MONTGOMERY et al. v. ÆTNA LIFE INS. CO., 97 F. 913

LURTON, Circuit Judge, after making the foregoing statement of facts, delivered the opinion of the court. 1. The first four assignments of error relate exclusively to the ruling of the court in respect to the limits of a cross-examination. A witness introduced and examined by the plaintiff to prove the mere formal parts of the plaintiff’s case was cross-examined in respect to the subject-matter of the defendant’s set-off, touching which he had not been examined in chief.

Upon objection by the plaintiff, the court ruled that the cross-examination should be confined to matters covered by the examination in chief, and sustained an objection to a number of questions which related only to the subject-matter of the set-off. This was not error. The right of cross-examination in courts of the United States is limited to facts and circumstances connected with the matter testified to upon the original examination of the witness. If it is desired to examine the witness as to other matters, the proper practice is to call the witness as the witness of the party desiring to make such proof.

Houghton v. Jones, 1 Wall. 702-706; Wills v. Russell, 100 U. S. 621-625. 2. The eighth, ninth, and fourteenth assignments of error relate to evidence offered to sustain the first item in the set-off, and may be considered together. That item, as stated in the amended detailed bill of particulars under the Michigan practice, was in these words: “Under the contract under which William B.

Montgomery entered the employ of the ¿Etna Life Insurance Company, said contract being dated March 16, 1896, he was to have 5 per cent, upon all annual premiums paid in on the second and subsequent years on all policies, ‘including those existing in said territory belonging to the Detroit agency.’ It was represented to said Montgomery at the time he entered into said contract that the renewals annually due on existing policies amounted to $54,000, but as a matter of fact they only amounted to $47,000, so that said Montgomery has not received, or lost, 5 per cent, on $7,000 from, to wit, March 16, 1896, to August 10, 1897, the sum of four hundred and ninety dollars ($490).” To establish this item the plaintiff in error was asked as to what was said to him at Hartford, Oonn., when this contract was signed by the vice president of the corporation in behalf of the corporation, by either Mr.

Webster, the vice president, or Mr. Merrill, the eompany’s superintendent of agencies, in respect to the amount of business thou standing upon the books of the Detroit agency, commonly called “renewals.” he was also asked to state what was said to him at Detroit on either the 18th of March, 1886, when the contract was signed by the witness, or on the 17th of March, at Detroit, when the office and business of the agency was turned over to the witness by Merrill, the superintendent of agencies.

The written agreement under which Montgomery became the general agent of the JEÍna Life -Insurance Company was full, clear, and specific, both as to his duties and powers, and as to how he was to be compensated for his services. By the specific terms of that agreement, the said company was “to allow and pay said party of the second part for his services, and the services of such agents as he may employ, commissions, as follows: Seven per cent, of premiums paid and reported on single-payment policies.

Forty-five per cent, of premiums paid and reported the first year on nonparticipating, renewable term policies, and upon other policies requiring less (han twenty annual payments. Fifty per cent, of the premiums paid and reported the first year on other policies. Five per cent, of the premiums paid the second and subsequent years on all policies, including those existing in said territory, and belonging to the- Detroit agency.” This covered the whole subject of compensation, and the aggregate of allowances constituted his entire compensation for his exclusive services to the company as Its general agent.

This agreement, though signed for the company at Hartford, where its general office was located, was not signed by or delivered to Montgomery until March 16, 189(5, when the business was turned over to him at Detroit. It contains no representations or guaranty as to the amount of renewals payable at the Detroit agency. Whatever colloquies may have occurred between the parties prior to that time nrart be regarded as merged in the deliberate contract evidenced by the written engagement into which they have entered. The contract between the parties is particularly free from ambiguity in respect to any of its terms.

The conclusive presumption is that the whole of the engagement, as the parlies understood it, was reduced to writing, and that the absence of any provision in respect of the amount of renewals upon the books of the agency which Montgomery was about to fake was in consequence of a determination that any statement occurring in the course of the negotiations in regal'd to such renewals should not amount to a guaranty or term or condition of the flna i engagement.

Farol evidence was therefore not admissible to contradict, vary, or add to the terms of the written agreement, or to establish a collateral guaranty as to the amount of such renewals. Reid v. Glass Co., 54 U. S. App. 619, 29 C. C. A. 110, 85 Fed. 193; De Witt v. Berry, 134 U. S. 306, 10 Sup. Ct. 536; Seitz v. Machine Co., 141 U. S. 510, 12 Sup. Ct. 46; McAleer v. U. S., 150 U. S. 424, 14 Sup. Ct. 160.

Montgomery did not sign this agreement l'or some days after it was signed for the company at Hartford Every colloquium between Montgomery and the vice president, or Merrill, the superintendent of agencies, occurring either at Hartford or Detroit, prior to the time when the engagement went info effect, is conclusively presumed to be merged in the written contract. 3. The next item in the set-off is for salary for services rendered in excess of the contract, at $150 per month, aggregating $2,520.

The fifth, sixth, seventh, and «deventh assignments of error relate to evidence tending to establish this set-off, which was offered and excluded upon objection of plaintiff below. The evidence offered and excluded was intended to show that at the time the office and business of the agency was turned over to him at Detroit by Merrill, the superintendent of agencies, the latter instructed him to designate himself on all his stationery as “general manager,” and that he had obeyed this direction.

Montgomery also offered to prove that from that time he had not only discharged the duties of a general agent, but those of a general manager, and that the duties of a general manager include services which are not included within the duties of a general agent, and that he had performed the duties of such general manager, which were in excess of his duties under the written contract as general agent.

There was no offer to prove any specific things done in consequence of this charge in the style of his office, but only an offer to prove that “the duties, among insurance men, of a manager of a state office,” are different from those incident to the place of a “general agent.” There was no offer to prove that any additional compensation was agreed to be paid, or that Montgomery ever at any time, until discharged from the services of the defendant in error, indicated any purpose to claim extra compensation for any possible extra services involved by this change in the designation and duties of his office.

The right to recover for any extra service rendered by him must therefore depend wholly upon an implied contract to pay him, in addition to his compensation as general agent, the reasonable value of any additional services rendered by him as general manager. The excluded evidence, at most, only tended to establish that the designation of the position had been changed from that of “general agent” to that of “general manager,” and that this change involved the rendition of certain services not incident to the place of a general agent.

There was no offer to prove any agreement that Montgomery’s compensation should be increased or in any way affected by the supposed imposition of duties not contemplated under the existing written contract. That contract obligated Montgomery “to devote his entire time and energy to the business of the company,” and that he would not “engage in, nor give any time to, any other business whatever.” The same contract required him to “conduct the business in all respects in accordance with the instructions” of the company.

His compensation for this devotion of his “entire time and energy” to the business of the company was to consist in commissions upon premiums collected upon the business of the company within his territory. Under such circumstances, if the company should deem it advantageous that he should be designated as its “general manager” within the territory embraced within his general agency, would there arise by implication any contract to pay him additional compensation, even if this changed designation involved the rendition of services additional to those he was bound to render as its “general agent” ?

The general rule by which a promise to pay for services is implied from the circumstances of the case does not assist the plaintiff' in error; for an implied contract to pay for services rendered only arises when they are rendered “under circumstances authorizing an expectation of compensation therefor, or the inference that they would not otherwise have been rendered.” McCarthy v. Mayor, etc., 96 N. Y. 1-8; Griffin v. Potter, 14 Wend. 209.

Nothing is more evident than that Montgomery expected no extra, compensation by reason of this change in the title of Ms position, even though it involved the rendition of some service which might not have devolved upon him otherwise. Month after month for a period of a year and a half he rendered his monthly account of premiums, and deducted therefrom the commissions allowed Mm according to the written contract, and made no claim for any other or additional compensation. The presentation of his claim only after he had been discharged is very cogent evidence that it was a mere afterthought.

This rendition of monthly accounts, and deposit of the balance so shown due to the company, is in the nature of an account stated, which, though subject to impeachment for fraud or mistake, is prima facie evidence against the party rendering them of great weight. Oil Co. v. Van Etten, 107 U. S. 325, 1 Sup. Ct. 178; Wiggins v. Burkham, 10 Wall. 129; Pray v. U. S., 106 U. S. 594, 1 Sup. Ct. 483; McCarthy v. Mayor, etc., 96 N. Y. 1-8; Fertilizer Co. v. Hartog, 29 C. C. A. 56, 85 Fed. 150; Bartlett v. Railwav Co., 82 Mich. 658, 46 N. W. 1034; Cicotte v. Wayne Co., 59 Mich. 509, 26 N. W. 686; Schurr v.

Savigny, 85 Mich. 144, 48 N. W. 547; Sidway v. Commissioners, 120 Ill. 496, 11 N. E. 852. ISTo evidence tending to rebut the implications arising from this course of dealing between the parties appears in the evidence received or that rejected.

Without passing upon the question as to whether Merrill was authorized to make a new contract or vary that which had been made, or whether the evidence offered and rejected in respect to this item was technically admissible, we are of opinion that, if all the evidence excluded had been admitted, no case would have been made requiring the submission to a jury of the question as to whether there was an implied agreement to pay for the services which are the subject of the set-off now under consideration. The error in excluding the evidence, if error it'was, was therefore harmless. 3.

The next item in the set-off is for $3,166.90 advanced from time to time to agents. The detailed bill of particulars filed by the plaintiffs in error shows that these advances began in January, 1886, and were continued through each month until the termination of Ms contract. After proving that advances had been made to subagents, Montgomery was asked, as a witness, to state what his purpose was in making such advances. Objection was made to this evidence as incompetent. Thereupon there occurred the following colloquy between the court and counsel for plaintiffs in error: ‘•Air. Baker: I want to prove the facts.

I want to get the record in shape so that these legal questions can be considered together. And what I want to prove is that, in order to get efficient work from agents, it is necessary, advisable. and proper to make advances to them. Court: Is the right to employ them given by the contract? Air. Baker: Yes, as we understand it. We desire to show under that contract that Mr. Montgomery employed a large ntimber of subagents, and that he made advances to them in order to keep them at work, and that the time that they terminated this contract his advances amounted to $3,550.

In addition to what the contract provided for, we will show that it is customary, in conducting the insurance business, for general state agents, like Mr. Montgomery, to make these advances; that it is usual in the business. We desire to show, in addition to that, the company, after the termination of the contract, got the benefit of that money, and realized on this very business that he started and built up for them, and insists upon having the earnings from it.

And I desire to prove these advances were made with the knowledge of the company; that it is the usual course of businéss, and it is impossible for us to realize on them, and they are realizing on them. Court: I will have to exclude that. It is admitted, is it not, this account is substantially correct? Mr. Baker: They seek to recover upon his statements of the moneys he had received, and there is no doubt those accounts, as far as they go, are all right, but that is not all the case. There are these matters that arise because of the sudden and unexpected termination of the contract.

Court: I am forced to take another view*of that, I am sorry to say. I cannot interpret .the contract as you do, and, if I understand your position correctly, that terminates your defense, under the rulings of the court? Mr. Baker: Of course, I offer to prove another item of clerk hire, which is covered by your honor’s ruling in regard to the set-off. Court: Gentlemen of the jury, under the instruction of the court you will return a verdict in favor of the plaintiff for $6,000. Mr. Baker: I will note .an exception to that instruction.” We cannot regard Mr.

Baker's expression of a “wish, to show” or “desire to prove” the matters stated by him as a proper mode of ob- • taining a ruling as to the competency or incompetency of the evidence he wished to make. Proper questions calculated to elicit the evidence desired should have been propounded, and, if objected to, a ruling thus obtained. This should have been followed with a distinct offer to prove specific facts, etc. This was not done.

Waiving this, we are of opinion that there was no error in the ruling that under the contract such “advances” made by Montgomery to his agents were advances made at his own risk, and were wholly unauthorized by the contract. .While the contract obligated Montgomery “to employ a sufficient number of agents to canvass the territory named, and to see that the company is represented therein by efficient, active agents,” yet the same contract provided that the commissions allowed to Montgomery were “for his services and the services of such agents as he may employ.” The moneys so advanced to these agents so employed by Montgomery were “advances”; that is, the sums so advanced were tó be acco'unted for out of future commissions earned by them.

It is too plain for discussion that the company was not responsible to Montgomery if he failed to recover such advances. The suggestion that the business thus built up would ultimately be beneficial to the company is of no force. The contract provides that, if the agency should terminate during the first five years, the company should be under no obligation to pay anything further to the agent than the commissions earned up to date of its termination. If it should continue longer than five years, the same agreement provides for certain payments to the agent upon its termination.

The contract was terminated before five years, and, by the express terms of the contract, nothing was to be paid as a consequence of any interest in the business resulting from the labors or expenditures of the agent. But this item is subject to the same objections which applied to the item for extra services; that is, the claim was never made until after the agent v/as discharged.

The advances were made in small sums from month to month, and if they were made for the company, and out of its funds, and in expectation that, credit, would be given for them as legitimate expenses allowable under the contract, they should have been reported.

Section 7365, 3 How. Ann.

St., provides as follows: “If there be several defendants the demand sot-off must be due to all of them, jointly, except where other provision is expressly made by law; provided, that in actions upon a note or other contract for the payment of money against several defendants, any one of whom is principal, and the others sureties therein, any claim upon contract in favor of the principal defendant, and against the plaintiff or any former holder of the note who transferred the same after due, or other contract, may be allowed as a set-off by the principal or any other defendant.’" The court construed this statute as excluding the entire set-off of the defendants below, upon the ground that this was not an action “upon a note or other contract for the payment of money,” but upon an indemnity bond, and that a set-off due to W.

B. Montgomery, as the principal in the bond, was not a set off due to all of the defendants, and therefore not a proper subject of set-off under the statutes of Michigan. We are not prepared to agree with the learned judge in this construction, though we find it unnecessary to decide the question. Irrespective of the ruling in this regard, the instruction to find for the plaintiff below was correct, for the reasons we have already stated. The error, if it be one, in also basing that instruction upon the inadmissibility of any set-off due to W. B. Montgomery, was harmless.

The last item in the set-off account stands upon a somewhat different ground. That: item is for §350, clerk hire paid by Montgomery “at the special request of the plaintiff,” according to the amended bill of particulars. This bill of particulars shows that this sum was paid out in monthly installments oí §50 each month for a period of seven months. At the conclusion of the colloquium between the court and Mr. Baker, counsel for defendants below, touching his offer to make certain proof in respect to the item for advances to agents, which has been set out above, Mr.

Baker said, “Of course, I offer to prove another item of clerk hire, which is covered by your honor’s ruling in respect to the set-off.” To this the court seems to have made no direct reply, 'so other reference to this item of the set-off occurs in the bill of exceptions. The error assigned is the fifteenth, and is founded upon the general ruling that a set off due to one of the defendants only was inadmissible. Treating this item as excluded wholly upon the ground that the set-off was due only to W. B. Montgomery, the ruling was harmless. The recovery was only for §6,000, the full amount of the bond.

The balance duo from W. B. Montgomery, if credited by this item of $350, was not less than MU00. Xo harm, therefore, resulted; for the judgment was for no more than was recoverable, if this item had been allowed, as a credit. The result, upon the whole case, is that no harmful error occurred in respect to any part of. the defense, and the judgment is therefore affirmed.