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Kaydan v. New York Life Ins. Co.

March 8, 1940

KAYDAN
v.
NEW YORK LIFE INS. CO.



Appeal from District Court of the United States for the Northern District of Illinois, Eastern Division; Michael L. Igoe, Judge.

Author: Treanor

Before MAJOR, TREANOR, and KERNER, Circuit Judges.

TREANOR, Circuit Judge.

Plaintiff-appellant instituted suit to recover compensation which his complaint alleged to be due to him for services rendered as an insurance agent of the defendant. The defendant filed an answer to the complaint, but thereafter filed a motion under rule 12 of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, to strike plaintiff's pleading on the ground that his complaint failed to state a claim upon which relief could be granted; and defendant further requested that judgment be entered for it on the pleadings. The court sustained the motion and ordered plaintiff's complaint to be stricken for failure to state a claim for relief, and judgment on the pleadings was entered for defendant. The propriety of the procedure adopted is not questioned by either party to this appeal; and they agree that the defendant's motion was the equivalent of a demurrer to plaintiff's complaint. We shall assume that the motion, and order pursuant thereto, were timely and in correct form; and that the motion properly presented to the court, as a question of law, the sufficiency of the complaint to state a claim upon which relief could be granted.

Plaintiff's complaint based claim upon what is designated as a "supplementary contract." The subject matter of the "supplementary contract" is found in a booklet or pamphlet issued by the defendant, such booklet or pamphlet being set out verbatim in the complaint. The booklet contains information for agents, or prospective agents, of the defendant company and purports to explain the meaning of "Nylic", an acrostic of the words in the name of the defendant, New York Life Insurance Co. The reader is informed that the purpose of establishing "Nylic" was to give agents something to work for; to enable the company "to secure good men, educate them, and keep them." According to the text of the pamphlet the word "Nylic" is misunderstood and the sponsor of the pamphlet, the third vice-president of defendant company, states that he is "going to take the liberty once more of going over * * * (the agent's) Nylic contract and giving * * * (him) an idea of what it means in simple language." And the sponsor further states that he is going to call it "Salary" instead of calling it "Nylic."

In the course of the pamphlet emphasis is placed upon the importance of impressing upon a prospective agent that he is entering into a twenty year contract; and what puroports to be an illustration of such contract is indicated by the following summary:

1 - First 2 years - stirctly commission contract.

2 - Commencing third year a Salary (Nylic) will be paid in addition to commissions you earn.

3 - End of five years Salary will be doubled.

4 - End of ten years Salary will be increased 50%.

5 - End of fifteen years Salary will be increased 33 1/3% over previous five years.

6 - End of twenty years you will be entitled to Life Pension.

It will be noted from the foregoing that commencing with the third year "a salary (Nylic) will be paid in addition to commissions." Also at the end of five years the salary will be double, etc. A fair inference from the foregoing is that although agents are to be impressed with the idea that they are entering upon a twenty year contract, yet under "Nylic" they actually begin to receive a salary at the commencement of the third year, in addition to regular commissions.

Another portion of the pamphlet is devoted to an agent's recital of his experiences under Nylic which were so remarkably remunerative that the person to whom he was relating them exclaimed, "I'm paralyzed!"; although he recovered sufficiently to congratulate the lucky agent and to regretfully declare: "And from the bottom of my soul I regret that I didn't do as you did and cast my lot with the New York Life Insurance Company 20 years ago." The agent recites as a fact that at the end of two years, on the basis of insurance written by him, the company began paying $50 a month Nylic; and at the end of ...


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