The opinion of the court was delivered by: Robson, District Judge.
This litigation arises out of a written contract of employment
in which the defendants agreed to employ the plaintiff as the
manager of their insurance agency in Wisconsin. The contract was
terminated in May of 1959 when the defendants closed the agency
and quit doing business in Wisconsin. Plaintiff later filed this
suit alleging that a two per cent renewal commission on business
written by him for the agency was due him. The defendants
answered, filed an affirmative defense and a counterclaim.
The answer admits that renewal commissions were no longer paid
after the termination but asserts that the agreement was
terminated because of the plaintiff's own wrongful and improper
conduct in the sales of insurance policies.
The affirmative defense asserts that defendants closed their
Wisconsin agency because of the manner in which the plaintiff
effected sales of insurance and that the plaintiff became
employed by an accident and health insurance company within six
months of the contract in violation of paragraph 6 of his
The counterclaim asserts that defendants were required to close
their Milwaukee office because plaintiff permitted his agents to
represent that they were agents of the State of Wisconsin; that
the insurance they offered was required under Wisconsin's Workmen
Compensation laws and that these representations were in
violation of plaintiff's obligation to use his best efforts to
perform his duties as manager in a faithful and honest fashion.
A bench trial was had on the issue of liability. Proposed
findings of fact and conclusions of law have been submitted by
the parties and the issues briefed.
On January 7, 1959, plaintiff entered into a written agreement
with defendants. Pursuant to that agreement, defendants appointed
plaintiff as manager of their Personal Compensation insurance
agency in Milwaukee, Wisconsin, an agency of the National
Travelers Life Company of Des Moines, Iowa, which agency was
owned in partnership by the two defendants. The agreement
provides that plaintiff is to receive a commission of two per
cent of all premiums on policies written through the agency and
a two per cent commission of all premiums on the policies renewed
from October 1, 1957, which had been written by the agency.
The agreement also provides that should it be terminated and
plaintiff has not violated any of his obligations under said
agreement, defendants shall continue to pay plaintiff the vested
renewal commissions as long as policies continue to renew.
Defendants sent certain brochures from Chicago into Wisconsin
with the intent of working up leads for insurance sales. These
pamphlets were brought to the attention of the Wisconsin
Insurance Commissioner, Paul J. Rogan. He contacted Thomas J.
Duffey, the attorney who had represented National Travelers Life
in procuring a license to write insurance in Wisconsin. The
Commissioner informed Mr. Duffey that he believed these pamphlets
were in violation of Wisconsin's lottery laws. Mr. Duffey
plaintiff who arranged a meeting to discuss the matter
A luncheon meeting was held in April of 1959 in Milwaukee.
Present at that meeting were Mr. Duffey, the plaintiff and both
defendants. The mailing piece was there discussed but the
testimony is in conflict as to whether plaintiff has seen any
copies or knew of any use or distribution of these pamphlets
prior to the meeting. Plaintiff testified that he did not have
any prior knowledge of the use of these brochures while defendant
James Napier testified that in Illinois, in January of 1959, he
showed plaintiff how to solicit leads developed by the pamphlets,
and in February of 1959 talked to him on the telephone about the
use of the brochures.
The day following the luncheon meeting, a similar meeting was
held in the office of the Wisconsin Insurance Commissioner at
Madison, at which the mailing pieces were again discussed. The
Commissioner expressed the opinion that the use of these mailing
pieces violated the Wisconsin lottery laws and expressed the hope
that plaintiff would disassociate himself from the defendants.
The agreement was then terminated on May 15, 1959, at the
request of plaintiff and with the consent of defendants. A short
time thereafter defendants closed their Milwaukee agency.
Within six months of the termination of the agreement,
plaintiff became an agent of the General Life Insurance
Corporation of Wisconsin, a company authorized to sell accident
and health insurance in the State of Wisconsin.
After several written requests for an accounting of the money
he felt was owing to him, plaintiff arranged a luncheon meeting,
which took place in June of 1963 in a Chicago restaurant. In
attendance were plaintiff, defendant James Napier and Mr. David
Delahunt, an associate of plaintiff. The purpose of this meeting
was to determine what might be done concerning plaintiff's
renewal commissions in connection with his employment contract
with defendants. Defendant James Napier, whether in jest or
seriously, indicated that he felt plaintiff had nothing coming to
Since the employment contract was terminated, defendants have
paid no renewal commissions under ...