
    AMERICAN STEAM BOILER INSURANCE COMPANY, Appellant and Respondent, v. EDWARD C. ANDERSON, et al., Respondents and Appellants.
    
      Insurance.—Commissions of agents, construction of contract for same.
    
    The plaintiff contracted with defendants to secure insurance at a compensation of thirty per centum of the premiums received. Defendants procured two policies of insurance, issued by plaintiffs to R. Hoe & Co, upon which was paid as premiums $1,125, from which the defendants retained as their commissions $337.50, or 30 percent, thereof. Each of these policies were frit three years, and contained a clause that it might be cancelled at the option of the company, on refunding to the assured a rateable proportion of the premium for the unexpired term of the policy, or it might be can-celled at any time by the request of the assured ; and in such case the company shall retain the customary rates for the time the policy had been in force. Afterwards, and before the end of the term of the policies, they were cancelled by agreement between plaintiff and R. Hoe & Co., and the plaintiff returned to the latter $118.13 as unearned premiums. Before the terms of the policies had expired the defendants ceased to be the agents of the plaintiff and became the agents of the Hartford Steam Boiler Insurance Company, and, as such, solicited R. Hoe & Co. to cancel their policies with the plaintiff and take policies in the Hartford Company. R. Hoe & Co. acceded to this, and at their request these policies were cancelled and the premiums to the amount of $118.13, returned to R. Hoe & Co. The judge below directed the jury to find for the plaintiff the sum of $39,34, being 30 per centum on the returned premiums and interest. Held, on appeal, that the ruling of the court below was the result of a correct construction of the contract. The premiums referred to in the contract between the parties, mean the premiums as provided in the policies on which they were to be paid, and if those premiums are afterwards reduced by the terms of the policies, then the premiums on those policies on which the commissions are based, are the reduced amount, and the amount of the commissions are reduced accordingly.
    On the claim of plaintiff that the defendants violated their obligations, as agents, in a way that deprived them of any right to any commissions on the premiums, Held, that if the defendants procured R. Hoe & Co. to require the plaintiff to do what it had previously contracted to do, the plaintiff suffered no damage.
    Before Sedgwick, Oh. J., and Freedman. J.
    
      Decided June 28, 1889.
    
      Appeal by each party from the judgment entered for plaintiff, upon the verdict directed for plaintiff, for the sum of $39,34.
    
      Wolff & Hodge, attorneys, and Robert Sewell, of counsel for plaintiff as appellant and, respondent, argued :
    I.—Defendants violated a positive duty which they owed plaintiff, their principal, when they induced K Hoe & Co. to cancel the policies in question’, and plaintiff is entitled to recover, They were plaintiff’s general agents, with power to issue long term policies, and were not brokers acting for both parties to the insurance contract. The duty they owed was, therefore, entirely to the plaintiff, and their relation to R. Hoe & Co. was merely that of agents of plaintiff soliciting their custom for plaintiff. There existed between plaintiff and defendants, therefore, the strictest kind of a trustee relation. They were bound to serve their principal with the utmost fidelity, and they could do nothing against the interests of that principal. For example, they could not in this case, acting as plaintiff’s agents, procure the insurance of Hoe & Co. for three years, collect their stipulated compensation for the services, and then induce Hoe & Co. to withdraw the business and give it to a rival company. That is what they did do, and we say they not only did not have a legal right to do it, but they committed a positive wrong against plaintiff in doing it. The claim is made that, as the agreement had been cancelled and the agency terminated, they were no longer under a duty or obligation to plaintiff, and had a perfect legal right to rob plaintiff of the business which they had brought to it during the time of the agency, and for obtaining which they had been paid. But the agency had not terminated so far as past contracts were concerned. It was terminated as to future transactions, but it ran with the life of the contracts negotiated during the continuance of the agreement. The defendants’ confidential relations to the plaintiff, so far as the policies were concerned which they had been paid for procuring, could not cease during the three years the policies were to run. An agency, though terminated, will continue so far as past contracts are concerned. The termination of the agreement was not a rescission of it. Hercules Mut. Life Ass. Soc. v Brinker, 77 N. Y. 435. Loyalty to his trust is the first duty which the agent owes to his principal. Without it the perfect relation cannot exist. Reliance upon the agent’s integrity, fidelity and capacity is the moving consideration in the creation of all agencies ; in some it is so much the inspiring spirit, that the law looks with jealous eyes upon the manner of their execution, and condemns, not only as invalid as to the principal, but as repugnant to public policy, everything which tends to destroy that reliance. Mechem on Agency, § 454. Mr. Mechem further says, § 455, “ It follows as a necessary conclusion from the principle last stated, that the agent must not put himself into such relations that his interests become antagonistic to those of his principal. Indeed this rule is but a restatement of the previous one, and is based upon the same fundamental prin-' ciples.
    II.—The plaintiff is entitled to recover from the defendants the amount which it lost through their violation of the duty which they owed to the plaintiff. The evidence is that there was no explosion of the boilers insured during the whole time for which the insurance was taken out, and, therefore, except for the acts of the defendants, plaintiff would have earned on the said policies the amount which they were obliged to return to the insured. This loss was directly owing to the acts of the defendants, and they are responsible to the plaintiff for the same. Mr. Sedgwick on the Measure of Damages (6th Edition), at page 400, says : “ The law is perfectly clear that whenever an agent' violates his obligation to his principal, whether by exceeding his authority, by misconduct or omission, and any damage results to his principal, he is responsible for such injurious consequence and bound to make indemnity.” An agent who violates his obligations to his principal, whether by negligence, misconduct or mere omission in the exercise of the proper functions of his agency, and any loss or damage thereby falls upon his- principal, must make full indemnity. Story on Agency, § 217c ; Marzetti v. Williams, 1 Band Ad. 415. The only two questions that emerge from the facts in this case are: First, were the defendants guilty of misconduct, and second, what is the amount of the plaintiff’s damage. Neither of these questions are affected by the percentage of loss or profit sustained or made by the defendants. This is fundamental, and it is believed that no case can be cited where these clear rules of law have been forgotten or modified. It was error, therefore, for the court to direct a verdict for only thirty per cent, of such return premium. The direction should have been for the full amount.
    
      T. Henry Dewey, attorney and of counsel for defendants as respondents and appellants, argued:
    I. The proposition of the learned judge that there was an agreement implied in law to refund the amount of the commissions on the premiums returned to E. Hoe & Go. upon the cancellation of their policies, is erroneous.
    II. The proposition of the plaintiff that there was an implied agreement on the part of the defendants that they would do nothing to cause the said -contracts of insurance to be cancelled or surrendered, but that the same should continue for the full term of three years without interference on the part of the defendants, and that for a breach of this implied agreement the damages are the whole amount of the commission paid or the premium returned, is equally erroneous. If this or the court’s proposition is correct the plaintiff should have moved for judgment upon the pleadings, because the only thing that could be called “ interference” on the part of the defendants was the bare solicitation by them- as the agents of another company alleged in the complaint and admitted in the answer. There was no proof of malice or unlawful intent.
    III. “ The law, however, presumes a promise only where it does not appear that there is any special agreement between the parties.” “ Expressum facit cessare tacitum,” 2 Greenleaf on Evidence, § 103; Draper v. Randolph, 4 Harr. 454; 2 Addison on Contracts 575, (n. ed.), 1883; Whiting v. Sullivan, 7 Mass. 107; Mass. Gen. Hospital v. Fairbanks, 120 Ib. 78; Metcalf on Contracts, 6; Toussaint v. Martinnant, 2 T. R. 105; Cutter v. Powell, 6 Ib. 320; Cowley v. Dunlop, 7 Ib. 568; 2 Parsons on Contracts, 515; 1 Ib. 556; 2 Addison on Contracts, 575; bottom of page; Van Ness v. Washington, 4 Pet. 232; Gavinzell v. Crump, 53 Wall. 308; Brown v. Spofford, 95 U. S. 474; 1 Washburn on Real Property (4th ed.) 487 ; 3 Ib. 485 ; Kent v. Welch, 7 Johns. 258 ; Vanderkaw v. Vanderkaw, 11 Ib. 122. There is no room for an implied contract where an express contract exists. Mass. Gen. Hospital v. Fairbanks, 129 Mass. 81; Brown v. Fales, 139 Ib. 21; Earle v. Coburn, 130 Ib. 596-598. Washburn, vol. 1, p. 487, says : “ The presumption where parties have entered into written engagements with express stipulations is, that having expressed some, they have expressed all the conditions by which they intend to" be bound under the instrument.” Courts will not make contracts for the parties which they have not made themselves; nor will they impose conditions or restrictions upon parties to the contracts. 1 Parsons on Contracts, 556. Parsons says : “ The well-recognized principle that courts will not make a contract for the parties which they have not made themselves, will * * prevent the court from interpolating an implied condition.”
   By the Court.—Sedgwick Ch. J.

It is not necessary to state the pleadings. The decision of the judge below was, without objection, upon the case made by the testimony.

The plaintiff was a corporation, with the business of insuring against loss from explosion of steam-boilers. It made a contract in writing with the defendants by which the latter were made the general managers and agents of the company and its business in certain states. There was the following provision : “ and the said company do promise to pay to the said Anderson & Stanton, a commission of 30 per cent, upon all premiums received by them upon policies issued through their agency, which said amount of 30 per cent, is to be deducted from the monthly accounts to be rendered by them and settled for each month, &c.”

Afterwards the defendants issued to B. Hoe & Co. two policies of insurance upon which was paid the sum of $1,125 as premiums, and upon which the defendants retained as their commissions $337.50, as the 30 per cent, upon the premium. These policies were made for the term of three years. Each contained a clause, that it might be cancelled at any time, at the option of the company, on refunding to the assured a rateable proportion of the premium for the unexpired term of the policy, and the policy might also be cancelled at any time, at the request of . the assured, in which case the company shall first retain the customary short rates for the time the policy has been in force.

Afterwards, and before the end of the term of the policies, by mutual consent of the parties to the agreement, “ it is understood and agreed that the same shall cease and determine upon the first day of January, 1886, and on and from that date be null and void ; but it is also understood and agreed that in no way shall it invalidate any claim that the company shall have against Anderson & Stanton, for unpaid accounts.”

Afterwards the defendants became agents of the Hartford Steam-Boiler Insurance Company, and, as such agents, solicited R. Hoe & Co. to cancel their policies with the plaintiff and take policies in the Hartford Company. R. Hoe & Co. acceded to this, and at their request, and under the terms of the policies of plaintiff, these policies were cancelled, and the plaintiff returned to R. Hoe & Co. the premiums to the amount of $118.13.

On this case the learned judge below directed the jury to find for the plaintiff in the sum of $39.34, being 30 per cent, of the returned - premiums and interest.

The judge was, in my opinion, correct in his ruling, as it was the result of a correct construction of the contract. By the contract the compensation was to be 30 per cent, of the “ premiums received by the defendants upon policies issued through their agency.” The premiums referred to, necessarily mean the premiums as provided in the policies on which they are to be paid. If, as in the policies in question, in the first instance they are specified as being a certain sum, yet if they are subject to a future claim in the policy which' will change the policy and reduce the amount, and the latter is carried into effect, and the amount is reduced, then the premiums on that policy, as a whole, is in the reduced amount.

In the first instance, the higher amount of premium being paid, there being no presumption that a change will be made in the policy, it may properly be included in monthly settlements. But in those settlements the item is to be considered according to the fact, and be held subject to future occurrences which may properly reduce the amount. The matter would appear more clearly if the reduction were . to take place before a monthly settlement, and while the defendants remained the agents and managers of the plaintiff. If, on the first day of a month, the premium of $1,125 was paid, and in the middle of the month the policy cancelled, so that they themselves, as managers, returned to the insured $1,000 . of that premium, could it be maintained that on the whole transaction, they received the sum of $125 as premium. And the whole of a transaction is to be considered and not a part by itself, when that part is related to the rest by the nature of things and the interest of the parties.

One difference between this transaction and the one in action is, that the part of the premium returned, was returned after all monthly settlements had been made. If the views that have been expressed are correct, these monthly settlements were not final in those matters that were, in their nature, to be subject to future occurrences, and should be corrected according to those occurrences when they exist. On this point the annulling the agreement did not annul rights that had accrued before. Hercules Mutual Life Assurance Soc. v. Brinker, 77 N. Y. 435.

Another difference is, that the returned premium was returned by the plaintiff itself, and not by the defendants, as in the transaction supposed. Physically, this is correct, but in legal effect, and as to the correction of the account of commissions, the plaintiff being bound to return it by the terms of the policy as issued by the defendants, and as the defendants were in the first instance to receive premiums for the plaintiff, they were bound by the return, as reducing the original amount as efficiently as if they had themselves returned the part premiums.

I, therefore, think that the conclusion of the court below should be sustained.

The defendants urge that there was error in excluding evidence as to a custom among insurers, that agents should not be charged with the amount of the per-centage upon returned premiums in instances like the one in action. I, however, think, that the contract has a conclusive force in its terms that cannot be varied by proof of custom. The proposed proof as to short rates would not have altered the result.

The plaintiff argues, that the defendants continued in their obligations, as agents, after the contract was annulled, and that they violated these obligations in a way that deprived them of. any right to commissions to any amount. Without going into the merits of this, I think it must be seen that if the defendants procured R. Hoe & Co. to require the plaintiff to do'what it had contracted to do, it suffered no damage.

The judgment should be affirmed on each appeal, without costs.

Freedman, J., concurred.  