United States Liability Insurance v. Haidinger-Hayes, Inc.

Effective April 1, 1959, plaintiff insurance company and defendant corporation, an insurance general agent and surplus line broker, entered into a written agency contract which, in paragraph (8) thereof, provided for a profit-and-loss sharing formula. Five years later, in March of 1964, plaintiff instituted the present action, asserting that there was a loss on the business written for it by defendant and, pursuant to the above formula, asking reimbursement to the extent of one-half of such loss. Denying the above claim, defendant alleged by various counterclaims that under the formula the business had produced a profit and prayed for judgment in an amount due it under the agreement and an amendment thereto. The court denied plaintiff recovery and upheld certain of defendant’s counterclaims. Plaintiff appeals from the judgment.

Paragraph (8), setting forth the formula, reads as follows: “ (8) The commission to be paid to the Agent is to be 20%, and subject to the following formula:

The court found that: “loss reserves” constitute reserves established by the company for claims which have not been paid, and for which claims have been paid, but which have loss expenses still…