206 Mass. 203 | Mass. | 1910
This is a suit in equity for an accounting between a fire insurance company and its agents. The material facts are that the defendants were constituted the agents of the plaintiff by a contract dated September 3, 1903, which set out the terms under which the business was to be done. .It contained no express provision as to termination, and both parties assumed that the relation would be of long duration. On February 15, 1907, the plaintiff telegraphed the defendants in substance that it had reinsured its fire risks and discontinued that branch of its business. The controversy arises as to the contingent commission, which may be due under this clause of the agency contract, to wit:
“ In addition to the above rates of Commission, a contingent commission of 10% will be allowed you, predicated on the yearly profits of the Agency, computed in the following form, — the first computation to be as of September 1, 1904, i. e. —
“ The first year you will be credited with the gross amount of premiums written, less cancellations, reinsurances and returns of every nature on the one hand, and debited with commissions,
It is to be observed that this language does not specifically refer to the state of affairs which has arisen. It must be assumed, however, that an ending at some time of the relationship created by the contract was impliedly contemplated. It would inevitably occur by the efflux of time through the death of one or both of the defendants. The language of the clause is general. Its purpose is to make a part of the compensation of the defendants commensurate with the energy, industry and perseverance with which they should prosecute their work as agents. This purpose is applicable to the relation of the parties, whenever the agency may cease. The words, “predicated on the yearly profits ” do not indicate an intention that no such profits should be ascertained in the event of a termination of the agency between the annual dates fixed in the contract, but rather describe a term of calculation which is to be used year by year, so long as the contract is in force, and for any fraction of a year remaining unadjusted when the relation of principal and agent ceases. See Doe v. Grafton, 18 Q. B. 496, 501. The date was apparently adopted for convenience, and was not coterminous with the calendar year of the agency. Hence the terms of payment established by the contract are to be applied to the situation of the parties as it is found to be on February 15,1907, and their rights and liabilities are to be determined as of that date.
The plaintiff urges that the word “ reinsurances ” in the contract means that in making up the items of the account upon which the contingent commission is to be computed, the actual cost to it of reinsuring its risks should be charged against the gross premiums. Evidence was received to show that the word “ reinsurance ” as used in dealings between fire insurance com
The contract must be the only guide for ascertaining the rights of the parties. We cannot speculate as to what they might have agreed had the event which has now come to pass been before them when its terms were settled, nor undertake to make what may now seem an equitable adjustment of their conflicting claims. The rule which the parties have themselves adopted must be used to measure their obligations. According to that rule the contingent commission is to be computed, whenever the occasion arises for ascertaining it, by putting upon the credit side of the account the gross amount of premiums received for the period under consideration, (less cancellations, agency reinsurances and other returns,) and the forty per cent reserve which had been used as a debit item at the last previous accounting, and charging against it on the debit side, expenses, losses and a forty per cent reserve on the net premiums of the period under consideration. Upon whatever balance of profit is thus shown the contingent commission is to be computed.
The master has found that the word “reserve,” employed to describe the item of forty per cent on the net premiums in making up the account, although used in the insurance business to designate a fund set aside for reinsurance of outstanding risks, if necessary, is not limited to this meaning but includes also funds to pay losses or other expenses of the business. In whichever sense it may have been used in this contract, the result is the same. Forty per cent on the net premiums of any
On the report of the master under this rule the balance due the plaintiff is $219.48.
So ordered.
This sum was arrived at by the following computation, based upon findings of the master: