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07/09/87 the Prudential Insurance v. Michael D. Van Matre

July 9, 1987




Before leaving this Discussion, we must observe, as did the United States Court of Appeals for the Seventh Circuit, that "[it] is clear that the primary motivation for Prudential's vigorous prosecution of this action is that it is now dissatisfied with the agreement that it presumably signed with many other agents." (Prudential Insurance Co. v. Sipula (7th Cir. 1985), 776 F.2d 157, 164.) Prudential seeks to establish a legal precedent which will, in effect, relieve it of the consequences of its failure to place express restrictions in the agreement on an agent's post-termination activities. As a general matter, however, implied covenants are not favored in the law. (17A C.J.S. Contracts sec. 328, at 287 (1963).) "plaintiff ordinarily cannot enlist the support of the judiciary to reform a contract the plaintiff and defendant freely entered into." (Prudential Insurance Co. v. Sipula (7th Cir. 1985), 776 F.2d 157, 164). As stated in Village of Grandview v. City of Springfield (1984), 122 Ill. App. 3d 794, 798, 461 N.E.2d 1031, 1035, "[the] court cannot add to contracts of parties elements which they did not themselves provide, nor protect one of the contracting parties against subsequent contingency, which would have been advantageous to him, had he but foreseen it." The trial court therefore did not err in dismissing count II of plaintiff's complaint.


511 N.E.2d 740, 158 Ill. App. 3d 298, 110 Ill. Dec. 563 1987.IL.971

Appeal from the Circuit Court of Effingham County; the Hon. William D. Kelly, Judge, presiding.


JUSTICE HARRISON delivered the opinion of the court. WELCH and KASSERMAN, JJ., concur.


Plaintiff, Prudential Insurance Company of America (Prudential), filed an action in the circuit court of Effingham County seeking damages and an injunction to prevent defendant, Michael D. Van Matre, one of its former agents, from inducing Prudential whole-life insurance policyholders to terminate policies which Van Matre had sold or serviced while in Prudential's employ and to replace them with whole-life policies of a different company. Prudential's complaint contained three counts. Count I alleged tortious interference with contract, count II alleged breach of an implied covenant of good faith and fair dealing, and count III alleged breach of fiduciary duty. On Van Matre's motion, the circuit court dismissed all three counts pursuant to section 2-615 of our Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-615) as being substantially insufficient in law. Although the circuit court granted Prudential leave to file an amended complaint, Prudential elected to stand on its original pleadings. This appeal followed. We affirm.

A motion to dismiss a complaint pursuant to section 2-615 (Ill. Rev. Stat. 1985, ch. 110, par. 2-615) requires the appellate court, as well as the trial court, to accept all facts well pleaded as true and to draw all reasonable inferences therefrom in favor of the plaintiff. (Towne v. Cole (1985), 133 Ill. App. 3d 380, 382, 478 N.E.2d 895, 897.) Prudential, the plaintiff in this case, alleged that on or about April 7, 1975, Van Matre entered into an "Agent's Agreement" with it. According to the agreement, which was attached as an exhibit to plaintiff's complaint, Van Matre was obligated to "promote the success and welfare of [Prudential]; conform to and abide by its instructions, rules and requirements; and refrain from engaging in any other pursuit or calling from which [he would] receive financial remuneration while this Agreement is in force." Agreement sec. 1.

As part of this general obligation, Van Matre agreed to "canvas regularly for applications for insurance contracts of the kinds and upon the plans sold by [Prudential]," to "advocate the class of insurance most suitable to the applicant's position," to "not press for a larger amount of insurance than the applicant is able to maintain," to "endeavor to keep in force the existing insurance of [Prudential], to secure the reinstatement of insurance which is lapsed and to perform all the duties, incident to the care and conservation of [Prudential's] business, that may be assigned to [him] from time to time by [Prudential]." Agreement sec. 2.

The agreement provided that Van Matre's "appointment as Agent and this Agreement may be terminated either by [Van Matre] or [Prudential] at any time." (Agreement sec. 13.) Upon termination of the agreement, Van Matre was required:

1) to "immediately submit [books and records of accounts indicating money received by Van Matre on Prudential's behalf] for an inspection and accounting" (Agreement sec. 7(a));

2) to "hand over" to a proper representative of Prudential "all books, records, and supplies furnished" to Van Matre by Prudential (Agreement sec. 7(b));

3) to grant a "prior lien" to Prudential "upon any amounts due [Van Matre], [his] executors, administrators or assigns, by the terms of the Agreement, until the amount of such indebtedness is fully paid" (Agreement sec. 14); and

4) to authorize Prudential to release to third parties, upon inquiry, information regarding his record with the company, his "personal character, habits, ability, and cause for leaving the service" and to "release [Prudential] from all liability for damages in connection with the furnishing of such information," (Agreement sec. 15).

This agreement thus appears to have been identical to one recently considered by the United States Court of Appeals for the Seventh Circuit in Prudential Insurance Co. v. Sipula (7th Cir. 1985), 776 F.2d 157. As in that case, no further post-termination obligations were expressly imposed, and "[no] mention was made of the confidential nature of policyholder information." 776 F.2d 157,159.

From approximately April 1975 to June 1983, Van Matre was employed by Prudential pursuant to the agent's agreement and was assigned to Prudential's Decatur District Office in Decatur, Illinois. During his employment, Van Matre sold several types of Prudential whole-life insurance policies to various customers throughout the central Illinois area. He also "serviced" those policyholders, as well as other policyholders assigned to him by Prudential.

A Prudential whole-life insurance policy is a contract between Prudential and a policyholder that is, in the words of the policy, "insurance for the whole of life." Under the policy, Prudential agrees to pay a specified sum to the policyholder or beneficiary upon the death of the insured, and to pay dividends and other benefits during the life of the policy. The policies are based on actuarial assumptions which contemplate a long-term contractual relationship. Prudential's premium rates, estimates of expected dividends, cash surrender value accumulations, mortality assumptions and other economic terms of the policy are premised upon the policy's remaining in force for a number of ...

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