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LINN v. EMPLOYERS REINSURANCE CORPORATION. (03/17/58)

March 17, 1958

LINN, APPELLANT,
v.
EMPLOYERS REINSURANCE CORPORATION.



Appeal, No. 303, Jan. T., 1957, from judgment of Court of Common Pleas No. 7 of Philadelphia County, March T., 1954, No. 8686, in case of Walter Linn et al. v. Employers Reinsurance Corporation. Judgment reversed.

COUNSEL

C. Russell Phillips, with him George Francis Blewett and Montgomery, McCracken, Walker & Rhoads, for appellants.

George E. Beechwood, with him Miles Warner and Beechwood, Lovitt & Murphy, for appellee.

Before Jones, C.j., Bell, Chidsey, Musmanno, Jones and Cohen, JJ.

Author: Cohen

[ 392 Pa. Page 59]

OPINION BY MR. JUSTICE COHEN

Plaintiff insurance brokers brought this action in law to require the defendant insurance company to account and pay to them commissions on insurance premiums received since 1953 from a New Jersey company. At the close of plaintiffs' evidence, the trial judge entered a non-suit which the court en banc refused to remove, and this appeal followed.

From the undisputed evidence it appears that in 1926 the plaintiffs were engaged in the insurance brokerage business in Philadelphia.*fn1 In that year plaintiffs offered to place with the defendant contracts for the reinsurance of certain risks undertaken by the Selected Risks Insurance Company of New Jersey for a consideration of five per cent of all premiums collected by the defendant on such policies. Plaintiff

[ 392 Pa. Page 60]

Linn went to New York City to negotiate an agreement with one William Ehmann, an agent of the defendant. Ehmann stated that he would first have to obtain authority to accept the offer from the defendant's home office in Kansas City. He promised that he would communicate with the plaintiff "as soon as he could get word from Kansas City." Linn then returned to Philadelphia, and subsequently received a telephone call from Ehmann accepting the offer.

The defendant entered into the required treaty with the New Jersey company which, as modified and renewed, continues in effect. From 1926 until 1953 the defendant paid the plaintiffs the agreed upon commissions. But in 1953, the defendant notified the plaintiffs that it did not consider itself obligated further under the contract and that it would discontinue accounting to the plaintiffs for the premiums received from the New Jersey company.

On this evidence the trial judge found that the contract was made in New York, and applying the New York Statute of Frauds,*fn2 held that the agreement was unenforceable thereunder because it was not to be performed within one year from the date it was entered into. Wherefore, the court concluded that the defendant was under no duty to account.

We recognize that the formal validity of a contract is determined by the law of the state in which the contract was made. Bernstein ...


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