California American Insurance. v. Midland National Life Insurance

FLEMING, J.

Appeal from a summary judgment for defendant. Plaintiff’s fourth amended complaint for breach of contract charges:

[496]

First Count: In 1962 plaintiff California American Insurance (California American) and defendant Midland National Life Insurance of South Dakota (Midland) entered a contract under which California American became Midland’s general agent in Los Angeles. California American, and agents of Midland assigned to California American, procured insurance for Midland, and pursuant to this contract California American “conducted a very successful insurance business which was highly profitable to defendant.” By 9 July 1964 it had sold $35,000,000 of insurance for Midland, but on that date Midland purported to terminate the contract by falsely charging California American with having breached the contract by agreeing to represent another insurance company without Midland’s consent. California American claimed $190,000 in accruing insurance commissions.

Second Count: On or about 30 May 1964, Midland took possession of California American’s books, records, files, office furniture, and equipment; and caused California American’s telephone listing to be transferred to a Midland office. These activities, together with a refusal to pay accruing commissions, violated the contract provision for 30 days written notice for termination of the contract without cause. Damages of $190,000 were sought.

Midland denied these allegations and moved for summary judgment on the ground that the action was “barred by res judicata, collateral estoppel, and the full faith and credit clause ... as a result of a judgment” in a prior action by California American against Midland in the United States District Court for South Dakota.

In the district court action California American sought damages on a claim that Midland had pirated its best agent. Midland counterclaimed under the contract for moneys advanced to agents assigned to California American.

The Midland-California American contract provided that Midland’s advances to agents would become a debt of California American which Midland could deduct at any time from any moneys owed to California American. Under the contract California American agreed to devote its full timé to the performance of its duties as agent and not to represent any other insurance company while the contract was in force. Paragraph (14), headed Termination, provided :.