.

The appellant filed a motion for a new trial which contained but one specification, namely: that the decision of the court is contrary to law. The appellant assigned as error the overruling of the motion for a new trial.

The appellant in interpreting the words 'five per cent (5%) from the renewal commissions provided herein as a service and collection fee,' contained in the sixth paragraph of the brokerage contract, contends that this language means five per cent of the renewal premiums to be withheld from the renewal commissions as a service and collection fee. Appellant's contention is founded upon the theory that insurance commissions are based upon the amount of premiums and that that is the only basis upon which any construction of this contract can be made; and since there is no recited basis for determining the five per cent, the five per cent is required to be based upon the amount of the premiums.

The appellee on the other hand maintains that 'it is so universal as to be almost axiomatic that deductions are expressed in terms of a percentage of the amount from which they are deducted and not a percentage of the amount from which they are deducted is based.' Therefore, it appears to be the contention of the appellee that the words 'five per cent (5%) from the renewal commissions provided herein as a service and collection fee' means five per cent of the renewal commissions which is to be withheld from the renewal commissions as a service and collection fee.

The construction of a contract is mainly controlled by the construction as intended by the parties as such intention appears from the language used by the parties within the four corners of the written instrument. Sindlinger v. Dept. of Financial Institutions, 1935, 210 Ind. 83, 199 N.E. 715, 105 A.L.R. 501; Elliott v. Travelers Ins. Co., 1951, 121 Ind.App. 400, 99 N.E.2d 274. There was no evidence presented in the case at bar concerning practical usage or construction of similar provisions by the brokerage or insurance profession. The controversial paragraph, as quoted above, provides for the payment of 'renewal commissions' whenever the contract is terminated after having been in force for twelve months. These apparently are renewal commissions that were to be paid to the appellee for a specified time, depending upon the number of years, up to five years, that the agreement has been in force. Consistently, and without deviation, the identifying or descriptive words 'renewal commissions' are used, and no reference is made at all to 'renewal premiums.' It is also provided that the five per cent service and collection fees are to be withheld from the renewal commissions 'provided herein.' Now, if the words 'provided herein' are to be given any effect at all, the source from which the collection and service fee is to be taken and upon which the five per cent is to be computed, must of necessity, be the 'renewal commissions.' Such construction gives full, easy, reasonable and understandable meaning to the language used by the parties, and supplies vitality to the plan the parties to the contract laid out and expressed therein concerning payment of commissions to the appellee after the termination of the contract. To say that the five per cent is to be reckoned and based upon the 'renewal premiums' not only places in the contract words which are not there, thus creating a new contract for the parties, but also runs counter to the evident intention of the parties as expressed by them in simple, plain and unambiguous language. If the parties had not intended that the collection and service fees were to be measured upon the renewal commissions, they, no doubt, would have expressed such intention by providing, for example, that the insurance company is 'entitled to five per cent of the...