Court Opinion

ID: 7817977
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:43:12.393578+00
Date Added: 2024-06-11T16:30:39.197260
License: Public Domain

Carleton Harris, Chief Justice, dissenting. In my opinion, this judgment should be reversed because of the simple fact that the contract entered into was in violation of the law. Ark. Stat. Ann. § 66-4240 (Repl. 1966) provides as follows: “No domestic insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for the insurer, unless the contract is filed with and approved by the Commissioner. The contract shall be deemed approved unless disapproved by the Commissioner within twenty (20) days after date of filing, subject to such reasonable extension of time as the Commissioner may require by notice given within such twenty (20) days. * * *” On September 25, 1964, the State Insurance Commissioner disapproved the agency managers’ contract between appellant, American Accident and Life Insurance Company and Pioneer Underwriters, Inc., R. B. Phillips and Huey Duke, individually. The commissioner, in disapproving same, stated that he had carefully read the contract, and would first say that he would not have approved it had it been presented to him at any time following the date of its execution which was July 2, 1964. The commissioner then stated that he was required, under the law (Section 66-4240), to disapprove any such contract if he found that it: “ (a) Subjects the insurer to excessive charges; or (b) Is to extend for an unreasonable length of time: or (c) Does not contain fair and adequate standards of performance; or (d) Contains other inequitable provision or provisions which impair the proper interests of stockholders or members of the insurer.” He concluded: “It is my opinion that this contract would violate each and every one of the above provisions under Paragraph 2 and for those reasons the contract is this day disapproved. ’ ’ It is true that the statute only prohibits the insurance company from entering into this type of contract without approval of the commissioner, but the statute necessarily prevents any other person from entering into a contract with a domestic insurance company— for it takes two to contract. It must be remembered that the insurance industry is one charged with the public interest, and its dealings are subject to close scrutiny by the Insurance Department. As pointed out in appellant’s brief, our Insurance Code is designed to produce an insurance industry operating at a reasonable profit for the benefit of the stockholders, but more importantly, operating in a sound manner for those members of the public who have chosen to become its policyholders. - The majority say that there is substantial evidence to support the trial court’s finding that the amount allowed is due upon a quantum meruit basis. I am unable to determine, from the record, that the amount of the judgment was based upon quantum meruit. Though not at all clear, it appears, as stated by appellant, that the judgment was awarded on the basis of the contract.1  Be that as it may, I do not think that appellees are entitled to the judgment obtained since they had already received more than $130,000.00. In this litigation, appellees are attempting to obtain payment for renewal commissions supposedly owed after termination of their services, and this type of recovery, in my view, depends entirely upon the validity of the contract sued upon. For the reasons herein set out, I respectfully dissent.  From appellant’s brief: “The judgment of the Court does not state whether it is based upon a quantum meruit theory, on the general agency contract or under the previous general agency contract with First American Reserve. Apparently, however, the Court awarded judgment on the general agency contract with American Accident and Life Insurance Company inasmuch as the total premium income for the period involved — July 1, 1964, through June 30, 1966 — amounted to $962,131.44. Commissions due under the general agency contract would amount to $48,106.57, which is the amount of the judgment less certain setoffs for amounts advanced to appellants, leaving a net recovery of $36,957.57.