Wallace v. American Life Ins. Co. of Des Moines, Iowa

• Court: Oregon Supreme Court
• Writing for the Court: BROWN, J. (after stating the facts as above).
• Citation: Wallace v. American Life Ins. Co. of Des Moines, Iowa, 111 Or. 510, 225 P. 192 (Or. 1924)
• Decision Date: 15 April 1924
• Parties: WALLACE v. AMERICAN LIFE INS. CO. OF DES MOINES, IOWA. [*]

225 P. 192

111 Or. 510

WALLACE v. AMERICAN LIFE INS. CO. OF DES MOINES, IOWA. ^[*]

Supreme Court of Oregon

April 15, 1924

Department 2.

Appeal from Circuit Court, Multnomah County; George Rossman, Judge.

Action by Lew Wallace against the American Life Insurance Company of Des Moines, Iowa. Judgment for plaintiff, and defendant appeals. Reversed and remanded for a new trial.

This is an action at law, in which the plaintiff seeks to recover from the defendant the sum of $77,327.91 damages, for the alleged breach of an insurance agency contract.

On November 10, 1915, the plaintiff and defendant entered into a contract whereby Lew Wallace, plaintiff herein, was appointed general agent of the defendant insurance company for the state of Oregon. The contract contains no express provision relating to the duration of the agency.

It is the contention of the plaintiff that on May 18, 1921, the defendant breached its agency contract, and that as a result thereof he has suffered damages in the amount hereinbefore stated. The complaint avers that the defendant is indebted to plaintiff in several sums, amounting in the aggregate to $77,113.91, all of which the defendant denies, and by its counterclaims avers that the plaintiff is indebted to it in two several sums aggregating $4,739.34.

Plaintiff's first claim is for the recovery of the sum of $1,534.36 based upon commissions due him upon second and third year premiums received by the insurance company up to February 22 1922, for insurance business written by plaintiff for defendant. A second claim, for the sum of $2,095.52, is based upon second and third year premiums due, accruing after February 22, 1922, for like services. A third claim, for the sum of $218.67, is based upon fourth or subsequent years' premiums received by defendant up to February 22, 1922. A fourth claim is for the sum of $22,515.36, renewal premiums upon policies written for defendant by plaintiff, which premiums were to accrue subsequent to February 22, 1922. A fifth claim is for the sum of $750, alleged to be due as salary at the rate of $100 per month, from May 15, 1921. A sixth claim is for the sum of $50,000 damages, the alleged value of the insurance agency arising out of the contract averred to have been breached.

The plaintiff attempts to recover all of these separate amounts in his first cause of action. A second cause of action alleged in the complaint consists of one claim in the sum of $214, arising from a proposed bonus averred by plaintiff to have been promised him by defendant.

The defendant's first counterclaim is for the recovery of $3,191.33, averred to be due it from plaintiff, which sum defendant alleged had been collected by plaintiff and was due the defendant for renewal premiums and renewal premium notes and defendant alleged that the plaintiff had obtained the cash proceeds thereof in the sum above named.

For a second counterclaim the defendant avers that during the life of the insurance contract involved herein there became, and was, due, under the terms of that contract, from the plaintiff and the agents associated with him, for net amounts, commonly known as "nets," the aggregate sum of $1,548.01.

Upon trial the jury found that the plaintiff was entitled to recover from the defendant the gross sum of $75,909.67; that the defendant was entitled to recover its two counterclaims amounting in the aggregate to the sum of $4,739.34; and that the plaintiff was entitled to recover of and from the defendant the net sum of $71,170.33.

The contract involved in this controversy occupies pages 22 to 38, inclusive, of the abstract.

It is averred in the complaint, and provided in the contract, that Lew Wallace should act as the general agent of the American Life Insurance Company, of Des Moines, Iowa, within this state, in the business of soliciting and writing life insurance exclussively as the defendant's agent, and devote his time, talents, and energy to canvassing for applications for life insurance, and give his personal attention to the renewal of all business written for the defendant. Among other things, the complaint sets out the following provisions of the contract:

"(20) The first party agrees to pay the second party (during the continuance of this agreement) a renewal commission of five per cent. commencing with the fourth policy year and continuing until the twentieth, but not beyond the renewal paying period of any policy, on all cash renewal premiums received by the first party on business produced by the second party and his agents, excluding first party's special $5,000 ordinary life policy.

"(21) If the second party, after having been continuously in the service of the first party for five years or longer, shall elect to discontinue his employment as state agent and give notice of such intention to the first party in writing, the above renewal commission provided in section 20 shall be paid to the second party after his active employment shall have ceased for the same period that he would have been entitled to such compensation if he had continued actively in the service of the first party, provided that the second party and his agents shall have produced not less than $150,000, paid and accepted insurance, other than term policies, in each calendar year while this agreement was in force, and provided that not less than sixty per cent. of all the business produced by the second party and his agents and accepted by the first party during the continuance of this agreement, excluding business produced in the current calendar year and policies carried under extended insurance, shall be in force. It is specially agreed that, if the second party shall discontinue his active relation with the first party and shall engage in the employment or service of any other life insurance corporation as soliciting agent or agency manager, then subject to all the conditions governing the payment of renewal commissions, the first party shall be bound only to pay such renewals for a period of five years after the active employment of the second party shall have ceased. Otherwise, such compensation shall continue as above provided. * * *"

"(23) In addition to the compensation otherwise provided in this agreement the first party agrees to pay the second party a salary of $1,200 for the first year of this agreement payable in twelve equal monthly installments. If the second party and his agents shall produce $150,000 paid and accepted business, excluding term policies, during the year commencing January 1 and ending December 31, 1916, then the first party agrees to continue said salary for the year 1917, and thereafter the continuance of such salary shall be subject to the production of not less than $200,000 paid and accepted business by the second party and his agents during the preceding year, excluding term policies, and the renewal of at least sixty per cent. of the outstanding renewal premiums in the state of Oregon which shall become due and payable in each calendar year. When the renewal commissions, excluding the first year advance against renewals, due and payable to the second party in any calendar year, shall equal or exceed the sum of $2,400, then the perpetuation of the salary provision thereafter shall be optional with the first party.

"(24) The second party is hereby appointed state agent for Oregon, with his principal place of business at Portland, Or., and agrees to give diligent and faithful attention to the performance of all his duties, agrees to be governed by and comply with the insurance laws of Oregon to the best of his knowledge, agrees to notify the first party promptly of any matter which should receive attention at its principal place of business, agrees to furnish such reasonable surety bond as may be required of him by the first party, agrees to establish branch agencies, local agencies, and do all acts and things which may be properly required of a state agent, and in the discharge of all these duties to be governed by the instructions of the first party. The difference in the compensation provided in other agency contracts in the state of Oregon and the compensation provided in this agreement shall belong to the second party, subject to the terms of this agreement and the faithful performance of his duties."

The plaintiff further alleges:

"That in and by said contract it was further mutually agreed that plaintiff should receive for his services certain commissions upon the first year's premiums paid upon policies written by him, all of which have been paid to plaintiff, and that he should receive certain commissions upon renewal premiums for the second and third years upon such policies; and in and by said contract it was further mutually agreed that certain cash advances should be made to plaintiff on account of renewal premiums, the rates and amounts of the said renewal premiums and cash advances and the terms and conditions upon which the same were to be paid being as follows:

" 'Commission of Renewal Premiums.

" 'In addition to the aforesaid commissions for the cash and accepted premiums on the first year of assurance, the first party agrees to pay the following renewal commissions to the second party, and make cash advances to the second party against said renewals on the basis provided in the renewal commissions schedule, namely: [Here follows schedule of commissions and cash advances.]' "

It is averred in the complaint that by the terms of the contract the payment of such commissions upon renewals was made dependent upon the collection of the renewal premiums, and that plaintiff was thereby given an interest in such collections and in the perpetuation of the policies written by him. It is further alleged:

"That the said second...