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Smith v. Boston Mutual Life Insurance Co.

Court of Appeals of Ohio, First District

June 19, 2013

KAREN L. SMITH, Executrix of the Estate of Daniel W. Smith, Jr., Plaintiff-Appellant,
v.
BOSTON MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellee, and UNIFIED CAPITAL SOLUTIONS, INC., Defendant.

Civil Appeal From: Hamilton County Court of Common Pleas TRIAL NO. A-1102562

Droder & Miller, Co., L.P.A., A. Dennis Miller, Richard J. Rinear and W. John Sellins, for Plaintiff-Appellant.

Squire Sanders, LLP, Scott Kane and Colter L. Paulson, for Defendant-Appellee.

OPINION

DeWine, Judge.

{¶1} This is an appeal from a trial court decision granting a motion to dismiss. Daniel Smith assigned certain insurance commissions that he was entitled to receive from the Boston Mutual Life Insurance Company ("Boston Mutual") to Unified Capital Solutions, Inc., ("Unified Capital"). After Mr. Smith's death, his estate ("the Estate") attempted to revoke the assignment. When Boston Mutual refused to recognize the revocation of the assignment and continued to pay the commissions to Unified Capital, the Estate instituted this lawsuit asserting claims for breach of contract, breach of fiduciary relationship, fraud, conversion, and an accounting. We agree with the court below that the assignment was irrevocable as a matter of law. Based on the irrevocability of the assignment and various other deficiencies in the claims asserted, we affirm the trial court's decision to dismiss the Estate's claims against Boston Mutual.

{¶2} In August 2000, Daniel Smith entered into a general agent's contract ("Agent's Contract") with Boston Mutual to sell life and health insurance policies. The contract provided that Smith was entitled to receive commissions from Boston Mutual. On December 16, 2006, Mr. Smith entered into a Declaration of Trust and Assignment ("the Assignment") with Unified Capital. Under the terms of the Assignment, Mr. Smith assigned commissions he was entitled to receive from Boston Mutual to Unified Capital. At the time of the Assignment, Mr. Smith was President of Unified Capital and received a salary.

{¶3} Mr. Smith died on June 17, 2010. On August 16, 2010, Karen Smith, the executrix of his estate, notified Boston Mutual that the Estate was revoking the Assignment, and that all commissions due Smith should be paid directly to the Estate. When Boston Mutual continued to pay the commissions to Unified Capital, the Estate brought this action against Boston Mutual and Unified Capital.

{¶4} The trial court granted a motion to dismiss filed by Boston Mutual, concluding that all of the Estate's claims against Boston Mutual were deficient as a matter of law. See Smith v. Boston Mutual Life Ins. Co., Hamilton C.P. No. A-1102562, 2011 Ohio Misc. LEXIS 361 (Aug. 17, 2011). The Estate then dismissed its claims against Unified Capital without prejudice. The Estate now appeals and asserts in a single assignment of error that the trial court erred in dismissing the Estate's claims against Boston Mutual.

{¶5} Ms. Smith's breach of contract claim against Boston Mutual is premised on the allegation that the assignment was validly revoked and that commissions should have been paid to the Estate instead of Unified Capital following Mr. Smith's death. The unambiguous terms of the assignment, however, are to the contrary. The assignment provides as follows:

The undersigned, DANIEL W. SMITH, JR., acknowledges that in his capacity as President and employee of UNIFIED CAPITAL SOLUTIONS, INC., he has maintained licensure as an insurance salesman/broker in various states of the United States in order to enable him to fulfill his duties of employment and maintain his relationship with various insurance companies. In connection with this employment, he has and will continue to receive commissions on the sale of insurance which he has received for and on behalf of UNIFIED CAPITAL SOLUTIONS, INC., and in furtherance of such employment does hereby bargain, sell and assign all of such commissions, past, present and future, to UNIFIED CAPITAL SOLUTIONS, INC.

{¶6} A non-gratuitous assignment of a contract right is said to "extinguish the right in the assignor and recreate[] the same right in the assignee." ' 9 Murray, Corbin on Contracts, Section 47:2 (Rev.Ed.2007). According to the Restatement:

'assignment' is used to refer to an act which extinguishes in whole or in part the assignor's right and creates a similar right in the assignee. See §§ 317, 324. On proof of an unconditional assignment, the assignee can recover on an assigned right; the assignor cannot. The assignor may be entitled to revoke the assignment because it is gratuitous or by virtue of a reserved power, or the assignment may be voidable for fraud or other invalidating cause.

Restatement of the Law 2d, Contracts, Assignment and Delegation, Section 331 (1981).

{¶7} Ohio courts are in accord in concluding that there is no right to revoke such an assignment unless the power to revoke is reserved. See Fyda v. Habuda Concrete and Supply Co., 7th Dist. No. 85 C.A. 120, 1987 Ohio App LEXIS 6292, *5 (Mar. 27, 1987); see also Hsu v. Parker, 116 Ohio App.3d 629, 631-633, 688 N.E.2d 1099 (11th Dist.1996). Here, Mr. Smith made a deal: he unconditionally bargained away present and future commissions from Boston Mutual in furtherance of his employment relationship with Unified Capital. ...


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