NEWCOMB V. IMPERIAL LIFE INS.' CO.
725
commodates the full purpose of the parties, asI conceive it, which is that the insurer shall have time to investigate a it may be,-and the insurer shall have a reasonable time to sne. Any policy that does not secure the latter would, as we have seen, be declared. unreasonable. Once secured, it cannot be embarrassed by the acts of the insurer. This, we have also seen, was declared by the supreme court in this case. Did the defendant company waive the provision requiring suit to be brought 12 months next after the fire? I do not think the allegations of the complaint that the plaintiff failed to sue by reason of the wl1duct of the company is sustained by the evidence.
NEWCOMB
v.
IMPERIAL LIFE INS.
Co.
(Circuit Court, E. D. Mi88ouri, E. D.September 9, 1892.)
L
INSURANCE AGENT-WRONGFUL TERMINATION OF AGENCy-CONTRACT.
Plaintiff was appointed general agent of a life insurance company, to solicit Insurance on the "natural premium plan, "as distinguished frOm "tbe level premium plan." He was to receive as compensation a certain commission on ail first and renewal premiums collected on policies i!;lsued under the contract. Thecompany agreed, in case of a discontinuance of the agency for any cause except dishonesty, after plaintiff had secured a certain amount of insurance in force, to collect the premiums possible, and pay to pla.ntiff a certain per cent. of the renewal commissions collectedfor a period of five years. The contract provided that the company could terminate the contract" upon the neglect or refuil8l of the agent to account for all moneys belonging to the company, or for dishonesty, " or for noncompliance with certain rules and instructions. The company abandoned tbe "natural premium plan" without plaintiff's consent, and refused to allow him to solicit risks according .to such plan. Hald, this action constituted a wrongful termination of the agency. After thuil terminating the agency, the company endeavored to induce persons whom plaintiff bad insured on the" natural premium plan" to change their policies for "level premium policies." HeW that, even conceding that the agency Was not wrongfully terminated, this action constituted a viola.,on of the company's engagement to collect renewal premiums and pay plaintiff a percentage thereof. When a person agrees to act as agent for a life insurance company, for a s.tated commission to be paid on premiums collected, he cannot abandon the agency at any time, without cause, and sue the company as upon quantum meruit.
2.
SAME-BREACH OF CONTRACT.
8.
SAME-ABANDO:,<MENT OF AGENCY.
4.
PLEADINa---CONTRACT-QUANTUM MERUIT.
a quantum meruit.
In an action by a general insurance agent against his principal for services rendered under an express contract, which was wrongfully terminated by tile principal, wilen all the facts are stated intbe complaint entitling plaintiff to recover damages as for the violation of the express covenant, a general demurrer will not be sustained, even thougb Dlaintiff has asked to have his damages assessed as'upon
At LaW. On demurrer to complaint. Overruled. This was a suit brought by a general agent of a life insurance company against his principal to recover compensation for four years' services, and for certain outlays and expenditures while conducting. the .agency,thewhole claim amounting to $11,466.66. The plaintiff asked judgment for the reasonable value of his services during the period.iu question, althQugh its appeared from the complaint that the. services had
726
FEDERAL
vol. 51.
been'rEl1:ider6duunder a between the ·,parties.,whiC'h provided that the :p1:aintiff should receive: as ·com pensation,for his services as agent;a certain commission on all first and' renewalpreniiums that might<be collected' on all policies issued under the contract.' The defendant demurred generally to the complaint, on the ground that it did not state,acause,of action. The terms of the contract and the allegations ofthecl!lmplaint al'e sufficiently stated in the opinion. Hiram J. GrD1Jer, for plaintiff. Charla Nagel, for defendant. THAYER, District Judge. 1. It cannot be admitted to be a sound proposition of law that in every case where a person engages to render services for another for a stipulated time and price, he may at any stage of the work undertaken abandon it without legal excuse, and sue his employer upon a qu(tntt£m meruit for ,the services actually rendered, leaving his employer to offset against a recovery such damages as he may have sustaiQed by the nonfulfillment of the contract. In the leading case of Britton v. Turner, 6 N. H. 494, that rule was applied to au ordinary hiring contract. It has also been applied to contracts to furnish labor and materials where the labor and materials furnished were of value to the employer, and had been accepted. Yeats v. Ballentine, 56 Mo. 530; v. .A88ociation,61 Mo. 489; 2 Pars. 00nt. pt. 11, § 5. See. also, Bish. Cont. §§ 1442, 1444, 1445, and citations. But the rule in questidpian,ecessarily to some limitations, and is not of universal application to contracts of all descriptions. For example, where It agrees t9 act as agent and solicitor for aUfe insurance company for a stated commission to be paid on premiums collected, he cannot abandon the agency at any time without cause, and sue the company upon a quantum vulebat for services rendered; and it:goes without sayingthatanllgent working under such a contract cannot sue his principal upon a qU(J.'ntam vulebat for services rendered, if the agency is lawfully terminated by the principal, in pursuance of a power reserved in the contract so to terminate it. The present suit having been brought by the plaintiff upon a quantum valcbnt to, recover the reasonable value of services rendered during a period of years while he was acting as agent and solicitor of the delendant for an agreed commission'to ,be paid on premiums. the court holds, contrary to the contention of, ;C(lUnsel , that to maintain such an action it is necessary that the complaint should show, either that the agency \Vas wrongfully terminated by the defendant, or that the defendant has in some respect violated the agency contract. The first question to be considered, therefore, is whether the cdmplaint does, show that the agency:w8e wrongfully discontinued. or that the contract betwE'en the parties was broken by the neftmdant. It is a\lerred in the complaint, in substance; that the plaintiff was appointed agent of thedefen:dant iOompany to solicit insurance in a certain territory on what is termed "the natural premium plan of insurance;" that the contraotbetween the!1Jarties contemplated that the plaintiff should
NEWCOMS
IMPERIAL LIFE INS". 00.
727
solicit policies based upon the "natural premium plan," as distinguished from "the level premium plan;" and that that mode·of insurance affords an agent or solimtor greater facilities for securing risks than the ordinary methods of insurance in vogue among life companies. It is further averred, in substance, that on or about the 14th day of April, 1891, while the agency contract was in force, the defendant company ceased to do business on "the natural premium plan," and refused to permit the plaintiff to risks on that plan. It must be held, without doubt, that if the plaintiff was appointed an agentof the defendant company to solicit risks according to one method of insurance, and the company subsequently abandoned that mode of transacting its business without his consent, and refused to permit the plaintiff to solicit risks according to such method or plan, then it, in effect, terminated the agency, and the act of the company in so doing was unless, by the provisions of the contract existing between the parties, the company had reserved to itself the power ofterminating the agency whenever it thought proper. .Whether it had such power involves a brief reference tCl the agency contract. That agreement is not set out in full in the complaint, but a copy is attached thereto, and the court has deemed it advisable, in disposing· of the particular question now under consideration, to treat the instrument as fully incorporated into the complaint. By the terms of the contract the plaintiff was appointed general agent of the defendant company for the city and connt)" of St. Louis, but the duration of the agency was not explicitly stated. It was provided that he should receive. as compensation for his services as agent, a certain commission on all first premiums paid on policies issued under the contract. as well as a certain commission on all renewal premiums subsequently paid. There were many other provisions in the agreement defining the agent's powers and duties, and prescribing the manner in which the business of the agency should be transacted, but the only other provisions to which particular reference need be made are the following: "(17) The company in case of discontinuance of this agency ('for any cause except dishonesty) at any time after the said Newcomb shall have $i:\OO, 000 of insurance in force. to collect the premiums possible. and. to pay to him. or his legalrepresentativl'lI. quarter-yearly, the sum of, 80% of the commissions collected on. all unexpired renewals on the se\'eral forms of policies herein named, as prOVided for in this contract, for a period of five years from thetime of such discontinuance; but he shall have nosuch renewal interest. unless he shall have procured at least $3UO,OOO of insurance, which shaH be in force at the time of such discontinuance. "(18) This contract may be terminated upon lhe neglect or refusal of the said NewcombtoacGount for all moneys belonging to .the cOlllp.anyaccordiog to rule 7, or fur dishonesty, or for noncompliance with any of the foregoing rules and instructions.'.'.
In view of these provisions of the contract, and in view of the fact that the plaintiff was to be compensated for his by a commiseioll on renewal premiums, and therefore had a vital interest in the.continuance of the agency, the 'courtconclndes that it was not competent for.the defendant company to terminate the agency at its mere pleasure.
728
nDERAL !tEPORTER,
If'it was the hitention of the parties that the defendant might terriJinatethe agency at will, and in that evemtshouldonlybebound to pay the plain,tiff a renewal commission for the period of five years, as specified in the seventeenth clause of the contract, then there was no occasion :ior the insertion of,the eighteenth paragraph of the agreement, which enumerates the causes which would justify a revocation of the agency. As the parties have themselves stated what shall be deemed arises that a sufficient cause for terminating the agency, an it can only be lawfully terminated for one of the specified canses, or by mutual lconsent. The seventeenth .clause of the contract evidently meanS·that the renewal commission shall be paid for the period of five years after the discontinuance of the agency if discontinued for any of the specified causes other than dishonesty. It was not intended, as the court, thinks, to fix the measure of damages or compensation in case the ageney> was terminated by the defendant company at its pleasure, and withtlut :the existence ofanv of the enumerated causes. It,;follows, therefore, tha't the complaint shows that the agency in ttuestionwas wrongfully discontinued, and the demurrer is not well talteni,in, so far,as it assumes that the defendant has merely exercised toterminate the agency, which was reserved to it by the terms of theco'ntract. , 2}'Fhe court is furthermore ofthe opinion that a general demurrer to the,complaint,such as has been filed, is not tenable, even though the ci>urthas erred in the conclusion last announced, that the agency was wrongfully terminated by the defendant company. By the seventeenth paragraph of the contrllct it will be observed that the company agreed, in case,:ofa discontinuance of the agency for any cause except dishonesty, after the plaintiff had secured $300,000 of insurance in force, to collect the premiums possible, and to pay to the plaintiff 80 per cent. of the renewal commissions prOVided' for in the contract for the period of five This covenant must be held to imply that the company woul!! make reasonable efforts to induce parties who had become insured through ,plaintiff's solicitation to renew their policies, and that it would also reasonable efforts to collect the renewal premiums in which the plaintiff had an interest. At all events, the defimdant had no right to ohstacles in the way of the renewal of such policies. But; the complaint avers,. in substance, that, after discontinuing the agency in the manner before indicated, the defendant, in violation of its agreement, entered upon a scheme, the purpose of which was to iriduce persons whom plaintiff had insured on the "natural premium plnn" to give upund,abandon their.llolicies.The of this 'schellle, and the acts done in furtherance of the same, to get rid of all policies issued on the "natural premium plan," are fully stated in the !oomplaint. . . ':Fhe court conCludes that this portion of the pleading shows a viola.tion of the agreement such as would entitle the plaintiff to recover dam'ages in some amount, even though it be conceded that, under the. contract, 14e defendant company had the right to tElrminate the agency at
DEXTER, HORTON &: CO.
r.
SAYWARD.
729
its pleasure. The question does not arise upon this demurrer whether, for a breach of the contract such as is last described, an action should be brought upon the contract, or whether for such breach the contract maybe abandoned, and a recovery had upon a'lOOntum valebat.The facts are stated with sufficient fullness in the present complaint to sustain a judgment for damages, treating the action as a suit upon the contract, even ifa suit upon a quant'um valebat cannot be maintained; and, when nIl the facts are stated in a complaint entitling a plaintiff to recover damages as for the violation of an express covenant, a general demurrer will not be sustained, even though the plaintiff has asked to have his damages assessed as upon a quantum valebat. The demurrer to the complaint must accordingly be overruled, and it is so ordered.
DEXTER, HOR'rON
& Co. v.
(OirC'Ulit Court, D. Washington, N. D. June 27,1892.)
CONTRACT-CONSTRUCTION-NoVATION.
A certain firm were creditors of defAndant, having supplied him with merchandise and money for operating a sawmill. Thereafter they made a contract with a third person, whereby the latter was to furnish the money and supplies to operate the mill in future, and. receive and sell the product,-paying to the firm $20,000 at the beginning, and $2,500 monthly for a period of 30 months, unless defendant in the mean time should pay the firm the sum due them. The contract contained a stipulation that payment of the sum due the firm should not be enforced during that time against defendant, with the proviso that the agreement should not prevent the firm from the neCeSSal"y steps to preserve the "legal life" of their demand. Held, that the contract did not constitute a novation, and the firm retained their right to sue defendant at any time before the account beoame barred by limitation. The stipulation that the firm should not enforce their claim against defendant during the 30 months was not an extension of time so that the debt did not become due, or a bar to the maintenance and proseoution to final judgment of a suit thereon, but merely operated to prevent the seizure of defendant's property under execution or attachment for the indebtedness. ' If defendant had any right of action growing out of the contract, he was entitled to plead it as a defense pro tanto, whether the contract shoulp be regarded as affecting primarily plaintiff's cause of action, or only as giving rise to a claim for damages; for the Code of Washington' permits any matters constituting a set-off or counterclaim, growing out of or connected with the subject of the actiOn. or any other contract, to be pleaded by defendant in an action on a contract.
BAME.
S.
S.\ME-AoTION-DEFENSES-COUNTEROLAIM.
BAME-PARTIES TO CONTRAOT-PLEADING.
Defendant, not being a party to the contract, or the party for whose benefit it was made, could not plead it as a defense by a mere general averment that he had performed its conditions. He must allege some specific act by which he had adopted the contract, and made himself a party to it.
6.
FEDERAL COURTS-FoLLOWING BTATE PRACTICE-AcTION BY ASSIGNEE.
Code Wash., providing that a cause of action assigned in writing may be sued on by the assignee notwithstanding that the assignor retains an interest therein, governs the federal courts sitting in the state, in actions at law.
At Law. Action by Dexter, Horton & Co., commeMed bya1tachment, against W. P. Say ward, to recover a balance on account. Demurrer to plea in abatement sustained. Blaine & De Vries, tor plaintiff.