Government Personnel Mut. Life Ins. Co. v. Wear

247 S.W.2d 284, 1952 Tex. App. LEXIS 2014

• Court: Court of Appeals of Texas
• Decided: February 6, 1952
• Docket: 12290
• Status: Published

Opinions

W. O. MURRAY, Chief Justice.

This is an appeal by Government Personnel Mutual Life Insurance Company, hereinafter referred to as appellant or as Insurance Company, from a judgment awarding to Gordon Wear a recovery in the sum of $68,630.79 for override commissions on certain insurance, and the further sum of $5,000 as attorney’s fees. The judgment also has declaratory features as to future commissions on renewals of policies. The trial was to a jury, but the court disregarded such answers of the jury as were favorable to the Insurance Company and rendered the above judgment, notwithstanding such jury answers. The Insurance Company has prosecuted this appeal.

The above judgment was based upon ap-pellee Wear’s claim to override commissions upon insurance policies written by the Insurance Company and solicited by one C. H. Earl and twenty-five of his so-called sub-agents.

Wear’s right to recover these commissions depends upon the interpretation to be placed upon three contracts executed on July 1, 1946. For the purpose of designating these contracts we will call them contracts Numbers 1, 2 and 3. Contract No. 1 was between Wear and the Insurance Company and had the effect of appointing Wear a solicitating agent of the Insurance Company and authorizing him to solicit insurance policies for the Insurance Company, for which he was to be paid certain stipulated commissions. Contract No. 3 was a somewhat similar soliciting agency contract appointing C. PI. Earl a soliciting agent and authorizing him to solicit insurance for the Insurance Company, for which he was to receive certain' commissions.

This entire controversy arises under the terms of Contract No. 2.- This contract was styled “Supplemental Agreement” and provided in part as follows: “The company agrees to pay Gordon Wear'the following commission on (premiums paid for) life insurance contracts issued by said company •on insurance written (solicited) by C. H. Earl under his contract dated July 1, 1946.” (The parties agree that the inserted words were intended.) Then follows the schedule of percentages to be paid to Wear on the various kinds of life insurance policies to be solicited by Earl.

The first question to be decided is upon what date this Contract No. 2 was terminated. The Insurance Company contends that, it was terminated on January 1, 1948, by oral notice given by P. J. Hennessey, Vice-President and General Manager of the Insurance Company to Wear in 'October, 1947. Wear contends that Contract No. 2 was not terminated until thirty days after written notice of termination or cancellation was given to him on May 28, 1948.

There was no provision within the four corners of Contract No. 2 for written notice of termination, but such a provision is found' in Contract No. 1. Appellee, Wear, contends that these two contracts, being executed between the same parties on the same date and relating to the same subject matter and Contract No. 2 being styled “Supplemental Agreement,” should be read and construed together as one contract, and that when this is done paragraph X of Contract No. 1 became a part of Contract No. 2, and that this paragraph provides for termination only upon thirty days’ written notice.

We are well aware of the general rule contended for by Wear. It is well stated in 10 Tex.Jur. § 166, Contracts, p. 286, as follows: “Al-1 written instrument's whereby a single transaction is consummated are to be taken and construed together. So, instruments executed at the same time or contemporaneously, for the same purpose, and in the course of the same transaction, are to be considered as one instrument, and are to be read and construed together; and in such case parol evidence is admissible to connect the instruments and to explain any conflict between them.” The authorities are so numerous upon this general proposition that we do not deem it necessary to cite them here.

Appellant, Insurance Company, contends that these two contracts were not executed for the same purpose but had very different purposes; that Contract No.’ 1 was executed for the purpose of appointing Wear a soliciting agent for the Insurance Company and Contract No. 2 was executed for the purpose of giving Wear, as a general agent .of the Insurance Company, override commissions on insurance solicited by Earl under his contract of even date, .being Contract No. 3.

Contracts Nos. 1 and 2 do not expressly refer to each other or expressly make one a part of the other. The only thing that might be so construed is the fact that Contract No. 2 is styled “Supplemental Agreement”; also, it might be mentioned that Contract No. 1 expressly provides in paragraph XVI thereof that: “this agreement, together with any amendments thereto duly executed constitutes the entire contract between the parties.” This last provision was a stereotyped provision found in all of the soliciting agency contracts executed by the Insurance Company.

We may assume without deciding that Contracts Nos. 1 and 2 should be construed together as one contract for the purpose of determining the intention of the parties. This brings us to the question of what is meant by tire statement that “all written instruments whereby a single transaction is consummated are to be taken and construed together.” Does it mean that the several instruments are bodily consolidated into one instrument so that every provision in one instrument becomes a part of every other instrument, or does it mean that such instruments are simply read and. considered together so as to arrive at the tmp, intention of the parties in executing the several instruments? We think the latter is correct.

Contract No. 1 and Contract No. 2 are each a’complete and separate contract, written on separate pieces of paper and each is signed by the parties. They are not in conflict as to the purpose to be accomplished. The intention of the parties can readily be understood from the language contained within the four corners 'of each. They mean the same thing, whether you read them separately or together. The only purpose of construing them together is to apply paragraph X in Contract No. 1 to Contract No. 2 and thereby requiring thirty days’ written notice of termination of Contract No. 2. This is all that will be accomplished by construing them as one contract. Reading and construing contracts together does not justify bodily taking a paragraph from one contract and transplanting it in the other.

We do not find any Texas case directly in point. In Mechanics’ Lumber Co. v. Yates American Mach. Co., 181 Ark. 415, 26 S.W.2d 80, 83, the Court quotes from 6 R.C.L. 852, as follows: “But construing contemporaneous instruments together, means simply that if there be any provisions in one instrument limiting, explaining or otherwise affecting the provisions of another, they will be given effect as between the parties themselves and all persons charged with notice so that the intent of the parties may be carried out and that the whole agreement actually made may be effectuated. This does not mean that the provisions of one instrument are imported bodily into another contrary to the intent of the parties. They may be intended t» be separate instruments and to provide for entirely different things.” 12 Am.Jur., Contracts, § 246, p. 783, is to the same effect.

. In Huyler’s v. Ritz-Carlton Restaurant & Hotel Co., D.C., 1 F.2d 491, 492, the rule is stated as follows: “It is true that the principle by which instruments executed at the same time, by the same parties, for the same purpose, and in the course of’ the same transaction are considered as one, and receive the same construction as if embodied in one instrument, is of wide application and the illustrative cases are many. Elliott on Contracts, § 1522; 6 R.C.L. 851; 13 C.J. 528. But at most that principle is merely a rule of construction to give effect to the intent of the parties. The provisions of one instrument are not thereby imported bodily into another. The application of the rule does not result in actual consolidation of the several contracts. It does not convert a specialty into a simple contract, or a simple contract into a specialty. Each of several instruments may be construed in the light of the others, without their being considered as one for all purposes. Moreover, considering several instruments as one is not the natural construction, and is resorted to only to effectuate the intention. They may be intended to be separate instruments and to provide for different things. Barker v. Sartori, 66 Wash. 260, 264, 119 P. 611; Thorp v. Mindeman, 123 Wis. 149, 101 N.W. 417, 68 L.R.A. 146, 107 Am.St.Rep. 1003, 6 R.C.L. 852. To effectuate the intention of the parties in the case at bar I think that it is not necessary to consider the three instruments as one.”

What was said by Chief Justice Fly of this court in Harris v. G. M. H. Wagner & Sons, Tex.Civ.App., 195 S.W. 351, 352, sheds considerable light on this question: “The second contract is separate and distinct from the first, which was a contract for raising, gathering, and marketing the onions on 25 acres of land. The last contract was one of purchase alone of the onions on 15 acres of land. There is no provision for appellees to receive 11 cents a,crate, over 12 per cent, of the total value, merely for accepting the onions which they had bought from appellee. In the second contract it is provided: ‘This instrument to in no way affect previous contract.’ If there was any doubt as to the last contract being independent of the former contract, that provision dispels it. It is a separate and distinct contract, totally different from the former one. It follows that the first contract should not be looked to in construing the second, as none of its provisions have any applicability to the provisions of the last contract. It may be presumed that there were other onions than those on the 15 acres to be marketed, and that the saving clause copied was placed in the contract to show that the brokers still had their rights under the first contract.' The provision in the first contract that appellees, at Chicago, ‘shall have the privilege of buying from the Texas office upon an f. o. b. basis, upon equal terms with competing organizations or firms,’ would not be impaired by not permitting them to retain over 12 per cent, commissions, but, on the other hand, the retaining of that amount would give them an unconscionable advantage over other buyers.”

In Canadian Coal Co. v. Lynch, 28 Okl. 585, 115 P. 466, 468, the court said: “The effect of sustaining the contention of plain- ■ tiff in error would be to allow it to contradict the terms of one written instrument by another for the purpose of refining away a contract concerning a valid subject of contract between the parties, by merging it into another contemporaneous contract between the same parties concerning a subject they were not authorized to contract about, so that finally all that remains is the invalid contract, which of course would be unenforceable. This would not constitute ‘construing contracts together,’ as we understand the doctrine.”

The fact that Contract No.. 2 was styled “Supplemental Agreement” is of little or no importance. It is not a part of the contract, it does not indicate what it supplements. If the parties had styled the instrument a “Will” or a “Warranty Deed” it would not have changed the nature of the instrument. It is much more important what the instrument when read within its four corners provides than the name the parties who were not lawyers gave it. At the time of the trial Contract No. 2 was attached to Contract No. 1, but there is nothing to show when this was done or that it was so intended by the parties. If it was intended that Contract No. 2 was to become a part of Contract No. 1 and be governed and controlled by all of the provisions contained in Contract No. 1, it would have been very easy to have so provided in the instrument. This was not done.

. Contract No. 2 contains no provision requiring thirty days’ written notice of termination and we see no reason why such a provision should be lifted up bodily from Contract No. 1 and placed in Contract No. 2, where the instruments fail to show that the parties so intended. There being no provision in Contract No. 2 requiring written notice of termination, it was subject to cancellation at any time by either party and was therefore terminated or cancelled by the oral notice given by Hennessey to Wear in October, 1947.

The most that can be said for ap-pellee’s contention in this connection is that the evidence raised a question of fact as to the intention of the parties and appel-lee having failed to request any issue as to the intention of the parties has waived such issue. Rule 279, T.R.C.P.

The provisions of the two contracts state in plain language that the company agrees to pay Wear certain commissions on life insurance contracts issued by the company on life insurance written by C. H. Earl under his contract dated July 1, 1946. Contract No! 3, which is Earl’s Contract of July 1, 1946, above referred to, provides that Earl is to be paid commission on insurance contracts issued by the company on applications secured and turned in to the company by C. H. Earl and bearing his name as soliciting agent. It becomes necessary to construe Contract No. 2 with Contract No. 3 to determine what was meant in Contract No. 2, when it refers to insurance written by C. H. Earl under his contract dated July 1, 1946. When we examine Contract No. 3 we find that’Earl is required to solicit insurance and that he will be paid a commission only upbn applications ■ signed by him. This plain language contained in these contracts shows plainly that Wear was to have overriding commissions on 'insurance secured upon the personal solicitation of C. H. Earl and upon applications . signed by him.

The testimony of Wear that it was a general custom for soliciting agents to appoint sub-agents can have no weight here, because the parties have plainly stated what they intended and therefore proof of custom is not necessary or proper to construe the contracts. Where the' parties have' plainly stated within the four- comers of the contract what their rights are under such contract general custom plays no part in construing it, because the intention of the parties is to be derived from the language used in the contract when it is clear and unmistakable as to its meaning.

There is another reason why Wear cannot collect any’ override commissions on insurance written after January 1, 1948. Contract No. 2 provided that he was to1 have certain override commissions on insurance written by Earl under Earl’s contract dated July 1, 1946. This language is plain and certainly he was not entitled to- override commissions written under any other contracts. It is similar to a person buying oil royalty under an existing oil and gas lease. He is not entitled to royalty under subsequent or different leases. Keaton v. Murphy, 198 Ark. 799, 131 S.W.2d 625; McWilliams v. Standard Oil Co., 205 Ark. 625, 170 S.W.2d 367; Fleming v. Ashcroft, 141 Tex. 41, 175 S.W.2d 401; Curlee v. Anderson & Patterson, Tex.Civ.App., 235 S.W. 622; Elk Horn Coal Corp. v. Casebolt, 6 Cir., 38 F.2d 37; Rogers v. Jones, 10 Cir., 40 F.2d 333; Leydig v. Commissioner of Internal Revenue, 10 Cir., 43 F.2d 494; Maxwell v. Hunter, 5 Cir., 116 F.2d 260.

The evidence shows conclusively that Earl and the Insurance Company terminated his soliciting agency contract dated July 1, 1946, as of December 31, 1947, and operated under a new contract whereby Earl became the general agent of the Insurance Company. It is true the terms of this contract were not reduced to writing until about May, 1948, and dated back to January 1, 1948, but, nevertheless, the parties had cancelled the old contract and ceased to do business under ■ it by January 1, 1948. Wear was in no way a party to this contract and his consent to its cancellation was not required. When Earl’s contract of July 1, 1946, was terminated by the consent of the parties thereto, Wear’s rights to override commissions on insurance thereafter written by Earl came to an end.

Question No. 6 submitted to the jury was as follows: “Do you find from a preponderance of the evidence that defendant acted in good faith toward" plaintiff, Wear, in the cancellation effective December 31, 1947, of C. H. Earl’s contract of July 1, 1946 (if there was such cancellation) ?”

The jury answered this issue “Yes” and this answer is supported by ample evidence. The trial court disregarded this issue upon the theory that it was immaterial. In this he was in error. By the good faith cancellation of Earl’s contract of July 1, 1946, all rights of Wear to override commissions on future insurance was brought to a close under the provisions of Contract No. 2.

Appellant contends that appellee should not have been permitted to recover attorney’s fees. Attorney’s fees were allowed under the provisions of Art. 2226, Vernon’s Ann.Civ.Stats., as amended in 1949. Bellinger v. Schutte, Tex.Civ.App., 244 S.W.2d 261 (writ refused). Appellant points out that appellee’s claim arose prior to the effective date of this amendment and therefore the trial court gave retroactive effect to the amendment in violation of Section 16, Article 1, of the State Constitution Vernon’s Ann.St. We overrule this contention. A careful reading of Art. 2226 as amended does not require that the claim must have accrued subsequent to the effective date of the amendment, but simply provides in part that a person having a claim against a person or corporation for personal services who presents such claim and it is refused after the effective date may collect attorney’s fees. The claim here was presented and refused after the effective date of the 1949 amendment to Art. 2226 and therefore was within its provisions. The claim was for personal services as a general agent of the Insurance Company. It is not contended that the attorney’s fees are excessive.

Appellant tendered the sum of $942 to appellee as being due him under 'his override contract, and the judgment will be amended so as to eliminate the recovery of $68,630.79, and in place thereof provide for a recovery of $980.40, together with interest at the rate of 6% per annum from January 1, 1948, until paid.

Paragraph (6) of the judgment will be amended so as to hereafter read as follows:

(6) That, in addition, defendant, Gdv-ernment Personnel Mutual Life Insurance Company, either now owes or else will owe plaintiff, Gordon Wear, two and one-half (2½%) percent commission on renewal premiums paid'or that may later be paid, on each and every twenty-year endowment and twenty-payment life insurance policy, application for which was originally procured by C. H. Earl prior to January 1, 1948, that has been or is later renewed within ten years of its original issuance, if, as and when the premiums have been paid thereon to defendant since December 31, 1949, or are hereafter paid thereon to defendant in the future.

The judgment as reformed is affirmed.