141 F. 835 | 8th Cir. | 1905
after stating the case as above, delivered the opinion of the court.
This action is predicated of two written contracts of January 30, and 31, 1903. We are unable to perceive what advantage can be claimed by the defendant in error in having it conceded that the two contracts of January 30th and 31st “were made, executed and delivered at the same time and as part of one transaction.” If they are to be treated as interdependent, so as to be an inseparable legal unit, the action should fail when no recovery was or could be had for a breach of the salary contract. Indeed, if,' as his counsel insists, the inducement for the guaranty of the contract between the parties was the acceptance of service as agent under the plaintiff in error, and the defendant in error, of his own motion, resigned that agency, it would follow that the consideration between the parties for the two contracts should be held to have failed, and therefore the plaintiff in error would be absolved from liability on both. As the judgment was predicated alone of the contract of January 31st, it must stand or fall as the right of recovery thereon shall be decided.
The first contention is that the plaintiff in error broke the salary contract of January 30th by refusing to go on with its execution, independent of the interference of the court in annulling the contract of December 18, 1903, between the two companies; and second, by reason of its failure to renew the license to do business in the state of Nebraska. A brief review of the correspondence between the parties between January 31st and February 13th, the date of defendant in error’s resignation, and the letter of resignation, will demonstrate that the resignation was voluntary, and that the contention now made respecting the obligation of the plaintiff in error to retain the defendant in error under the salary contract and the failure to renew the license, is a mere afterthought. In the letter of February 5th, advising the defendant in error of the decision of Judge Hook and the purpose of the court to perpetuate the business of the Mutual Company, Mr. Davis, president of the Union Company, after saying that “the decision was a great disappointment,” said:
The response made to this letter by Mr. Burman was a demand to return to him a check for the amount of premiums paid on his own policy and that of his wife for the month of January; thus contributing to discredit the business and bring about lapses on policies. In this letter he made complaint of the failure to pay his salary. On the same day Mr. Davis wrote him informing him that under the order of the court the officers, clerks, agents, and collectors, should collect premiums under the supervision of the trustees appointed by the court, and remit them to the office as usual, and generally carry on the business of the Mutual Company as theretofore; that these officers were directed to pay. out no money at the present time, and for that reason they were restrained from paying the February salary and March rent, until the trustees qualified and took charge of the business, promising to call their attention to this matter. In another letter of the same date Mr. Davis advised Mr. Burman of a conference had that morning with a number of the agents and the attorney, and that it was decided under the order’ of court that the officers, clerks, agents, etc., were expected to render their services to the Kansas Mutual Life, and therefore he advised that they proceed with the solicitation of applications for the Mutual Company.
On the 7th of February Mr. Burman wrote Mr. Davis in answer to the letter of the 6th, making inquiry as to. whether the Kansas Mutual had authority to do business in Nebraska, as its certificate expired on the 1st of February, in which letter he said:
“It is my opinion tbat the Kansas Mutual Life will never succeed in reorganization, although I earnestly hope that they may do so. This reinsuring in the Kansas Union and then the reorganization of the Kansas Mutual has done irreparable harm. * * * Will you kindly advise me where I stand? I hold a contract with the Kansas Union Life Insurance Company, and also-a guaranty with them that my renewal commission contract with the Kansas Mutual will be taken care of. And in the absence of a contract with the Kansas Mutual, I shall hold the Kansas Union for my salary and expenses. I .shall be pleased to receive full instructions in regard to this matter. The impression of our policy holders and the public in general is that the company is insolvent-and in the hands of receivers. * * * If this is not a fact, equal prominence should be given to repudiate that statement, and it also seems to me that every policy holder should receive an explanation as to the company’s status and future and that cannot be done any too-quickly.”
This is the only reference made by Mr. Burman to the expiration, of the license to do business in the "state of Nebraska. On .the same-
“The Kansas Union has no other thought or intention but of being true to you and every other agent and employs, and have arranged for the Kansas Mutual to protect the Kansas Union along every line. * * * In the meantime, please use your influence in keeping the policy holders in line and also the agents in your employ.”
On February 10th Mr. Davis, replying to a letter of Mr. Burman of the 7th instant, said:
“You ask the question where do you stand, holding a contract with the Kansas Union and also a guaranty that renewal commission under your Kansas Mutual contract will be taken care of. The Kansas Union expects to take care of your contract fairly and honorably, and from inclosures you will notice that the court provides that the Kansas Mutual shall protect and hold the Kansas Union harmless on account of any agent’s contracts taken over from the Kansas Mutual Life Insurance Company. * * * Please be patient and kind about the matter, and you will receive a check for salary and all other expenses at an early date. You ask how about the policies issued by the Kansas Union. Of course, the Kansas Union will take care of and protect the interest of its policy holders.”
On February 11th the trustees wrote to Mr. Burman, advising him 'that the business of the Mutual Life would be continued on the lines as near as possible conducted prior to the 18th of December, 1902; that he was authorized and directed to solicit applications for insurance in the Mutual Company on the same conditions as set forth in his agency contract; and directing him to encourage the policy holders to pay renewal premiums when due. The only response made to all this was the letter of resignation of February 13th, which shows on its face that the sole ground of resignation was his conclusion that the decision of Judge Hook, annulling the contract between the two companies, made “it impossible for me to be of any service to your company,” and in which he stated that:
“Tbe complications that have arisen in this matter are such that a conscientious agent of the Kansas Union or the Kansas Mutual would be doing both himself and the company he undertook to represent an injustice in attempting to write insurance at the present time. And it will be at least some time before this embarrassment can be overcome: * * * It is evident that this union of the companies has very materially damaged me with reference to my Kansas Mutual contract, and, as the Kansas Mutual Life Insurance Company is directly responsible for this loss to me, I will, as soon as I can estimate my actual damages, present a claim against your company for such damages. And while I will make this claim against your company, I do not in any manner waive any rights I have against the Kansas Mutual Life Insurance Company under all my contracts with that company. I therefore by these presents tender my resignation as state manager for Nebraska to the Kansas Union Life Insurance Company to take effect March 1, 1903,
The letter of resignation shows on its face that this astute insurance agent was stating 'his case with a view to litigation with the plaintiff in error, and with ingenious particularity he specified the reasons that influenced his surrender of the agency. It was not upon the ground that the Union Company was unwilling to proceed to carry out the salary contract, or on the ground of a failure to renew the license. It is a wholesome rule of law, instinct with fair play, expressed by Mr. Justice Swayne, in Railway Company v. McCarthy, 96 U. S. (6 Otto) 267, 24 L. Ed. 693:
“Where a party gives a reason for his conduct and decision touching anything involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and different consideration. He is not permitted thus to mend his hold. He is estopped from doing it by a settled principle of law.”
This principle has been applied in the following instances: Davis v. Wakelee, 156 U. S. 690, 15 Sup. Ct. 555, 39 L. Ed. 578, where a bankrupt obtained his discharge, claiming that the judgment against him was not affected by it, it was held he could not, in a subsequent action on the judgment, deny its validity. In Davis, etc., Company v. Dix (C. C.) 64 Fed. 411, where it was held that the purchasers of a creamery repudiating the contract on the ground of fraudulent representations, could not thereafter set up an interpolation in the contract. In Harriman v. Meyer, 45 Ark. 40, where it was held that the defense that a tender was not made in ready money was not admissible where the prior objection was to inadequacy of price. In Wallace v. Minneapolis, etc., Elevator Company, 37 Minn. 465, 35 N. W. 269, where it was held that a bailee refusing to deliver wheat because ■claimed by another, could not afterwards refuse on the ground that the charges were not paid. In Harris v. Chipman, 9 Utah 105, 33 Pac. 243, where it was held that a plaintiff rejecting title for want of administrator’s bond, could not be heard to object afterwards that letters of administration were not under seal. In Ballou v. Sherwood, 32 Neb. 689, 49 N. W. 796, where it was held that title objected to because of pending litigation, the purchaser could not afterwards object for want of seal on the deed. In Frenzer v. Dufrene, 58 Neb. 436, 78 N. W. 720, where it was held that where a party alleged his Avife’s recalcitrance as a reason for not executing a contract, he could not afterwards be heard to allege other reasons.
This rule should have especial application to this case for the palpable reason that had the defendant in error assigned as a reason for resigning his agency the neglect to renew the license, he would have afforded the company an opportunity to remove the objection. By not assigning the delay or omission as a reason for his refusal to continue his agency, and making no claim either in his letter of resignation or in fact in the petition that the plaintiff in error was unwilling to go ahead with the salary contract, he, in effect, said such ground is not relied on. The truth is that the most persuasive
By his own statement, in the letter of resignation, he recognized that the only obligation of the Union Company for his commissions on premiums was under the contract of assumption for the liability of the Mutual Company; and he only made claim for his salary up to the 1st of March. The whole gravamen of the petition as a basis for the claim for damages under the salary contract is the alleged failure of the plaintiff in error to renew its license in the state of' Nebraska. Moreover, on the trial, on ruling on the demurrer to the evidence and in its charge, the court expressly ruled that no damages by way of profits on anticipated business which the defendant in error might do for the plaintiff in error within the year, were recoverable; but in the submission to the jury limited the inquiry to supposable commissions on renewal premiums. The defendant in error sued out no writ of error on this ruling, and he is, therefore, in no position to complain here thereof. He has had his day in court on that issue, and that controversy has passed in rem judicatum. What possible basis did or could Burman furnish for estimating such profits? During the year he was doing business in the same field under a salary contract of $200 per month and traveling expenses, with a bonus or sum equal to 6 per cent, of the gross premiums received on business from the date of the contract with the Fidelity Company, which took effect February 14,1903, in excess of the premium receipts from said state for the previous year. This contract, according to the proofs, he deemed more advantageous to himself than his salary contract with the plaintiff in error. As he could not have served both masters in the same field during the same year, to furnish any possible basis for estimating profits in this action an accounting of his salary and commissions earned under his contract with the Fidelity Insurance Company would have to be taken to show his loss, if any. His claimed damages in this respect, therefore, were entirely speculative, if not imaginary.
Treating the two contracts of January 30th and 31st as divisible, as the defendant in error must do to sustain his judgment, he must maintain the position, not only that the plaintiff in error, on the 13th day of February, 1903, had broken the contract of January 31st, but had
“That no commissions shall be due or payable to said party of the second part upon any policy, except upon the actual payment in cash to said company of the premium stipulated in that policy for the terms for which the commission is claimed.”
And respecting renewal commissions it declares that:
“The renewal commissions under this contract on all forms of policies shall be 7% per cent, of the annual premium, as paid to the company.”
As the guaranty is no broader than the thing guarantied, the only undertaking by the plaintiff in error in this respect was, first, to pay to the defendant in error commissions upon the policies obtained by him “upon the actual payment in cash to said company of the premiums,” and, second, the renewal commissions as the premiums should be “paid to the company.” The petition neither avers, nor did the defendant in error make proof, that any such payments had been made after the execution of the contract in question or any prior thereto unaccounted for. And if any such premium had been collected or received by the plaintiff in error, unaccounted for, it was by the decree of the court required to be turned over to the trustees appointed by the court. To escape from this obvious purport of the contract of guaranty, counsel for the defendant in error was driven to the position of seeking to maintain the right to recover the entire amount of prospective premiums on the theory that by its wrong the plaintiff in error had broken the contract so as to render it impossible of performance. This contention took form and was made the basis of recovery in the following portion of the court’s charge to the jury:
“However, if you find from a preponderance of all the evidence in this case, that the defendant company and the property it received from the Kansas Mutual Life Insurance Company were, by the decision of this court, placed in the bands of trustees appointed by this court and afterwards turned over to the Illinois Life Insurance Company, under order of the court, and that the appointment of said trustees and the decision of this court rendered impossible the fulfillment of the contract, and that this was occasioned by the fault of the defendant company in entering into its contract with the Kansas Mutual Life Insurance Company, then and in that event the breach of the contract between plaintiff and defendant was in law occasioned by the defendant.”
From which it is made clear that the learned trial judge was not willing to say that if all the property and benefits which the plaintiff in error received from the Mutual Company were by the decision and order of the court taken away from it and placed in the hands of trustees of the court, and under its order turned over to the Illinois Life Insurance Company, whereby the contract was rendered impossible of fulfillment, the defendant in error was entitled to recover as for a breach
An actionable, breach of contract, in its very nature, must be supervenient. It must arise after the making of the contract, from some affirmative act in disregard of its mandate. The act of entering into the contract with the Kansas Mutual Life Insurance Company occurred 40 days prior to the contract in question with the defendant in error. The existence of the contract between the two companies was fully known to the defendant in error when he entered into the contract with the plaintiff in error on January 31, 1903. More than that, he then knew that the validity of that contract was being tested in court; and it was as much within the contemplation of the defendant in error as in that of the plaintiff in error that the possibility of carrying out the contract of guaranty depended upon the result of that suit. When the defendant in error entered into the contract with the Mutual Company no contractual relations existed between it and the defendant in ■error,v and it owed him no duty in that regard. In so far as he was ■concerned, the plaintiff in error could enter into any arrangement with the Mutual Company to take over its business and reinsure its outstanding risks, without incurring any liability to any agent of the Mutual Company, except its liability to account in equity to such agent for any fund transferred to it by the Mutual Insurance Company, or thereafter received by it under the contract of transfer, when such fund might be chargeable in its hands with some lien, express or implied, in favor of such agent. No adjudicated case has ever gone further in this direction.
The case of Schrimplin v. Farmers’ Life Association, 98 N. W. 613, 123 Iowa, 102, is an apt illustration. In that case the Bankers’ Guaranty Life Association made a contract with an agent which inured to the benefit of the complainant, Schrimplin, by which the agent became entitled to a stipulated commission on premiums obtained by him, and on renewals thereof for a designated period. The contract contained the express stipulation that no transfer of management or change of name of the association or reinsurance by any other concern, should affect the plaintiff’s right to receive the stipulated income from the renewals of said policies. Under this contract the agent effected a large amount of insurance, when the said association, by convention between it and the Union Life Association, transferred
“Then, and not till then, did any indebtedness arise to plaintiff for which it could be held liable. It has received these moneys not only with notice of the charge attaching thereto for the benefit of plaintiff, but with promise to pay the same, and it will not now be permitted to retain them and shield itself behind the plea of ultra vires against the plaintiff’s demand for an accounting. * * * We must not overlook the fact, already suggested, that to hold defendant liable for the payment of plaintiff’s claim does not in reality add a single dollar to the burden of its original members. Defendant is required to account only for the renewal payments made to the expense fund by the membership taken over from the Union Association.”
Commenting upon the case of Twiss v. Guaranty, 87 Iowa, 733, 55 N. W. 8, 43 Am. St. Rep. 418, the court said:
“If, in the case before us, plaintiff’s claim was one which had accrued or become payable from the Union Life Association before the transfer of the business to the defendant, or if it was shown that defendant had received and retained nothing of value by reason of such transfer, * * * then the precedent cited would perhaps be in point.”
9
What difference can it make that the action at bar is based upon an express contract between the parties rather than on one which the law implies? The same obligation and the same consequences arise and flow from each. The express undertaking was to account to the defendant in error for his commissions as the premiums should be paid to the company, and not otherwise. On the authority of this Iowa Case, invoked.by counsel for defendant in error, it mattered not if the contract between the two companies was ultra vires, the purchasing company was estopped from interposing such defense, on the ground that having knowingly, by virtue of the transfer, received and retained the fund impressed with a trust in favor of the complainant, it was unconscionable to withhold it from the cestui que trust. But in the case at bar, not only has the plaintiff in error not received any fund to which the claim of the defendant in error attaches in its hands, but the very compact it made, by which alone it could ever collect or receive a cent of premiums, was nullified by the decree of court, and it
As already suggested, the defendant in error knew when he entered into the contract with the plaintiff in error that the validity of the transfer from the Mutual Company was being tested in court; and that the ability of the plaintiff in error to perform the contract by accounting to him for commissions on premiums paid depended upon the result of that suit. And one remarkable feature of the court’s ruling on the demurrer to the evidence was in the following paragraph:
“I'have refused to allow evidence here as to damages for anticipated profits on this contract, because the plaintiff in this case knew, or by the exercise of any ordinary care might have known, that the Kansas Union had placed itself in such a position under the law that it could not comply, and I have relieved the case of that element of damages.”
If the plaintiff was disentitled to recover damages for anticipated profits because he knew that the Kansas Union had placed itself in such position under the law that it could not comply, for the same reason, and by. the same logic, he was not entitled to recover any other damages ■ resulting from the. alleged breach of the contract.
In his letter of resignation the defendant in error said:
“In view of the decision of Judge Hook in the recent case testing the legality of the transfer of the Kansas Mutual into the Kansas Union and placing it in the hands of trustees, thereby making it impossible for me to be of any service to your company, I have decided to sever my connection with the Kansas Union Life Insurance Company.”
If the decree absolved him from his contractual obligations, by making it impossible for him to be of any service to the company, by the same token, mutatis mutandis, it should follow that it operated to acquit the company from further performance.
In People v. Globe Mutual Life Insurance Company, 91 N. Y. 174, it was held that where a life insurance company had entered into a contract with an agent for a specified term, at a stipulated salary, etc.,
In principle there can be no distinction between an injunction granted on the interposition of the state, in the exercise of the soveriegn right of visitation, and one granted by the court at the suit of a stockholder on the ground ¿hat the transaction of the two corporations is in contravention of the charter granted by the sovereign. The decree of the court rendered it illegal for the plaintiff in error to collect or receive a dollar of premiums on the policies issued by the Mutual Company; and it prevented the agent from paying over a dollar to the plaintiff in error of any such premiums. And as there was no evidence that the plaintiff in error either induced or connived at the action taken by the stockholders of the Mutual Company, the case seems to us to come within the ruling in People v. Globe Mutual Insurance Company, supra, the reasoning of which commends itself to our approval. This case is followed and approved by Judge Simon-ton in Malcomson v. Wappoo Mills et al. (C. C.) 88 Fed. 680, holding that damages are not recoverable against a corporation for its failure to perform a contract for the sale and delivery of merchandise where performance was prevented solely by the action of a court in appointing a receiver for the corporation, and enjoining all others from interfering with its business or property. The vis major, which prevents performance in such cases, is the interposition of the court.
The situation is little different, in the concrete, from that where, on account of the nature of the contract, it is evident that the parties dealt on the assumption of the continued existence of the thing to which it relates, the subsequent destruction of which, in law, will excuse performance. The substantive thing contracted about by the parties here was the collection of renewal premiums on the policies theretofore issued by the Mutual Company, on which depended the right of the defendant in error to commissions. And when the court, without default on the part of either party, and against the resistance of the plaintiff in error, impounded the subject-matter—took it into custodia legis—and prohibited the plaintiff in error from collecting or receiving any such premiums, and required the agent to attorn to the trustees appointed by the court, it in effect put an end to the
Aside from the liability of the Mutual Company to the defendant in error for commissions on premiums collected, the only limitations or conditions imposed by the contract between him and the Mutual Company are found in the 12th paragraph, which declares that:
“In the event of the termination of this contract from any cause after two years from date hereof, the company will continue to pay to said Frank Burman, if living, or to his executors, administrators or assigns, the renewal commissions under this contract as they accrue and are paid, less any indebtedness, for as many years as the party of the second part shall have been' in the employ of said company under this contract; provided, there shall not be less than $500,000 of insurance in force upon the books of the company at the time of such termination, written by said party of the second part and his agents; provided, further, that if at any time the renewal premiums or any portion of them are collected by or at the expense of said company, or in the event of the termination of this contract from any cause whatsoever, there shall be deducted from the renewal commissions due said party of the second part, 2% per cent, of the annual premium as collected, to cover cost of . said collection.”
So if the attempted transfer by the Mutual Company to the Union Company warranted the agent, Burman, in treating his agency for it at an end, the situation came clearly within the purview of said paragraph 12, as a termination of the contract from any cause after two years from its date (the contract at that time having been in force more than two years), whereby he would, as against it, be entitled to be paid by it “the renewal commissions as they accrue and are paid.” If such renewal premiums are paid to the Mutual Company or to its transferee, with notice, or under a guaranty or assumption, the agent would be entitled to his commissions or renewals as they accrue and are paid and not otherwise. He cannot be placed in a better position by a termination of his contract from any given cause than the contract expressly stipulates. Where the parties by contract have expressly provided for the liability of one of the parties by reason of its termination, it is not for the court to substitute a different and additional liability.
Other errors complained of in the progress of the trial, and the charge of the court to the jury, need' not be considered. As the case stood at the conclusion of the evidence, the court should have directed a verdict for the defendant below. The judgment of the Circuit Court is, therefore, reversed, a-nd the cause is remanded with direction to grant a new trial and for further proceedings herein in conformity with this opinion.