Case Name: The Potomac Insurance Company of the District of Columbia, Respondent, Appellant, v. John A. Kelly, Appellant, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1916-07-10
Citations: 173 A.D. 791
Docket Number: 
Parties: The Potomac Insurance Company of the District of Columbia, Respondent, Appellant, v. John A. Kelly, Appellant, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 173
Pages: 791–794

Head Matter:
The Potomac Insurance Company of the District of Columbia, Respondent, Appellant, v. John A. Kelly, Appellant, Respondent.
First Department,
July 10, 1916.
Principal and agent — accounting — right of insurance company to accounting by agent — fiduciary relationship — evidence — burden of proof — contract —letter not constituting contract.
The relation existing between a fire insurance company and a general agent bound to render monthly statements or accounts is fiduciary and the company is entitled to maintain a suit against the agent for an accounting.
In such a suit the burden is upon the agent to show that he has turned over to the plaintiff all of the moneys collected by him and to which it is entitled.
The fact that such agent has rendered from time to time statements which have been retained without objection does not deprive the company of its right to have a full and complete account of its agent’s dealings if it so desires.
It is not necessary for the company to show that anything will be found due in order to obtain an accounting. It is sufficient that the fiduciary relation exists between the parties.
Where a letter, stating that the writer is agreeable to the appointment of a certain person as manager on certain terms and that formal agreement will be submitted in a day or two, is indorsed by the person to whom it was addressed as follows: “ The foregoing is accepted this day,” and signed by said person, and no formal contract is ever presented, such letter with the indorsement thereon does not constitute a contract and hence is insufficient as a basis for an accounting between the parties.
Cross-appeals by the plaintiff, The Potomac Insurance Company of the District of Columbia, and the defendant, John A. Kelly, from an interlocutory judgment of the Supreme Court, entered in the office of the clerk of the county of New York on the 20th day of July, 1915, directing an accounting upon the decision of the court after a trial at the New York Special Term.
Stephen P. Anderton, for the plaintiff.
Edgar J. Nathan, for the defendant.

Opinion:
McLaughlin, J.:
Appeal by both parties from an interlocutory judgment directing the defendant to account. Plaintiff is a fire insurance company, with offices in Washington, D. C. Defendant is a resident of New York city. On the 12th of January, 1909, he was appointed by the plaintiff its agent for the United States and Canada, excepting the District of Columbia and its immediate vicinity, for a term of five years, under a written contract which fixed his compensation at thirty-seven and one-half per cent of the net premiums received on policies written through his office. Defendant agreed, for the compensation stated, to establish an agency, maintain an efficient and capable field and office force, to give his personal attention to the management, and to render to the plaintiff monthly statements or accounts. Immediately following the execution of the contract the defendant entered upon the discharge of his duties and continued to act as plaintiff's agent until February 17, 1913. He issued and canceled policies on behalf of the plaintiff, collected premiums, adjusted and paid losses, and from time to time rendered statements to the plaintiff of the policies written and the amount of moneys collected and disbursed.
The evidence clearly established that acting under this contract his relation to the plaintiff was a fiduciary one and the action lies for an accounting. The burden is upon him to show that he has turned over to the plaintiff all of the moneys collected by him and to which it is entitled. (Marvin v. Brooks, 94 N. Y. 71.) The fact that he rendered statements from time to time, which were retained without objection, does not deprive the plaintiff of its right to have a full and complete account of defendant's dealings if it so desires. (Jordan v. Underhill, 91 App. Div. 124; Frethey v. Durant, 24 id. 58.) To obtain an accounting it is not necessary for the plaintiff to show that anything will be found due. It is sufficient that the relation exists between the parties and this entitles the plaintiff to a full and complete statement of defendant's acts as agent. But, from the theory upon which the case was tried and decided, as well as the manner in which it was presented by the plaintiff on appeal, it would seem that the plaintiff does not want an accounting under the contract referred to, but does desire one from May 1, 1911, when it is claimed another contract was entered into. The interlocutory judgment does not direct the defendant to account from January 12, 1909, but only from May 1, 1911, when the alleged second contract was made.
About the time the contract was made, January 12, 1909, the defendant purchased a majority of plaintiff's capital stock. Some time in 1909 he became acquainted with one Norie-Miller, the general manager of the General Accident, Fire and Life Assurance Company of Perth, Scotland, whom he finally interested in the plaintiff's company. Defendant went to Perth in April, 1911, and saw Norie-Miller, with whom he arranged for the sale of his stock in plaintiff to the General Accident Company. The sale of the stock also contemplated that the Accident Company should acquire the balance of the stock in plaintiff, either through the defendant or others. On May 1, 1911, Norie-Miller wrote a letter to the defendant, referring to the purchase of his stock, and saying: "We are agreeable to appoint you as our Manager for that business in the United States on the terms arranged namely, you to be paid a straight commission of 35 per cent, on the net premiums received, this to cover every commission and expense, including taxes and any other special charge, and you to receive also a contingent commission of 10 per cent on the net ascertained profits, such profits to be arrived at after deduction of necessary reserves. 'x * Formal agreement to this effect will be submitted by us to you with the usual clauses and conditions, and shall send you draft of the necessary agreement in the course of a day or two." Upon receipt of this letter the defendant indorsed upon it "Perth 1st May 1911. The foregoing is accepted this day, Jno. A. Kelly." No formal contract was ever presented; hut the court, on the theory that the letter itself constituted a contract, has directed an accounting from its date.
It did not constitute a contract. It was, at most, the statement of what the contract, when presented, would contain. It was not executed by the plaintiff and there .is nothing to indicate that it was intended to be a binding contract between the parties. The defendant continued as agent until May 23, 1913-, and transacted business for the plaintiff in substantially the same way that he had prior to the time the letter was written. The contract of January 12, 1909, had not been terminated, and, therefore, if the plaintiff is entitled to an accounting at all, it is under that contract and not under the letter referred to.
It follows that upon the defendant's appeal the judgment should be modified so as to direct an accounting, if the plaintiff so desires, of the defendant's acts as agent under the contract of January 12, 1909.
The plaintiff's appeal is from so much of the judgment as holds that the defendant was entitled to a contingent commission of ten per cent on the net ascertained profits of the plaintiff's business. In the letter to which reference has been made there is a statement to that effect, but, as has already been indicated, this letter never ripened into a contract, and for that reason the interlocutory judgment is erroneous in that it directs such an accounting. Defendant is not entitled to a contingent commission of ten per cent on the net ascertained profits. The contract under which the services were rendered contains no such provision and the interlocutory judgment should also be modified in this respect.
The judgment appealed from is modified as indicated in this opinion, and as thus modified affirmed, without costs to either party. The order to be entered herein, which will be settled on notice, should contain the necessary modification of the findings.-.
Clarke, P. J., Scott, Dowling and.Davis, JJ., concurred.
Judgment modified as indicated in opinion, and as modified affirmed, without costs. Order to be settled on notice.