MacKenzie Insurance Agencies, Inc. v. National Insurance

OPINION By the Court, Springer, J.: The summary judgment entered against plaintiff-appellant MacKenzie Insurance Agencies (MacKenzie) is reversed. There are issues of fact to be tried, and defendant-respondent National Insurance Association (NIA) is not entitled to judgment as a matter of law. MacKenzie is a Nevada corporation doing business as an independent insurance agency that sells lines of insurance under agency agreements with various insurance companies. On January 30, 1989, MacKenzie entered into an agency agreement with [505] NIA that provided for a commission at the rate of fifteen percent of MacKenzie’s total sales. The agency agreement, prepared by NIA, also contained the following termination provision: This agreement shall terminate at any time (1) by either party giving the other written notice, with or without cause, and (2) immediately without notice upon cancellation, revocation, or expiration of the Agent’s license issued by the State. Termination shall cancel all authority granted to the Agent. After signing the agreement, MacKenzie began placing policies with NIA at the contract rate of fifteen percent. Some time after the parties signed the contract, NIA sent MacKenzie a document styled as an “Addendum to the Agency Agreement,” which purported to reduce MacKenzie’s commission from fifteen to five percent effective May 15, 1990. MacKenzie continued to sell NIA policy renewals and new policies after NIA advised MacKenzie of its intention to reduce MacKenzie’s commission rate to five percent. Throughout the period from January 30, 1989, to May 15, 1990, MacKenzie received its commissions at the contract rate of fifteen percent. After May 15, 1990, however, NIA paid commissions on new and renewal business at the rate of five percent, based upon the unilateral “Addendum.” On September 10, 1990, NIA sent to MacKenzie a letter indicating that NIA was terminating the parties’ agency agreement. MacKenzie then filed an action against NIA claiming that NIA had breached its contract when it refused to pay the agreed-upon fifteen percent commission. NIA moved for summary judgment, which the district court granted. The trial court ruled that since the relationship between Mac-Kenzie and NIA was terminable by either party, with or without cause, the right of termination by written notice included the lesser right of imposing prospectively, changes in the conditions of the contract, including the terms of compensation. This is an incorrect interpretation of the parties’ contract. The written contract in question provides that either party could end the contract by giving written notice of termination to the other party. Neither party gave to the other the written notice of termination provided for in the contract; and, prima facie, the contract continued to be binding until it was terminated in accordance with its terms. The unilateral reduction in commission payments instituted by NIA does not release it from its contractual obligations for so long as the contract remained in effect. [506] The trial court incorrectly ruled that either party to the written contract had the “privilege of imposing prospectively, changes in the conditions of the contract.” If this were true, and either party had actually had the “privilege” of imposing unwanted changes in the contract on the other, then there would be no point in having a written contract which set the commission percentage agreed to be paid. The contract gives the parties an option to terminate by giving written notice; it does not give either party the “privilege of imposing” unilateral changes “in the conditions of the contract.” MacKenzie had the right to receive the fifteen percent commission rate agreed-upon by the parties until the contract was terminated in accordance with its terms, unless, of course, MacKenzie waived the required written notice or agreed expressly or impliedly to accept less than was provided for in the written contract. Whether MacKenzie and NIA entered into a new agreement or whether MacKenzie waived its rights under the written contract are factual questions that must be dealt with at trial. On this record, NIA is not entitled to judgment as a matter of law. The summary judgment is reversed. Rose, C. J., and Young and Shearing, JJ., concur.