Case Name: Arbaugh et al. v. Shockney
Court: Appellate Court of Indiana
Jurisdiction: Indiana
Decision Date: 1904-05-31
Citations: 34 Ind. App. 268
Docket Number: No. 4,676
Parties: Arbaugh et al. v. Shockney.
Judges: 
Reporter: Indiana Court of Appeals Reports
Volume: 34
Pages: 268–279

Head Matter:
Arbaugh et al. v. Shockney.
[No. 4,676.
Filed May 31, 1904.
Rehearing denied December 13, 1904.]
1. Contracts.- — Soliciting Insurance. — Commission.—-Where plaintiff contracted to employ defendant to solicit life insurance, and to pay him for his .services a certain commission on all premiums collected and paid over upon insurance secured by him, and that all money or notes received by defendant should constitute a fiduciary trust, to be paid over to plaintiff at the plaintiff’s option, the only compensation to which defendant was entitled was the commission provided, p. 272.
2. Same. — Soliciting Insm-ance. — Expenses.-—Advancements.—Where plaintiff contracted to employ defendant to solicit insurance and to pay him therefor a certain commission, and also- to advance money, not to exceed $15 per week, for current expenses, the same to be retained out of and be a first lien on defendant’s commission on premiums secured by him, and the contract further provided that defendant should turn over all premiums until his commissions should equal such advancements, and the bond, executed as security by defendant, provided that defendant should pay over to plaintiff all moneys payable in any event on account of the advancements made to him, such contract provides compensation only to the amount of commissions and does not include the $15 per week in addition, p. 272.
3. Same. — Repudiation.—Right of Party Repudiating. — Where the plaintiff employed defendant to solicit insurance for a certain commission, and agreed to advance to defendant, for current expenses, not to exceed $15 per week, such advancements to.be deducted from commissions, and the plaintiff after making some advancements refused to make any further advancements unless defendant would execute a new contract, such refusal constituted a repudiation of such contract and justified defendant in quitting such employment, and the plaintiff’s repudiation precludes any recovery by him on such contract, p. 273.
4. Contracts. — Advancements.—Collection.-—Where a contract provided that plaintiff should “advance” to defendant not to exceed $15 per week for current expenses, such amount to be a first lien and payable out of commissions which should become due1 to the defendant, such “advancement” did not constitute a personal liability, since there is no provision requiring the defendant to pay such sums. p. 275.
5. Same. — Advancements.-—-Obligation for Repayment. — Implied Contract. — Where plaintiff contracted with defendant for certain work, and to enable defendant to give his entire time and energy .to such work agreed to advance him not to exceed $15 per week, payable out of commissions to become due defendant, it being agreed that defendant should remain in plaintiff’s employ at plaintiff’s option, so long as defendant was “in debt” to him, such contract does not show any obligation upon defendant personally to repay such advancements,, but the same must be collected from such commissions, nor does it show any implied promise arising from such terms, p. 275.
6. Principal and Surety. — Bond.—Construction.—Sureties have the right to stand upon the strict terms of their contract, and their liability can not be extended by implication, p. 279.
From Superior Court of Marion County (59,414) ; John L. McMaster, Judge.
Action by James N. Sbockney against Archibald M. Arbaugh and others. From a judgment- for plaintiff, defendants appeal.
Reversed.
Harvey, Pichens, Cox & Kahn, for appellants.
Oliver H. Carson, for appellee.

Opinion:
Wiley, J.
Action by appellee upon two contracts entered into by him and appellant Arbaugh, by the terms of which the latter agreed to act as insurance solicitor for the former, and upon a bond signed by Arbaugh as principal and appellants Lesley and Gist as sureties, guaranteeing performance on the part of Arbaugh. The amended complaint is in two paragraphs, to which an answer in denial was filed. Trial by the court, resulting in a finding and judgment for appellee. Appellants' joint and several mo tion for a new trial was overruled, and suolx railing is the only error assigned.
The two contracts and bond sued on were executed the same day. The contracts xnay px'opexdy be designated as prixnary axxd supplemental, and will be so referred to in this opixxion. By the terms- of the primary contx'act, appellant Arbaugh engaged to act as soliciting agent for appellee for life insurance companies designated by the appellee. The appellee was to pay Arbaugh for his services a specified commission oxx all premiuxns collected and paid over upon the insurance secux'ed by him. x^rbaugh bound himself not to solicit applications for life ixxsurance, or do any business conxxected therewith, for any other compaxxy than that designated by appellee. He also agreed to execute a bond with appx'oved sxxreties, conditioned for the faithful performance of his duties and obligatioxxs as sxxch agent. He also agx'eed to be governed by axxd'submit to all rules and regulations then existing or that xnight thereafter be adopted by the coxnpanv or companies for which he was to solicit business. The contract also px-ovided that the appellee might offset against any claims under the contract any and all debts or liabilities of Arbaugh to appellee. The contract further provided that all xnoneys or other evidences of value or of indebtedness that might be received by Arbaugh "should be a fiduciary txuxst ixx the hands of said Archibald N. Arbaugh," and that all such funds, etc., should be paid ovey to the appellee at his option. It was fux'ther provided that either party might cancel the contract by giving to the other thirty days' notice in writing.
The supplemental contract provided for advancements to be made by the appellee to Arbaugh, not to exceed $15 per week, conditioned that Ax'baugh shoxxld remit to1 appellee, on receipt of saxne, all moneys or notes secured by him for preixxium or premiums on applications for insurance. By the terms of this supplexnental contract, these advances wex'e to be a first lien on all commissions or renewals then due, or that might thereafter become due to Arbaugh, and appellee was authorized to deduct any advances made from any money in his hands received on premiums, and which, under the primary contract, would be due to Arbaugh. By the supplemental contract it was also provided that appellee was not bound to pay any commission on any note taken by Arbaugh for premiums until the same should become due and paid. It was agreed between the-m that whenever any commission was due Arbaugh, the same should constitute and form a part of the amount which appellee agreed to advance from time to time. Another provision of the supplemental contract was that it was tire intent of the parties that appellee, by making advances, was to furnish Arbaugh with ready money for current expenses; and it was further stipulated that Arbaugh should remain in the employ of the appellee, at the latter's option, so long as Arbaugh should be indebted to him, and that appellee might terminate the supplemental agreement at any time, by giving written notice, without invalidating or interfering with the primary contract.
. By the terms of the bond, the obligors bound themselves that Arbaugh "shall pay or hand over all moneys payable in any event to James R. Shoekney, aforesaid, which shall at any time be received by him or for which he shall be accountable or liable, including all moneys received prior to the date of this instrument (if any there be), as well as that received thereafter; as also all moneys which he now owes, or hereafter may owe, to said James R. Shoekney, aforesaid, on account of the advances made to him or otherwise, and shall now, and at all times hereafter, well, truly, and faithfully do and perform all the duties appertaining to his said agency, which are now, or which may hereafter be prescribed at any time for the government of the business of said agency by said James R. Shoekney, aforesaid, and shall well and faithfully conform to and fulfil all instructions and directions which he, as said agent, may at any time and from time to. time receive from said James FT. Sliockney." The bond further required that Arbaugh should, on the 12th and 27th days of each month, account for, remit and pay over to appellee all moneys due by him, not previously remitted and duly accounted for, less his commission and allowance, expressly authorized by his written appointment. These several instruments should be construed together to ascertain the intention of the parties.
It is clear that under the primary contract the only compensation Arbaugh wa^ to receive for his services as soliciting agent for appellee was the commission agreed upon, and this was to he repaid solely out of the premiums collected. He did not collect any premiums for which he failed to account. From the date of the contract to the time Arbaugh quit the service of appellee, the latter made weekly advances to him, aggregating $323.50. All notes taken by Arbaugh in payment of premiums were turned over to appellee, and he retained them and all proceeds therefrom.
The contracts speak for themselves. The language used is not ambiguous, and, as above suggested, the only compensation Arbaugh was to receive was a fixed commission upon the business he secured. To hold that the supplemental contract provides for additional compensation by an advancement of $15 per week, would he against the clear intention of the parties as expressed by their contract.
It appears from the evidence that Arbaugh was an inexperienced insurance solicitor, and it is evident that the advancements provided for in the supplemental contract were to aid him in his business. The intention of the parties is made clear by a provision in that contract that Arbaugh was to repay appellee all such advances out of the commissions earned, and, to secure such repayment, the terms of the primary contract were modified, in that he was to turn over to appellee all of his commissions tO' reimburse him for such advancements, and was to remain in his employ until the commissions earned would equal the advancements made. Under the primary contract, Arbaugh was permitted to retain out of all remittances his commissions earned. As another evidence of- the intention of the parties, the bond bound him to "pay over" to appellee "all moneys payable in any event on account of the advances made to him or otherwise."
There- is a sharp contention between the parties as to whether or not the advances made by appellee to Arbaugh constituted a personal indebtedness which was covered by the bond, hut, from the view we have taken of the law as applicable to the facts proved, it is unnecessary for us to decide that question.
The supplemental contract provides that the appellee could terminate it at any time by giving to> Arbaugh written notice. Eo written notice of his intention to terminate it was given, but the uncontradicted evidence shows that he refused to carry out its conditions on his part.
The two contracts were executed February 1, 1899, and the parties to them operated under them until on or about June 21, 1899. Prior to the last-named date, appellee had said to Arbaugh that he would not make any more advances, as provided by the supplemental contract, and in fact did not make any more. He told Arbaugh that he would make a new contract with. him on an entirely different basis, prepared such contract, signed it, and tendered it to Arbaugh for his signature. The latter refused to sign it, and left the employ of appellee. Appellee's repudiation of the supplemental contract was such a breach of its terms as to relieve Arbaugh from further liability thereunder. He was, therefore, justified in quitting appellee's service. It is true the supplemental contract bound Arbaugh to remain in appellee's service until his earned commissions should be sufficient to repay the advances made; but, as he was operating under his primary and supplemental contracts, and could only earn commissions while ' serving his principal thereunder, appellees refusal to- continue him in his service under the terms of the contracts, and his declaration that he would not so continue him, except upon the terms of a new contract, which he proposed and presented to him for acceptance and signature, were sufficient to release him from his obligations.
Performance on the part of Arbaugh was rendered impossible by the act of appellee, for the rule is that one who has violated his obligations under a contract is in no position either to compel the other party to fulfil his duties, or complain because the latter is unwilling to do so. 7 Am. and Eng. Eney. Law (2d ed.), pp. 151, 152, and authorities there cited. It is a recognized rule of law that a failure to perform the engagements of a contract constitutes a breach. 7 Am. and Eng. Ency. Law (2d ed.), pp. 149, 150. A vital condition in the contract before us was the advancement to Arbaugh of $15 per week. This advancement appellee refused to continue, and refused, also, to carry out the contract in any of its parts. Under the original contract, the evidence fails to disclose any liability on the part of Arbaugh, and, as appellee is at fault for refusing to carry out the supplemental contract, no liability upon the bond is shown.
The evidence is not sufficient to- sustain the decision and judgment. Judgment reversed, and the court below is directed to sustain appellant's motion for a new trial.