Macgregor v. Union Life Ins.

THAYER, Circuit Judge, after stating the case as above, delivered the opinion of the court. The complaint to which the demurrer was addressed contains allegations that are sufficient to show that the contract in suit had been broken by the defendant company when this' action was commenced, unless the agency contract was of such a nature that the agency could be terminated at the pleasure of the company. The doctrine is elementary that when one of two contracting parties disables himself from performing the stipulations by him to be performed, or refuses to permit the opposite party to execute the agreement according to its tenor, he is guilty of a breach of contract, and may be sued therefor. Wolf v. Marsh, 54 Cal. 228; Smith v. Jordan, 13 Minn. 264 (Gil. 246), 97 Am. Dec. 232; Webster v. Coffin, 14 Mass. 196; Bishop on Contracts, §§ 826, 1426. In this instance the complaint not only alleged that the defendant company, by abandoning its business and transferring it to another, had disabled itself from keeping its engagements with the plaintiff, but it was also averred that it had refused to permit the plaintiff to further act as its solicitor and manager. The important question in the case, therefore, would seem to be whether the defendant company, acting within its rights under the contract, could terminate it without cause, at its mere pleasure, without incurring any liability to the plaintiff, who had agreed to act as its agent and manager. A contract should always be so construed as to effectuate the intentions of the parties thereto; and, in determining what was their intention, everything within the four corners of the instrument is to be considered, as well as the situation and relations of the parties, and the subject-matter to which the contract relates. A mere glance at the agreement before us, as well as a consideration of the business to which it related, convinces us that it was not the intention of the parties to create an agency of a mere temporary character. One of the contracting parties was an insurance company which desired to build up a permanent and lucrative business in a large city and in a populous district adjacent thereto. To that end, it appointed the plaintiff, who was presumptively an experienced insurance agent, as its [497] manager at the place in question; agreeing to pay him as compensation for his services not only a commission on initial premiums, but also a commission of 7^2 per centum on all subsequent premiums on business solicited by him, or any of the agents whom he might appoint, and binding him to send to the company only such business as, in his judgment, would “continue in force and pay premiums after the first year,” and to solicit only good business, that would “be a credit to both agent and the company.” These circumstances create a strong presumption that, in the contemplation of the parties to the agreement, the agency was to continue for a considerable period, and might last for years. Indeed; it can hardly be supposed that two persons entering into such a business arrangement, and having such objects in view, would intentionally leave either party at liberty to terminate it without cause at his mere pleasure. Turning to the contract which is quoted above, it will be observed that in one of the opening paragraphs it was provided that the compensation agreed to be paid to the plaintiff should be “subject to revision at the end of five years,” while in the same clause it was declared that the compensation specified should be paid “during the term provided for in this contract.” In view of this language, it is manifest that the parties to the agreement supposed that they had fixed a period or “term” for the continuance of the agency. It will also be observed that in paragraph 2 of the agreement the defendant company reserved the right to declare the contract at an end if the plaintiff “shall procure no applications for insurance for said company during a period of two consecutive months, except in case of temporary sickness or accident”; also that by paragraph 8 it reserved the right to terminate it for any dereliction of duty, such as a neglect on the part of the plaintiff to attend to the collection of renewals, or if he was guilty of any conduct prejudicial to the interests of the company. These provisions reserving the right to declare the contract void and to terminate it for the reasons last specified were clearly unnecessary if it be true, as now claimed, that the defendant company had the right to put an end to the contract at any time at its mere pleasure. Moreover, provision 10 of the contract, on which some stress was laid in argument, as giving the plaintiff the right to abandon the agency at any time, did not, in our opinion, confer that right, but was only intended to secure to the plaintiff his right to commissions on renewal premiums, provided that the contract was terminated, after the plaintiff had been in service for as much as three years, for any of the causes therein specified. It is a well-known rule for the construction of contracts that a contract should be interpreted, if possible, so as to give effect to all of its provisions, and not render any of them nugatory or useless; for, when parties insert independent stipulations in an agreement, they are supposed to have some object in view, and to have formulated them for the purpose of securing some right or guarding against some liability which otherwise would not be adequately secured or guarded against.- It is also well settled that whatever may be fairly implied from the express provisions of an agreement is as binding and obligatory upon the parties thereto as that which is in terms expressed. [498] Williams Cooperage Co. v. Scofield, 115 Fed. 119, 123, 53 C. C. A. 23. Applying these rules to the contract in suit, and considering all of its provisions, we are of opinion that the contract created an agency for the term of five years, and that such was the intention of the parties. After the lapse of that period the plaintiff’s compensation was to be readjusted, and if the parties failed to. agree on that point the agency would necessarily end; there being no agreement for compensation after that time. If they did reach an agreement, a new contract would necessarily result therefrom; the old one becoming functus officio. It is true that the contract contained other provisions, to which reference has already been made, in virtue of which the agency might be terminated at an earlier day — as, for example, if the plaintiff failed for as much as two months to secure applications for insurance, or was guilty of any of the specified derelictions of duty; but, barring the termination of the contract in these ways, it was to continue, we think, for a period of five years, and in this respect was mutually obligatory, upon the contracting parties. The views heretofore expressed find support, we think, in the following cases: Thus in Norton v. Cowell, 65 Md. 359, 4 Atl. 408, 57 Am. Rep. 331, an accepted offer tendering one wages at $100 per month, and containing the further clause, “and if you give me satisfaction at the end of the first year I will increase your salary accordingly,” was held to imply an engagement for a year’s service. So, also, in Gundlach v. Fischer, 59 Ill. 172, where an agent was employed to sell certain machines, and the principal agreed that, if the agent faithfully performed his duties, he would furnish him such a number of machines as he might be able to sell prior to October 1, 1867, it was held that this imported a definite agreement that the agency should continue until October 1, 1867. And in the case of Smith v. Theobald, 86 Ky. 141, 5 S. W. 394, the court concluded that one who had been employed to come from a neighboring city, where he was manager of a hotel, and assume control of a hotel at Hot Springs, Ark., at a salary of $125 per month and board for himself and family, in view of all of the circumstances, was engaged for a year, although there was no express promise to that effect. See, also, Koehler v. Buhl, 94 Mich. 496, 54 N. W. 157; Danby v. Coutts, L. R. 29 Ch. 500, 515. The general doctrine which is invoked by counsel for the defendant company, that a principal is entitled to revoke the authority of an agent at any time, when there is no express or implied agreement between -them that the agent shall be retained for a definite period, is not denied; but in the case in hand we are of opinion, for the reasons already stated, that there was an implied agreement between the contracting parties that the agency here involved should continue for the period of five years unless it was terminated by mutual consent, or in one of the ways provided for in the contract. We conclude, therefore, that the petition stated a cause of action, and that the demurrer thereto ought not to have been sustained. No question arises upon this record concerning the appropriate measure of damages for the breach complained of, and no opinion need be expressed on that point. Even though the damages for the breach shall prove to be nominal,.the petition states a cause of action, and [499] whether it does state a cause of action is the sole question presented on the present occasion. The judgment below is reversed, and the case is remanded for a new trial. SANBORN, Circuit Judge, dissents.