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April 18, 1966


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 agreement.

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 contacted plaintiff who arranged a meeting to discuss the matter with defendants.

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 him.

Since the employment contract was terminated, defendants have paid no renewal commissions under ...

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