Conley Byrd, Justice.
This litigation questions the
validity of two exclusive agency contracts that were not approved by the Insurance Commissioner as required by Ark. Stat. Ann. § 66-4240 (Repl. 1966). It was commenced in the trial court by appellee American Pioneer Insurance Company, against appellees Pioneer Underwriters, Inc. and R. E. Phillips and Huey Duke for a debt owed. Appellants American Accident and Life Insurance Company and Investors Insurance Corporation were brought into the action by garnishment on the„ allegation that thev were indebted to Pioneer Underwriters, Inc., et al, for commissions due upon renewal premiums received. Thereafter there were cross complaints and counterclaims which put into issue the validity of the exclusive agency contracts, the liability of appellants upon quantum meruit and the assumed liability of Investors Insurance Corporation.
After a trial on the merits, the trial court entered judgment for 5% of the premiums received less credits for payments received or monies retained. For reversal appellants rely upon the following points:
“I. Appellees are not entitled to recover under unapproved contracts requiring prior approval of the insurance commissioner.
“II. In such cases of contracts void by statute, to permit recovery by quantum meruit is against public policy.
“III. Even were quantum meruit recovery permissible, appellees are entitled to nothing, and appellants are entitled to recover for refunds made on policies cancelled or unissued.
“IV. There is no basis for any liability to appellees by appellant Investors Insurance Corporation. ’ ’
Tbe record shows that on August 22, 1963, the management of American Pioneer Insurance Corporation also controlled the management of First American Reserve Life Insurance Company and appellant American Accident & Life Ins. Company. On that date First American Reserve Life Ins. Co. entered into an exclusive agency contract with Pioneer Underwriters to write hospitalization insurance. By the terms of that contract Pioneer Underwriters were to receive all of the initial premium plus 15% of all renewals for a period of at least two years from the date of termination.
In July, 1964, the management determined that it would be more advantageous to place the better risk hospitalization policies into American Accident & Life Ins. Company. This was accomplished through a reinsurance agreement by which American Accident gave $27,000.00 in cash, assigned a $4,991.52 account owed by Hyneman Enterprises, Inc., and assumed the liabilities of First American Reserve to Pioneer Underwriters.
In the same month American Accident entered into a new contract with Pioneer Underwriters, by which American Accident promised Pioneer Underwriters an exclusive agency contract and to pay to them 15% of the initial premiums and 5% of the total annual renewal premium income.
On July 28, 1964, American Pioneer Life Insurance Company sold its 8,263 shares of capital stock in American Accident to Floyd Shellman and Byron Prugh. As part of the purchase agreement the purchasers agreed to assume the obligation owed by American Accident to Pioneer Underwriters. Shellman and Prugh later assigned their contract to Investors Insurance Corporation upon the same terms and conditions.
Subsequent to Investors’ acquisition of control of tbe management of American Accident, tbe latter caused its attorney to submit tbe exclusive agency contract of July 2, 1964, to the Insurance Commissioner pursuant to Ark. Stat. Ann. § 66-4240 with a suggestion that the contract was not in the best interest of the company. On September 25, 1964, the Insurance Commissioner refused to approve the contract. Shortly thereafter American Accident discharged Pioneer Underwriters.
Robert M. Gannaway testified that he was in charge of the management of American Accident when it entered into the 1964 exclusive agency contract, that he discussed the terms thereof with the Deputy Insurance Commissioner and got his approval, and that American Accident obtained a financial advantage over the renewal terms in the exclusive agency contract with First American Reserve Life Ins. Company.
Richard M. Flahibe qualified as an expert in the field of health and accident insurance management. He described a two year commission of 15% on renewal premiums as being reasonable and proper. However he was not nearly as definite about the 100% commission on the initial premium.
The present management admitted that if they were not obligated to Pioneer Underwriters, they would get the $400,000 annual renewal premiums virtually commission free.
POINTS I & II: Appellants, to avoid liability under both contracts and upon quantum meruit, rely upon Ark. Stat. Ann. § 66-4240 which provides:
“No domestic insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for tbe insurer, unless the contract is filed with and approved by the Commissioner. ...”
Obviously this statute would prevent the enforcement of the exclusive agency provision of either contract without the approval of the Insurance Commissioner, but it does not follow that the statute would prevent a quantum meruit recovery. In Gantt v. Ark. Power & Light Co., 189 Ark. 449, 455, 74 S. W. 2d 232 (1934), we said:
“. . . The general rule is that, where a contract is expressly prohibited by law, and the statute in terms declares the contract to be null and void, no recovery can be had under it, and a taxpayer has a right to maintain an action to recover back money when its officers neglect or fail to perform their duty in that respect. Capron v. Hitchcock, 98 Cal. 427; Winchester v. Frazier, (Ky.) 43 S. W. 453; Milford v. Milford Water Co., 124 Pa. St. 610.
“The status, however, of appellees does not come strictly within the prohibition of the rule just stated. The prohibitory statute here involved does not, in terms, declare the contract to be ‘null and void.’ The rule seems to be that, in the absence of the prohibitory words ‘null and void’ and where the contract has been performed by the parties in good faith, compensation may be retained measured by the reasonable value thereof. Such recovery, however, is not because of the contract, but is grounded squarely upon the proposition that valuable services having been rendered which have been accepted by the parties, it would be inequitable and unjust to permit one party to substantially gain under the contract to the great and irreparable damage of the other.”
Neither does it follow that the compensation portion of the exclusive agency contract with First American Reserve Life Ins. Co. is not enforceable. In Hanauer & Co. v. Gray, 25 Ark. 350 (1869), we had a note payable in Confederate bonds or Tennessee money. We there held:
“. . .
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Conley Byrd, Justice.
This litigation questions the
validity of two exclusive agency contracts that were not approved by the Insurance Commissioner as required by Ark. Stat. Ann. § 66-4240 (Repl. 1966). It was commenced in the trial court by appellee American Pioneer Insurance Company, against appellees Pioneer Underwriters, Inc. and R. E. Phillips and Huey Duke for a debt owed. Appellants American Accident and Life Insurance Company and Investors Insurance Corporation were brought into the action by garnishment on the„ allegation that thev were indebted to Pioneer Underwriters, Inc., et al, for commissions due upon renewal premiums received. Thereafter there were cross complaints and counterclaims which put into issue the validity of the exclusive agency contracts, the liability of appellants upon quantum meruit and the assumed liability of Investors Insurance Corporation.
After a trial on the merits, the trial court entered judgment for 5% of the premiums received less credits for payments received or monies retained. For reversal appellants rely upon the following points:
“I. Appellees are not entitled to recover under unapproved contracts requiring prior approval of the insurance commissioner.
“II. In such cases of contracts void by statute, to permit recovery by quantum meruit is against public policy.
“III. Even were quantum meruit recovery permissible, appellees are entitled to nothing, and appellants are entitled to recover for refunds made on policies cancelled or unissued.
“IV. There is no basis for any liability to appellees by appellant Investors Insurance Corporation. ’ ’
Tbe record shows that on August 22, 1963, the management of American Pioneer Insurance Corporation also controlled the management of First American Reserve Life Insurance Company and appellant American Accident & Life Ins. Company. On that date First American Reserve Life Ins. Co. entered into an exclusive agency contract with Pioneer Underwriters to write hospitalization insurance. By the terms of that contract Pioneer Underwriters were to receive all of the initial premium plus 15% of all renewals for a period of at least two years from the date of termination.
In July, 1964, the management determined that it would be more advantageous to place the better risk hospitalization policies into American Accident & Life Ins. Company. This was accomplished through a reinsurance agreement by which American Accident gave $27,000.00 in cash, assigned a $4,991.52 account owed by Hyneman Enterprises, Inc., and assumed the liabilities of First American Reserve to Pioneer Underwriters.
In the same month American Accident entered into a new contract with Pioneer Underwriters, by which American Accident promised Pioneer Underwriters an exclusive agency contract and to pay to them 15% of the initial premiums and 5% of the total annual renewal premium income.
On July 28, 1964, American Pioneer Life Insurance Company sold its 8,263 shares of capital stock in American Accident to Floyd Shellman and Byron Prugh. As part of the purchase agreement the purchasers agreed to assume the obligation owed by American Accident to Pioneer Underwriters. Shellman and Prugh later assigned their contract to Investors Insurance Corporation upon the same terms and conditions.
Subsequent to Investors’ acquisition of control of tbe management of American Accident, tbe latter caused its attorney to submit tbe exclusive agency contract of July 2, 1964, to the Insurance Commissioner pursuant to Ark. Stat. Ann. § 66-4240 with a suggestion that the contract was not in the best interest of the company. On September 25, 1964, the Insurance Commissioner refused to approve the contract. Shortly thereafter American Accident discharged Pioneer Underwriters.
Robert M. Gannaway testified that he was in charge of the management of American Accident when it entered into the 1964 exclusive agency contract, that he discussed the terms thereof with the Deputy Insurance Commissioner and got his approval, and that American Accident obtained a financial advantage over the renewal terms in the exclusive agency contract with First American Reserve Life Ins. Company.
Richard M. Flahibe qualified as an expert in the field of health and accident insurance management. He described a two year commission of 15% on renewal premiums as being reasonable and proper. However he was not nearly as definite about the 100% commission on the initial premium.
The present management admitted that if they were not obligated to Pioneer Underwriters, they would get the $400,000 annual renewal premiums virtually commission free.
POINTS I & II: Appellants, to avoid liability under both contracts and upon quantum meruit, rely upon Ark. Stat. Ann. § 66-4240 which provides:
“No domestic insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for tbe insurer, unless the contract is filed with and approved by the Commissioner. ...”
Obviously this statute would prevent the enforcement of the exclusive agency provision of either contract without the approval of the Insurance Commissioner, but it does not follow that the statute would prevent a quantum meruit recovery. In Gantt v. Ark. Power & Light Co., 189 Ark. 449, 455, 74 S. W. 2d 232 (1934), we said:
“. . . The general rule is that, where a contract is expressly prohibited by law, and the statute in terms declares the contract to be null and void, no recovery can be had under it, and a taxpayer has a right to maintain an action to recover back money when its officers neglect or fail to perform their duty in that respect. Capron v. Hitchcock, 98 Cal. 427; Winchester v. Frazier, (Ky.) 43 S. W. 453; Milford v. Milford Water Co., 124 Pa. St. 610.
“The status, however, of appellees does not come strictly within the prohibition of the rule just stated. The prohibitory statute here involved does not, in terms, declare the contract to be ‘null and void.’ The rule seems to be that, in the absence of the prohibitory words ‘null and void’ and where the contract has been performed by the parties in good faith, compensation may be retained measured by the reasonable value thereof. Such recovery, however, is not because of the contract, but is grounded squarely upon the proposition that valuable services having been rendered which have been accepted by the parties, it would be inequitable and unjust to permit one party to substantially gain under the contract to the great and irreparable damage of the other.”
Neither does it follow that the compensation portion of the exclusive agency contract with First American Reserve Life Ins. Co. is not enforceable. In Hanauer & Co. v. Gray, 25 Ark. 350 (1869), we had a note payable in Confederate bonds or Tennessee money. We there held:
“. . . ‘A distinction must be taken between the cases in which the consideration is illegal in part, and those in which the promise, founded on the consideration, is illegal in part. If any part of a consideration is illegal, the whole consideration is void, because public policy will not permit a party to enforce a promise which he has obtained by an illegal act, or an illegal promise, although he may have connected with this act or promise another which is legal. But, if one gives a good and valid consideration, and thereupon another promises to do two things — one legal and the other illegal — he shall be held to do that which is legal, unless the two are so mingled and bound together that they can not be separated, in which case the whole promise is void.’ ”
The record here clearly demonstrates that the 1963 contract contains two separate and distinct promises— i. e. one for the payment of the services to be rendered by Pioneer Underwriters, and one for an exclusive agency management contract. The statute relied upon does not attempt to regulate the commission which an insurer may agree to pay to an agent for writing policies. For other cases supporting the Hanauer & Co. case, see Re Port Publishing Co., 231 N. C. 395, 57 S. E. 2d 366, 14 ALR 2d 842 (1950) where a collective bargaining contract was held enforceable to recover vacation pay although it contained a “closed shop” provision contrary to North Carolina’s “right to work” law.
POINT III. Appellants’ arguments under this point appear to be that the $130,000 initial premiums which Pioneer Underwriters received for writing the policies in the first place is sufficient consideration and also that appellants are entitled to recover from Pioneer Underwriters for premiums that appellants were forced to refund to policy holders in settlement of policy claims.
With respect to the premiums refunded, the record shows that a portion thereof has been collected in a federal district court action against American Pioneer Life Ins. Co. and appellants have made no attempt here to show what portion of the premiums refunded they are still entitled to collect. Furthermore, they appear to also be precluded by the separate and valid promises contained in the 1963 contract with First American Reserve Life Ins. Company.
On the contention that the $130,000 initial premiums received by Pioneer Underwriters constitutes adequate compensation we find no merit. Without either expressing approval or disapproval of the 100% initial premium commission paid to Pioneer Underwriters, we find that appellants are in no position to complain. The record shows that the major portion of the premiums were collected by Pioneer Underwriters when the policies were written for First American Reserve Ins. Co. and that American Accident, in purchasing the policies from First American Reserve, agreed as part of the purchase price that it would pay Pioneer Underwriters the obligations which First American Reserve recognized. The law will not permit one in such a position to retain the benefit of its agreement and at the same time question its validity. See Murray v. Murray Laboratories, Inc., 223 Ark. 907, 270 S. W. 2d 927 (1945); McBlair v. Gibbes, 17 How. (U. S.) 232, 15 L. Ed. 132 (1854).
Furthermore,, there is substantial evidence to support the trial court’s finding that the amount allowed is due upon a quantum meruit basis.
POINT IV: The contract upon which Investors Insurance Corporation relies to reverse the judgment of the trial court is not abstracted and although Investors Insurance Corporation designated the exhibited instrument as a part of the record, the exhibit has not been filed with the Clerk of this Court nor made a part of the record. It is appellant’s duty to file the instruments upon which it relies for reversal, Ark. Stat. Ann. § 27-2127.3 (Repl. 1962). In the absence of the instrument we cannot say that the trial court erred.
Affirmed.
Harris, C. J. and Fogleman, J., dissent.