*1 45,303 Nо. Casualty Company Alliance Mutual and Farmers R. Company, Mutual Insurance v. C. Appellees, Appellants. and Mrs. Scheufler,
(453 15) 2dP. Opinion filed April 12, 1969. L. Rerglund, Bend, argued of Great the cause was on James the brief appellants. Milk, McPherson, argued Evart cause, T. Michael Milk and Milk, William McPherson, S. both of were with him on the brief for the appellees.
The court opinion delivered
Hatcher, C.: This appeal stems from a controversy over the rights an agent, who had defaulted account failing to to his premiums collected, he to the agency’s expiration records. trial court’s findings fact and conclusions of law were in-
favor of all plaintiffs issues. defendant, Scheufler, C. F. became an insurance agent for Kansas, of the plaintiffs
each Hoisington, by contracts July dated 11, 1956, each of which contract provides insofar as material here: Agent Agent shall bе held agrees reveived that all “The it; privilege, Company if and the until delivered as trustee for the him *2 construed as granted, taking shall not be from the commissions parties respective changing relationship hereto. of the being Agreement, Agent not of this “In the of the termination event paying accounting balances promptly for and over in default and thereafter record, liable, agent’s use and control he in default for which Agent property and his un- of the left expirations shall be deemed expirations records, and control of shall possession; use disputed otherwise Company.”
be vested in the 1962, delinquent from C. R. Scheufler became In and and plaintiffs “stop remitting of premiums in the to time insurance, were to write more orders,” are directives 1962, 5, 1962, 1961, 17, 17, April December to him on issued June his accounts to date follow- brought 31,1962. Scheufler and October following stop to do so orders but failed stop three the first ing 31, October 1962. issued order 16, Williams, 1962, representative field Leonard
On November Hoisington concerning Agency at the Scheufler called plaintiffs, and then five checks Mrs. given due accounts was the past Ellinwood, State Bank of Kansas. Peoples drawn Scheufler detailed attention when the given will be more This transaction cоnsidered. issue is pertinent 4, 1962, Leonard Williams went to the Scheufler
On December Kansas. Mrs. Scheufler was there. He told Hoisington, Agency and that notices of cancelling her was written can- he and he Mrs. Scheufler then sent. removed from cellation and filing cabinets the dailies of the the Scheufler The manila folders with the Companies. Alliance names of the picked up were left. He also supplies insured boоks, as unwritten such rate Companies policies, Alliance endorse- furnished supplies ments other The work companies. 5, 1962. finished on December was Vohs, Iola, Kansas, E. previously inquired of the being
Alliance about Companies appointed Alliance Agent. He taking over the Alliance was called about business in Hoisington, McPherson, Kansas, Kansas, came to the main offices of n companies, aftеrnoon of December 1962. After some n discussionthe Alliance Companies offered to sell him their expira- $11,231.77, Agency tions in the Scheufler which actually repre- that thought Alliance Scheufler Companies sented about what the to each owed them. The sum was down paid company $500.00 and the on December price balance of the purchase paid 1962. Vohs took Alliance after Decem- shоrtly over the business ber 1962.
Vohs testified that Scheufler told him he had reconstructed the holders; expiration records of Alliance Company policy Scheufler Alliance holders whose calling upon policy policies and that he was expiring unable to hold expira- $3,000.00 He tions. did than more worth renewal business keep but he had to work to it. keep amended Companies Alliance $5,500.00 sales contraсt to Vohs him back paid May, 1963.
Final audits of the Scheufler accounts showed owed Alliance Casualty Mutual Farmers *3 Mutual $1,642.56, Insurance Company they but announced that they claim waiving their for the additional $109.09 due Alliance Mutual Casualty and the additional Company due $497.55 Farmers Alliance Mutual Insurance Company.
On December Scheufler, a letter was to C. R. mailed by the the vice-president of Alliance Insurance cаn- Companies, celling the The agency agreement. letter will be given detailed attention later.
With these abbreviated facts before consider us we appellants’ grounds for reversal. suggested contend that there appellants
The of payment appellants’ to the companies by debt the of payment Vohs in the and, also, of the purchase expirations the contract agenсy should so that the debt would interpreted be be considered paid when elected to sell companies the the the expirations; contract should as the interpreted requiring to credit the companies appellants records; any payments the expiration the Alliance had to sell right the companies appellants’ expirations as .except and for the Scheuflers must acсount for the agent proceeds, and was accord and there satisfaction between the parties.
We have detailed the rather and cumbersome overlapping con- in order that it not tentions that of them appear had been However, we that believe the ignored.. contentions present but simple two what were the (1) rights of the parties as issues —
174 contract, and what the (2) under the terms оf the letter cancellation. was the of the of effect in terms that— contract no uncertain provides The being Agreement, Agent in of this the not the event of the termination “In Agent’s record, expirations shall be . use and control of default . . the possession; undisputed property Agent and his of the left in deemed the records, expirations in of shall be vested use and control otherwise Company.” fact, his in wаs, in default without a agent question language remittance of company. due contract left no as to whom uncertainty insurance agent. of the belong part records would case of default on 712, 452 In Mays Corp., the recent v. Middle Realty case P. 2d we held: unambiguous plain mean- “When the terms of a lease [contract] are
ing into must be cannot be read determined its contents alone and words agreement import unexpressed wholly it exe- an intent when (Syl. 4.) cuted.” matter, court has on the Although this not occasion pass it appear right ownership possession matter for insurance records are agency’s expiration proper L. R. our an annotation in 124 A. tract. call attention to Appellants insurance discussing rights as between However, page agents respect renewals. find the statement: following of the same annotation we expirations belong agent the termina- rule “The provisions apply tion case contract does deny right contrary, expressly and the contract need not provisions implied expirations, such denial from the but Insurance, 148, p. 813.) (See, S., also, 44 the contract.” § J. *4 contract. a as to the suggestion have further Appellants They state: getting specifics proрosal, urged into on this “Before provide away taking that . . . a contract such as Plaintiffs’ expiration agent’s asset, independent records, valuable his de- an most against policy public and void. . . . clared to be These small businessmen
spend developing expiration an that their their lifetime so records can eventually they selling can retire rec- sustain them ords. . .” . that to stated and control already right possession
We have are insurance matters agency’s expiration proper is, therefore, not against public Such a contract policy. contract. If appellants are attempting stress the facts circumstances case, this particular we are not impressed. appellant, Scheufler, had been in default with his remittance premiums four times during December, 1961, the eleven month from рeriod October, 1962. His accounts not were to date brought following the stop 31, 1962, $12,000.00 order issued October when he was some in default. gave He the appellees five checks dates carrying different in satisfaction of the default. These checks were returned after all deposit marked “Insufficient Funds.” In December of Kansas, First National Bank of Hoisington, of which Hoisington, C. R. Scheufler was a president, judgment against оbtained him for $27,874.95. unauthorized loans in the sum of He also a suffered loss in 1962 of in the trucking business. He was not a small insurance agent being subjected to persecution. appellees had ample grounds believe C. R. Scheufler was not a proper repre- sentative to contact their insureds.
The letter of cancellation on which appellants rely reads: your agency “This will confirm the cancellation . . . your agency “The paying agency fact that is in default in balances of these Companies, expirations the records and control of are now vested in our Companies. appoint We will another to service this business. “Whatever amount expirations is obtained from the sale of these will be applied your past due you account. This take some will be responsible balance of the аccount still due. hope your cooperation “We this balance will be small.” When the letter of cancellation of the agency was written the appellees were making generous gesture under the assumption C. R. Scheufler Vohs, compete with the new agent, and Instead, solicit such expirations. Scheufler reconstructed the expira- tion records and proceeded solicit their business.
On this the trial court point found: “Vohs said that Scheufler told him he had reconstructed the Company policy records of the Alliance holders. Vohs also said that Scheufler calling upon policy policies expiring holders whose were and that many expirations. he to hold actually was unable such expirations He said purchased Companies really which he from the Alliance any- not worth thing. keep $3,000 Hе did more than worth of renewal business but he had to keep finally develop good agency work to it. He did but this was because up. of the new business he worked gave cooperation plaintiffs. “Defendants thereafter Defendants later against plaintiffs. threatened suit the Vohs and the Defendants solicited the plaintiffs’ policies sold to Vohs and caused *5 176 agent. plaintiffs Vohs, put plaintiffs Defendants and new difficultiеs of expenses, and trouble to save the business to substantial work Hoisington area.
in promise, for this unilateral it could be was received “Since no consideration plaintiffs obligation perform.” any under time and at withdrawn trial court. with the agree constrained We are 512, 408, Smith, P. in discussing Kan. 134 2d con- v. 156 Coder In of opinion: sideration, 513 page we stated petition question argued alleges is whether this court “In 420, Contracts, 70, prоmise. C. S. it is said: In 17 § oral for the sideration J. promisor or a loss or detriment to the is a benefit ‘Consideration Empire Co., including many cases, citing v. Gas and Fuel Brinkman promisee,’ Coop. Tice, 127, Equity 602, 107; Ass’n v. 122 Kan. Farmers Pac. 245 Kan. 120 350, Corp., Rempel 5 421; v. 134 Kan. P. 2d 1094. Shell Petroleum 251 Pac. by supported Also, p. 421, must be consideration to be valid ‘A contract 71:§ Bank, 356, 520, enforceable,’ citing McGregor v. 219 Pac. legally Contracts, See, also, 12 72. Am. § authorities. other Jur. Contracts, pertinent portion Restatement, of section reads: “In (1) promise (a) for a is Consideration “‘Definition of Consideration: creation, forbearance, (b) (c) promise, a or a or modification other than act relation, (d) bargained legal promise, a of or return destruction or ” exchange promise.’ given in nothing suggestion because gave up The appellants benefit, cancellation, nothing appellees letter consideration and no enforceable binding there was no therefore R. as related above conduct cer- agreement. claim. equitable be indicative of any would not tainly is no basis in contend there law or fact for appellants Last — Mrs. Scheufler. against rendered the judgment the trial court found: On this issue Williams, representative plaintiffs, Leonard field “On November Hoisington Agency concerning past at the Scheufler due accounts called given Peoples Mrs. then checks Scheufler drawn State and was Ellinwood, Kansas, as follows: Bank $705.36 11-16-62—FAI ..................... ..................... 439.68 11-16-62—FAI 2,320.75 .................... 11-21-62—AMC 1,287.36 11-21-62—AMC .................... 6,034.45 11-23-62—AMC .................... right-hand signed “Each check was on the lower side C. R. Scheufler and Mrs. across the left end Mrs. C. Scheufler. Scheufler said that she then doing making personally so knew and understood that she was herself through responsible payment thеreof. Such debts were created acting fiduciary capacity. defalcations these defendants while *6 deposited ‘Insuffi- and returned marked thereafter “All of checks were said cient Funds.’ appointed an insurance that she had been “Mrs. C. R. Scheufler testified premiums trust funds.
agent were collections of and that she knew that companies, agent some- signed many policies for insurance as the She said she putting her by signing husband that of her times her own name or else placed in the were initials underneath. She said the insurance Hoisington wrote account and she bank in R. Scheufler the C. living expenses expenses, rent, checks. She said wrote checks household she for normally signed checks all the and other that she matters. C. R. Scheufler said supplied.) bookkeeping.” (Emphasis because she did the court concluded: the trial findings, Based on the above personal knowingly for her Scheufler, having trust funds used “Mrs. C. R. signed having checks for purposes for than trust benefit and other payment, is $10,787.60 knowing intending for their be liable that she money.” personally along amount husband for such liable with her competent substantial by The trial findings supported court’s No further of law. the conclusion evidence and the findings support justified. discussion of this issue would be claim. counter alleged What has said disposes appellant’s been reason justifiable discloses A examination of the record careful court. for of the trial disturbing judgment The is affirmed. judgment
approved by the court. in debt to Scheufler was The dissenting: appellant J.,
Fromme, $11,921.92. The amount companies insurance appellee records which the expiration possession obtained companies these They six sold years. period over appellant compiled $11,231.77 and received for agent records to another $5,500 to refunded Later the companies of this amount. payment net pecuniary these records. The had purchased who records from the expiration companies benefit received $5,731.77. terminating notice written companies gave
The notice, in the is forth set In this written tract with appellant. as follows: the appellant the companies promised majority opinion, will the sale of these amount is obtained from “Whatever you may will your past take some time applied due account. This responsible any due.” balance of the account still the terms required of termination A written notice agreement The the parties. between agency agreement either рarty be terminated agreement provided, “[T]his other.” notice written received appellant termination notice of written only from a received companies amount the him that whatever advised to his account be applied sale of records the expiration the company. his account and the credit on did not receive for a him were against lower court entered
judgments whiсh the will have $11,921.92. The appellee-insurance total of agent’s expiration from the sale $11,921.92. plus judgments *7 the accepts because this court
This result is unjust permitted they legal received of the insurance argument any credit with appellant to promise consideration to support com- a the records. The amount received from sale of consideration was panies legal contend the was without promise was filed. propеrly withdrawn when this suit the syllabus in 3 of paragraph of law stated principle The general Contracts, Restatement, 75 and Sec. Coder v. the is based upon 2d 408. The statement in Coder Smith, 134 P. a promise may to the support that consideration acknowledges creation, legal or of a relation. The promise modification destruction of case arose out of the termination defend- in the present recеived relationship plaintiff. ant’s agency an support executory promise may consideration to adequate A a A in of moral legal relationship. obligation inhere the termination under by arise from benefits received the may previously promisor as will an support executory promise. such circumstances by appellees Prior to the the the present promise appellant a an under written contract. This relation- appellees by between the could terminated “written notice”. ship parties the years the five had During preceding generated $50,000 $143,000 in in losses. The approximately $93,000 an received excess under the appellees When the was terminated agreement. agency relationship written notice a specific termination contained promise apply the amount received from sale of company the
179 should not be per- records to account. The companies appellant’s obligations mitted to from the terminal separate promise this of their parties legal which existed reason termination Then- of termination was conditioned relationship. letter included arose promise obligation therein. The moral out the termination оf is sufficient legal parties relationship to constitute consideration for the promise.
It is hornbook law that moral of a obligation, the sense mere conscientious will not duty, support subsequent promise.
However, the rule which was
this court in Holland
recognized by
Martinson,
v.
237
Kan.
Pac.
holds that a pre-existing
is not
legal liability
essential
case for a moral
every
consideration
to be sufficient
an
A
support
executory
obliga-
moral
promise.
tion is sufficient to
support
executory promise
promi-
where
sor has
originally received from the
of value
promisee something
benefit,
form of a material
as
create
under
circumstances
such
a moral
obligation
for what he
part
promisor
pay
received. This is true
though
even
there was no antecedent or
temporaneous promisе or
and no
request,
legal liability
Co.
prior
Old American
Ins.
subsequent promise. (See
Life
495; State,
Funk,
v. Biggers,
C. A.
172 F.
v.
(1949,
10th)
2d
ex rel
146, 161,
113;
Schoenkerman,
105 Or.
209 Pac.
Estate
Wis.
311,
I would reverse the and remand the case to the district judgment amount court directions to credit accounts with the appellant’s from sale of appellees for the balances. judgments accordingly and to enter Fatzer, [., in the joins foregoing dissenting opinion.