United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 97-2154

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Lincoln Benefit Life Company, a *

Nebraska Domestic Insurance *

Corporation, *

Plaintiff - Appellant, * District Court for the

 v. *

Robert R. Edwards, *

Defendant - Appellee.

* Appeal from the United States

* District of Nebraska.

*

*

___________

Submitted: November 19, 1997

 Filed: July 7, 1998

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Before BEAM, HEANEY and JOHN R. GIBSON, Circuit Judges.

___________

JOHN R. GIBSON, Circuit Judge.

Lincoln Benefit Life filed a declaratory judgment in Nebraska state court against

Robert Edwards, alleging he owed Lincoln $452,558.29. Edwards removed the action

to federal court and filed a counterclaim for breach of contract. Lincoln raised the

statute of limitations as an affirmative defense to Edwards' counterclaim. The district
The Honorable Richard G. Kopf, United States District Judge for the District 1

of Nebraska.

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court concluded that there was an agency relationship between Lincoln and Edwards, 1

and that the statute of limitations did not begin to run until February 1995, when

Lincoln terminated the contractual relationship. Lincoln appeals, arguing that Edwards'

claim is barred by the statute of limitations, and that the district court incorrectly

decided that the statute of limitations period did not commence until the agency

relationship ended. We affirm.

Lincoln and Edwards entered into a Marketing Director Agreement effective

February 1, 1982. In exchange for overwrite commissions, Edwards agreed to recruit,

train, and supervise general agents to sell Lincoln's policies. The agreement provided

that Edwards was an independent contractor and that amounts payable under the

contract "shall be solely for services as an independent contractor." 

The agreement provided that the agent commission statements rendered by

Lincoln concerning "commissions paid and/or payable, advances and indebtedness shall

be conclusive" unless Lincoln received notice within thirty days. The agent

commission statements documented all financial activities for a particular agent,

including commissions earned and "chargebacks" (which occurred when Lincoln

advanced a commission on a policy and the policy was canceled before the policy

term). The agreement allowed Lincoln to amend the overwriting commission at any

time, but Lincoln agreed that it would pay all marketing directors the same commission.

Contemporaneously with the Marketing Director Agreement, Lincoln and Edwards

entered into a General Agent Agreement which also set forth Edwards' obligation to
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market insurance products for Lincoln in exchange for commissions. Edwards and

Lincoln later entered into a Master General Agent Agreement on March 29, 1984. This

agreement also provided that Lincoln would pay all master general agents the same

overwriting commission and characterized the relationship of master agent and Lincoln

as an "independent contractor." 

Although not stated in the written agreements, Lincoln told Edwards that it

would not "compete" to recruit future agents in his geographical area, and that it would

assign all agents in the Dallas-Fort Worth area to Edwards. 

On March 7, 1986, Edwards signed an agreement to pay Lincoln $433,100.72,

plus interest. This obligation came about from an indebtedness created by several of

Edwards' subagents. To help Edwards pay this debt, Lincoln agreed to increase his

commissions and to assist Edwards in the recruitment of additional brokers in the

Dallas-Forth Worth area. 

In January 1994, Edwards requested an accounting of all transactions under the

1982 agreement. Lincoln denied the request, and on February 21, 1995, Lincoln

notified Edwards that it was terminating its agreements with him. Lincoln filed suit in

state court for breach of the March 7, 1986, contract, as modified by a May 1, 1987,

addendum revising Edwards' payment obligations.

Edwards removed the case to federal court and filed a counterclaim on June 1,

1995, alleging that Lincoln breached their agreements by: 1) failing to assign agents in

the Dallas-Fort Worth area to him; and 2) paying some agents at a higher commission
Nebraska provides for a five-year statute of limitations for breach of a 2

written contract and a four-year statute of limitations for breach of an oral contract. 

See Neb. Rev. Stat. §§ 25-205, 206 (1995).

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rate. Lincoln raised the statute of limitations as an affirmative defense. Lincoln's

position was that Edwards knew of the alleged breaches more than five years before

he filed his counterclaim on June 1, 1995. Lincoln contended that Edwards knew about

the assignment of agents as early as 1985 and about the differing commission rates in

1989. 

The district court denied Lincoln's summary judgment motion, concluding that

the statute of limitations did not begin to run until Lincoln terminated the agency

2

relationship on February 21, 1995. Lincoln now appeals, arguing that the statute of

limitations began to run in 1989, the date of the alleged breach. Lincoln contends that

the court erred in concluding that the statute of limitations period began from the date

Lincoln and Edwards ended their agency relationship and in concluding that the two

parties had an agency relationship. 

I.

In general, a cause of action accrues and the statute of limitations begins to run

when the aggrieved party has a right to institute and maintain a suit. See, e.g., L. J.

Vontz Constr. Co. v. Department of Roads, 440 N.W.2d 664, 666-67 (Neb. 1989).

Relying on Central States Resources Corp. v. First National Bank, 501 N.W.2d 271

(Neb. 1993), the district court concluded, however, that the statute of limitations did

not begin to run when the alleged breach of contract occurred, but rather, the statute did
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not commence until Lincoln and Edwards terminated their agency relationship in 1995.

Lincoln contends that the district court relied on dictum from Central States, and that

the court erred in applying Central States at all because Edwards was an independent

contractor and not an agent of Lincoln.

We review the district court's interpretation of Nebraska law de novo, giving no

deference to the district court's interpretation of state law. See Salve Regina College

v. Russell, 499 U.S. 225, 231 (1991).

A.

In Central States, the Nebraska Supreme Court stated:

[W]here there is a general or continuing agency, a statute of limitations

does not commence to run until the agency is terminated, so that unless

the death of one of the parties occurs, the termination of a continuing

agency cannot be effective so as to set the statute in motion until an

accounting is had or a demand for an accounting made and refused, or

there is an express repudiation of agency communicated to the principal.

501 N.W.2d at 276. 

The district court concluded that there was a general or continuing agency

relationship between Edwards and Lincoln such that the statute of limitations did not

begin to run until February 1995, when Edwards demanded an accounting and Lincoln

terminated their contractual relationship.
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We summarily reject Lincoln's first argument that the district court relied on dicta

from Central States in concluding that a general or continuing agency relationship tolled

the statute of limitations. The Nebraska Supreme Court decided the statute of

limitations had not expired in Central States because there was a continuing agency

relationship between two banks. 501 N.W.2d at 276-77. The direction of the court

that the statute of limitations period did not commence until the agency relationship

ended was central to the court's holding that the statute had not yet expired. The

language was not dictum, and controls here. Cf. McCuen v. American Cas. Co., 946

F.2d 1401, 1407 (8th Cir. 1991).

B.

Lincoln's next argument is that Central States does not apply because Edwards

was an independent contractor and not an agent of Lincoln. Lincoln points out that the

1982 and 1984 agreements specifically provide that Edwards is an independent

contractor and not an "employee[] or servant[] of [Lincoln]." Lincoln also contends

that an examination of the ten factors used to determine whether an individual is an

agent or an independent contractor, see Delicious Foods Co. v. Millard Warehouse,

Inc., 507 N.W.2d 631, 636 (Neb. 1993), establishes that Edwards was an independent

contractor and not an agent of Lincoln. The ultimate conclusion of whether an

individual is an independent contractor is a question of law, which we review de novo.

See id.; see also Berger Transfer & Storage v. Central States, Southeast and Southwest

Areas Pension Fund, 85 F.3d 1374, 1377-78 (8th Cir. 1996); Wal-Mart Stores, Inc. v.

Crist, 855 F.2d 1326, 1330 n.4 (8th Cir. 1988).
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Whether an agency exists depends on the facts underlying the relationship of the

parties, irrespective of the words or terminology used by the parties to characterize

their relationship. See Waterhout v. Associated Dry Goods, Inc., 835 F.2d 718, 720

(8th Cir. 1987); Delicious Foods Co., 507 N.W.2d at 637. Lincoln argues that because

Edwards determined when he wanted to work and who he wanted to work with, he

controlled his own business and was not an agent of Lincoln. 

The district court found, however, that Lincoln had sufficient control over

Edwards to create an agency relationship. The court pointed out that although the

marketing agreement gave Edwards the responsibility of developing and supervising

Lincoln's business, this responsibility was subject to Lincoln's rules, regulations and

standards. The agreement barred Edwards from entering into insurance sales

agreements with other insurers. The court acknowledged that although Lincoln did not

control the manner in which Edwards physically conducted himself in performing his

duties, Lincoln required Edwards to operate on Lincoln's behalf and held veto power

over Edwards' agent selections. Lincoln considered Edwards as a marketing director,

"the front line of management for the company." The court determined that Lincoln

required Edwards to act as its representative, and Edwards had authority to conduct

business transactions on Lincoln's behalf. Lincoln does not argue that these underlying

findings are clearly erroneous, and we are persuaded that the relationship parallels the

relationship in Grone v. Lincoln Mutual Life Insurance Co., 430 N.W.2d 507 (Neb.

1988). In that case, the Nebraska Supreme Court characterized a similar relationship

as that of a principal and agent. Id. at 511. As here, the individual had an exclusive

selling agreement with the insurance company, and there was evidence of the insurer's

ability to control the agent's activities. Id. at 509. Cf. Birchem v. Knights of
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Columbus, 116 F.3d 310, 313 (8th Cir. 1997); Moore v. Hartford Fire Ins. Co., 481

N.W.2d 196, 197 (Neb. 1992). 

We conclude that an agency relationship existed between Edwards and Lincoln

and that the statute of limitations did not begin to run until February 1995, when the

agency relationship ended. Accordingly, we need not consider Edwards' alternative

argument that the statute of limitations was tolled because of fraudulent concealment

or Lincoln's argument that Edwards claim is actually a claim for an "account stated."

We affirm the district court's judgment.

BEAM, Circuit Judge, concurring.

I concur in the result reached by the court, and write separately only to address

a distinction which the parties failed to discern. Lincoln argues that Edwards could not

have been an agent because he was an independent contractor. This, however, is a

false dichotomy. An agent can be either an independent contractor or an employee.

See, Restatement (Second) of Agency § 14N. For example, the attorney-client

relationship is an agent-principal relationship and yet attorneys are also independent

contractors. See 41 Am. Jur. 2d Independent Contractors § 2. The ability of

independent contractors to be agents is beyond dispute. The parties' confusion seems

to stem from the occasional tendency of courts to use "agent" as a colloquial synonym

for "employee" when distinguishing between an employee and an independent

contractor. See, e.g., Delicious Foods Co. v. Millard Warehouse ,Inc., 507 N.W.2d

631, 636 (Neb. 1993). 

In this case, we are not concerned with whether Edwards was Lincoln's

employee or an independent contractor. We are concerned with whether Edwards was
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Lincoln's agent, because only agency will toll the statute of limitations. Under

Nebraska law, one is an agent if he or she acts: (1) for the benefit of another and (2)

subject to that other’s control. See, e.g., Andrews v. Schram, 562 N.W.2d 50, 54

(Neb. 1997). Edwards meets both prongs of this test. Therefore, the court correctly

holds that the resulting agency relationship served to toll the statute of limitations, and

I concur.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.