Case ID: ohio-st_21/html/0492-01.html
Source: Caselaw Access Project
Author: {"author": "Day, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Ætna Insurance Company v. William F. Church.
    1. As a general rule, all profits which are made by an agent, in the course of the business of the principal, belong to the latter; but mere gratuities, which are received by the agent for incidental benefits derived by them from services rendered by the agent for his principal, where neither the principal nor agent had any claim for the amount so received, are not properly such profits, and cannot be recovered of the agent by the principal.
    ■2. Where a contract, made by an agent for his principal, for the services of another party in the business of the principal, provided that, as part compensation for such services, the party so employed should receive a specified per cent, of the amount paid by the principal for the services of the agent so making such contract — held, that the contract for such percentage was the contract of the principal and not of the agent.
    3. Where such contract stipulated fora definite salary “for the first year" of the service of the party so employed, and “ annually thereafter,” in addition thereto, a specified percentage on the amount paid to the agent making the contract — held, that such percentage does not accrue to the party so employed, until after the expiration of the “ first year,” and no recovery therefor can be had under the first year’s service.
    Error to the superior court of Cincinnati.
    The suit below was brought by Church against the .¿Etna Insurance Company, upon two causes of action. The first was abandoned by him before trial j the second was for a .share of one-twentieth, or five per cent, of the profits payable to J. B. Bennett, general agent of the company, accruing or made during the period of Church’s service, from July 1, 1865, to November 1, 1865, being a period of four months, under a contract with the company, by J. B. Ben* nett, agent.
    This claim was founded upon the following letter :
    
      
      May 20th, 1865.
    Wm. E. Church, Cincinnati, Ohio.
    Dear Sir : The proposition now made you, for re-engagement of your services, is upon about the same line of duty as formerly performed, at a salary of |3,500 for the-first year and traveling expenses, say commencing duty first, of June next; and annually thereafter so long as the connection continues ; in addition to that salary and expenses, an interest of one-twentieth (5 p. ct.) of the general agent’s-yearly profits account. As the duty begins at a time when 7-12ths of the fiscal year of the .¿Etna Company is expired, upon IstNovember, 1866, the 5 p. c. will apply to only 5-12ths-of the fractional year, and thereafter the annual figure as-determined each 1st November. Eor this compensation a hearty and energetic co-operation of your best services is desired. Vacation can be taken at individual expense, and. cessation of salary for the time.
    The company really wants your services, and therefore asks for four months’ traveling duty per aunum, with possibly six months. There is no desire for transient engagements, especially with one as well understood as you are in this office, yet either party may terminate the arrangement by giving 60 days notice to the other.
    Hoping for a long, pleasant and profitable association,
    I am, dear sir, truly yours,
    J. B. Bennett,
    
      General Agent.
    
    To the petition, the company answered: First. That the contract set out in the petition, so far as it related to a share of Bennett’s profits, was not its contract, but was the personal engagement of Bennett himself. Second. That if it was its contract, by its terms, Church was not entitled to-receive any percentage for his first year’s service.
    To this answer is added a counter-claim, alleging, that, by the terms of its contract, the company was entitled to the benefit of the whole time, skill and service of Church, during the time of his employment; and having, during that time, rendered services for other companies and individuals, in matters of insurance, for which he has received compensation, he must account to this company for the sums so received.
    The reply, in response to interrogatories filed with the counter-claim, set forth the facts in relation thereto.
    The case was tried to the court, which made a special •finding of facts as follows :
    
      11 First: The court finds that the paper annexed to the petition [said letter] is a contract between the plaintiff and the defendant, and that there is no other party thereto.”
    “ Second : That by said contract the plaintiff is entitled to five percentum of the proportion of the defendant’s profits paid to the general agent at Cincinnati, Ohio, for the months of July, August, September, and October, a.d. 1865, being four-twelfths of the fiscal year of said company, ending October 31, 1865 : for which defendant was liable to account, and pay to plaintiff Nov. 1, 1866 ; and it is agreed by the parties that the amount of said percentum for said period was $400.”
    “ Third: The court finds that the plaintiff between July 1, 1865, and October 30, 1867, while employed as aforesaid by defendant, received from other persons sundry sums of money as remuneration for services rendered to them, in all amounting to $458.07; that the services consisted in some instances of calculations made for other insurance companies, the labor being performed by plaintiff at his residence in the evening, when not engaged in the discharge of his duty to the defendant, and the remaining instances as follows: The plaintiff having, in the discharge of his duties to defendant, made adjustment of losses by fire in which other companies were interested as insurers, said companies after the labor was performed being satisfied with said adjustments, and thereby saved the labor and expense of procuring other adjustments to be made, chose to and did pay the plaintiff a sum of money; and that said services did not in any way interfere or conflict with plaintiff’s duty to defendant.”
    “And the court finds upon the foregoing facts, that plaintiff is entitled to a judgment against the defendant for the sum of $400.00 with interest from Nov. 1, 1866. And touching said counterclaim the court finds that the defendant is not entitled to recover'thereon.”
    A motion by defendant for a new trial, on the ground that the findings of fact were not sustained by the evidence, and that the court erred in its holdings of the law thereon, was overruled. Exceptions were duly taken and a bill of exceptions embracing all the evidence was filed.
    Judgment was rendered in favor of the plaintiff below, and on error was affirmed in general term. To reverse these judgments this petition in error is prosecuted in this court.
    
      Bateman, Moulton & Johnson for plaintiffs in error:
    1. The contract proven, so far as it relates to the percentage claimed, is not the contract of the .¿Etna Insurance Company, but was the personal engagement of Bennett.
    2. By the terms of the contract Church was not entitled to receive any percentage for his first year’s service.
    3. As to the counterclaim, we suppose the company has no claim for the money received by Church from insurance companies and others, for services rendered at his house in the evening, when not required to be on duty with the ¿Etna Insurance Company; but for moneys received by Church for services rendered in course of the discharge of his duty to the ¿Etna company, in the adjustment of losses wherein other companies were interested with it, the .¿Etna company has a just claim. Story on Agency, sec. 207; Smith on Master and Servant.
    
      W. M. Ramsey, for defendant in error:
    1. The counterclaim. Church received this money as a gratuity in part and as compensation in part for services rendered at a time when it did not interfere with his duty to the ¿Etna company. Smith’s Master and Servant, 87.
    2. The contract is that of the company. The obligation to pay the “profits” is upon the same party who is liable for “salary.”
    
      3. The contract guaranteed to Church “ a salary of $3,500 for the first year, and annually thereafter so long as the connection continued;” “and in addition to that salary,” etc. “an interest of 1-20 of the general agent’s yearly profits account.”
   Day, J.

The questions presented for our consideration are embraced in three propositions :

Did the court err in holding that the contract for a share of the general agent’s yearly profits account was the contract of the company, and not the personal contract of the agent? We think not. There were but two parties to the contract, Church on the one part and the company on the other. The contract was made on behalf of the company by its agent, who was thereby estopped from claiming of the company the share of his profits thus contracted by the company to be paid to another.

Did the court err in holding that Church was entitled to receive a share of the general agent’s percentage for his first year’s service? We .think it did. The interpretation of the contract as claimed on the part of Church, as calling for a share of this percentage for the first year’s service, renders some clauses of the contract useless. If that waa the intent of the drafter of the instrument, he would most natuarally have drawn it for a fixed annual salary and expenses, and in addition thereto the interest stipulated in the agent’s yearly profits account. But, instead of that, the contract is carefully made to stipulate in the first place, for a given salary “for the first year.” There was no need of this provision unless it was to distinguish that year from the succeeding time of the employment clearly contemplated by the parties; and no distinction is made except in the amount of compensation, and no difference is made in that except in the added percentage. Exclude the percentage from the first year, and every word of the contract has significance, showing that to be its true meaning. Emphasizing the clauses to show their true relation and meaning, it reads as follows: “The proposition now made you for re-engagement of your services, is upon about the same line of duty as formerly performed, at a salary of $3,500 for the first year and traveling expenses, (say commencing duty first of June next,) and annually thereafter so long as the connection continues, in addition to that salary and' ex penses, an interest of one-twentieth (5 p. ct.) of the general agent’s yearly profits account.” This view of the contract is strengthened by the succeeding clause, viz.: “As the duty begins at a time when 7-12ths of the fiscal year of the ACtna company is expired upon 1st November, 1866, the 5 p. c. will apply to only 5-12ths of the fractional year,, and thereafter the annual figure as determined each 1st. November.” This clause seems to have been inserted for the purpose of showing that the five per cent of the general agent’s yearly account would apply to only a fractional part of the company’s fiscal year, and that it should apply to the five months of the year 1866, being the five months after the expiration of the “first year,” which was to begin June 1, 1865. Looking to the contract alone, this is its-obvious and clear import. But doubt is raised on this construction, by reference to the fact appearing in the record that, according to a usage of the company, the yearly profits account of the general agent with the company was not. made up until after one year had elapsed from the rendition of the service: that is, the account of the fiscal year 1865, would be stated November 1, 1866. Giving this fact, its full weight, it is not as strong to show that the date refers to the time of stating the account, as the context of the. instrument is to show that it refers to the time of the rendition of the service to which the percentage is applied.. Moreover, the force of this fact is much weakened by the further fact appearing in the case, that during the previous, engagement between the same parties alluded to in the contract, it was the usage as in all like employments of sub-agents, to determine by estimate the interest of such sub-agents in the percentage of the general agent at the end of the year of service, instead of waiting until the following, year, when the general agent settled with the company.

Beading the contract in the light shed upon it by all the circumstances appearing in the case, we are constrained to hold that the contract of the parties as written, did not include an interest in the general agent’s percentage for the first year’s service contemplated by it, and that the court therefore erred on that point.

Did the court err in finding for Church on the counterclaim interposed against him by the company ? We think not. At first sight it might seem that he would be liable to account for moneys received by him of other parties for services rendered for the company; for it is an undoubted principle that as a general rule all profits which are made by the agent in the course of the business of the principal, or which are incidentally obtained in the execution of his duty belong to the latter. Story’s Agency, sec. 207.'

But it will be found in that class of cases that the profit arises from a claim that could be enforced, either by the principal or agent, against the party from whom it was received.

A part of the amount claimed by the company was received by Church, for services rendered another party when not on duty for the company, and to that extent its claim does not come within the principle stated. The remainder was received from other insurance companies, which instead of adjusting losses by fire for themselves, adopted the adjustments made for the ¿Etna company by Church. Neither the ¿Etna company nor Church had any legal claim against them for so doing. The several amounts paid on these occasions were mere gratuities. Had they been paid to the principal the agent would have had no claim therefor, nor can the principal call the agent to account merely because it was his good fortune to be the donee instead of the principal. These gratuities were not properly earnings or profits made by the agent in the course of the business of the principal. They were gifts prompted by the politeness of the donors and belong to the donee.

It results that neither party was entitled to judgment on their respective claims. It follows that the judgment of the superior court in general term affirming that of the special term must be reversed in part and affirmed in part; and this court proceeding under the statute to render the judgment that should have been rendered by that court, will reverse the judgment rendered in favor of Church on his claim against the company, and affirm that rendered against the company on its claim against Church.

Welch, C.J., and White, McIlvaine and West, JJ., concurred.