U.S. Supreme Court Stagg v. Insurance Company, 77 U.S. 10 Wall. 589 589 (1870)
Stagg v. Insurance Company
77 U.S. (10 Wall.) 589
ERROR TO THE CIRCUIT COURT
FOR THE DISTRICT OF MISSOURI
1. Where there is an express contract for the compensation of an insurance agent, no proof of a general custom as to such compensation is admissible which is in conflict with the contract.
2. Where such agent had received a general circular from his company which contained in clear language the terms of his compensation, and had acted on that circular without complaint for several years, he is estopped to deny that he was employed on those terms.
3. The production of a circular of prior date with other terms as to compensation does not alter the case.
Stagg became the agent of the Connecticut Mutual Life Insurance Company, in October, 1849, by his acceptance of a circular which contained this language:
"The usual compensation of agents, so far as we know, is 10 percent commission on the premiums, with one dollar for each policy, and 5 percent on the premiums on the renewal of policies."
This circular gave him certain instructions about his agency, and some suggestions as to the modes of inducing persons to insure with the company. In about a year afterwards he received another circular like the former one in its main purpose, but much more full and specific; a sort of short essay on the subject of life insurance, setting forth its
advantages, and pointing out the various reasons which the agent might advantageously suggest to persons whom he should address, why they should insure their lives, and do this with the Connecticut company rather than with any other company. This second circular, intended obviously for his careful perusal and study throughout, contained, in lieu of the language above cited, from the first one, the following:
"For your services as above, you will be allowed a commission of 10 percent on the first premiums (cash and notes), and 5 percent on all subsequent renewal premiums so long as you continue the agent of the company. "
The plaintiff received and acted on this latter paper for about fifteen years, when he was discharged. He now brought this suit, claiming some $3,000 as the 5 percent commission on the renewal premiums of policies originally made by him as agent which had been received by the company since he was discharged.
To support this claim, he undertook to prove by other insurance agents that such was the custom as between insurance companies and their agents. But the court ruled as matter of law that there was an express contracts in the case, and that the custom could not be admitted.
It also ruled that the later circular was substituted as a new contract instead of the first one, and that its fair construction was to limit the agency to the pleasure of the company, and to terminate the right of the agent to commissions on renewal premiums with the revocation of his agency.
These rulings, or more particularly the second one, made the error complained of.
MR. JUSTICE MILLER delivered the opinion of the Court.
The right of the insurance company to terminate the agency of the plaintiff at its discretion is not denied by his counsel, nor is there any serious effort to support the offer to prove the custom. Indeed, if the court was right in holding that the contract between the parties was expressed by the language of the second circular, it is quite clear there was no room for usage, for it is there expressly stated that
the commission on the renewal premiums, like those on the original premiums, was to be paid only so long as the plaintiff continued to be the agent of the company.
Nor can we doubt for a moment that the later circular must be held to represent the agreement of the parties as to compensation. After having received that circular and acted on it for fifteen years, received and adjusted his compensation by it, he is estopped to deny that it was the contract under which he acted. If there was any other contract, it was for him to show it. He does not do this by producing the circular of the year previous. If there was anything fraudulent, unfair, or illegal in the new terms offered or in the mode in which he was induced to accept them, he should have shown it, but he has not even attempted it.
We are therefore clearly of opinion that when it is shown that, as agent of the company, he received and acted upon that circular, he is bound by its terms as the measure of his compensation.