Liberty National Insurance Company, Appellant-Cross-Appellee v. Reinsurance Agency, Inc., Appellee-Cross-Appellant

This is a diversity of citizenship case. Appellant Liberty National Insurance Company, the defendant in the Trial Court, is a citizen of Idaho, and appellee Reinsurance Agency, Inc., the plaintiff in the Trial Court, is a citizen of Illinois. A sum in excess of $10,000 exclusive of interest and costs is involved. The Trial Court under § 1332, Title 28 U.S.C., had, and this Court under § 1291, id., has jurisdiction.

This appeal involves incidents of the rehabilitation of appellant insurance company. The main issue here is whether the appellant’s rehabilitator, who on September 24, 1956 was appointed and ordered by the Idaho State Court to take control of appellant’s insurance business and remove the causes which made rehabilitation necessary, effectively can-celled the September 1, 1955 contract of appellant to pay appellee insurance brokerage commissions.

Appellant entered into by that contract a written agreement dated September 1, 1955, in return for appellee’s assistance in obtaining for appellant the insurance business involved, to pay monthly to ap-pellee a 5% commission on all money remitted to appellant by appellant’s agent respecting the agent’s automobile insurance…

(dissenting).

I dissent.

I agree that under Idaho law rehabilitation of an insurance company permits its escape from burdensome contracts, but I do not apprehend that it permits the rehabilitated company to continue to receive the benefits of a contract and escape only from its detriments. Yet it seems to be that this is precisely what occurs here.

Here the services for which appellee by its agreement was entitled to a commission had been fully performed. The benefits, subject to the agreed commission, were flowing to the company. The district court ruled that if the rehabili-tator had felt that the price being paid (commission) for these benefits was too high, he could have terminated the whole arrangement, but that the company could not continue to enjoy the benefits and unilaterally relieve itself from the necessity for paying the stipulated compensation. I agree.

Nor do I feel that this claim has been barred by res judicata. It does not appear that the issues presented by this case were ever considered in the state court or resolved by that court. Appellant apparently relies upon the following paragraph in the order of the state court terminating rehabilitation:

This…

307 F.2d 164 LIBERTY NATIONAL INSURANCE COMPANY, Appellant-Cross-Appellee, v. REINSURANCE AGENCY, INC., Appellee-Cross-Appellant. No. 16829. United States Court of Appeals, Ninth Circuit. June 28, 1962. Rehearing Denied Aug. 1, 1962. 1 Hawkins & Miller, Eugene L. Miller, Coeur d'Alene, Idaho, Paine, Lowe, Coffin, Herman, O'Kelly, and Alan P. O'Kelly, Spokane, Wash., for appellant. 2 Elder, Elder & Mitchell, R. N. Elder, and Thomas A. Mitchell, Coeur d'Alene, Idaho, for appellee. 3 Before CHAMBERS and MERRILL, Circuit Judges, and BOWEN, District judge. 4 BOWEN, District Judge. 5 This is a diversity of citizenship case. Appellant Liberty National Insurance Company, the defendant in the Trial Court, is a citizen of Idaho, and appellee Reinsurance Agency, Inc., the plaintiff in the Trial Court, is a citizen of Illinois. A sum in excess of $10,000 exclusive of interest and costs in involved. The Trial Court under 1332, Title 28 U.S.C., had, and this Court under 1291, id., has jurisdiction. 6 This appeal involves incidents of the rehabilitation of appellant insurance company. The main issue here is whether the appellant's rehabilitator, who on September 24, 1956 was appointed…