Court Opinion

ID: 9568842
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:07:57.398838+00
Date Added: 2024-06-11T11:10:02.815983
License: Public Domain

Fromme, J.,
dissenting: The appellant Scheufler was in debt to the appellee insurance companies in the amount of $11,921.92. The companies obtained possession of the expiration records which appellant had compiled over a period of six years. They sold these records to another insurance agent for $11,231.77 and received payment of this amount. Later the companies refunded $5,500 to the agent who had purchased these records. The net pecuniary benefit received by the companies from the expiration records was $5,731.77.
The companies gave written notice terminating the agency contract with appellant. In this written notice, which is set forth in the majority opinion, the companies promised the appellant as follows:
“Whatever amount is obtained from the sale of these expirations will be applied to your past due account. This may take some time and you will be responsible for any balance of the account still due.”
*178A written notice of termination was required by the terms of the agency agreement between the parties. The agency agreement provided, “[T]his agreement may be terminated by either party at any time upon written notice to the other.”
The only written notice of termination received by appellant advised him that whatever amount the companies received from a sale of the expiration records would be applied to his account with the company.
The appellant did not receive credit on his account and the judgments which the lower court entered against him were for a total of $11,921.92. The appellee-insurance companies will have received $5,731.77 from the sale of the agent’s expiration records plus judgments for $11,921.92.
This unjust result is permitted because this court accepts the argument of the insurance companies that they received no legal consideration to support their promise to credit appellant with any amount received from a sale of the expiration records. The companies contend the promise was without legal consideration and was properly withdrawn when this suit was filed.
The general principle of law stated in paragraph 3 of the syllabus is based upon the Restatement, Contracts, Sec. 75 and Coder v. Smith, 156 Kan. 512, 134 P. 2d 408. The statement in Coder acknowledges that consideration to support a promise may be the creation, modification or destruction of a legal relation. The promise received in the present case arose out of the termination of defendant’s agency relationship with plaintiff.
A consideration adequate to support an executory promise may inhere in the termination of a legal relationship. A moral obligation may arise from benefits previously received by the promisor under such circumstances as will support an executory promise.
Prior to the present promise by the appellees the appellant was an agent of appellees under a written agency contract. This relationship between the parties could be terminated by “written notice”. During the preceding five years the appellant had generated approximately $143,000 in premiums and $50,000 in losses. The appellees had received an excess of $93,000 under the agency agreement. When the agency relationship was terminated the written termination notice contained a specific promise to apply the amount received by the company from the sale of the expiration *179records to appellant’s account. The companies should not be permitted to separate this promise from the terminal obligations of the parties which existed by reason of the termination of their legal relationship. Then- letter of termination was conditioned upon the promise included therein. The moral obligation which arose out of the termination of the legal relationship of the parties is sufficient to constitute consideration for the promise.
It is hornbook law that a moral obligation, in the sense of a mere conscientious duty, will not support a subsequent promise.
However, the rule which was recognized by this court in Holland v. Martinson, 119 Kan. 43, 237 Pac. 902, holds that a pre-existing legal liability is not essential in every case for a moral consideration to be sufficient to support an executory promise. A moral obligation is sufficient to support an executory promise where the promisor has originally received from the promisee something of value in the form of a material benefit, under such circumstances as to create a moral obligation on the part of the promisor to pay for what he received. This is true even though there was no antecedent or contemporaneous promise or request, and no legal liability at any time prior to the subsequent promise. (See Old American Life Ins. Co. v. Biggers, (1949, C. A. 10th) 172 F. 2d 495; State, ex rel v. Funk, 105 Or. 146, 161, 209 Pac. 113; Estate of Schoenkerman, 236 Wis. 311, 294 N. W. 810.)
In Holland v. Martinson, supra, this court held:
“When the issue is whether an oral promise to pay money was made, evidence of the existence of a moral obligation to pay the money for benefits received by the promissor, is admissible, and may be considered by the jury as tending to show probability that the promise was made.” (Syl. f 1)
“Moral obligation to make recompense for benefits received will sustain a subsequent promise to pay for the benefits.” (Syl. f 2) (119 Kan. 43)
In our present case the companies promised to credit appellant’s account with the value received by them from the sale of the expiration records. Benefits were received and a moral obligation to make recompense for those benefits received will sustain a subsequent promise to pay for the benefits. This is true even though the companies were not legally required under the agency contract to credit appellant for the expiration records sold.
The principle upon which I would enforce the promise made by the appellees was applied in the early case of Brick Co. v. Oil Co., *18079 Kan. 603, 100 Pac. 631. Our court speaking of the Brick Co. case in Holland v. Martinson, supra, said:
“. . . The unstated principle on which the decision rested was that moral obligation to make recompense for pecuniary benefit received will sustain a subsequent promise to pay for the benefit.” (p. 46)
It is undisputed the companies received $5,731.77 from the expiration records which they promised to apply on appellant’s account.
I would reverse the judgment and remand the case to the district court with directions to credit appellant’s accounts with the amount received by the appellees from the sale of the expiration records and to enter judgments accordingly for the balances.
Fatzer, [., joins in the foregoing dissenting opinion.