Rosenbaum v. United States Credit System Co.

— 302 — The opinion of the court was delivered by Van Syckel, J. The declaration in this case sets out a contract by which the plaintiff was appointed the defendant’s agent for the State of Massachusetts, for the period of five years from December 1st, 1892, and alleges that on the 23d day of August, 1894, the defendant, without the fault of the plaintiff, ceased and refused further to employ him, and for this disregard of the contract damages are claimed. As appears from the declaration, the contract contains the following provision: “ It is further agreed by the party of the second part [the plaintiff] that-during the first three years of the existence of this contract he will, during each consecutive three months thereof, procure new business from parties who have never been guaranteed by this company prior to the procurement of said business, which said business shall be such as is accepted by said company, and shall be actually paid for, to an amount not less than one hundred and twenty-five thousand dollars ($125,000) for each of said three months, and in case of his failure so to do the said company shall have the right, which is hereby expressly reserved, to terminate this contract in its discretion.” The third and fourth pleas are intended to meet this clause in the contract. They each allege that “during three consecutive months during the first three years of the existence of the said contract the plaintiff did not procure new business from parties who had never been guaranteed by the defendant prior to the procurement of said business, to the amount of one hundred and twenty-five thousand dollars,” and that the defendant therefore terminated the said contract. The third plea also names the three months during which the required amount of business was not procured, viz., May, June and July, 1894. To eacli of these pleas, as well as to the fifth and sixth pleas, the plaintiff has filed a separate demurrer. The allegation in the third plea, “that during three consecutive months during the first three years of the existence — 303 — of said contract, to wit, the months of May, June and July, in the year eighteen hundred and ninety-four, the said plaintiff did not procure new business,” &c., if true, does not show a breach of the contract on the part of the plaintiff. The plaintiff did not stipulate that there should be no three consecutive months during the first three years of the contract, during which the business procured by him should fall below the fixed standard. The engagement is that the minimum amount of new business shall be procured in each consecutive three months during the first three years; that is equivalent to saying during each consecutive quarter, commencing December 1st, 1892. The first quarter contemplated by the contract is December, January and February. The second, March, April and May, and the third, June, July and August, and not May, June and July as in the plea set forth. The third plea is, therefore, faulty for failing to aver noncompliance with the terms of the contract. The fourth plea is fatally defective for the like reason. The fifth plea alleges in substance that the defendant company became insolvent, and ceased to employ plaintiff, because it was declared to be insolvent and enjoined from doing business by the Court of Chancery and put in the hands of a receiver, and that its charter was declared to be forfeited and void except for the purpose of the collection and distribution of its assets. The contract alleged in the declaration to which this plea is interposed is, that the defendant company appointed the plaintiff its agent in and for the State of Massachusetts to procure applications for insurance, which -appointment was to continue for the period of five years, and that the company agreed to pay the plaintiff, as compensation for his services as such agent, the sum of $5 for every $1,000 of guarantee issued by it upon application procured and presented by the plaintiff, and the renewals thereof on all regular business, and $7 per $1,000 of guarantee on inferior business, so long as he — 304 — shall remain the agent of said company, such sum to be paid only upon receipt by the company of all fees or premiums due for each certificate of guarantee, or renewal thereof, issued by it as aforesaid. What the effect of insolvency and forfeiture of the company’s charter will be upon a claim for damages for breach of a contract made with one who has no connection with the conduct of the business of the company need not be considered. The discussion in this case is limited to the effect of such insolvency and forfeiture upon a claim for damages for breach of a contract to continue the plaintiff in the service of the company after the time when the receiver was appointed. It is well settled that contracts for personal services are made upon the implied agreement that both contracting parties will continue to live, and they are terminated by the death of either party. Farrow v. Wilson, L. R., 4 C. P. 743. Spalding v. Rosa, 71 N. Y. 40, and cases cited. The distinction between contracts for personal service and contracts with policyholders was applied in People v. Globe Mutual Insurance Co., 64 How. Pr. 240, which was a case involving the question now presented, and where, as in this case, the life of the company was extinguished by the act of the state. There the New York Supreme Court held that a general agent whose compensation depended upon his success in procuring insurance for the company upon which he was to receive a percentage, could not maintain an action for damages against the receiver, because before the expiration of the period for which he was engaged, he was prevented by the insolvency, receivership and dissolution of the company from continuing his employment. This view was unanimously concurred in by the New York Court of Appeals. The views of the court are presented in a clear and. forcible opinion by Mr. Justice Finch. People v. Globe Mutual Insurance Co., 91 N. Y. 174. The rule adopted in that case will be accepted here, and the demurrer to the fifth plea overruled. — 305 — The decree declaring insolvency and forfeiture of the charter and the appointment of a receiver operated alike upon the company and its agents, so that neither could perform and put the other in the wrong. “ There being no right to continue the service there can be no future earnings; and as the prohibition to continue the corporate business must prevent the obtainment of other policies of insurance, there cannot possibly be an allowance of damages based upon the possibilities of future earnings, which, it is plain, can never be made.” 64 How. Pr., supra. In the language of the contract declared upon, “ the plaintiff, so long as he remained the agent of the company, was to be paid his stipulated percentage only upon receipt by the company of all fees or premiums due for each certificate of guarantee, or renewal thereof, issued by it.” After the receiver was appointed and the charter of the company declared to be void, it is manifest that the plaintiff could not obtain any business for the company upon which his right to a percentage would arise. The sixth plea sets up a Massachusetts statute, providing that only certain classes of risks shall be the subject of insurance in that state, and that no foreign insurance company shall be allowed to do business in that state without license from the insurance commission. The plea further alleges that the defendant company was not authorized to transact its business in Massachusetts; that the plaintiff was not authorized to transact the business as agent, and that it was unlawful to engage in the business of indemnifying any person against excess losses from credit in said commonwealth, and that therefore, the said alleged contract was void. The objection to this plea for duplicity cannot be considered on general demurrer; it must be taken advantage of on motion to strike out. To maintain this plea as a substantial defence to the action, the defendant cited and relied upon the case of Claflin v. United States Credit System Co., 43 N. E. Rep. 293, but it is not necessary to criticise that case. — 306 — On demurrer the allegations of the plea must be taken to be true. Assuming it to be true as alleged in this plea that the plaintiff was not authorized to transact the business which he engaged to do, and that it was unlawful to engage in such business, it is obvious that no action can be maintained for failure to employ the plaintiff to transact it. No one can be constrained to do an act against the law, nor can he be cast in damages for the refusal or neglect to do such act, or permit it to be done. The demurrer to this plea must be overruled. The demurrers being separate to each plea, costs will be allowed to the party prevailing in each case.