Court Opinion

ID: 9687800
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:49:35.797431+00
Date Added: 2024-06-11T12:07:48.860779
License: Public Domain

*630HAMITER, Justice
(dissenting).
The important question to be determined ;in this cause is whether the discharge in "bankruptcy of appellants (the defendants conducting a local insurance agency) effected a release of their indebtedness with .appellee (plaintiff corporation carrying on a general insurance agency) which was in the amount of $9,012.68 and arose out of business operations between the two pursuant to a written agency contract.
According to the Federal Bankruptcy Statute, 11 U.S.C.A. § 35, sub. a, “A discharge in bankruptcy shall release a bankrupt from all of his provable debts, whether allowable in full or in part, except such :as * * * (4) Were created by his fraud, embezzlement, misappropriation or defalcation while acting as an officer or in any fiduciary capacity; * *
The phrase “in any fiduciary capacity”, :as contained in the exception to the general rule, has consistently been limited in its application to technical trusts and trusts which have been actually and expressly constituted by the parties. Ordinarily it does not apply to acts of agents, commis.sion men, bailees, brokers, factors, partners, and other persons similarly situated; nor ■does it relate to trusts which are merely implied by law from contracts. Upshur v. Briscoe, 37 La.Ann. 138, also Id., 138 U.S. 365, 11 S.Ct. 313, 34 L.Ed. 931; Hennequin v. Clews, 111 U.S. 676, 4 S.Ct. 576, 28 L.Ed. 565; Nobel v. Hammond, 129 U.S. 65, 9 S.Ct. 235, 32 L.Ed. 621; Davis v. Ætna Acceptance Co., 293 U.S. 328, 55 S.Ct. 151, 79 L.Ed. 393; Collier on Bankruptcy, Volume 1, Section 3589, pages 851 and 854.
Appellee herein contends that the mentioned contract created a “technical trust”, as a result of which appellants operated in a fiduciary capacity; and, hence, that the indebtedness was not released by the discharge in bankruptcy. Appellants, on- the other hand, insist that their relationship with appellees was solely that of agent and principal or debtor and creditor.
I am convinced that in the conduct of their local insurance agency the appellants did not act in any fiduciary capacity toward plaintiff, within the meaning of the bankruptcy statute, so as to prevent a release of their indebtedness by the discharge. The written contract which governed all of their operations made no mention whatever of the existence of a trust relationship. Rather, as its provisions disclose, it contemplated appellants’ carrying on a separate and distinct undertaking in the nature of a local insurance agency, with considerable discretion being vested in them, subject of course to proper and timely accounting to and certain supervision by appellee.
In the contract, for example, authority was granted appellants “ * * * to issue and deliver policies, bonds, certificates, endorsements and binders which the General Agent may, from time to time, authorize to be issued and delivered; to cancel such policies and bonds in the discretion of *632the Local Agent, where cancellation is legally possible; to collect, receive and receipt for premiums on insurance tendered by the Local Agent to, and accepted by, the General Agent; and to retain out of premiums so collected, as full compensation on business so placed through the General Agent, commissions at the rates set out in said Schedule ‘A’; * * (Italics mine.)
Further, the contract stated that “In the event of the termination of this agreement, the Local Agent’s records and the use and control 'of his expirations shall be and remain the property of the Local Agent, and be left in his undisputed possession, provided he has promptly accounted for and paid over all premiums for which he may be liable; * * And, “The General Agent shall not be responsible for Local Agency expenses such as rentals, transportation facilities, clerk hire, solicitors’ fees, postage, advertising, exchange, personal local license fees, adjustments by the Local Agent of losses under policies issued by the Local Agent, or any other Local Agency expenses whatsoever.” (Italics mine.)
To be noted also are these provisions of the contract: “Monthly accounts will be prepared by General Agent and forwarded to Agent shortly after close of month. * * * Balances are to be paid at the New Orleans office of General Agent not later than sixty (60) days after the dose of the month in which the business covered by such account was written. * * * In conducting your agency, the companies, are to enjoy the benefit of your careful judgment and conservatism must govern, so that our relations will prove mutually beneficial and enduring.”
The cases relied on by appellee herein for rendering applicable the exception to the general rule, and those cited in the majority opinion in support of its conclusion, do not appear to be appropriate. For the most part they involve either (1) a technical or an express trust or (2) a state statute declaring that premiums received by an insurance agent are held by him in a fiduciary capacity.
As to the latter alternative the following" is to be found in Collier on Bankruptcy, Volume 1, in an annotation at page 1648 of the Pocket Supplement: “N. 14 Agent to1 collect funds. — In line with the case of Guernsey-Newton Co. v. Napier, cited in the Treatise, there is a growing line of authority based on state statutes that premiums received by an insurance agent are received in a fiduciary capacity — contrary to the general rule respecting agents — and that the liability of the agent for a misappropriation, embezzlement or the like is therefore non-dischargeable in bankruptcy. ‡ % ‡ »
Clearly the contract in this cause did not create or provide for any kind of trust. Moreover, there has come to my knowledge no pronouncement of our Legislature to the effect that a local insurance agency, operating as did these appellants, receives and *634holds premiums in a fiduciary capacity. Hence, I can conceive of’ no good reason for this court’s departing from' the above stated general rule that has been followed consistently by both the federal and state courts.
I respectfully dissent.