Wright v. SOUTHWESTERN LIFE INSURANCE COMPANY

364 F. Supp. 981, 1972 U.S. Dist. LEXIS 12502
CourtDistrict Court, W.D. Louisiana
DecidedAugust 1, 1972
DocketCiv. A. 14562
StatusPublished
Cited by5 cases

This text of 364 F. Supp. 981 (Wright v. SOUTHWESTERN LIFE INSURANCE COMPANY) is published on Counsel Stack Legal Research, covering District Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wright v. SOUTHWESTERN LIFE INSURANCE COMPANY, 364 F. Supp. 981, 1972 U.S. Dist. LEXIS 12502 (W.D. La. 1972).

Opinion

*982 OPINION

DAWKINS, Chief Judge.

Plaintiff entered into an agreement with Southwestern Life Insurance Company to canvass for applications for life insurance on October 10, 1955. There Were four written amendments to the contract, effective respectively on November 1, 1955, March 1, 1958, February 1, 1960, and March 14, 1962 (attached hereto as Appendices 1 through 5). Wright was one of the first agents in Louisiana to write business for Southwestern Life Insurance Company.

As a result of a certain research project, he sustained physical injuries and in 1958 an automobile accident further restricted his ability to sell life insurance “door to door.” Following passage by Congress of the Technical Amendments Act of 1958, in the latter part of that year, plaintiff became interested in selling tax-sheltered annuities plans (TSAP). This is a type of annuity which permits persons participating to receive a portion of their salaries after retirement while in a lower tax bracket. Wright’s educational background, including Bachelor and Master Degrees from L. S. U., and his prior employment with the L. S. U. Agricultural Experimental Station in Houma, Louisiana, prepared him exceptionally well to solicit business for a TSAP. His first attempts were directed at employees of the St. Francis Hospital, in Monroe, Louisiana. After another agent for Southwestern, Richard Troy, secured an application for an annuity contract with one of the physicians at the hospital, plaintiff no longer pursued the program there.

Having referred to recent insurance journals and the Research and Review Service, Wright became interested in presenting the program to the various colleges and universities in Louisiana. Directly attributable to his efforts, Southwestern became the first insurance company to write annuity programs for colleges in Louisiana and, indeed, in the nation.

Despite several trips to Southwestern’s home office in Dallas, Texas, Wright was unable to obtain significant assistance from the Company in laying the groundwork for the hoped for annuity programs. Southwestern’s reluctance was ascribed, properly but not exclusively, to its hesitation in engaging in the unauthorized practice of law or giving tax accounting advice. However, Wright obtained, after numerous letters to and from Congressman Otto Passman, a personal visit with the Congressman, and conferences with others, a Treasury Department Revenue Ruling that Louisiana Colleges, in particular Northeast Louisiana State College, were organized and operated exclusively for educational purposes, and, as such, were exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1954. This ruling, obtained at some personal expense and much time, was critical to Northeast’s participation in TSAP. A great deal of work was done preliminarily, with attendant expenditure of time, in presenting the program to the Louisiana State Board of Education. Letters to the Board members and appearances before the Board without the presence of home-office Southwestern personnel resulted in his obtaining permission for the different colleges under the Board’s control to let franchises for the program.

In May of 1961, the first TSAP franchise was signed with Northeast Louisiana State College after bids were called for twice. With minor exceptions, all forms and information were prepared by Wright and his associates. Salary renegotiation forms and an important formula for premium payments by employees of the College over a nine months, rather than on a twelve months, basis were prepared solely by plaintiff. Equipment was obtained by Wright better to serve the annuitants under the program.

In October, 1961, Northwestern State College and McNeese State College were added to Southwestern Life Insurance Company’s annuity program, utilizing *983 the invaluable research and work done by Wright in connection with his having secured the Northeast franchise.

The Treasury Department, in November, 1961, recalled its earlier exemption from Federal income tax under Section 501(e)(8) of the Internal Revenue Code, but noted that H.R. 4317 had been signed by the President on October 4th, 1961, amending Section 403(b), so that it no longer was necessary for public schools to file applications with the Commissioner of Internal Revenue for classification as “organizations” described in Section 501(c)(3) in order for their employees to purchase annuities under Section 403(b). This amendment granted direct permission under the statute, obviating a Revenue Ruling for the State Colleges and Universities to proceed with the program.

Shortly thereafter, Nichols State College and Southeastern Louisiana College let franchises to Southwestern Life Insurance Company. Later in 1962, Louisiana Polytechnic Institute was added; Southern University and A. & M. College signed a franchise with Southwestern in 1963; and, in 1964, Grambling College, Southern State College, in Magnolia, Arkansas, and Lincoln Parish School Board were added. By 1963, Southwestern’s home office requested and received as much information as Wright had gathered on the section 403(b) annuity program to aid them in their attempt to prepare information for general distribution in Louisiana and other States.

Undeniably, as to several of the franchise contracts, and at every one of the schools in which a franchise was obtained, Wright was considered by the Colleges and by Southwestern as the “servicing agent.” His familiarity with the program and his contact with each of the presidents of the colleges made him the single person best able to service the program.

Because of the volume of business involved, and in order to keep contact with each of the franchises, Wright entered into several agreements with different persons permitting them to write policies at an agreed-on percentage split. At least two of these contracts were suspended by Wright. Obviously, those parties could not bind Southwestern, which was not a signatory, and one contract expressly recognized that fact.

Early in the formative stages of the program, Wright attempted to secure from Southwestern his position as the sole agent authorized to sell such policies in Louisiana. He was advised that the best way to protect his position was to provide good service to each one of the franchises which he had been instrumental in obtaining and to secure agent’s letters of record from the individual colleges and universities. Not until March and April of 1968 did Wright have agent’s letters of record signed by each of the institution’s presidents. The record indicates that in 1961 a problem arose concerning a Southwestern agent, unconnected with Wright, soliciting business in one of the universities whose franchise had been procured by Wright. This problem apparently was solved without difficulty. However, it did prompt Wright to inquire again of Southwestern as to just how he might protect his past and future time in promotion of the program.

The evidence shows that even had there been agent’s letters of record from the College presidents long prior to 1968 those letters would not have prevented Southwestern from permitting others of its agents to solicit business on these campuses. Not only was Southwestern not a party to those letters, but it would have been foolish for them to agree to their exclusivity in Wright’s hands.

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Related

Pierce v. Northwestern Mutual Life Insurance
444 F. Supp. 1098 (D. South Carolina, 1978)
Randolph v. New England Mutual Life Insurance
526 F.2d 1383 (Sixth Circuit, 1975)
Wright v. Southwestern Life Insurance
404 F. Supp. 1324 (W.D. Louisiana, 1975)
Wright v. Southwestern Life Insurance
485 F.2d 1238 (Fifth Circuit, 1973)

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Bluebook (online)
364 F. Supp. 981, 1972 U.S. Dist. LEXIS 12502, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wright-v-southwestern-life-insurance-company-lawd-1972.