Bohrnstedt v. Travelers' Ins. Co. , 123 Or. 539 ( 1927 )

Reversed on rehearing January 10, 1928 ON REHEARING. (262 P. 938.) We confess error in the former opinion (259 P. 419). Pride of opinion should never be permitted to prevail over logic and reason. Stubborn adherence to an erroneous conclusion ill becomes any court.

The sole question for consideration is whether the plaintiff should be denied the right of recovery for commission upon renewal premiums by reason of having accepted the agency of a rival insurance company within one year after the termination of his contract. So far as material herein, the contract provides:

"If this contract shall be terminated before the agent has been continuously in the service of the company for five years for any cause except the death of the agent (when renewal commissions as per the preceding paragraph shall be paid), and if the agent has not violated any of his obligations hereunder, the company will pay to the agent, or to such person as he may designate with the consent of the company, commissions on renewal premiums at the above rates for the period stipulated in the following table; but in no case shall commissions on renewal premiums be payable on term policies after the fifth year of insurance. * *

"(19) Either party to this contract may terminate same by giving to the other party seven days' notice in writing to that effect, and the power of the agent to collect and receive premiums shall cease with the termination of this contract."

The forfeiture clause provides:

"If the agent shall at any time within one year from date of the termination of this contract for any cause whatsoever enter the employment of any other life insurance company to work in the territory specified in section 1, all right to further commissions on renewal premiums shall cease with the date of such employment."

It will thus be seen that plaintiff's right to commission on renewal premiums is predicated upon two propositions: (1) that he has not violated any of the obligations of his contract; (2) that he has not entered the employment of any other life insurance company, to work in the territory specified, within one year from date of the termination of the contract. If our construction of the contract, as stated in the former opinion, is correct, namely, that plaintiff would be entitled to commission unless he had breached the contract, then the forfeiture clause is superfluous. The parties had already specifically stipulated that no commissions would be paid if the plaintiff violated any of his obligations under the contract. The error in the first opinion resulted from an attempt to harmonize these two parts of the contract, whereas they provided for separate and distinct contingencies. In our effort so to do we entirely destroyed the force and effect of the forfeiture clause. It is argued that "a termination of this contract for any cause whatsoever" means that there must be some reasonable cause and it was not within the contemplation of the parties that the insurance company could arbitrarily or capriciously deprive plaintiff of commission on renewal premiums. If the words, "for any cause whatsoever," had been eliminated and the clause read thus: "If the agent shall within one year from date of the termination of this contract enter the employment of any other life insurance company," then, we think, without doubt, that there could be no recovery. The additional words: "for any cause whatsoever" merely emphasize the matter of forfeiture and are equivalent to "without regard to the cause." A case particularly in point is Chase v. New York Life Ins. Co., 188 Mass. 271 (74 N.E. 325), wherein the court said:

"As the plaintiff sues upon the contract he must abide by its terms. His right to commission on renewal premiums depended upon his abstaining from engaging in the business of life insurance in any capacity in the state of Massachusetts. He chose to engage in such business and we find no agreement in the contract to pay him commissions on renewal premiums in case he chose to become a competitor of the defendant."

There is no merit in the contention that the forfeiture clause is unenforceable as a penalty. A somewhat similar clause was under consideration in Wallace v. American Life Ins. Co.,116 Or. 195 (237 P. 974), and was there given full force and effect.

In view of the fact that plaintiff, in violation of the terms of his contract, entered the employment of another insurance company within a year after the termination of the contract, it follows that the defendant was entitled to a directed verdict.

The judgment rendered in favor of plaintiff is reversed and the action dismissed.

REVERSED AND CASE DISMISSED.