Court Opinion

ID: 8045325
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:53:28.844073+00
Date Added: 2024-06-11T16:37:27.677268
License: Public Domain

Steffen, J.,
dissenting:
I respectfully dissent.
The facts are essentially undisputed, and despite the majority’s factual recital, I will necessarily refer to various facts of record in order to lend context to this dissent.
In entering into an agency contract with National Insurance Association (NIA), MacKenzie Insurance Agencies, Inc. (Mac-Kenzie) agreed to a fifteen percent commission on total insurance sales placed with NIA. MacKenzie, an independent insurance agency that sells insurance pursuant to agency agreements with a number of insurers, also agreed, under the terms of the agency contract with NIA, to the following termination provision:
This agreement shall terminate at any time (1) by either party giving the other written notice, with or without cause, and (2) immediately without notice upon cancellation, revocation, or expiration of the Agent’s license issued by the State. Termination shall cancel all authority granted to the Agent.
Within several months after MacKenzie commenced selling NIA policies, NIA unilaterally executed an addendum to the agreement which, by its terms, reduced MacKenzie’s commissions to five percent effective May 15, 1990. MacKenzie contends without record support, that it objected to the addendum. In *507any event, MacKenzie continued to sell new NIA policies and policy renewals after the reduced commission rate became effective. Throughout the period from January 30, 1989, to May 15, 1990, MacKenzie received its commissions at the contract rate of fifteen percent. After May 15, however, MacKenzie accepted commissions on new and renewal business at the modified rate of five percent.
On September 10, 1990, MacKenzie received a letter from NIA indicating that it was terminating the agency agreement. Without challenging the propriety of the termination, MacKenzie filed an action against NIA alleging, inter alia, breach of contract in the unilateral reduction of MacKenzie’s commission. NIA responded with a motion for summary judgment that was granted by the district court.
The trial court ruled that since the relationship between Mac-Kenzie and NIA was terminable by either party, with or without cause, that right included the lesser right, in either party, of prospectively imposing changes in the provisions of the contract, including the terms of compensation. I am persuaded that the district court’s reasoning is both compelling and legally correct.
The termination clause in the agency agreement provided that either party could terminate the agreement with or without cause upon written notice. MacKenzie insists that NIA’s unilateral addendum could not effectively modify the agreement because there was no mutual agreement between the parties regarding the addendum.
“Typically, the insurer can change the compensation scale prospectively by simply sending [the agent] a general advisory memorandum to that effect, usually to be attached to the physical contract itself.” 2 Bertram Harnett et al., Responsibilities Of Insurance Agents And Brokers § 8.05[2] (1992). In Mall Tool Co. v. Far West Equip. Co., 273 P.2d 652, 655 (Wash. 1954), the court was faced with a contract between a manufacturer and a distributor which could be terminated at the will of the manufacturer upon thirty days’ notice. The Mall Tool Co. court concluded that because the contract was terminable at will, the manufacturer could propose a modification at any time as a condition of its continuance. Moreover, the court noted that the distributor had the choice of accepting or rejecting the modification, knowing that a refusal would result in the termination of the agreement. Id. at 655.
In the instant case, NIA presented MacKenzie with a modification of the original agreement. MacKenzie simply could have refused to sell or renew NIA policies under the reduced commission rate, thus precipitating either the termination of the agency agreement or a cancellation of the addendum. Instead, MacKen-zie elected to continue writing and renewing NIA policies after *508the effective date of the addendum, and accepted the reduced amount of the commission. By its conduct, MacKenzie accepted the terms of the addendum. See Adair Homes, Inc. v. Jarrell, 650 P.2d 180, 183 (Or. Ct. App. 1982) (conduct can manifest acquiescence in modification); Wal-Go Assoc. v. Leon, 624 P.2d 507, 510 (N.M. 1981) (course of dealing may modify an agreement); Resource Eng’g, Inc. v. Siler, 500 P.2d 836, 839 (Idaho 1972) (consent to modification of prior written contract may be implied from course of conduct consistent with asserted modification); and Fast v. Kahan, 481 P.2d 958, 961 (Kan. 1971) (assent to modification may be implied from circumstances and conduct).
Ordinarily, “[w]hile one party to a contract cannot alter its terms without the assent of the other parties, the fact of agreement may be implied from a course of conduct in accordance with its existence.” 17A C.J.S. Contracts § 375, at 425 (1963). Although NIA did unilaterally modify the terms of the agreement, MacKenzie continued to secure new clients and to accept the reduced commission. Moreover, the nature of the contract in the instant case invested the parties with the power of prospective unilateral modification because of the right of the contracting parties to terminate the contract at any time without cause. Of necessity, the greater right in either party to terminate without cause included the lesser right to unilaterally and prospectively modify contract terms unilaterally.
Another basis for denying relief to MacKenzie exists in the form of a waiver. Waiver has been defined as “the intentional relinquishment of a known right.” Mahban v. MGM Grand Hotels, 100 Nev. 593, 596, 691 P.2d 421, 423 (1984). “[W]aiver may be implied from conduct which evidences an intention to waive a right, by conduct which is inconsistent with any other intention than to waive the right.” Id. A determination of whether there has been a waiver is usually a question best reserved for the trier of fact. Id. However, the circumstances of this action clearly indicate waiver as a matter of law.
In this instance, NIA did not purport to terminate or provide notice of termination of the agency agreement in the May 3, 1990, addendum to the agency agreement. Upon receipt of the addendum lowering the commission, MacKenzie continued to place insurance and renew policies with NIA. Despite MacKen-zie’s unsupported suggestion that it somehow protested the lowering of its commissions, it nevertheless accepted the five percent commission rate without complaint until NIA terminated the agency agreement.
I am forced to conclude from the record that MacKenzie knowingly and intentionally waived any right of complaint it may have had concerning the prospective reduction in its rate of *509commission; it also elected not to exercise its contractual right to terminate the agreement, thus registering its unmistakable unwillingness to do further business with NIA at the reduced rate of commission. MacKenzie was at liberty to either terminate its relationship with NIA or continue under the modified terms of the contract for so long as the contract remained in effect. It chose the latter. I suggest that MacKenzie is hardly in a position to complain of a breach of contract when it operated under the amended terms, without complaint, for approximately five months prior to instigating this litigation.
In my opinion, the district court focused directly and properly on the dispositive issue in this case, and properly granted summary judgment in favor of NIA. I therefore dissent.