Williams v. Williams

590 So. 2d 649, 1991 WL 236319
Louisiana Court of Appeal·Decided November 13, 1991·No. 90-497·Published·Cited by 11 cases

Opinion

590 So.2d 649 (1991)

Ronnie WILLIAMS, Plaintiff-Appellant,
v.
Bonnie S. WILLIAMS, Defendant-Appellee.

No. 90-497.

Court of Appeal of Louisiana, Third Circuit.

November 13, 1991.

*650 Gravel, Brady & Berrigan, Charles G. Gravel, Alexandria, for plaintiff-appellant.

Brent S. Gore, Ferriday, for defendant-appellee.

Before GUIDRY, DOUCET and KNOLL, JJ.

GUIDRY, Judge.

Plaintiff-appellant, Ronnie Williams, appeals from a community property partition judgment.

Ronnie Williams and the defendant-appellee, Bonnie Williams, were married on June 15, 1964. The parties were legally separated by a judgment dated November 2, 1984. The community of acquets and gains existing between the parties was dissolved effective July 13, 1984. The parties were divorced by judgment dated September 18, 1985. On December 1, 1986, Bonnie Williams instituted this proceeding seeking a partition of community property. The trial court rendered and signed the partition judgment at issue on September 5, 1989, having given both original and supplemental written reasons in support thereof. Ronnie Williams appealed.

On appeal, appellant asserts error in the trial court's judgment in the following respects. First, he contends that the trial court erred in determining that the premium commissions received by him as a State Farm agent from policies renewed after dissolution of the community are a community asset. In accord with this finding, the trial court ordered appellant to pay appellee $103,546.85, calculated to be her share of the net income derived from policy renewal commission income for a five year period beginning July 13, 1984. Secondly, appellant asserts trial court error in the disallowance of his reimbursement claim for payments made after July 13, 1984 from his separate property on the home mortgage principal, interest, taxes and insurance. Thirdly, appellant seeks reversal of the trial court's judgment insofar as it determined that "termination payments", under his agreement with State Farm Insurance Company, are community property.

For the reasons which follow, we find merit in all of appellant's specifications of error and amend the trial court's judgment accordingly.

INSURANCE PREMIUM RENEWALS

Ronnie is a State Farm Insurance Company agent in Ferriday, Louisiana. He has been an agent pursuant to a "State Farm Agent's Agreement" since June 1, 1968, having for two years prior to this date been classified as a trainee. Under this agreement, the agent is limited to soliciting and writing policies solely and exclusively for State Farm. The contract styles Ronnie's status as an independent contractor. He is required to remit all premiums he collects to State Farm and he receives commission checks from the company *651 based on total collected premiums. The agent's percentage of commission varies depending on the type of policy written (automobile, fire, life or general). In all instances, if the policy is renewed at the end of its initial term, the agent receives a renewal commission, i.e., a percentage of the premium paid at renewal. Thus, Ronnie receives income from new policies issued and from existing policy renewals.

The trial court, in its reasons for judgment, found that "a very substantial portion" of the income received by Ronnie after July 13, 1984 resulted from renewals of policies issued prior to July 13, 1984, i.e., during the existence of the community property regime. The trial court reasoned that, since the renewals resulted from work performed while the community was in existence, Bonnie should share in the renewal commissions received after July 13, 1984. In his supplemental reasons for judgment, the trial judge devised a formula to calculate the share of these commissions attributable to Bonnie. The court concluded that, for each year following July 13, 1984, the renewal rate on policies existing before this date would decrease 20%. Accordingly, he awarded Bonnie one-half of the yearly percentage of premiums to be collected on a five year decreasing scale, e.g., one-half of 100% for year one; one-half of 80% for year two, etc. This calculation was made in reliance on the cases of Due v. Due, 342 So.2d 161 (La.1977); Boyle v. Boyle, 459 So.2d 735 (La.App. 4th Cir. 1984), writ denied, 462 So.2d 651 (La.1985); and, Michel v. Michel, 484 So.2d 829 (La. App. 1st Cir.1986). We find the principles enunciated in the cited cases inapplicable, under the circumstances of this case, and the trial court's reliance thereon error.

In Due, supra, our Supreme Court considered the classification of an attorney's contingent fee contract as separate or community property stating:

"... an attorney's interest in pending contingent fee contracts constitutes a patrimonial asset which, if the contract is acquired during the marriage, forms part of the community insofar as its value is based upon the attorney's services performed during the marriage." Due, supra, at 165, 166, citing former La.C.C. art. 2402.

The court reasoned that such a contract, although aleatory and revocable at the will of the client or by death, creates a vested interest in the attorney to recover for the services performed prior to termination of the contract. Due, supra, at 164, 165. This principle of proration of services performed during and after the marriage was applied by the Fourth Circuit in Boyle to an insurance agency begun by a husband and wife during their marriage. The trial court awarded the wife "one-half of the renewals on policies written as of November 13, 1978 [the date the community terminated], although the funds would not be collected until a future time". Boyle, supra, at 736. The trial court found that renewals on policies issued during the marriage and renewed on or prior to November 13, 1978 were community property. On appeal, the wife-appellant urged that she was entitled to a greater award in the form of a continuing one-half interest in the insurance agency. She claimed that the agency was either a joint venture or a partnership consisting of herself and Boyle. The Fourth Circuit denied this contention and, in doing so, affirmed the holding of the trial court as to the classification of renewal premium commissions earned on policies renewed after November 13, 1978 as separate property of the husband.

In Michel, the First Circuit was also faced with an identical question of classification of policy renewal commissions. At issue was $1,461.00 of commissions clearly identified by the court as resulting from renewals received after termination of the community on policies sold prior to the termination date. In adopting the trial court's reasoning, the court found that:

"While it is true that the spade work had been done when the original sale had been made, some service work had to be performed and in addition there was no certainty that the policies would be renewed. The collection of these renewals was of a speculative nature." Michel, supra, at 835. (Emphasis added).

*652 The court then found that the "community's interest" in the renewal premiums was 50%, or approximately $730.00. Accordingly, Mrs. Michel's share was determined to be one-half of $730.00 or $365.00. This calculation was held to be fair in light of the court's classification of the wife's uncompleted literary works at an earlier stage in the opinion as community property. Thus, in Michel, it appears that an equitable result was fashioned on the issue of the husband's renewal premi

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