Court Opinion

ID: 9514199
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:45:29.094286+00
Date Added: 2024-06-11T09:06:13.578559
License: Public Domain

CROTHERS, Justice,
dissenting.
[¶ 26] I respectfully dissent from Part II of the majority opinion. I would reverse the district court, making Part III unnecessary.
[¶ 27] The majority affirms after giving the word “accrue” technical meaning. Majority Opinion at ¶ 17 (“Considering the technical meaning given to the term ‘accrue’ in this context, we agree with the district court that, as a matter of law, Myaer is entitled to the deferred commissions.”). I respectfully disagree with the majority’s reliance on an encyclopedia and an aging Texas case to reach its conclusion. I also believe the majority erroneously deviates from North Dakota precedent requiring interpretation of contracts based on a plain and ordinary reading of terms and clauses to give the entire contract full effect.
[¶ 28] The majority relies on an insurance treatise for the proposition, “In the area of insurance policy commissions, the term ‘accrue’ has acquired a technical meaning to ‘grow, increase, or augment, and does not apply to the unpaid portion of *355a premium on a policy in force at the time [the agent’s] contract was terminated.’ ” Majority Opinion at ¶ 16 (quoting 4 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 57:55, at p. 57-107 (3d ed.2005)). The Couch authors state:
“[U]nder an agency contract provision that an agent’s interest in premiums to ‘accrue’ on business secured is to cease on termination of his or her employment, -accrue’ means grow, increase, or augment, and does not apply to.the unpaid portion of a premium on a policy in force at the time his or her contract was terminated, although the contrary would be true as to future renewal premiums.”
4 Russ, Couch on Insurance, supra, § 57:55.
[¶ 29] The only authority relied on by the Couch authors is two Texas decisions, the more youthful of which was written in 1922, the other in 1918. Both are bereft of legal authority and, when their facts are examined, neither supports the majority’s holding in this case.
[¶ 30] The first vintage case is American Surety Co. v. Sheerin, 203 S.W. 1120 (Tex.Civ.App.1918). Majority Opinion at ¶¶ 14-16. The majority correctly describes the issue in Sheerin as whether a broker was entitled to collect the second year commission on a two-year bond when the premium was paid annually but the broker’s contract had been terminated before the second premium payment was due or made. Majority Opinion at ¶ 14. The majority accurately quotes the holding of the Texas court. However, lost in the majority’s extensive quotation from Shee-rin is that that court adopted its definition of “accrue” out of whole cloth. The definition’s source or origin is not revealed. No case is cited. No dictionary is quoted. No contract is referenced. Rather, the court in Sheerin simply uttered, “ ‘Accrue’ means to grow, increase, augment, additional. Hence the provision has reference to premiums to accrue in the future as distinguished from those which have accrued, as we hold the premium in controversy did when the bond was written under the circumstances stated.” 203 S.W. at 1122. The twin deficiencies of no authority and no analysis in Couch or in Sheerin become problematic when North Dakota’s precedent is applied.
[¶ 31] Under North Dakota’s rule of law, contracts are interpreted as follows:
“ ‘The cardinal principle of contract interpretation is to ascertain the intention of the parties and to give effect to that intent.’ Contract terms ‘are read as a whole to determine the intentions of the parties and are given their plain, ordinary, and usual meaning.’ ‘[E]ach term of a contract is construed to avoid rendering other terms meaningless.’ ‘A construction that attributes a reasonable meaning to all the provisions of the agreement is preferred to one that leaves some of the provisions without function or sense.’ ‘Where the language of a contract is unambiguous, the intent of the parties is to be gathered from the contract alone, and a court will not resort to construction where the intent of the parties is expressed in clear, unambiguous language.’ ‘Extrinsic evidence may not be introduced to vary or contradict the terms of an unambiguous agreement or to create an ambiguity.’ ”
Schwarz v. Gierke, 2010 ND 166, ¶ 16, 788 N.W.2d 302 (inside quotations and citations omitted).
[¶ 32] North Dakota law directs that we ascertain contractual intent from examination of words used in a contract, giving them their “plain, ordinary, and usual meaning.” Schwarz, 2010 ND 166, ¶ 16, 788 N.W.2d 302 (quotation omitted). This Court often uses Black’s Law Dictionary and Merriam-Webster’s Collegiate Dictio*356nary to supply definitions of words used in a legal context. See State ex rel. N.D. Dep’t of Labor v. Matrix Props. Corp., 2009 ND 137, ¶ 10, 770 N.W.2d 290 (“The plain meaning of ‘practice’ as defined by Black’s Law Dictionary is....”); Chamley v. Khokha, 2007 ND 69, ¶ 26, 730 N.W.2d 864 (“[T]he common definitions of ‘expectation’ and ‘remuneration’ from Merriam-Webster’s Collegiate Dictionary 439 (11th ed.2005) and Black’s Law Dictionary 1296 (6th ed.1990) seem plain enough.”); Western Nat. Mut. Ins. Co. v. Univ. of N.D., 2002 ND 63, ¶ 10, 643 N.W.2d 4 (“The plain, ordinary meaning of ‘flood’ is ‘an overflowing of water on an area normally dry.’ Webster’s New World Dictionary 535 (2nd Coll. Ed.1980). See Black’s Law Dictionary 1640 (6th ed.1990) (defining flood as inundation of water over land not usually covered by it)”).
[¶ 33] Paragraph 15 of the contract between Myaer and Nodak provides, “Upon cancellation of this Contract, no further commission or premium credit shall accrue.” The plain meaning of accrue in a legal context is “[t]o come into existence as an enforceable claim or right; to arise.” Black’s Law Dictionary 23 (9th ed.2009). See also Merriam-Webster’s Collegiate Dictionary 9 (11th ed.2005), (accrue means “to come into existence as a legally enforceable claim”); Dunford v. Tryhus, 2009 ND 212, ¶¶ 6-7, 776 N.W.2d 539 (holding statute of limitations begins to run when the underlying cause of action accrues). Under these definitions, the plain meaning of paragraph 15 is that a Nodak insurance agent is not entitled to payment of commissions which do not exist or which are not due and payable prior to termination.
[¶ 34] Rather than rely on the ordinary meaning of accrue customarily used between contracting parties, the majority concludes without explanation that “the term ‘accrue’ has acquired a technical meaning to ‘grow, increase, or augment, and does not apply to the unpaid portion of a premium on a policy in force at the time [the agent’s] contract was terminated.” Majority Opinion at ¶ 16 (quotation omitted). The selected “technical” definition is curious in that it represents a usage more suitable for application in situations other than a business contract. See, e.g., Merriam-Webster’s Collegiate Dictionary 9 (11th ed.2005) (“accrue” also means “2 a: to come about as a natural growth, increase, or advantage <the wisdom that accrues with age> b: to come as a direct result of some state or action crewards due to the feminine will accrue to me— Germaine Greer> 3: to áccumulate or be added periodically <interest accrues on a daily basis > vt: to accumulate or have due after a period of time < accrue vacation time>”).
[¶ 35] Although not entirely clear, it appears the district court’s and the majority’s analyses were clouded by a mistaken assumption that Myaer was already entitled to the commissions and that the commissions were already owed to Myaer subject only to the policyholder paying the final premium. The district court states:
“In both forms of the Contract an[d] Addendum C is attached which discusses [SIC] the payment of MPCI commissions. In both of the Addendums paragraph III.B. says:
‘Career Producer will receive balance of commissions due on those policies that are paid in full in the month following processed premium.’ {‘premium payment’ in 2004 form}
Nodak maintains that the payment in full is a new event leading to a new accrual. The position of Mr. Myaer is that payment in full only relates to the timing of the payment of his commission not to the accrual of the right to pay*357ment. Hence the importance of the definition of accrue.
“Unfortunately, the word ‘accrue’ and its meaning with regard to the relationship of the parties is not defined in the Contract. Nodak maintains that the Contract is unambiguous and that No-dak clearly has no further obligation to Mr. Myaer. If the Contract was really that clear we would not be dealing with this issue.
“Black’s Law Dictionary (Eighth Edition) defines accrue as ‘[t]o come into existence as an enforceable claim or right....’ Black’s defines accrued compensation as ‘[r]enumeration that has been earned but not yet paid.’ Also of interest is Black’s definition of deferred compensation: ‘[p]ayment for work performed, to be paid in the future or when some future event occurs.’ ”
[¶ 36] The majority takes the district court’s “deferred compensation” discussion a step farther by 11 times referring to Myaer’s claim as one for payment of “deferred commissions.” Majority Opinion at ¶¶ 1, 5, 6, 8, 11, 15, 17 and 24. In reality, no deferred commissions exist in this dispute. Because contract paragraph 6 prevented Myaer from earning commissions on premiums paid after termination of his contract, the phrase deferred commissions is a misnomer. Nodak’s arrangement with its policyholders allowed for deferred payment of premiums, and Nodak contributed to the confusion by listing “deferred” commissions on its 2009 MPCI Commission Statement. However, words in a contract and not titles on columns in commission statements control the contracting parties’ rights. Plain language in the contract directs the conclusion that deferred premium payments do not result in deferred commissions. Rather, under paragraph 6, deferred premium payments result in a current commission payment obligation if a commission has been earned by the agent under the contract.
[¶ 37] The other Texas case relied on by Couch but not mentioned by the majority is American National Insurance Co. v. Teague, 237 S.W. 248 (Tex. Comm’n App. 1922), modified on rehearing 239 S.W. 604 (Tex. Comm’n App.1922). The question before the Teague court was whether an insurance agent was entitled to commissions for policies secured by the agent where premiums were paid after termination of the agent’s contract. The Texas court did not cite Sheerin. Rather, the Teague court held:
“The contract provided for certain compensations which would be due and payable at the time premiums were received by the company. These amounts, if so received before the contract was terminated, were absolutely earned and due and payable. There were other compensations, such as renewals, which depended upon collection after the business was written, and which might not accrue until after the agency was terminated. The clause quoted clearly provides that the agent shall not be entitled to commissions on premiums collected after the termination of the agency under the provisions above quoted with reference to future business. We think the contract should not be construed as evidencing an intention on the part of the parties to the contract that sums unconditionally due and payable under the terms of the contract at the time of its termination should be forfeited to the company merely because they had not been actually paid to the plaintiff up to that time.”
237 S.W. at 251-52, as modified 239 S.W. at 604-05.
[¶ 38] A careful reading of the Teague decision reveals it only marginally — if at all — supports the proposition for which it *358is cited in Couch. First, Teague holds the agent’s contract provided that Teague was entitled to commissions on premiums received by the company before termination. 237 S.W. at 251. Second, Teague holds the agent was not entitled to commissions on future business when commissions were collected after the agent’s contract was terminated. Id. Third, without citation to legal authority, the Teague judges expressed their thought (“[w]e think”) the contract should not be construed to deprive the agent of commissions that were “unconditionally due and- payable under the terms of the contract at the time of its termination.” Id. at 252. The Teague court used the word “accrue” but did not define it. Id. at 251. Nor did the court explain its definition of the term. However, by implication and context of use, it must apply to the third holding that commissions were recoverable after termination only when they were unconditionally due and owing when the contract was terminated. As explained below, the Teague court’s holding is consistent both with the plain meaning of the word “accrue” that I am using and with the result I reach in this case.
[¶ 39] The contract between Myaer and Nodak provides when Myaer was entitled to earn a commission:
6. COMMISSIONS, CREDITS, AND REFUNDS. Commissions on any policy or on added coverage shall be earned when: (1) the policy or added coverage has been accepted by the Company or the other insurers identified in the Ad-dendums to this Contract; (2) the policy is issued; and (3) premium is received and processed by the Company. Renewal commissions shall be earned when the renewal premium is received and processed by the Company and when credited on the Company’s books. If, for any reason, there is a refund of any premium on any policy or contract, the commission shall be deducted on the refunded portion of any premium.
(Emphasis added.) The contract specified that all commissions and compensation due Myaer from Nodak were payable only according to terms of the contract:
9. COMMISSION OBLIGATIONS. All commissions, compensation and monies of any kind or nature to which Career Producer is entitled under this Contract are outlined in the various Ad-dendums, which are incorporated herein as an integral part of this Contract. Career Producer agrees that all bases for entitlement to compensation, commissions or monies for any reason are limited to the four comers of this Contract.
(Emphasis added.) Finally, the contract addressed termination:
15. TERMINATION OF AGREEMENT AND OTHER TERMS. This Contract may be canceled by either party, with or without cause, at any time upon giving notice, in writing, to the other party.
This Contract may be immediately canceled, at the Company’s option, upon termination of Career Producer’s license to act as an insurance producer of the Company. Career Producer acknowledges that Company has not either expressly or otherwise, agreed to continue the term of this contract for any definite period of time. This Contract shall be automatically canceled upon the death of the Career Producer or upon determination by Company that Career Producer is totally disabled. In the event of-the death of the Career Producer all commissions provided herein which are -due and payable shall be paid to Career Producer’s surviving spouse, next of kin or legal representative, as the Company may elect. Upon cancellation of this *359Contract, no further commission or premium credit shall accrue.
(Emphasis added.)
[¶40] Here, the district court determined Myaer received all commissions on premiums paid prior to the July 7,- 2009 termination of his contract. No appeal is taken from that determination. The dispute on appeal is about commissions Myaer claims Nodak was required to pay on premiums received by Nodak after termination of Myaer’s contract.
[¶ 41] Under contract paragraph 6, Myaer could earn a commission after the premiums were received and processed by Nodak. Because the premiums on which Myaer claims commissions were not paid to Nodak before termination of Myaer’s contract, those commissions were not earned by Myaer under plain terms of the contract. Commissions that have not been earned are not due and payable under contract paragraph 9. See also Teague, 237 S.W. at 252. Commissions that are not due and payable cannot accrue. Id.
[¶ 42] Reading all of the contractual provisions together, and giving them their plain and ordinary meaning as our law requires, the district court erred as a matter of law when it interpreted the contract. I would reverse, holding Nodak is not liable to Myaer because his claimed commissions have not been earned, nor have they accrued, as those terms are used in the contract.
[¶ 43] DANIEL J. CROTHERS, J.