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STATE FARM MUTUAL AUTOMOBILE INS. CO. v. WEST

March 18, 1960

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, STATE FARM LIFE INSURANCE COMPANY, AND STATE FARM FIRE & CASUALTY COMPANY, PLAINTIFFS,
v.
STANLEY M. WEST, DEFENDANT.



The opinion of the court was delivered by: John E. Miller, District Judge.

The question before the court is presented by motion filed by plaintiffs for summary judgment on Count 2 of defendant's counterclaim and the cross motion filed by the defendant. All other issues have been disposed of, and the only remaining issue in this case is the claim of defendant against the plaintiffs on Count 2 of his counterclaim. The parties have stipulated the relevant and material facts.

The defendant and plaintiffs entered into a written agreement effective January 1, 1954, by which the defendant was appointed Local Agent for plaintiffs. A copy of the contract and defendant's acceptance of the appointment are attached to the stipulation, and designated as Form LA 540. The acceptance provision, omitting the formal parts, is as follows:

    "I hereby acknowledge receipt of executed Local
  Agent's Appointment Form LA 540 dated January 1,
  1954, and attached Schedule of Payments Forms A 541,
  L 541, F 541, applicable to the respective Company as
  indicated, constituting the entire offer of
  appointment and agreement by each Company as set
  forth therein all of which I hereby accept effective
  as of the date above and as evidence thereof have
  hereunto affixed my signature, properly witnessed,
  this 16th day of December 1953."

It is agreed, also, that the plaintiffs have paid the defendant all sums due under paragraph 1 of Form A 541.

The claim of defendant is based upon paragraphs 2, 3, and 4 of Form A 541, which is "Schedule of Payments and Conditions referred to in Local Agent's Appointment Form LA 540, Section II A as respects insurance written by the Company." The claim of defendant involves only the plaintiff State Farm Mutual Automobile Insurance Company. The relevant and material paragraphs are as follows:

    "2. For services rendered in any month while this
  Agreement is in force, in reporting, investigating
  and handling claims and otherwise servicing
  policyholders, the Local Agent shall be paid an
  amount equal to Ten Percent (10%) of the net premium
  collections, as hereinafter defined, received and
  recorded by the Company during the sixth preceding
  month on policies credited to the Local Agent during
  the month for which such payment is computed
  irrespective of whether such policies were secured by
  the Local Agent. Net premium collections are defined
  to be gross premium collections, less Selling
  Expense, if any, and less dividends paid or credited
  to policyholders. Membership Fees are not to be
  considered as gross or net premiums.
    "Payments shall not be allowed under this paragraph
  in event the Local Agent is or becomes an employee or
  relative by blood or marriage of a supervising
  district or state agent or is or becomes a partner of
  or has any form of joint financial interest as
  respects the insurance business with his supervising
  district or state agent.
    "3. On insurance written on any plan other than as
  provided in Section 1 hereof, the agent shall receive
  such payments as may be fixed from time to time by
  the Company.
    "4. Upon termination of this Agreement by death or
  otherwise as provided in Section III A, any unpaid
  amounts for securing new business under Section 1
  hereof, shall be paid as soon as ascertainable.
  Payments for the agents services under Section 2
  hereof for the particular month of termination by
  death or otherwise shall be prorated and paid as soon
  as ascertainable and shall constitute the final
  payment due under this Schedule for such
  services."

Section III of Form LA 540, inter alia, provides:

    "Upon termination however occurring, the Agent
  shall be entitled to receive only such payments as
  shall be then due or become due the Agent from such
  terminated Company or Companies as provided for in
  the applicable Schedules of Payments hereto attached
  and in Section IV."

Section IV A deals with termination by death, and is inapplicable. Section IV B provides certain termination benefits which are not involved in this litigation because, as provided in Paragraph 4 of Section IV B, the Agent in order to be entitled to these benefits is required to surrender all records and files used by the Agent in his representation of the company and all unused materials and supplies, and provided:

  "the Agent has agreed in writing not to service
  policyholders of the Company or to compete with the
  Company or interfere with its business for one ...

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