In 1932, appellant, an insurance brokerage concern, procured the issuance by appellee, an insurance company, to the insured, an importing company, of a so-called open ocean cargo policy of marine insurance. The policy, by its terms, was to remain in force until cancelled by either the insured or the appellee on thirty days' notice. Under the policy, shipments from foreign ports were automatically covered immediately upon inception of the transportation; but the insured was required
Appellant and appellee each filed a motion for summary judgment with accompanying affidavits. The lower court denied appellant's motion, granted appellee's and entered a judgment dismissing appellant's complaint.
FRANK, Circuit Judge.
As the insured had no contract with appellant, it could, without liability to appellant, arbitrarily exercise its privilege of cancelling the policy, although its sole purpose in doing so was to terminate appellant's right to earn future commissions under that policy. The letter of August 5, 1941, from the insured to appellee, if reasonably construed, meant that the insured would cancel the policy if appellee did not assent to the change of brokers. As it would be frivolous to make the rights of the parties turn on needless formalities, we think the situation is just as if appellee had received from the insured a formal cancellation notice and a request for the issuance of a new policy and as if appellee had immediately accepted both. Since appellee did not control the insured, and the insured was under no obligation to appellant, the cancellation did not render appellee liable to appellant. As the policy was, in effect, cancelled on August 5, no premiums were thereafter earned thereunder, and therefore no commissions were due appellant; it had no contract with appellee as to the policy which existed after August 5, and performed no services after that date. Appellee was under no obligation to appellant to resist the instructions in the letter from the insured, or to question the latter as to whether and why it meant to insist upon the change of brokers. See Clinchy v. Grandview Dairy, 283 N.Y. 39, 27 N.E.2d 425; Degnan v. General Acc., F. & L. Assur., etc., Corp., 161 App. Div. 439, 146 N.Y.S. 360, affirmed 221 N.Y. 484, 116 N.E. 346.
There remains, however, the question of the so-called "good faith" of appellee. Appellee was obligated by its contract with appellant (a) not to exercise its privilege of canceling the policy for the sole purpose of getting rid of that contract and (b) not to induce the insured to cancel the policy solely to enable appellee to be rid of that contract. It is no answer that appellee had not agreed to be thus restricted. Such restrictions on "rights" need not always be a matter of agreement. True, once upon a time — and not so long ago — the word "contract" cast a curious spell on legal thinking.
Granting then that appellee owed appellant a duty not to bring about the destruction of appellant's right to commissions, the question here narrows down to this: Was there anything in the pleadings and affidavits before the trial judge which tended to show that, had he permitted the case to go to trial, there would have been evidence to support a finding that appellee induced the insured to cancel the policy in order to bring about the change of brokers. The only evidence suggested by appellee as having that tendency is that appellee's vice-president and the president of the insured were "regular luncheon companions" and "warm personal friends." That was not sufficient to raise such an issue of fact as to require a trial, i.e., there was not a "genuine issue" as to a material fact under Federal Rules of Civil Procedure, rule 56(c), 28 U.S.C.A. following section 723c.
Of course when the courts have decided to attach such an obligation that fact sooner or later becomes known to many persons, and it can then be said that, in truth, they intend that obligation to be a part of their contracts made with such knowledge, unless they expressly stipulate against that obligation. Cf. Williston, loc. cit., § 615 (pp. 1767-1769). Some of those obligations can thus be precluded by an express contractual provision. Others cannot, e. g., a mortgagor cannot, in the mortgage contract, bargain away his "equity of redemption."
Some kinds of contracts give rise, it is said, to "fiduciary" status; see, e. g., Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 62 A.L.R. 1. In a certain sense, it can be said that almost all contracts create some "fiduciary" (i. e., "quasi-contractual") obligations.
Fuller asserts that the courts do not today give sufficient heed to what is socially desirable (to what is "just" and "ought to be"), and seems to entertain the notion that they will more readily do so if only they will revert to the use of the phrase "Natural Law" to describe such considerations. See Fuller, The Law In Quest of Itself (1940); cf. Fuller, Reason and Fiat in Case Law, N.Y.L.J. October 28-30, 1942. It is doubtless true that, if everyone understood "Natural Law" to have the noble meaning which it has for persons like Fuller and Lucey, it would be an apt symbol for the duty of courts (within the limits set by well-established precedents and by statutes) to "do justice" according to principles acceptable to decent civilized men. Unfortunately, however, most persons who are not students of Scholastic jurisprudence (and some who purport to be) give other, and often conflicting, meanings to "Natural Law." Indeed, it is acknowledged even by Lucey that that name is often misunderstood and frequently creates problems "due to a confusion of terminology." As to the numerous conflicting meanings given to that name, see, e. g., Haines, The Revival of Natural Law Concepts (1930); Ritchie, Natural Rights (1894) 20, 71ff.; Becker, The Declaration of Independence (1942), Ch. VI; Sabine, A History of Political Theory (1937); Pound, Law and Morals (1923); Pound, An Introduction to the Philosophy of Law (1922); Pound, The Revival of Natural Law, 17 The Notre Dame Lawyer (1942) 287; Schneider, Philosophical Differences Between The Constitution and The Bill of Rights, in The Constitution Reconsidered (1938) 143.
As to candid recognition of the propriety of judicial legislation, properly limited, see authorities cited in Commissioner v. Beck's Estate, 2 Cir., 129 F.2d 243, 245, and notes 3 and 4.