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World Ins. Co. v. Smith

MAY 20, 1975.




APPEAL from the Circuit Court of Cook County; the Hon. GEORGE B. DUGGAN, Judge, presiding.


World Insurance Company (hereinafter plaintiff) brought suit to collect insurance premiums allegedly due from Alex Smith (hereinafter defendant). After a bench trial, judgment was entered for the defendant. On appeal plaintiff urges that the judgment is contrary to the manifest weight of the evidence, asserting that the admission of evidence regarding oral conversations between the plaintiff's agent and defendant was in error.

In its complaint, plaintiff alleged defendant entered into an agent's agreement to sell credit health and life insurance policies in connection with car sales by Grove Dodge Sales, Inc. (hereinafter Grove Dodge.) It was further alleged defendant failed to account to plaintiff and failed to pay over premiums after proper deductions for commission. The balance alleged to be owing was $6,625.07.

Defendant's answer to the complaint alleged that any agreement made by him was made for and on behalf of Grove Dodge, and that the transactions and acts between the parties were between plaintiff and Grove Dodge and not the defendant; that the defendant did not personally collect any funds as agent of plaintiff; and that Grove Dodge was involved in a bankruptcy proceeding in the United States District Court for the Northern District of Illinois, and in said proceeding Grove Dodge listed said claim, that plaintiff was given notice of the bankruptcy proceeding, and that said claim was discharged in the bankruptcy proceeding.

Plaintiff replied that defendant assumed a personal, not a corporate, obligation when he signed the agreement and two subsequent amendments; and that further defendant was not a bankrupt. Defendant answered the reply urging that all obligations on the agreement were those of Grove Dodge, and that he was merely the conduit of Grove Dodge which handled all the accounting under the agreement.

Defendant never denied that he signed in his own name, without qualification, the agent's agreement and two subsequent amendments to that agreement.

At the trial plaintiff relied on the agreement, the two amendments, certain documentary evidence, and the testimony of Roger Thrane, Assistant Vice-President — Premiums for plaintiff, to prove its case. Thrane testified regarding various documents and records pertaining to the transactions with defendant. In sum these records established an amount owing to plaintiff in the sum of $6,624.04. Thrane stated on cross-examination that he never appeared at a bankruptcy hearing and had no knowledge as to whether plaintiff filed a claim against Grove Dodge in a bankruptcy proceeding.

The defendant testified that he was president of Grove Dodge. Over objection of plaintiff, the defendant was permitted to testify that he was solicited by a Fred Walich, an agent of plaintiff, relative to becoming an agent for plaintiff. An objection to any testimony regarding conversations between defendant and Walich prior to the signing of the agreement was sustained. The trial court then indicated that the defendant's conversations with Walich may be introduced but not to vary the contract, saying, "There was never a contract between Grove Dodge and World Insurance." The trial court further indicated that "Grove Dodge was never the agent of World Insurance."

Defendant then testified that he told Walich that Grove Dodge would sell insurance for plaintiff through retail installment contracts, that the proceeds of the premiums would go to Grove Dodge and any payments due would be made by Grove Dodge. Defendant testified that all funds were handled through Grove Dodge, and that he never received any funds from plaintiff in his individual capacity. Defendant further testified that Walich prepared the agreement which he signed. Defendant was confronted with two checks of plaintiff made out to and endorsed by the defendant personally. One check was endorsed over to Grove Dodge, while the second check defendant claimed did not carry his endorsement but was allegedly endorsed by a person other than defendant.


In urging that the judgment of the trial court is contrary to the manifest weight of the evidence, plaintiff contends (a) the admission of defendant's testimony regarding conversations prior to the written agreement in order to alter the meaning of that agreement constituted error, and (b) the evidence established plaintiff was entitled to judgment against defendant, as its agent, for premiums he collected but did not remit.


The agreement states in pertinent part:

"This agreement made this 10th day of July, 1964, between WORLD INSURANCE COMPANY of Omaha, Nebraska, hereinafter called Company, and Alex Smith — 9009 Waukegan Road — Morton Grove, Ill., hereinafter called Agent, WITNESSETH, Company hereby appoints Agent to solicit credit life and credit health insurance from, and to issue policies of such insurance on Company's forms and at its premium rates to debtors of Grove Dodge — 9009 ...

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