Linn v. Employers Reinsurance Corp.

Facts

Plaintiffs, Walter Linn and other insurance brokers (Linn), were engaged in the insurance brokerage business in Philadelphia, Pennsylvania. In 1926, Linn travelled to New York City to negotiate an agreement with William Ehmann, who was an agent of the Defendant, Employers Reinsurance Corp. (ERC). Linn offered to place risks undertaken by the Selected Risks Insurance Company of New Jersey in exchange for five percent of all premiums collected by ERC. Ehmann told Linn that he would have to obtain authority to accept the offer from ERC’s home office in Kansas City. Linn returned to Philadelphia and later received a telephone call from Ehmann accepting Linn’s offer. ERC and the Selected Risks Insurance Company entered into “the required treaty,” which was renewed and continued in effect until 1953. ERC paid Linn the agreed upon commissions during this time.

In 1953, ERC notified Linn that it was no longer obligated to perform under the agreement, and that it would stop paying Linn on the premiums received from the Selected Risks Insurance Company. Linn brought suit in the state of New York, asking that the court require ERC to account and pay Linn for the commissions received since 1953. The trial judge found that the contract was made in New York and applied the New York Statute of Frauds. The trial court held that the agreement was unenforceable because it was not to be performed within one year from the date that it was entered into. Therefore, the trial court found that ERC was not obligated to account. Linn appealed.