Where under a contract of employment an insurance company agreed to pay its agent commission on premiums paid to and accepted by it on policies secured and established by the agent; if, during the life of the contract, policies were established which the agent had secured under or during the life of a former agreement which the contract replaced, under the circumstances of this case, the agent was entitled to the renewal commissions on the second year's premiums when the first year's premiums were actually paid to and accepted by the company during the life of the contract notwithstanding the fact that the agent had accepted, with the approval of the company, personal promissory notes for the premiums during the life of the former agreement.
DECIDED JUNE 5, 1948. William W. Camp sued Mutual Life Insurance Company of New York to recover $262.03 plus interest alleged to be due under a contract set forth. The trial judge, trying the case without a jury, found for the plaintiff. The Appellate Division of the Civil Court of Fulton County affirmed the judgment and the insurance company excepts to that judgment. The evidence was substantially as follows: The plaintiff and the defendant entered into a contract on December 10, 1945, called an Incentive-Earnings-Plan contract of employment. It sets out a *Page 289 schedule of commissions on life insurance premiums to be paid to the plaintiff on premiums paid to and accepted by the company on policies secured and established by the plaintiff. The first year's commission was 35% on the policies involved and the renewal premium commission for the second policy year was 10%. The contract provided that payment of any commission was to be made only if the plaintiff had remained continuously with the company and was under contract with or in employ of the company when such payment became due. Twenty-five percent of the first year's commission and the renewal commission on second year policies established during the second 52 weeks of the employment contract were payable in cash, and the balance of the commission due the plaintiff was used to offset certain advances made to the plaintiff. The contract provided that it should terminate immediately, among other things, if the plaintiff should change to a commission contract. While the above contract was in force the plaintiff took applications for two policies, the commission on the premiums on which is here sued for, delivered the policies to the applicant, and took notes for the premiums, payable to him individually. On February 11, 1946, the plaintiff and the company entered into a commission contract. This contract provided for a commission on first-year premiums, about which there is no dispute in this case, and 10% renewal commissions for the second policy year which under this contract became a vested right of the plaintiff under the facts, there being no dispute on this point. The latter contract provided: "You are hereby appointed to represent The Mutual Life Insurance Company of New York for the purpose of soliciting insurance and annuities. . . The Company will pay you commissions, as stated in the `Table of Commissions,' on premiums paid to and accepted by the company (excluding temporary extra premiums) on policies secured and established by you subject to the provisions of this contract. . . This contract terminates all prior contracts except for your right to receive any renewal commissions that may become payable under the terms of such prior contracts." On February 17, 1946, the insureds in the policies written paid the premiums in cash. The notes, which were given to the agent for the premiums and retained by him, were destroyed. The company paid the plaintiff *Page 290 the full 35% commission on the premiums as provided in the latter (commission) contract. The plaintiff testified that a policy was established when the insured paid the first premium in cash. The plaintiff testified that if the insured had not paid the note the insured would have been indebted to him on the note. Witnesses for the company testified that a policy was established when the company's risk attached on the policy, but also that in a case where the agent took notes for the premium, with the approval of the company, the company's risk attached upon delivery of the policy, but that the company would not be liable to the agent for commissions until the insured paid the first year's premium in cash. The plaintiff repaid to the company $63, the amount he thought he owed them on incentive fees advanced to him, in view of his changing from the first contract to the second. This amount was $14.30 in excess of what the company's figures showed was due by the plaintiff and it reimbursed him on July 3, 1946, in the amount of $14.30. Attached to the check was a warrant with the notation "See Accounting Division's letter of 6/26/46." On the back of this check, indorsed by the plaintiff was the following: "The acceptance by you of the enclosed check No. 16295, dated 7/2/46, will be treated by the company as a receipt in full for the amount payable as shown on the foregoing warrant and in lieu of any further receipt." The letter enclosing the check to the plaintiff contained the following: "This represents refund of and overpayment by you in connection with repayment of incentive fees." 1. We think the trial and appellate courts rendered correct judgments. The two contracts which the plaintiff entered into with the company were prepared by it and if there is any doubt about their meaning they will be construed against the company. In the circumstances above stated the contracts in question are related, since the plaintiff changed his relationship with the company by going from one kind of contract to another. The solution to the question involved is the correct interpretation of the provision in the last, the commission contract, which provides: "The company will pay you commissions *Page 291 . . on premiums paid to and accepted by the company . . on policies secured and established by you, subject to the provisions of this contract." There is a similar provision in the incentive earnings contract. The meaning in that contract would seem to be that commissions would be paid on policies securedand established under that contract, for the reason that they could be secured and established in no other way. But the meaning of the commission contract is different and the obligation of the company is to pay the commission on premiums paid to and accepted by the company on policies secured and established by the underwriter regardless of when they were secured, for the reason that if an agent wrote and delivered a policy under the first contract, he could not be equitably deprived of his commission simply because he secured the policy under the first contract and established it under the second. The important thing to all concerned is the payment of the first premium and that factor determines the rights of the agent under the commission contract and not the time of the securing of the business. The liability of the company to the agent for the first year's commission accrues when the first premium is paid, whether by the agent or the insured. The company's contention that the agent is not entitled to the first or renewal commission simply because the policies here were secured during the life of the first contract, which became ineffective when the second contract was signed, and only established during the period of the second contract, is without merit. The agent under the second contract does not have to both secure and establish the policy during the period of the latter contract. A policy is established, as stated, when the first premium is paid to the company and it does not matter when it was secured so long as the agent claiming the commission secured it. The courts below correctly interpreted the commission contract. The finding by the trial court and its affirmance by the appellate division were correct.
2. The insurance company contends that the plaintiff below is estopped to claim the commission sued for by his acceptance of the check for $14.30 refund, which had attached to it a warrant stating, "See Accounting Division's letter of 6/26/46," the contention being that the accounting division's letter showed that the plaintiff was not entitled to commissions under the last *Page 292 contract. Assuming that the letter meant what the company contends, it was an interoffice letter, from one branch of the company to another and the plaintiff was not charged with knowledge of its contents. The statement on the warrant was for the benefit of the company's auditors and officials and placed the plaintiff under no duty to read the letter. He was justified in relying on the letter in which the refund check was enclosed, stating what the refund was for. The court did not err in excluding the accounting division letter.
The judgment of the Appellate Division of the Civil Court of Fulton County, affirming the judgment of the trial court, is affirmed.
Judgment affirmed. Sutton, C. J., and Parker, J., concur.