Defendant Minnesota Mutual Life Insurance Company had more than three hundred agents in thirty-one states. The subagents' contract made by defendants with plaintiff, Lewis, November 1, 1943, was a complete contract of considerable length upon the printed form of the Minnesota Mutual. It is entitled "Agents Contract." It provides, in part: The general agent (Carnahan), pursuant to his contract with the company "hereby appoints" Lewis "as Agent to procure applications for policies on the lives of persons satisfactory to the Company" and to collect and remit first-year premiums, etc., subject to the provisions hereof. Lewis "hereby accepts said appointment and the Company approves the same. * * * The agency relationship hereby established" is subject to termination by any party upon fifteen days' notice and may be terminated immediately for violation of its terms. Termination of the General Agents Contract with the company shall not terminate the agency relationship hereby established between the agent and the company. A schedule of commissions on premiums is set out. After two years the agent will be entitled to commissions or renewals as long as he procures twelve new applications per year. "After termination of the agency relationship *Page 1273 hereby established" the agent is charged a so-called collection fee of a certain per cent of said renewal commissions. The Agents Contract is "not a contract of employment" and does not create the relationship of employer and employee. The agent may exercise his own judgment and discretion as to the time, place and methods of solicitation and persons solicited but the company may prescribe rules and regulations not interfering with such freedom of action, which rules and regulations the agent will observe.
This was plaintiff's first experience selling life insurance. His record was phenomenal. By March 1945, he was selling more Minnesota Mutual insurance than any other salesman. He was first in the President's Dozen (twelve leading salesmen) and was consistently a member of the 50 Club ($50,000 per month). March 21, 1945, Harold J. Cummings, vice-president in charge of agencies, wrote Lewis, in part:
"It shouldn't be possible that a man should be leading the President's Dozen for the year whom I have not had the privilege of meeting personally. It should never have happened either that following the General Agency Conference here at the end of January, I was so crowded for time that I couldn't write and say thanks to you for having over $100,000 of business in one month."
In May another letter from Cummings complimented Lewis for "doing a fine job." About this time Lewis' name and picture began to appear in the company magazine "Application." In 1946, several laudatory articles in the magazine referred at length to his methods of operation and the quantity and quality of business done by him. As a select salesman he was paid additional compensation direct from Vice-president Cummings Agencies Department, called Club credits and not mentioned in his written contract.
July 10, 1945, Lewis wrote, in part:
"Dear Mr. Cummings: I am writing you for information not now available locally. The reason is because recently I have been approached by representatives of three excellent organizations with unlimited possibilities * * * all affording *Page 1274 attractive personnel connections and environment, and obviously all combining lucrative salary and bonus appeals, which is important, tho secondary if adequate.
"This has developed so quickly during the past two weeks that the different times I have gone to office intending to discuss same with your local Mr. Carnahan, I have missed him.
"Since Mr. Carnahan has now gone on a vacation, and an important decision, to me, may be required before his return about the 23rd inst. — will you therefore kindly advise my status regarding first year and renewal commissions should I decide to make a sudden change.
"I am undecided today, there are reasons why I would like to continue with Minnesota Mutual, and other good reasons for considering connections suggested, and offered to me that might prove much more satisfactory."
Cummings replied that upon receipt of the letter (at the St. Paul office of the company) he promptly discussed it with Mr. Elston (one of the three superintendents of agencies), who attempted to phone Lewis but learned he would be absent from Des Moines for several days. "I sincerely hope that you will not do anything in a hurry, because I would certainly want a chance to talk this thing out with you and I am sure Tom [Carnahan] would want the same opportunity." The letter suggests Lewis come to St. Paul at company expense, "we can find ample time to discuss your problem to your hearts content", or that Lewis and Tom spend a day or two with Cummings on the St. Croix River, or something of the sort, and that Lewis telephone Cummings concerning the situation, whether he would come and if so, when. "Meantime, let's hold everything please."
A few days later Cummings wrote Lewis he had made reservations for a trip on the St. Croix River, etc., for Carnahan and Lewis. "I am assuming the personal matter mentioned in your earlier correspondence can be left for a thorough discussion while you are here."
Lewis and Carnahan flew to St. Paul. Mr. Cummings had secured rooms for them at the St. Paul Athletic Club for Thursday night. Friday Lewis was conducted on a tour of the home *Page 1275 offices. In the afternoon he met Mr. Cummings. Later Cummings took them on a deluxe fishing trip from which they returned Saturday. Saturday evening they attended a buffet dinner at the Cummings home and then were taken to an ice revue at the Coliseum. Sunday morning they again went to the Cummings home.
None of the foregoing matters is in dispute. Although Lewis was brought from Des Moines and entertained, all at company expense, for the purpose of discussing his future with the Minnesota Mutual and the advisability of his accepting one of the other positions offered him, witnesses for defendants testified there was little discussion of these matters. Despite his frantic efforts to bring Lewis to St. Paul for a thorough discussion of "your problem", Mr. Cummings did not remember much about the conversations. He testified the most vivid recollection he had of any conversation with Lewis is that while they were riding from his house to the airport Sunday, he said, "Hu, what is it in the world you are looking for?" It is sufficient to say the jury must necessarily have believed plaintiff's testimony detailing the various conversations.
I. In Division IV the majority opinion finds the evidence was insufficient to show the written subagent's contract was modified, that at most it was given some consideration but it was not definitely modified and the evidence is too indefinite. This finding would be correct if the evidence for defendants only were considered. But, viewed in the light most favorable to plaintiff, the record on this point amply supports the general verdict.
Before the trip to St. Paul plaintiff had worked under the written subagent's contract, as modified by the payment of Club credits. There is no indication he was dissatisfied with any of its numerous provisions, except that he wanted security for his future. His concern about the status of his renewals was merely incidental to that. The oral agreement which the jury found was thereafter made, would in effect change only the provision that the subagency "shall continue during the will of the parties hereto subject to termination by any party hereto at any time upon fifteen days" notice. It is true the parties did not discuss just what provisions of the contract would be modified by this *Page 1276 new agreement. But in the absence of specific agreement affecting them other provisions of the subagent's contract would remain unchanged. The situation here is analogous to that in Elwell v. State Mutual Life Assur. Co., 230 Mass. 248, 119 N.E. 794, in which an oral contract continued the subagent's former written agreement with one change. Later the subagent was discharged. He sued to recover renewals which accrued after his discharge. The contract was held noncancellable and the subagent was held entitled to the renewals.
Lewis testified that when Cummings first stated the proposition whether it would be better for Lewis to accept one of the other offers rather than a lifetime contract with the Minnesota Mutual, Lewis replied, "I want to make a decision at my age [forty-six] once and for all. I want to know what my future is going to be for my security." Cummings pointed out that a lifetime arrangement with Minnesota Mutual would afford security for Lewis' future because of the continuing nature of the organization and also because, after nine years his annual receipts from renewals would pyramid to an amount which would approximately equal his average annual commissions on new business.
At the meeting between Cummings, Carnahan and plaintiff at Cummings' home on Saturday evening, Cummings asked Lewis, "Hu, have you reached any definite decision about our conversation * * * as to a lifetime contract with the Minnesota Mutual Life Insurance Company?" Lewis replied he had, depending, of course, upon Cummings and upon Carnahan's decision. Cummings then summed up the situation and said, "I think he should stay with us and work with us during his lifetime. I think he should forget these other offers or turn them down * * *. What do you think?" Carnahan said, "Fine, he ought to lead the company in production." Cummings said, "Is that agreeable with you, Hu?" Lewis said, "It is, provided we are all agreed that it is a lifetime future and a lifetime association." Cummings said, "Fine, I am glad we are all agreed." Carnahan said, "I am glad that Hu has decided to make a lifetime contract to work." Carnahan said he was glad Hu had decided to work for them the rest of his life. *Page 1277
The majority opinion states: "* * * plaintiff * * * claims Lewis did testify that he promised to remain as a subagent for the remainder of his life. We doubt that the record shows any such express agreement. What seems to be considered by the plaintiff as such an agreement was a conversation which was casual, at best * * *"; it was "in a general conversation" in which Carnahan "mentioned [the lifetime agreement] to Cummings in one part of the conversation."
This was the conference in St. Paul which Cummings had previously proposed. He had requested plaintiff, "Meantime, let's hold everything please." Plaintiff and Carnahan had been flown several hundred miles and feted and entertained at company expense, that Cummings might have "a chance to talk this thing out with you." This conference was part of the "thorough discussion" referred to in one of Cummings' letters. Yet the majority opinion, while stating the evidence should be considered in the light most favorable to plaintiff, overrules the finding of the jury and holds the discussion was "casual at best" and "general" and that Carnahan merely "mentioned to Cummings" the lifetime agreement in one part of it.
I do not believe a fair interpretation of the language of Lewis, Carnahan and Cummings, under the circumstances shown in the record, sustains the finding of the majority in Division IV that the evidence of modification is indefinite. On the contrary I believe it clear and explicit. It is ample to support a finding there was a specific and definite bilateral agreement between defendants and plaintiff, whereby defendants promised to retain plaintiff as their subagent for the remainder of his life, and plaintiff promised to refuse the other offers which had been made him, and to work for defendants as subagent for the remainder of his life.
The foregoing discussion and conclusion is applicable also to the finding in Division IV of the majority opinion "there is nothing in the claimed modified contract by which [appellant] was obligated to continue in employment for any length of time." This finding simply overlooks the evidence that plaintiff did promise to work for defendants "the rest of his life."
II. No decision comparable factually to the case at bar has been called to my attention. Lewis' written contract had made *Page 1278 him subagent in a territory, which was not exclusive, and was limited to the General Agents territory. The contract fixed his commissions based upon first-year premiums of policies procured by him. It provided also for renewal commissions in any year in which the agent earned first-year commissions of $500 but stated the right of the subagent to renewal commissions would continue as long as he actively represented the company and produced at least twelve new applications each year.
Within a short time Lewis became the leading salesman for Minnesota Mutual, was being photographed for the company magazine, heaped with encomiums, pointed to as a model for ordinary agents, and paid additional compensation called Club credits by Vice-president Cummings' agencies department. Then Mr. Cummings received the disquieting letter advising him Lewis was considering accepting other offers of employment. Mr. Cummings acted quickly. He promptly consulted one of the superintendents of agencies, who tried to telephone Lewis. Then Cummings wrote Lewis asking him to delay his decision, suggesting Lewis come to St. Paul at company expense to discuss the matter, inviting him to go on a fishing trip, requesting him to telephone and later arranging for the three-day trip to St. Paul.
At the first opportunity Mr. Cummings broached the subject of the Minnesota Mutual and Lewis' other offers. He offered Lewis a lifetime contract. They discussed the other offers and considered certain features of them which might prove disadvantageous to Lewis. Cummings then pointed out the advantages of a lifetime agreement with Minnesota Mutual.
Although Cummings assumed the attitude of a disinterested friend assisting Lewis in solving "your problem" it is evident his primary purpose was to advance the interests of the Minnesota Mutual. Apparently Lewis indicated the suggested lifetime contract would be acceptable to him. Here then was Cummings' opportunity to retain the services of the star salesman upon terms advantageous to the company. It was not chancing a long-time deal with a stranger. Lewis had been with the company for such time that they were familiar with him and his methods of operation. He would receive no salary. He would not be entitled to commissions upon insurance sold by *Page 1279 anyone other than himself. He would have charge of no office or agents. He would have no exclusive territory. Every dollar paid him would be for value currently received by the Minnesota Mutual. Life insurance companies generally are not troubled with overproduction, shortage of territory or overcrowding of territory by soliciting agents. They want as much volume as possible. They also want every good salesman to continue with them all his life. It may be inferred this is largely the reason for the collection charge on renewals after the subagent leaves the Minnesota Mutual. Nor was Mr. Cummings plagued with the question which has frequently troubled courts, that of the continued existence of the employer in the business in question throughout the lifetime of the employee. As he pointed out "an insurance company goes on and on even after individuals replace themselves."
Of course, the proposed agreement was one which the Minnesota Mutual might lose unless it was closed promptly before Lewis returned to Des Moines. There was evidence it was presented to Carnahan at Cummings' home on Saturday evening and was then and there agreed to by Carnahan, Cummings and Lewis. Lewis and Carnahan returned to Des Moines the next day. Lewis rejected his other offers. He continued his extraordinary sales record with the Minnesota Mutual until February 17, 1947. Then without advance notice Carnahan telephoned Lewis his contract was terminated. No reason for the termination was given. Lewis telephoned Cummings who promised to review the matter and call Lewis but did not call him.
The record does not support the statement in the majority opinion that plaintiff "was guilty of conduct which would promote trouble in the agency." Had this been true it is fair to infer defendants would have attempted to prove it. However, they have never contended they terminated the contract because Lewis violated its terms. Nor is it contended any explanation for its termination was ever given Lewis. Defendants neither pleaded nor offered any evidence tending to prove plaintiff "was guilty of conduct which would promote trouble in the agency." They took the position they had the right to terminate the contract at their option as provided by the original subagent's contract. Even under defendants' theory plaintiff was *Page 1280 entitled to fifteen days' notice of the termination of the contract and hence was clearly entitled to some damages. Massachusetts Bonding Ins. Co. v. Johnston Harder, 348 Pa. 512,35 A.2d 721.
III. As a general rule the term "permanent employment" as used in contracts of employment means steady employment as contrasted with temporary employment. Hence various contracts for permanent employment and even for life employment have been held no more than indefinite general hirings or hirings at will. "In other words, where the intent to enter into a contract for permanent employment, not terminable except pursuant to its express terms, is not clearly expressed, and there is no evidence showing consideration other than a promise to render service, the assumption will be that, even though the parties speak in terms of permanent employment, the parties have in mind merely the ordinary business contract for a continuing employment, terminable at the will of either party." 56 C.J.S., Master and Servant, section 8c, page 78.
The part of the rule above quoted is accepted in principle by most courts but there is much disagreement as to its application. One point of disagreement is referred to as follows in Littell v. Evening Star Newspaper Co., 73 App. D.C. 409, 120 F.2d 36, 37:
"The rule is that unless the parties reveal an intent to enter into a contract for permanent employment, it will be regarded as terminable. Where the intent is not clearly revealed by the express terms of the agreement, the courts will look to evidence of surrounding circumstances to determine what was in the minds of the contracting parties. Thus, when one who enters into a contract of employment, promises not only that he will give his services but also additional consideration — as, for example, * * * giving up his own business * * * — such facts may be sufficient, in each case, to show the intent of the parties to enter into a contract for permanent employment.
"Some of the courts have reasoned from these cases that, to prove a contract of permanent employment, two considerations must be shown; that is, a consideration in addition to the services to be performed; and that in the absence of two considerations *Page 1281 there can be no such contract. This misconception results from mistaking the form for the substance. If it is their purpose, the parties may enter into a contract for permanent employment — not terminable except pursuant to its express terms — by stating clearly their intention to do so, even though no other consideration than services to be performed is expected by the employer or promised by the employee. The meaning of the cases previously referred to is that where no such intent is clearly expressed and, absent evidence which shows other consideration than a promise to render services, the assumption will be that — even though they speak in terms of `permanent' employment — the parties have in mind merely the ordinary business contract for a continuing employment, terminable at the will of either party."
The rule announced in the Littell case was followed in Eggers v. Armour Co. of Delaware, 8 Cir., Iowa, 129 F.2d 729, 731, in which the court said:
"The applicable law is that of Iowa. Apparently no similar situation has been considered by the Iowa courts. There is no ground for believing that the law of Iowa governing this case differs from the law generally applicable.
"We have no doubt that the defendant could obligate itself to furnish the plaintiff for life with such work as he would be capable of performing in his disabled condition and to pay him wages so long as he was able to render service, and that his promise to remain in defendant's employ and render the required service would be a sufficient consideration to support the obligation. The rule is that a contract for lifetime employment will be given effect, according to its terms, if the intention of the parties to make such an agreement is clear, even though the only consideration for it, so far as the employer is concerned, is the promise of the employee to render the service called for by the contract. Littell v. Evening Star Newspaper Co., 73 App. D.C. 409, 120 F.2d 36, 37. See, also, Arentz v. Morse Dry Dock Repair Co., 249 N.Y. 439, 164 N.E. 342, 344, 62 A.L.R. 231, 234; Roxana Petroleum Co. v. Rice, 109 Okla. 161, 235 P. 502, 506; 35 Am. Jur. 460, § 24. *Page 1282
"Where the words `permanent employment' are used in a contract of hiring and it is not clear from the language of the contract, or from the circumstances surrounding the making of it, or from the consideration furnished, that the parties intended that the employment was to continue for life or while the employee could render the required service or the employer furnish the employment, the contract will be construed to be for an indefinite period and terminable at will by either party. Faulkner v. Des Moines Drug Co., 117 Iowa 120, 90 N.W. 585; Rape v. Mobile Ohio R. Co., 136 Miss. 38, 100 So. 585, 35 A.L.R. 1422, annotations page 1432; Arentz v. Morse Dry Dock Repair Co., supra, 249 N.Y. 439, 164 N.E. 342, 62 A.L.R. 231, annotation page 234; Littell v. Evening Star Newspaper Co., supra, 73 App. D.C. 409, 120 F.2d 36, 37. The contract, which the plaintiff testified that he entered into with the defendant, by its terms provided that the employment was to be for the term of plaintiff's life, provided he continued to render the service contemplated. If the contract existed, it was clearly not terminable at will."
This decision was in turn followed in Abbott v. Arkansas Utilities Co., 8 Cir., Ark., 165 F.2d 339, 340, which states:
"In Eggers v. Armour Co., supra, this court held that the situation there involved had never been considered by the Iowa appellate court and hence, there was no applicable law of Iowa, and it was held that a contract for lifetime employment `will be given effect, according to its terms, if the intention of the parties to make such an agreement is clear, even though the only consideration for it, so far as the employer is concerned, is the promise of the employee to render the service called for by the contract.' * * *
"The contract here pleaded, which is admitted by the motion, is a specific, definite bilateral contract as distinguished from a unilateral contract. Such a contract has been referred to as one in which there are reciprocal promises so that there is something on both sides to be done or forborne. It is `a promise for a promise'; that is, one in which there are mutual promises between two parties to the contract. 17 C.J.S., Contracts, § 8. The term `unilateral contract' has been criticized as *Page 1283 a misnomer and it has been applied to various situations, the term being frequently employed to express absence of mutuality, but for our purpose here it may be defined as a contract in which a promisor receives something more than a promise as compensation for his promise. * * *
"In a bilateral contract mutual obligations are requisite and the promise which one makes is a sufficient consideration for the promise which the other makes."
The rule announced by the foregoing decision is applicable to the bilateral contract shown here by the record. I am satisfied it is sound. The majority opinion would depart from the established rule of a promise for a promise and would require that two considerations be shown.
As pointed out by the Court of Appeals for this Circuit in the Eggers case and again in the Abbott case, there are no Iowa decisions from other jurisdictions applicable to this situation. Various decisions from other jurisdictions are cited in the footnotes in 56 C.J.S., Master and Servant, section 8c, page 78, and in annotations in 35 A.L.R. 1432 and 135 A.L.R. 646.
Elwell v. State Mutual Life Assur. Co., supra, 230 Mass. 248, 251, 119 N.E. 794, 795, is in many respects parallel to the case at bar. There the subagent made an oral agreement extending, with one change, his written contract with the general agent. He was discharged and sued the company and Williams, the general agent, to recover renewals. In allowing a recovery the court pointed out that the oral contract was to be deemed and treated as the same in terms and effect as though the written contract had been redrafted with the change. On the issue of consideration the court stated: "It is supported by a sufficient consideration, namely, services to be rendered by the plaintiff, and it was not terminable at the will of the defendant Williams or by the company * * *."
Defendants contend the subagent's contract in the Elwell case was different than in the case at bar. I am unable to find any such difference as would make the Elwell case here inapplicable. *Page 1284
IV. But had two considerations been necessary, it happens they were present in this case. There is evidence Lewis promised to "turn down" the other offers made him. This was a definite consideration for defendants' promises.
In Division V the majority opinion holds: "The giving up of the opportunity to take other employment cannot be held to be an additional consideration". I believe that is contrary to a basic rule of contracts, to wit: that a forbearance or detriment or a promise of forbearance is consideration.
Some of the decisions cited in Division V of the majority opinion turn upon the finding that any detriment sustained by plaintiff in preparing himself to accept the offered employment was not mutually understood as being part of the consideration. Those cases are not in point because here there was evidence the promise to "turn down" the other offer was mutually understood as being part of the consideration. Although there are some decisions supporting the pronouncement of the majority, the contrary rule, which I think is sound, finds support in the following:
Fletcher v. Agar Mfg. Corp., D.C. Mo., 45 F. Supp. 650; Riefkin v. Du Pont de Nemours Co., 53 App. D.C. 311, 290 F. 286; Carnig v. Carr, 167 Mass. 544, 46 N.E. 117, 35 L.R.A. 512, 57 Am. St. Rep. 488; Lucacher v. Kerson, 158 Pa. Super. 437, 45 A.2d 245, 248, affirmed 355 Pa. 79, 48 A.2d 857; Millsap v. National Funding Corp., 57 Cal. App. 2d 772, 135 P.2d 407, 409; Weber v. Perry, 201 S.C. 8, 21 S.E.2d 193, 195. See also 56 C.J.S., Master and Servant, section 8c, pages 78, 79.
Defendants would distinguish the cases above cited on the ground that there the party gave up his own business or an existing employment while here plaintiff merely agreed to (and did) "turn down" the other offers. This argument is basically unsound. A promise to relinquish an offered position constitutes consideration as valid and sufficient as a promise to relinquish an occupied position.
V. Defendants contend plaintiff was an independent contractor. The written agreement repeatedly refers to the agency relationship and I believe the term insurance agent correctly defines plaintiff's status. See 44 C.J.S., Insurance, section 136 *Page 1285 et seq.; 29 Am. Jur., Insurance, section 85 et seq.; section515.125, Code of Iowa, 1946. However, his title is not material. There may be a contract for life with an employee, an agent or an independent contractor. Walker v. John Hancock Mutual Life Ins. Co., 80 N.J.L. 342, 344, 79 A. 354, 355, 35 L.R.A., N.S., 153, Ann. Cas. 1912A 526, states with reference to the discharge of a soliciting insurance agent:
"As between the principal and agent the right [to terminate the relation] depends on the terms of the contract, and if the agent is discharged in violation of those terms, he has a right of action for the wrongful discharge. In this respect the contract and the rights thereunder are analogous to the ordinary contract between master and servant."
Defendants argue also plaintiff "had the absolute right to determine just how much or how little time he would devote to his work." Fairly interpreted, plaintiff's promise to work for defendants during his lifetime means continuing to give all his time and efforts to their service, as their agent, exclusively, in conformity with their rules and regulations, as he had been doing and as he proceeded to do until he was discharged. 44 C.J.S., Insurance, section 155, page 829, states:
"Where the agent agrees to devote his entire time and energy to the company's business, he is bound to devote his time and energy with that degree of diligence and attention usual among industrious business men engaged in like business and pursuing no other avocation."
I do not agree with defendants' contention that Lewis' promise to work for defendants did not bind him and thus furnish sufficient consideration for defendant's promise. However, the record shows he furnished other sufficient consideration in promising to reject the other offers of employment. 17 C.J.S., Contracts, section 74. He fully performed this promise. As stated in 17 C.J.S., Contracts, section 100, page 447:
"Where there are mutual promises between the parties, it is not necessary to render a particular promise by one party binding that there be a special promise on the part of the other *Page 1286 party directed to that particular obligation, as mutuality may be supplied to a subsidiary promise by the consideration of the principal contract."
17 C.J.S., Contracts, section 100, page 452, states:
"Where an independent consideration passes from the employee in addition to the performance of services, the duration of the contract may be optional on his part without impairing its mutuality. This rule is applicable in the case of contracts whereby in consideration of the release of a claim of damages the employer promises the employee employment, but the employee does not agree to serve."
In Kirkley v. Roberts Co., 268 Mass. 246, 251, 167 N.E. 289, 290, plaintiff was promised a written contract if he would leave his then employer and go with the company —
"He decided so to do, and received this written agreement. Here was sufficient consideration for the promise of employment. * * * The duration of the employment is stated to be `as long as he shall faithfully and diligently perform the duties of his employment.' There is no promise on the commission agent's part to remain with the company for any definite time. This does not invalidate the contract, nor, of itself, make it terminable at the will of the company. Whatever may be the law elsewhere, it is settled by the decisions already cited * * * that here a contract in the terms of the one before us is binding upon the company so long as the agent faithfully and diligently performs and is willing and able to perform the prescribed duties at the compensation fixed."
This principle was recognized in Wright v. Iowa Southern Util. Co., 230 Iowa 838, 842, 298 N.W. 790, 793: "Where there is more than one consideration for a contract, the insufficiency of one will not invalidate the contract, but the remaining consideration will support it. 12 Am. Jur. 612, section 118; Restatement of Contracts, Volume 1, section 84, clause (b)."
In Hichhorn, Mack Co. v. Bradley, 117 Iowa 130, 90 N.W. 592, plaintiff had given defendant an exclusive agency in Iowa for the sale of a certain brand of cigars. Defendant *Page 1287 had agreed to render his best services in pushing such sales but did not agree to devote his entire time thereto. The contract was held enforceable and defendant allowed to recover on counterclaim for loss of future profits. In Kaufman Bros. Co. v. Farley Mfg. Co., 78 Iowa 679, 685, 43 N.W. 612, 614, 16 Am. St. Rep. 462, plaintiff agreed to give defendant an exclusive agency for the sale of cigars "as long as he pushed them." On the point of want of mutuality it was urged there was no agreement on defendant's part to work up the trade or put men into the field, but the court said:
"The evidence does not, in terms, state such an agreement, but it does show that defendant bought cigars for sale in that territory, and that defendant was to have the goods for sale as long as it `pushed them.' This is surely evidence of the fact of such an agreement. Whether sufficient or not was a question for the jury * * *."
In Huntington v. Haish Co., 190 Iowa 1197, 1208, 181 N.W. 480, 484, plaintiff was a salesman on commission. The term of the contract was three years. Plaintiff agreed "to `use his best efforts' to promote the sale" of defendant's engines. The contract was terminated before the three years had expired and plaintiff recovered for loss of future profits thereunder.
Atlas Brewing Co. v. Huffman, 217 Iowa 1217, 1221, 1224, 252 N.W. 133, 135, 136, affirmed an allowance of damages for termination of an oral contract creating an agency for the sale of beer, to continue "as long as there would be a demand for the product, and as long as appellee desired to continue with the sale of the same." The decision refers to the Kaufman case, supra, as involving a similar situation and states:
"There the contract with the agent was for the sale of cigars in certain territory. The agent employed men to cover the territory and build up the trade for the cigars, and the principal was to ship the cigars when ordered, `for as long as the defendant desired to deal in the cigar, or so long as the trade continued.' The contract continued for about three months, when the principal breached the same, refusing to furnish further cigars to the defendant. Verdict was directed against the *Page 1288 agent in a suit to recover damages for the reason that the contract lacked mutuality, and was too indefinite. This court reversed the lower court and held that the contract did not lack mutuality, and that it was definite enough to be enforced."
VI. Defendants contend the proof of damages was insufficient because too uncertain. In that connection it may be observed this appeal does not involve the amount of the verdict. Upon the motion for judgment notwithstanding verdict the question was whether plaintiff was entitled to a verdict in any amount. Had that motion been overruled before or after this appeal, the motion for new trial would then have been before the trial court for consideration and the court would then have determined whether the verdict was excessive, together with other grounds of the motion for new trial.
The jury was instructed the amount of recovery, if any, would be the present worth of plaintiff's diminished earnings, resulting from the termination of the contract. Williston on Contracts, Revised Ed., section 1346, page 3781, states: "Where a breach of contract involves deprivation of a chance which has value in a business sense, a just reluctance will be felt by most courts to deny altogether the recovery of substantial damages."
Hichhorn, Mack Co. v. Bradley, 117 Iowa 130, 143, 90 N.W. 592, 596, holds the loss of prospective profits is a proper measure of damages for termination of a contract to sell cigars and states: "We think that it would be manifestly unjust to deny to the defendant in this case any recovery whatever for breach of his contract because the contract itself contemplated and was based upon prospective profits."
In Pierce v. Tennessee Coal, Iron Railroad Co., 173 U.S. 1, 19 S. Ct. 335, 43 L. Ed. 591, which involved a contract of life employment the court stated the difficulty and uncertainty of estimating future damages was no greater than in a personal injury case. See also Klingman Scoular v. Racine-Sattley Co.,149 Iowa 634, 639, 640, 128 N.W. 1109; Atlas Brewing Co. v. Huffman, 217 Iowa 1217, 252 N.W. 133; Huntington v. Haish Co.,190 Iowa 1197, 181 N.W. 480. *Page 1289
Moreover, the record shows without dispute that plaintiff was damaged $511.20 for renewal commissions withheld to the date of the trial and $2882.61, the agreed present value of renewal commissions to be withheld in the future. The majority opinion states these amounts were not allowable because "the instructions specifically limited the plaintiff's damages to loss of future profits and did not include renewal commissions or retained collection fees as an element of damages." This conclusion is erroneous. It is clear the $2882.61 represents future profits or earnings which plaintiff would have received. The error of the majority is in treating this is an item of damages, whereas it was merely an element of future profits.
VII. Division VII of the majority opinion finds the trial court should have sustained defendants' motion for judgment notwithstanding the verdict on the ground Cummings was not authorized by the Minnesota Mutual to enter into the contract claimed by appellant. The record shows this ground of the motion was made on behalf of the defendant Minnesota Mutual only and was based upon a ground of the motion for directed verdict which was specifically limited to Minnesota Mutual. I do not think Carnahan could predicate error on the refusal of the trial court to sustain this ground of the motion for judgment notwithstanding the verdict. Defendants contend he may do so because of one of the instructions to the jury. They cite only Western Fruit Candy Co. v. McFarland, 188 Iowa 204, 217, 174 N.W. 57, which does not appear to sustain their contention. The trial court denied generally this ground of the motion for judgment notwithstanding verdict. I believe this was correct.
Ney v. Eastern Iowa Telephone Co., 162 Iowa 525, 541, 144 N.W. 383, 389, discussed in the majority opinion, involved the hiring by the president of an attorney, in an internal corporation dispute. The president's duties had been limited to presiding at directors' meetings. The court stated:
"It is apparent, then, that the president, by virtue of his office, alone, has no power to bind the corporation by any contract unless the articles of incorporation or the by-laws authorize him to do so. * * * There are cases in which the ordinary business of a corporation is conducted by its president * * * and in *Page 1290 these cases it is held that the natural inference is that he, as its president, has been endowed with the power to direct its operation and manage the transactions for which it was organized."
Evidently the able trial court was familiar with the doctrine of this and other Iowa decisions. The jury was told:
"In this case you are instructed that Mr. Cummings had no inherent authority to enter into the oral lifetime contract, if any, with the plaintiff Lewis merely by reason of and by virtue of his office of vice-president in charge of the agency department. * * * plaintiff must show * * * Cummings, as vice-president, did in fact have authority to make such oral lifetime contract * * *.
"In determining whether or not the said Cummings had authority * * * you may consider his official position with the company, the articles of incorporation and by-laws of the company, the manner and method in which he has been permitted to transact business for the company in dealing with agents and subagents, the character of the alleged contract as to whether it was one that would likely have been left to Cummings alone to make on behalf of the company, or otherwise, and all other facts and circumstances as shown by the evidence from which his authority to so act, or his lack of authority to so act may be shown or inferred."
Upon this question, of course, the record must be considered in the light most favorable to plaintiff. In Division II of this dissent I pointed out that the contract appeared to be very advantageous to the Minnesota Mutual for that it prevented the loss of a star insurance salesman and for various other reasons, whereas, it promised in return only the continuing opportunity for plaintiff to earn standard commissions for selling the thing the company was organized to sell and of which it had practically an unlimited supply. There was no agreement for a salary, specific territory, management or control over others, or payment of commissions earned by others.
Cummings had brought plaintiff and Carnahan to St. Paul and entertained them freely at company expense because of his anxiety to retain plaintiff's services. He was faced with the *Page 1291 alternative of failure unless he made a new agreement with plaintiff before the latter returned to Des Moines. Cummings was the vice-president and chief executive officer of the corporation with reference to agency matters and was the highest authority in such matters. He was also a member of the board of trustees and of the agency committee of three which had general supervision of agency matters. He had complete charge of agency matters. As he told Lewis he was responsible for the men in the field. (At the time of trial he was president.)
Baltimore O.R. Co. v. Foar, 7 Cir., Ind., 84 F.2d 67, 71, 72, in affirming a judgment for damages for termination of an oral lifetime contract states:
"* * * it is worthy of note that the defense is usually the same, that is to say, that the contract was entered into without authority from the board, and without their knowledge or ratification. * * * With respect to appellant's knowledge of and acquiescence in the contract sued upon, we think it fair to assume that those in authority at Garrett performed their duties with reference to reporting to their superiors both at Garrett and at Baltimore."
Neither Cummings nor any other witness testified the contract with plaintiff was not authorized or ratified by the Agency Committee or Board of Trustees. The only evidence offered consisted of certain of the Articles of Incorporation and By-laws which contained general provisions for a Board of Trustees and Agency Committee, and minutes of meetings of the Board and Committee held in the year 1942.
It is worthy of note that in the one instance shown in the record in which the by-laws were applicable it does not appear any attention was paid their strict letter. I refer to the expenses of the trip to St. Paul of Lewis and Carnahan. The by-laws require that expenditures of less than $500 be authorized at a meeting of at least two members of the Agency Committee. It does not appear Cummings secured such authority. According to his letter he merely talked to a subordinate officer of the company before arranging the trip at company expense. The record does not indicate the Agency Committee concerned itself with anything other than matters of general policy. Under all *Page 1292 the circumstances I believe it was for the jury to say whether Cummings was authorized to make some concessions to retain the services of an outstanding agent.
Baltimore O.R. Co. v. Foar, supra, 7 Cir., Ind., 84 F.2d 67, 70, 71, states:
"The consensus of judicial opinion throughout the United States is that a corporation by its proper officers may lawfully enter into a life contract with an employee. * * * It is said, however, that the contract at bar is an unusual one in that it purported to run during the life of appellee, and that it should not be upheld unless express authorization or approval by the board is shown. Such contracts were properly characterized in the earlier decisions as unusual. However, from the number disclosed in the more recent cases, we are impressed with the fact that they are not now as unusual as they were."
In Eggers v. Armour Co., supra, 8 Cir., Iowa, 129 F.2d 729, the employee was injured at the Mason City, Iowa, plant and the case was tried under Iowa law. The court said, at pages 731, 732:
"The trial court was of the opinion that the alleged contract was of such an unusual nature that, in order to make a prima facie case, the plaintiff was required to show that the contract was executed by officers of the defendant pursuant to express authority conferred upon them by the defendant's Board of Directors. It seems to us that the trial court placed too great a burden upon the plaintiff.
"It is true that there was no evidence that McCann, as the employment manager at the Mason City plant of the defendant, had express authority to obligate the defendant to employ the plaintiff for life. There was evidence that he did not have such authority. The rule is that a general manager of a business with authority to employ is not presumed to have authority to make contracts for lifetime employment. [Citing authorities.] This rule, however, is not applied to cases where the contract for life employment is made in consideration of a settlement of a claim for damages for personal injuries. [Citing authorities.] * * * *Page 1293
"It seems to us, however, that there is no great distinction between the case of an employee who is given a life employment contract in settlement of his claim for injuries, and the case of an employee like the plaintiff, whose contract for life employment was not made in connection with the settlement of such a claim but was made because he, after many years of service for his employer, had suffered a disability, in the line of duty, which incapacitated him from performing his former duties but left him able to perform light work which the employer could furnish. In the former case the employer, by making the contract, satisfies a legal claim for damages, while in the latter case he satisfies a moral claim to afford a means of livelihood to an employee incapacitated in the service of the employer after many years of employment. If, in the former case, an employee might reasonably rely upon the apparent authority of the local agents or officers of such a corporate employer as Armour and Company to offer him a life contract of employment, we think that in the latter case an employee like the plaintiff could, with equal reasonableness, rely upon the apparent authority of such local agents and officers."
I would order the judgment reinstated and the case remanded for consideration and ruling upon defendants' motion for new trial.
BLISS, GARFIELD and MULRONEY, JJ., join in this dissent. *Page 1294