Opinion ID: 162312
Heading Depth: 2
Heading Rank: 2

Heading: ANPAC'S Counterclaim

Text: 16 ANPAC advanced to SDJ $108,000 pursuant to the AAA. Appellants allege that the purpose of the advances was to enable Appellants to open offices in several Colorado towns to facilitate the sale of Appellees' policies. At the time of termination, the district court found that Appellants had not yet repaid $97,709.74 of the advances made to them. Appellees counterclaimed for the unpaid advances arguing that the AAA obligated Mr. Jarvis to repay the outstanding balance from his personal assets. The district court granted summary judgment to the Appellees on their counterclaim. 17 Colorado law, similar to the law of the majority of the states, has adopted the principle that [r]egular advances to an agent are presumed to be in the nature of compensation. In the absence of an express or implied agreement to the contrary, advances in excess of earned commissions are not recoverable. Slabodnik v. Travelers Ins. Co., 489 P.2d 604, 605 (Colo.Ct.App. 1971); see also 32 A.L.R.3d 802 (1970). Therefore, absent a contractual provision expressly holding Mr. Jarvis personally liable for advances, Appellees must show that Mr. Jarvis, by his conduct, exhibited an intent to be held personally liable for the repayment of the advances. See Argonaut Builders, Inc. v. Dare, 145 Colo. 424, 359 P.2d 366, 368 (1961) (intent of the parties[] gathered from all of their dealings ... lead[s] to the contrary conclusion... that the defendant should be liable to the extent that the charges exceeded the payments to him). 18 The Agency Agreement as amended by the AAA contains two provisions discussing the repayment of advances. The first provision, contained in the AAA itself, states: 19 This Agent Advance Agreement may be terminated at anytime by the Company with or without cause. The termination shall be effective immediately upon the Company giving written notice to the Agent. Said Agreement shall automatically be terminated when the advance payment of compensation deficit is repaid in full. 20 Aplt.App. at 101. This provision in no way holds Mr. Jarvis personally liable for advances left owing after termination. Instead, this provision simply indicates that Appellees could terminate the agreement at anytime and that the agreement would terminate on its own volition once the advances had been repaid in full. Certainly once the entire amount of the advances had been deducted from commissions Appellants earned, the need for the continued payment of advances ceases. 21 The district court based its grant of summary judgment on Section C(7) of the Agent Agreement, which reads in part, You agree to repay to the Company, on demand, any unearned commissions and all other compensation received by you for or with respect to premiums or payments returned to policy or contract owners by the Company for any reason. Aplt.App. at 82. The district court held this repayment provision contained two separate obligations. According to the district court, the Appellants agreed to pay upon demand any unearned commissions, which would include advances. Appellants, per the district court, also agreed to reimburse Appellees for all other compensation received from premiums eventually returned to policyholders. 22 Appellants contest this reading of the repayment provision of the contract. Appellants argue that the entire provision refers only to premiums or payments returned to policyholders by Appellees for any reason and has no application to the repayment of advances. Under Appellants' interpretation, Appellants agreed to return the commissions they earned but were no longer entitled to because all or part of the policy premium had been returned to policyholders by Appellees. Additionally, Appellants agreed to return any other compensation (such as bonuses, vacation trips, points towards retirement plans, etc.) given the Appellants by Appellees based on premiums later returned to policyholders. The district court rejected Appellants' view of the repayment provision holding that such a reading of the contract would read the first clause out of the contract and render it surplusage. Aplt. Rec. at 48. 23 Absent a tortured reading of the plain language of the commission repayment provision, we cannot read the contract in the manner indicated by the district court. The phrase received by you for or with respect to premiums or payments returned to policy or contract owners by the Company modifies the Appellants' duty to pay back any unearned commissions and all other compensation. Advances made to SDJ were unrelated to any premium or payment returned to policy or contract owners by Appellees. 24 At most, the repayment of commissions contract provision is ambiguous and should be interpreted against the Appellees as the contract's drafters. The parties could have easily provided that Mr. Jarvis assume personal liability as a borrower by so stating in the contract. Considering the contract as a whole, it does not appear that the parties intended to hold Mr. Jarvis personally liable for the advances made. 25 While our reading of the contract precludes the grant of summary judgment to Appellees on their counterclaim, it does not foreclose the possibility that Appellees could ultimately prevail. As noted previously, Colorado law provides an exception to its general rule if Appellees can prove that Mr. Jarvis, by his conduct, exhibited an implied personal liability to pay. Upon remand, the Appellees should be permitted to put forth any evidence they may have regarding Mr. Jarvis' conduct that would imply assumption of a personal liability to repay.