Wright v. SOUTHWESTERN LIFE INSURANCE COMPANY, 364 F. Supp. 981 (W.D. La. 1972)

William H. Baker, Bobby L. Culpepper, Holloway, Baker, Culpepper & Brunson, Jonesboro, La., for plaintiff.

Solomon S. Goldman, Goldman & Levin, New Orleans, La., for defendant.

DAWKINS, Chief Judge.

Plaintiff entered into an agreement with Southwestern Life Insurance Company to canvass for applications for life insurance on October 10, 1955. There were four written amendments to the contract, effective respectively on November 1, 1955, March 1, 1958, February 1, 1960, and March 14, 1962 (attached hereto as Appendices 1 through 5). Wright was one of the first agents in Louisiana to write business for Southwestern Life Insurance Company.

As a result of a certain research project, he sustained physical injuries and in 1958 an automobile accident further restricted his ability to sell life insurance "door to door." Following passage by Congress of the Technical Amendments Act of 1958, in the latter part of that year, plaintiff became interested in selling tax-sheltered annuities plans (TSAP). This is a type of annuity which permits persons participating to receive a portion of their salaries after retirement while in a lower tax bracket. Wright's educational background, including Bachelor and Master Degrees from L. S. U., and his prior employment with the L. S. U. Agricultural Experimental Station in Houma, Louisiana, prepared him exceptionally well to solicit business for a TSAP. His first attempts were directed at employees of the St. Francis Hospital, in Monroe, Louisiana. After another agent for Southwestern, Richard Troy, secured an application for an annuity contract with one of the physicians at the hospital, plaintiff no longer pursued the program there.

Having referred to recent insurance journals and the Research and Review Service, Wright became interested in presenting the program to the various colleges and universities in Louisiana. Directly attributable to his efforts, Southwestern became the first insurance company to write annuity programs for colleges in Louisiana and, indeed, in the nation.

Despite several trips to Southwestern's home office in Dallas, Texas, Wright was unable to obtain significant assistance from the Company in laying the groundwork for the hoped for annuity programs. Southwestern's reluctance was ascribed, properly but not exclusively, to its hesitation in engaging in the unauthorized practice of law or giving tax accounting advice. However, Wright obtained, after numerous letters to and from Congressman Otto Passman, a personal visit with the Congressman, and conferences with others, a Treasury Department Revenue Ruling that Louisiana Colleges, in particular Northeast Louisiana State College, were organized and operated exclusively for educational purposes, and, as such, were exempt from Federal income tax under Section 501(c) (3) of the Internal Revenue Code of 1954. This ruling, obtained at some personal expense and much time, was critical to Northeast's participation in TSAP. A great deal of work was done preliminarily, with attendant expenditure of time, in presenting the program to the Louisiana State Board of Education. Letters to the Board members and appearances before the Board without the presence of home-office Southwestern personnel resulted in his obtaining permission for the different colleges under the Board's control to let franchises for the program.

In May of 1961, the first TSAP franchise was signed with Northeast Louisiana State College after bids were called for twice. With minor exceptions, all forms and information were prepared by Wright and his associates. Salary renegotiation forms and an important formula for premium payments by employees of the College over a nine months, rather than on a twelve months, basis were prepared solely by plaintiff. Equipment was obtained by Wright better to serve the annuitants under the program.

In October, 1961, Northwestern State College and McNeese State College were added to Southwestern Life Insurance Company's annuity program, utilizing *983 the invaluable research and work done by Wright in connection with his having secured the Northeast franchise.

The Treasury Department, in November, 1961, recalled its earlier exemption from Federal income tax under Section 501(c) (3) of the Internal Revenue Code, but noted that H.R. 4317 had been signed by the President on October 4th, 1961, amending Section 403(b), so that it no longer was necessary for public schools to file applications with the Commissioner of Internal Revenue for classification as "organizations" described in Section 501(c) (3) in order for their employees to purchase annuities under Section 403(b). This amendment granted direct permission under the statute, obviating a Revenue Ruling for the State Colleges and Universities to proceed with the program.

Shortly thereafter, Nichols State College and Southeastern Louisiana College let franchises to Southwestern Life Insurance Company. Later in 1962, Louisiana Polytechnic Institute was added; Southern University and A. & M. College signed a franchise with Southwestern in 1963; and, in 1964, Grambling College, Southern State College, in Magnolia, Arkansas, and Lincoln Parish School Board were added. By 1963, Southwestern's home office requested and received as much information as Wright had gathered on the section 403(b) annuity program to aid them in their attempt to prepare information for general distribution in Louisiana and other States.

Undeniably, as to several of the franchise contracts, and at every one of the schools in which a franchise was obtained, Wright was considered by the Colleges and by Southwestern as the "servicing agent." His familiarity with the program and his contact with each of the presidents of the colleges made him the single person best able to service the program.

Because of the volume of business involved, and in order to keep contact with each of the franchises, Wright entered into several agreements with different persons permitting them to write policies at an agreed-on percentage split. At least two of these contracts were suspended by Wright. Obviously, those parties could not bind Southwestern, which was not a signatory, and one contract expressly recognized that fact.

Early in the formative stages of the program, Wright attempted to secure from Southwestern his position as the sole agent authorized to sell such policies in Louisiana. He was advised that the best way to protect his position was to provide good service to each one of the franchises which he had been instrumental in obtaining and to secure agent's letters of record from the individual colleges and universities. Not until March and April of 1968 did Wright have agent's letters of record signed by each of the institution's presidents. The record indicates that in 1961 a problem arose concerning a Southwestern agent, unconnected with Wright, soliciting business in one of the universities whose franchise had been procured by Wright. This problem apparently was solved without difficulty. However, it did prompt Wright to inquire again of Southwestern as to just how he might protect his past and future time in promotion of the program.

The evidence shows that even had there been agent's letters of record from the College presidents long prior to 1968 those letters would not have prevented Southwestern from permitting others of its agents to solicit business on these campuses. Not only was Southwestern not a party to those letters, but it would have been foolish for them to agree to their exclusivity in Wright's hands. Southwestern understood, as Wright must have, that limiting the number of agents who could canvass employees of the different colleges and universities would severely curtail the number of policies written. It was literally impossible for Wright and the few people with whom he had personally contracted *984 to solicit and share business which physically would cover the hundreds, if not thousands, of employees of all the institutions of higher learning in the State. Those few men could not possibly possess the numerous necessary contacts that other Southwestern agents had developed through their years of living in communities where colleges and universities were located, and thus becoming personally acquainted with so many eligible employees.

Blacklock, the Regional Manager, explained the Company's thoughts regarding the various State Colleges and Universities and proper procedure for other agents to write tax-sheltered annuities under franchises secured by Wright, in a letter in early 1968. The letter noted that the Company would accept applications for these annuities under two conditions:

"1. The agent or broker who is to receive credit for the business has been approved by the manager of the territory where the agent or broker resides.

"2. The authorized personnel of each institution is willing to sign the application submitted to them by said approved agent or broker.

"If the above two requirements are not met, then it is the Company's opinion that any agent or broker who has been approved by the manager in the territory where he resides should work with Mr. Wright and it will be the responsibility of the manager to see that the business is sold correctly and processed in the usual manner in which Mr. Wright processes his business." (Ex. P-34.)

Serious problems arose when other Southwestern agents attempted to write policies in 1967 and early 1968. Those attempts precipitated a conference with Mr. Wright, his wife, Jeff Nickelson, Senior Vice President in Charge of Sales, Don Williford, Shreveport Branch Manager, and Winston Blacklock, Regional Manager, in attendance. Shortly thereafter, a letter was written to Dr. Kilpatrick, President of Northwestern State College, outlining the Company's procedures for handling the business in the future written at that College. (See Exhibit P-43.) In response to that, Wright contacted the law firm of Barham, Wright and Dawkins, of Ruston, Louisiana. April 10, 1968, Mr. Barham, of that firm, wrote a lengthy letter to the President of Southwestern (see Exhibit P-33A) explaining Wright's opposition to any other agent's thereafter writing business in the several institutions, with copy to each of those institutions' presidents. A week later, the contract between Southwestern Life Insurance Company and Wright was terminated by the Company's Senior Vice President, Jeff Nickelson.

If from 1961 through 1966 it was Company policy that an agent who had spent a great deal of time on any program was entitled to a reasonable period in which to exploit the new area as well as he could, it by no means was considered an amendment to the agency contract. It is true that from 1961 through 1964, when the first and the last franchises were let, Wright was encouraged to canvass those areas while the Company discouraged other Southwestern agents from writing these tax-sheltered annuity programs. With the exception of the minor problem in 1961, which was quickly solved, during that period Wright had no competition in the Universities in reference to the program. Moreover, the Company wished to compensate Wright for his efforts by permitting him to share in business written by other agents in 1967 and 1968. His earnings from Southwestern in the years from 1962, when the program began to yield results, through 1968 were never below $17,000, with an average of approximately $22,000. Wright was named Territorial Man of the Year in 1964, 1965, and 1966, and was rewarded for this with cash payments from Southwestern. However, at no time was *985 Wright given an exclusive contract to write tax-sheltered annuities. Nevertheless, he was allowed to exploit the program without competition for at least two years after the last franchise was obtained.

Presently before us as a defense is defendant's motion to dismiss on the ground that on the facts and the law the plaintiff has shown no right to the relief he seeks. F.R.Civ.P., Rule 41(b). Earlier Southwestern filed a motion to dismiss for failure to state a claim upon which relief could be granted which was disposed of adversely to defendant and upon which we were affirmed by the Fifth Circuit Court of Appeals. Also, we denied a motion for summary judgment filed by defendant for the reason that "the affidavits, exhibits, and depositions do not establish a lack of material issue of fact but indicate many areas of contention." We find it unnecessary to treat extensively the question of whether or not the contract was in existence past October 10, 1960. We accept arguendo that it was in existence for an indefinite term during occurrence of the events above described.

The agency contract between Southwestern and Wright contained particularly pertinent and controlling provisions:

"5. (a) The commissions herein provided for shall constitute the sole and only payment or compensation to be allowed hereunder to Second Party [Wright].

* * * * * *

"26. The territory hereby assigned Second Party for the canvassing of applications for insurance hereunder shall be Houma, Louisiana, and vicinity, but said territory is not assigned exclusively to Second Party.

* * * * * *

"28. (a) This contract cannot be modified by any verbal promise or statement by whomsoever made, and no modification hereof shall be binding upon the Company unless and until it shall have been approved at the Home Office of the Company by its President or a Vice President.

"(b) Notwithstanding any other provision of this contract, it is expressly agreed that same may be terminated by either party hereto by notice of termination, in writing, delivered or mailed to the other party, and that should Second Party fail to comply with any of the conditions of this contract, or should he violate or fail to comply with any law of the State first shown above, the Company shall have the right forthwith to terminate this contract without notice."

Indisputably, the contract was terminated by the Senior Vice President of the Company April 17, 1968 (see Appendix 6), in accordance with the terms of the contract for dismissal without cause. No case has been brought to our attention, nor do we know of any, which forbids one party under a contract such as this from terminating it after notice. See Dorsey v. State Farm Ins. Co., 294 F.2d 678 (5th Cir., 1961); Case v. State Farm Mutual Automobile Ins. Co. et al., 294 F.2d 676 (5th Cir., 1961); Martin-Parry Corp. v. N. O. Fire Detection Service et al., 221 La. 677, 60 So. 2d 83 (1952); Shain v. Washington National Ins. Co., 308 F.2d 611 (8th Cir., 1962). Authorities cited by plaintiff in support of his contentions to the contrary clearly are inapposite.^[1] Moreover, plaintiff's vested interest theory which he proffers as a bar to defendant's action is unpersuasive. See North American Company v. Bolling, 275 Ala. 457, 156 So. 2d 144 (1963).

*986 We cannot conclude that the Company's willingness to process policies written in 1967 by agents other than plaintiff constituted a breach of any obligation owed by the Company to plaintiff. The only communication remotely fitting the description of Paragraph 28 of the contract was a letter^[2] by the President of the Company to the President of Northeast Louisiana State College on March 28, 1968. Only by a tortuous interpretation of this letter can we conclude that Southwestern was assigning Northeast Louisiana State College and its tax-sheltered annuity program exclusively to plaintiff; nor can we say that this letter could prevent the Company from terminating its agreement according to the contract with Wright.

As heretofore indicated, we do not think that the agent's letters of record were designed to prevent Southwestern from permitting other agents to write policies at the different institutions. It is indeed true that each of the colleges, generally, desired only one agent soliciting on its campus. Their method of enforcement was refusal to process policies written by others. But Southwestern was not a party to these designations, though it was conceivable that the colleges themselves could revoke the franchises. Moreover, Wright's having been denominated as "Servicing Agent" on several of the franchise agreements avails him nothing. The evidence clearly shows that that phrase was not meant to give Wright an exclusive position with the Company in writing tax-sheltered annuities.

The exhibits and testimony of other Southwestern agents and personnel evidence an intent by the Company to provide Wright a competition-free market only for a reasonable time, which two years clearly and fairly encompassed, within which to sell policies in this program. See Deposition of Williford, pp. 92-93. The expenses he incurred were nothing more than what could be expected by an agent opening a new field, with the understanding that his reimbursement would be in the form of commissions only. As amply demonstrated by plaintiff's evidence, the return on his investment of time was substantial. Obviously, his return would have been greater had he continued as a Southwestern agent; however, the contract to which he voluntarily agreed provided exactly for the termination of which he now complains. See Repsold v. N. Y. Life Co., 216 F.2d 479 (7th Cir., 1954); Buska v. Central Life Assurance Co., 32 Wis.2d 534, 145 N.W.2d 721 (1966). We cannot permit him to avoid the clear and unequivocal terms of that contract.

Plaintiff further contends that his character has been slandered by termination of his contract; and alternatively he asserts the equitable doctrine of unjust enrichment. Neither issue gives us pause. Absolutely no evidence was adduced by plaintiff which would remotely suggest that his character has been slandered under any test. The short answer to plaintiff's claim under the theory of unjust enrichment is that the case is governed not by principles of quasi-contract but by the express terms of the written contract. See LSA-C.C. 2294; Minyard v. Curtis Products, Inc., 251 La. 624, 205 So. 2d 422 (1967) and authorities cited therein.^[3]

While we hold strong empathy for plaintiff's contentions, we cannot make that feeling the basis of a decision in his favor here, where the terms of the contract he entered into with Southwestern dictate otherwise.

Plaintiff's suit is dismissed at his cost. Defendant will submit a judgment in accordance.

[1] E. g., Sterling Colorado Agency, Inc. v. Sterling Ins. Co., 266 F.2d 472 (10th Cir., 1959); Phillips v. Mid-Continent Life Ins. Co., 130 So. 2d 791 (La.App., 2d Cir., 1961); Sporl v. New York Indemnity Co., 176 La. 363, 145 So. 771 (1932); Gilson v. Continental Casualty Co., 196 So. 2d 820 (La.App., 3rd Cir., 1967).

[2] "I am glad to confirm that the franchise will be serviced by Mr. Robert E. Wright, Sr., in accordance with your request. . . ." (Exhibit Sterling-5.)

[3] We are aware of a case, Inabnet v. Pan-American Life Insurance Co., decided by a state district court, presently on appeal before the Second Circuit Court of Appeals. A district court level decision is not binding on us.