Petition — Salomon v. Crown Life Insurance
Supreme Court brief1976
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FILED
oct 12
| Supreme Cou
76-511°
nanmaV 19 C\ FRK
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1976
SIDNEY SALOMON, JR., et al.,
Petitioners,
vs.
CROWN LIFE INSURANCE COMPANY,
Respondent.
CROWN LIFE INSURANCE COMPANY,
Respendent,
vs.
SIDNEY SALOMON JR. & ASSOCIATES, INC., et al.,
Petitioners.
PETITION FOR WRIT OF CERTIORARI
To the United States Court of Appeals
for the Eighth Circuit
JAMES J. BARTA
818 Olive Street, Suite 434
St. Louis, Missouri 63101
Attorney for Petitioners
Of Counsel
GUILFOIL, SYMINGTON and PETZALL P. TERRENCE CREBS
THOMAS J. GUILFOIL 7733 Forsyth Boulevard
JIM J. SHOEMAKE Suite 1800
JOHN W. O'NEIL, JR. St. Louis, Missouri 63105
818 Olive Street, Suite 434 for Petitioner Portnoy Tessier
St. Louis, Missouri 63101 & Associates, inc.
for Petitioners Sidney Salomon Jr. and
Sidney Salomon, Jr. & Associates, Inc.
SS | ee es A
\ St. Louis Law Printing Co., Inc., 812 Olive Street 63101 314-231-4477
a ad
|
INDEX
Page
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EL 6 ick eh hs Ae oe UAE ee eee es a ee es 2
FIP PEPE ET TCE ES 2
I ES ks cp pk cabecscusuceensuse 3
os nase e eek heen eee ee 6a 3
Reasons for Granting the Writ ..............020000: 11
ER oer re ie eg a en ee ee 22
Appendix A (Opinion of the United States Court of Ap-
goats Gor Gas Tames CiPCee) www cece ccc evcees A-l
Appendix B (Opinion of the United States District Court
for the Eastern District of Missouri) ............... A-25
Case Citations
Cousin v. Cousin, 192 F.2d 377 (8th Cir. 1951) ...... 20
Lindsay v. McDonnell Douglas Aircraft Corporation, 485
Pe Se Ge ee PED oc cvn cons aseeuesenscee 11
Mears v. Olin, 527 F.2d 1100 (8th Cir. 1975) .......... 1]
National Rejectors, Inc. v. Trieman, 409 S.W.2d 1 (Mo.
En ae eer ee mire 20-21
Pendergrass v. New York Life Ins. Co., 181 F.2d 136 (8th
ee EN 56 4ccod a bod ae hawks hace eee beae wes 13, 15
il
Safety Motors v. Elk Horn Bank and Trust Co., 217 F.2d
Se SE i bh OAS ROMER oh 0s SSSR KOOKS O88 13
Thau-Nolde, Inc. v. Krause Dental Supply and Gold Co.,
ee A ED nn 6 kc beescccseeseenceas 20, 21
United States v. Yellow Cab Co., 338 U.S. 338, 70 S.Ct.
I 60 ie ee eS a ee eae 16
Weiby v. Farmers Mutual Automobile Insurance Co., 273
i 2» J \. = <A ree owe re 20
Zenith Corp. v. Hazeltine, 395 U.S. 100, 89 S.Ct. 1562
EG SA ocak CASAERSR ELAM AR SOO RERA SO ERESE EMS 15
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1976
SIDNEY SALOMON, JR., et al.,
Petitioners,
vs.
CROWN LIFE INSURANCE COMPANY,
Respondent.
Me tcekee ewnds
CROWN LIFE INSURANCE COMPANY,
Respondent,
vs.
SIDNEY SALOMON JR. & ASSOCIATES, INC., et al.,
Petitioners.
PETITION FOR WRIT OF CERTIORARI
To the United States Court of Appeals
for the Eighth Circuit
The petitioners, Sidney Salomon, Jr., and Sidney Salomon,
Jr. & Associates, Inc., respectfully pray that a writ of certiorari
issue to review the judgment of the United States Court of Ap-
peals for the Eighth Circuit, reversing a judgment entered in
favor of petitioners on March 4, 1975 by the United States Dis-
trict Court for the Eastern District of Missouri, entered in the
above entitled causes on June 23, 1976, after which a petition
for rehearing was denied on July 16, 1976.
~~
Portnoy, Tessler & Associates, Inc. plaintiff/intervenor in
the District Court, and Appellant in the Court of Appeals joins
in this petition and prays that a writ of ceritorari be granted.
OPINIONS BELOW
The opinion of the Court of Appeals, (Appendix A, infra, p.
A-1) is reported at 536 F.2d 1233. The opinion of the District
Court (Appendix B, Infra, p. A-28) is reported at 399 F.Supp.
93.
JURISDICTION
The judgment of the Court of Appeals was entered on June
23, 1976. A timely petition for rehearing was denied on July
16, 1976. The jurisdiction of this court is invoked under 28
U.S.C. § 1254(1).
QUESTIONS PRESENTED
1. Whether a Court of Appeals when reviewing the Judgment
of a District Judge sitting without a jury may take a view of
the evidence which is not in the light most favorable to the party
which prevailed in the District Court, and engage in a de novo
reevaluation of the credibility of oral testimony, and other
evidence already heard and viewed by the District Judge.
2. Whether a Court of Appeals when reviewing the judgment
of a District Judge sitting without a jury may make new
findings of fact based upon testimony which the District Judge
found not to be credible.
3. Whether a Court of Appeals may use its own findings of
fact which are based upon a de novo review of the evidence
and are contrary to the findings of the District Court as a basis
for making different conclusions of state law in a diversity case
tried without a jury.
=—
RULES PROVISION INVOLVED
Rule 52(a) of the Federal Rules of Civil Procedure, dealing
with the scope of review of findings of fact made by a court
sitting without a jury provides in pertinent part as follows:
“Findings of fact shall not be set aside unless clearly er-
roneous, and due regard shall be given to the opportunity
of the trial court to judge of the credibility of the wit-
nesses.”
STATEMENT OF THE CASE
This case was initiated by petitioners on September 8, 1972
in the United States District Court for the Eastern District of
Missouri, against respondent, Crown Life Insurance Company,
a citizen or subject of Canada. The jurisdiction of that court
was invoked pursuant to the provisions of Title 28, United
States Code, Section 1332(a)(2). Petitioners sought relief for
tortious interference with business relations in the form of ac-
tual and punitive damages, and injunctive relief to prevent re-
spondent from using the business records of petitioners. In a
related case which was subsequently consolidated with petitioners
case respondents sought an order requiring petitioners and In-
surance Consultants, Inc. d b a Sidney Salomon, Jr. Life As-
surance Agency to deliver certain records, to prohibit the use
of said records and for damages.
Sidney Salomon, Jr. represented Crown Life Insurance Com-
pany in Missouri as its general agent and as a broker from 1946
until Crown terminated the relationship by letter dated August
9, 1972. Salomon’s business relations with Crown took a num-
ber of different corporate and business forms over the years.
but Crown always wanted Salomon to be personally responsible
to it and was not concerned with the structure of Salomon’s busi-
—
ness organization. During this entire 26 year period, in ac-
cordance with Crown’s wishes, the Crown general agency in
Missouri bore Salor:on’s name. Crown enjoyed great success
by reason of Salomon’s efforts over the years, as Salomon put
a great deal of time, effort and personal expense into promoting
Crown’s business in Missouri.
A detailed chronology of the earlier entities through which
Salomon conducted his general agency for Crown can be found
in the opinions of the courts below. The last of these entities
was created on May 15, 1971, when Sidney Salomon, Jr. &
Associates, Inc. entered into a joint venture with Insurance
Consultants, Inc. under the name Sidney Salomon, Jr. Life
Assurance Agency. The Memorandum between the two pro-
vided that in the event of the termination of the joint venture,
the general agency contact with Crown Life would belong to
Sidney Salomon Jr. & Associates, Inc. The Memorandum was
forwarded to Crown. As early as April 7, 1971, Crown inquired
about the arrangements and signatures on the new contract.
The papers required to process this agreement were forwarded
to Sidney Salomon, Jr. (Salomon) by Crown for Salomon’s
consideration. Salomon executed the agreement on behalf of
Sidney Salomon, Jr. & Associates, Inc. with an effective date of
May 15, 1971. It was this entity to which the termination leter
of August 9, 1972 was sent.
Robert Klostermeyer, James T. Blair and W. Andrew Bradley
were employees of Salomon at the time of his termination as
an agent for Crown.
Salomon recruited Blair as a broker in 1957 and Blair con-
tinued to work for Salomon until sometime in August, 1972.
Klostermeyer was recruited by Salomon in 1961, and remained
continuously associated with him until August 1972. Bradley
entered the employ of Salomon Associates, Inc., in 1970, having
previously been employed by Crown in Canada, and continued
—_
to be associated with the Salomon agency until August, 1972.
Blair received compensation from Salomon Associates, Inc., as
late as August 1, 1972, and from the Salomon Agency as late
as August 31, 1972. Klostermeyer continued to process busi-
ness of the “S. Salomon, Jr. Agency” until at least August 8,
1972 (Ex. 334). In addition, Klostermeyer made long-distance
phone calls to Canada for his own personal business including
matters relating to a new General Agency for Crown from the
offices of the Salomon Agency and at its expense.
Neither Klostermeyer, Blair or Bradley ever expresed dis-
satisfaction to Salomon about their association with Salomon.
Klostermeyer’s projection of estimated new writings for the
Salomon Agency in 1972 was in the amount of $5,450,000
(Exhibit 173 below).
On July 28, 1972, Klostermeyer, Blair and Bradley incor-
porated Crown Associates of St. Louis, Inc. which was to sup-
plant Salomon’s general agency. All of the activity which led
up to the formation of this new agency was done prior to the
termination of the Salomon agency and without Sidney Salomon
Jr's. knowledge. The exact nature and extent of these activities
was the subject of substantial oral testimony and it is the view
of this testimony taken by the Court of Appeals, being in conflict
with the view taken by the District Court, that is at the heart
of this petition, therefore, further discussion of these matters will
be found in the section stating the reasons for granting this peti-
tion.
In May, 1972, David Williams, a senior Crown officer, visited
Klostermeyer, Blair and Bradley in St. Louis. On July 5, 1972,
Klostermeyer went to Canada. Klostermeyer said that his trip
to Canada was in response to Crown's invitation in the spring
of 1971. Neither Salomon nor Ruth Hall, Sidney Salomon,
Jr.’s secretary for 36 years, knew that Klostermeyer was going.
Klostermeyer and officers of Crown conferred about the termina-
—
tion of the Salomon Agency. Klostermeyer solicited the agency
for himself.
On July 6, 1972, Williams assured Miss Hall that Sidney
Salomon, Jr. would always have a contract.
The next day, July 7th, Clark Lloyd, Crown's Senior Agency
Vice President, discussed the St. Louis agency with Kloster-
meyer and David Williams. The District Court found that
Klostermeyer was a broker and employee of plaintiff Salomon
at this time. On the same date, Klostermeyer called Blair in
Texas and informed him of these discussions with Crown. On
July 10th, Klostermeyer told Bradley to begin to look for office
space for the new agency.
On July 12, 1972, Robert Dowsett, President of Crown, sent
a confidential memorandum to Lloyd inquiring about the ad-
visibility of retaining the Salomon name in the new General
Agency as a gesture to gain Salomon’s support, if Klostermeyer
and Blair would not feel they would have to pay too much in
extra bonuses to Salomon.
Dowsett called Charles Burns, Chairman of the Board of
Crown, its vice president, Arthur Williams, and its retired vice
president, Maurice Gilbert, to forewarn them of possible de-
velopments concerning the Salomon agency. Dowsett had never
before taken such action concerning any other agent.
Many of the above facts were also the subject of disputed
testimony and will be discussed further in the subsequent section.
On July 24, 1972, Lloyd visited Salomon in St. Louis to
discuss the general agency. Previously Dowsett, had made sug-
gestions to Lloyd concerning the use of the Salomon name in
a new agency. as a “gesture” to Salomon to gain his support for
Crown’s actions, so that he would not have to lose pride as well
as the control over the direction of the Agency. Lloyd did not
_— aes
disclose to Salomon that he had received these suggestions from
Dowsett.
Lloyd outlined his own proposal for a new agency and at the
same time took notes. Miss Hall also took notes. Lloyd sug-
gested an organization consisting of a super-general agency
which he would run and said that Salomon would still have a
general agency. Lloyd said for the present Sidney Salomon Jr.
& Associates, Inc., would function as before.
Lloyd said that the shares of the stock in the new general
agency would be held by Crown’s Chairman, Charles Burns.
Sidney Salomon, Jr. questioned the legality of this stock holding
arrangement. Lloyd told Salomon that there were ways of get-
ting around it. When the meeting concluded Salomon was satis-
fied that an agreement had been reached between the parties.
Lloyd expressed no dissatisfaction and made no mention of his
later stated belief that the Salomon Agency was dissolved some
weeks earlier. Lloyd was to contact Salomon again within a
week. Salomon received no further communication from Crown
until August 14, 1972, when he received the termination letter.
By letter dated August 9, 1972, Crown terminated the con-
tract with the Salomon Agency. Lloyd sent a separate letter to
Salomon dated August 9, 1972, expressing his regrets at the
termination and relating the company’s policy of “single com-
pany representation” and requirement of an agent's full time
undivided attention as reasons for the termination. Lloyd also
expressed the hope that the new representative and Salomon
would be able to negotiate an agreement mutually profitable.
Klostermeyer already had made a decision that Salomon would
not be part of the new agency.
Lloyd said he called and talked to Miss Hall on the date of
the letter of termination to tell her the letter was being sent. Miss
Hall denied receiving such a call from Lloyd and said Lloyd's
testimony was not the truth. .
—
By memo dated August 9, 1972, Lloyd disclosed that he was
sure the Crown could count on the strong political influence on
the side of the new General Agents:
“Political pressure must be considered . . . there is strong
political influence on the side of the new General Agents.
I am sure we can count on it.”
Lloyd also expressed the thought that “if the course of action
we follow proves not to be in the best interests of the new Gen-
eral Agent, all that we lose is a small part of our market,
whereas the new General Agent will lose his livelihood.” The
memo also reveals that “The new Agency is organized and con-
tracted.”
On July 28, 1972, Crown Associates of St. Louis, Inc., was
formed by Klostermeyer, Blair and Bradley. By resolution dated
August 1, 1972, the officers of Crown Associates were author-
ized to contract with Crown for a new general agency. The
agency agreement between Crown Associates of St. Louis, Inc.,
and Crown, under which Crown Associates was appointed gen-
eral agent, shows execution by Klostermeyer on August 17,
1972, effective August 15, 1972, and Crown’s executives are
shown to have executed the agreement September 28, 1972.
However, by memorandum dated August 9, 1972, addressed to
the president of Crown, with copies to principal Crown officers,
Lloyd revealed that the new agency was “organized and con-
tracted.” An employee of the Salomon Agency, Karen Ameye
Kokish, was hired by Klostermeyer to work for Crown Associ-
ates. All the collection fees that had previously gone to Salomon
agencies were then being paid to Crown Associates.
Klostermeyer signed and caused to be filed a Federal Corpo-
rate Income Tax Return for the calendar year 1972 on behalf
of Crown Associates of St. Louis, Inc., disclosing that the owner
of at least 50% of the voting stock of Crown Associates was an
a!
alien individual or foreign corporation, partnership, trust or
association.
Salomon had maintained the records of his insurance clients
for a period of 26 years in his possession. Much of the informa-
tion contained on those records was personal data complied by
Salomon at his own expense. These records were maintained
for the benefit of Salomon and for the benefit of his clients. The
records were not maintained to serve Crown and were not in
fact required. Much of the information posted to these records
was available to Crown within their own record keeping system,
capable of duplication, and were described as agency records.
The material information contained in these records was ob-
tained initially by Salomon or his agents. During the course of
a hearing which concluded on October 26, 1972, many records
were delivered to Crown over which there was no dispute. Addi-
tional records were made available to Crown after the hearing.
No demand, prior to suit, was made for the records.
After a trial without a jury which lasted seven days, and in-
volved a great deal of oral testimony on many disputed facts,
the parties submitted comprehensive briefs, proposed findings of
fact and conclusions of law to the District Court. In awarding
judgment against Crown, the District Court found that Crown
conspired with plaintiff's employees to subvert a business rela-
tionship which had existed for 25 years, and further found that
Crown injured the plaintiffs by its successful subversion of plain-
tiff Salomon’s employees and agents prior to termination of the
contract.
In the “Crown lawsuit.” against Sidney Salomon, Jr., and
Associates, Inc., and ICI, Crown claimed the right to records
under a provision of the general agency agreement.
The Court denied judgment to Crown on the grounds, that:
we
1. The records were clearly not related to the business to
be transacted under the general agency agreement be-
tween the parties.
2. All records sought related to the past and future business
of defendant Salomon, and
3. Crown entered the court with unclean hands.
The Court of Appeals reversed the judgment in both cases on
the grounds that the findings of fact made by the District Court
were clearly erroneous.
Petitioners now come to this Court seeking a review of the
Court of Appeals decision in light of the limited scope of review
of findings of fact allowed by Rule 52(a) of the Federal Rules of
Civil Procedure.
= pa
REASONS FOR GRANTING THE WRIT
I
The Court of Appeals, in its opinion reversing the District
Court’s judgment, went beyond the role of a reviewing court in
cases tried without a jury as set out in Rule 52(a) of the Federal
Rules of Civil Procedure, because it did not construe the evi-
dence in the light most favorable to the prevailing party below.
In the case of Mears v. Olin, 527 F.2d 1100, 1103 (8th Cir.
1975), the Court of Appeals, in construing the limitations placed
upon it by Rule 52(a) F.R.C.P. stated:
“We cannot review the case de novo. We view the evidence
in the light most favorable to the prevailing party, and we
cannot reverse the trial court unless we should find that its
findings are clearly erroneous. We must bear in mind that
the trial judge has had the better opportunity to weigh the
credibility of the witnesses.”
The rule stated in the Mears case clearly establishes the re-
quirement that a determination that findings are clearly erro-
neous must be based upon an evaluation of the evidence viewed
in a light most favorable to the prevailing party. The court
cannot take a view of the evidence that is not favorable to the
prevailing party and on that basis conclude that the trial court's
findings are clearly erroneous. Such a view would violate the
rule against de novo review by an appellate court. In Lindsay
v. McDonnell Douglas Aircraft Corporation, 485 F.2d 1288.
1289 (8th Cir. 1973) the Court of Appeals stated:
“An appellate court accepts the presumption that the Dis-
trict Court’s factual findings are correct, and does not
reevaluate the evidence nor substitute its judgment for the
District Court's first-hand evaluation.”
ax 12 «um
There are several places in the Court’s opinion where it can
be seen from the language used, without even comparing it to
the record or the findings of the trial court, that the court did
not operate under such a rule of law and clearly did not view
the evidence in the light most favorable to the prevailing party.
On pages 6 and 7 of the opinion (App. A-6) the Court
of Appeals discussed the testimony of Sidney Salomon, Jr. and
Lee Kling regarding their discussions about the termination of
the joint venture. The Court stated that the substance of their
discussions was in dispute, but rather than taking the view most
favorable to the plaintiffs, that nothing definite had been de-
cided, which, as noted, is supported by the testimony of both
Salomon and Kling, the Court adopted a view of the evidence
supported by a memo written by Kling long before he testified
by way of deposition. The Court also took note of the obviously
hearsay testimony of Robert Klostermeyer and James Blair to
suppert its conclusions that the joint venture was terminated
by July 1, 1972. This reevaluation of disputed testimony is a
clear invasion of the trial court's prerogative to evaluate the
evidence and accept that which it deems to be credible, and
reject that which is not deemed credible.
The Court of Appeals for the Eighth Circuit has long espoused
the principle that a conclusion that a finding is clearly erroneous
cannot be based upon the appellate court’s independent evalua-
tion of conflicting evidence.
“The entire responsibility for deciding doubtful fact ques-
tions in a non-jury case should be, and we think it is, that
of the District Court. The existence of any doubt as to
whether the trial court or this Court is the ultimate trier
of fact issues in non-jury cases is, we think, detrimental
to the orderly administration of justice, impairs the confi-
dence of litigants and the public in the decisions of the
District Courts. and multiplies the number of appeals in
_—
such cases.” Pendergrass v. New York Life Ins. Co., 181
F.2d 136, 138 (8th Cir. 1950).
. a finding of fact made by the trial court on con-
flicting evidence cannot be said to be clearly erroneous.”
Safety Motors v. Elk Horn Bank and Trust Co., 217 F.2d
517, 522 (8th Cir. 1954).
Although the Court of Appeals expended a great deal of
verbiage citing the aforementioned principles, it still made its
own evaluation of disputed and conflicting testimony in reaching
its conclusion.
The Court of Appeals has used the conclusion that the joint
venture was definitely terminated as a foundation for the re-
mainder of its opinion, and led it to further de novo reevaluation
of the evidence already weighed by the trial court.
On page 16 (App. A-16) of the Court's opinion it is noted
that Salomon’s lack of knowledge of the May, 1972 visit by
David Williams to the office of the joint venture “could very
well be attributed to his infrequent contact with those offices
and with the brokers during the time in question.” Such spec-
ulative statements are a clear indication that the Court was
not viewing the evidence in the light most favorable to the
plaintiff, but had embarked upon a complete reevaluation of
the record.
On page 18 (App. A-18) of the opinion the Court in discuss-
ing the contacts between Lloyd and Klostermeyer stated:
“It is our view that these contacts were part of an over-
all course of conduct by Crown during this period that
was justifiable as an effort to protect its valid economic
interests in maintaining a viable insurance agency in St.
Louis.”
This language, on its face, shows that the court viewed the
evidence in a light more favorable to the defendant-appellant
—_" an
rather than in favor of the plaintiff-appellee as it was required
to do by its own interpretation of Rule 52(a).
On page 17 (App. A-17) of the opinion in its discussion of
the finding that Clark Lloyd made his decision to terminate
the Salomon Agency on July 6, 1972, the Court stated:
“The only credible evidence in the record on this specific
factual finding is the testimony of Clark Lloyd in which
he indicates that he was informed by Williams on July 6
via a long distance telephone call that the joint venture
in St. Louis had been terminated. The court's statement
regarding Lloyd’s decision to terminate the joint venture
general agency on that date wholly disregards this testi-
mony and places an entirely different emphasis on the
facts that exist in the record.” (emphasis added )
In this statement the court openly states that it is ignoring
the trial court's prerogative to judge the credibility of witnesses
and making its own determination of what evidence is cred-
ible. The trial court cannot be faulted for disregarding testi-
mony, because the very essence of the function of the trial court
sitting without a jury is to weigh the testimony and disregard
that which it determines not to be credible. It is not error to
place a particular emphasis on facts just because the appellate
court would place the emphasis on different facts.
The above quoted language is a clear indication of the de-
parture of the Court from the letter, spirit and express purpose
of Rule 52(a) as it has been construed by this Court.
“In applying the clearly erroneous standard to the find-
ings of a district court sitting without a jury, appellate
courts must constantly have in mind that their function
is not to decide factual issues de novo. The authority of
an appellate court, when reviewing the findings of a judge
as well as those of a jury, is circumscribed by the def-
_~
erence it must give to decisions of the trier of the fact,
who is usually in a superior position to appraise and weigh
the evidence.” Zenith Corp. v. Hazeltine, 395 U.S. 100,
123, 89 S.Ct. 1562, 1576 (1969).
The portions of the opinion noted above clearly indicate that
the court did not review the evidence in the light most favorable
to the prevailing party but instead embarked upon a complete
de novo review of the evidence as it appeared in the cold record
and disregarded the findings of the trial court which were made
with the benefit of being able to observe the witnesses, and evalu-
ate their credibility first hand. This first hand evaluation of the
credibility of witnesses is especially important where, as here, the
questions of motive, design and intent are crucial issues. This
Court, in the case of United States v. Yellow Cab Co., 338 US.
338, 70 S.Ct. 177 (1949), stated,
“Findings as to design, motive and intent with which men
act depend peculiarly upon the credit. given to witnesses
by those who see and hear them.” 338 U.S. at 341.
Clearly the Court of Appeals failed to heed this admonition.
The Court of Appeals failed to abide by its own principle,
enunciated by Judge Sanborn in Pendergrass v. New York Life
Insurance Co., supra at 138:
“Whether a reviewing court thinks that it would or might
have made different findings of fact or have entered a dif-
ferent judgment had it been the trier of facts, is a matter of
no consequence. On review this court should refrain from
exercising any of the trial functions conferred by law upon
the district courts.”
There are several portions of the Court's opinion that are in
such direct conflict with the trial court's findings of fact that
they indicate that the Court has merely substituted its own eval-
uation of the evidence for that of the trial court which is prop-
erly charged with primary duty of evaluating the evidence.
—
On page 8 (App. A-7) of the Court of Appeal’s opinion there
is reference made to the fact that Klostermeyer directed Bradley
to begin looking for office space for the “tentative” new general
agency. The District Court made a finding (No. 12) that Klos-
termeyer instructed Bradley to search for office space for the
new St. Louis Agency of Crown Insurance Company. The in-
sertion of the word “tentative” places a different emphasis on
the evidence and is an indication that the Court of Appeals imade
its own evaluation of the evidence on this point without the
deference that is due the trial court's findings.
The discussion of the July 24, 1972 meeting between Lloyd
and Salomon at page 9 (App. A-8) of the Court of Appeal’s
opinion shows a distinctly different slant than the finding (No.
13) of the District Court on the same subject. It is clear that
Court of Appeals disregarded much of the evidence of what
transpired at that meeting which if viewed in the light most
favorable to the prevailing party would give a much different
picture of what was discussed. The Court of Appeals mentions
only demands made by Salomon, and the District Court made a
finding about offers made by Lloyd. Such a divergent conclu-
sion could not have come from view of all the evidence with
due deference given to the District Court’s evaluation.
The District Court stated in its general findings of fact that
the evidence of Crown offered to counter the claims of plain-
tiffs was simply not credible. It is clearly within the province
of the trial court to reject any evidence that it does not deem
to be credible. United States v. Yellow Cab Co., supra. Under
Rule 52(a) it is not the role of the appellate court to reevaluate
the evidence on the issue of credibility, yet in several instances
the Court of Appeals has done so in its opinion.
The most obvious example is the statement on page 17 ( App
A-17) which was discussed above regarding Lloyd’s determina-
tion to terminate the Salomon agency made on July 6, 1972,
=.
in which the Court of Appeals patently stated its reevaluation of
the credibility of Lloyd’s testimony.
In addition at page 8 (App. A-8) of the opinion of the Court
noted the disputed testimony regarding the July 6, telephone
call from Ruth Hall to David Williams, and referred to the tes-
timony of Klostermeyer which disputed Hall's testimony.
The testimony of Klostermeyer and Blair noted at page 7
(App. A-7) and also discussed above fits into the category of
testimony which could properly be rejected by the District Court
if in that court's evaluation it was not credible.
The above references clearly show that the Court of Appeals
made its determination that the District Court's findings were
clearly erroneous, not on a view of the evidence which would
be most favorable to the prevailing party, but on a view of the
evidence derived from a de novo evaluation.
Il
The Court of Appeals has gone beyond the role assigned to
it by Rule 52(a) by making new and contradictory findings of
fact rather than limiting itself to a review of the findings of the
District Court. Many of these findings are contrary to findings
of the District Court which were supported by evidence, and
give the distinct impression that the Court of Appeals did not
view the evidence in the light most favorable to the prevailing
party.
Many of the obviously new findings of fact have been dis-
cussed above. There are two new findings that clearly indicate
that the Court of Appeals ignored its role as an appellate body
and acted as a fact-finder substituting its view of the evidence
for that of the District Court without viewing that evidence in
the light most favorable to the prevailing party.
aw {3 ..
The Court of Appeals has taken the view of the evidence
that the actions of Klostermeyer and Blair and Bradley acting
at the direction of Klostermeyer were not encouraged, enticed
or solicited by Crown, but were merely the actions of three
men planning for the future. While it is true that the three were
not named as defendants, the timing and tenor of their activities
is evidence that Crown was more involved with these activities
than the Court of Appeals chose to recognize.
The District Court viewed the evidence of these activities
and drew reasonable inferences therefrom which is that court's
proper function. The fact that Klostermeyer contacted Bradley
almost immediately after his meeting with Crown officials in
Toronto and directed him to look for office space for the new
agency is certainly supportive of the reasonable inference that
Klostermeyer had been given a strong indication if not an assur-
ance by Crown officials that he would be given the lead in
creating a new agency. This evidence also supports the reason-
able inference that Crown had indicated to Klostermeyer that
Sidney Salomon, Jr. would not be a primary factor in the new
agency. The same inference is also supported by the fact that
a new corporation entitled Crown Associates of St. Louis, Inc.
was formed on July 28, 1972 by Klostermeyer, Blair and
Bradley. The trial court could reasonably infer from the timing
of this action and the fact that the word “Crown” appeared in
the name of the corporation that this was not done on a mere
hope that Crown might consider the new corporation for its
general agency in St. Louis. This is further supported by the fact
that on August 1, 1972 the three incorporators voted themselves
salaries from the new corporation. One additional point in the
evidence from which the District Court could reasonably infer
that the new agency had a firm commitment from Crown is the
final statement in the interoffice memo from Lloyd to R. C.
Dowsett dated August 9, 1972, introduced as Exhibit 63 at trial,
which states: “The new agency is organized and contracted.”
(Emphasis added)
a 19 «=
Another point upon which the Court of Appeals substituted
its evaluation of the evidence for the reasonable inferences
drawn by the District Court was the question of when the of-
ficials of Crown decided to terminate the Salomon agency. The
Court of Appeals made a finding of fact that this was not done
until after the July 24 meeting between Lloyd and Salomon.
The District Court, however, made a reasonable finding that
the determination was made on July 6, 1972. This fact is im-
portant in determining whether or not Lloyd’s meeting with
Salomon on July 24 was really a good faith effort to work out
some kind of an arrangement with Salomon or a mere sham
designed to conceal what was really happening. The confiden-
tial memorandum dated July 12, 1972 from R. C. Dowsett to
Lloyd introduced as Exhibit 66 at trial, is a clear indication
that the decision was made prior to that date and would cer-
tainly support the District Court’s findings that the decision
to terminate Salomon was made well in advance of July 24.
The language of the memorandum clearly indicates that the
Crown officials had made a definite decision that there would
be a new general agency in St. Louis with Klostermeyer and
Blair as the key personnel in the agency. This memorandum
which completely refutes the position taken by Crown on this
point was disregarded by the Court of Appeals but certainly
supports the reasonable inferences of the District Court. It is
extremely difficult to see how the Court of Appeals could dis-
regard this evidence and state in their opinion that the only
credible evidence on this point was the testimony of Lloyd
which was obviously self-serving.
The two points discussed above are the clearest indication
that the Court of Appeals has not reviewed the findings of the
trial court in light of the evidence most favorable to the pre-
vailing party but instead has embarked on a de novo review
of the evidence and merely substituted its inferences for those
of the District Court. Such a review is clearly beyond the
scope of Rule 52(a).
= wa
Ill
While the scope of review on questions of law is broader
than that where the issues are factual, the views and interpre-
tations of the trial judge are still entitled to some deference,
especially when it is a question involving the law of the state
in which the trial judge is sitting. On this point the Court of
Appeals has stated:
“We give to the opinion of a trial judge on questions in-
volving interpretation of the law of his own state great
deference.” Cousin v. Cousin, 192 F.2d 377, 387 (8th
Cir. 1951).
In the case of Weiby v. Farmers Mutual Automobile Insurance
Co., 273 F.2d 327, 331 (8th Cir. 1960), the Court stated:
“Upon review of a judgment in a diversity case governed
by state law, this court will accept the considered view of
a trial judge as to the applicable law of his state unless
convinced of error.”
The District Court in this case concluded that Crown had
committed an actionable wrong under Missouri Law when it
tortiously interfered with the business relationship that existed
between plaintiffs and three of their employees.
The Court of Appeals in an attempt to show justification for
Crown's actions stated at page 13 of its opinion:
“Missouri law provides that employees whose contracts
are terminable at will have the right to terminate their
employment for the purpose of competing with their em-
ployer. Additionally, they are allowed to plan and pre-
pare for this competitive enterprise prior to their termi-
nation without revealing their plans to the employer. See
Thau-Nolde, Inc. v. Krause Dental Supply and Gold Co.,
518 S.W. 2d $5. 9-10 (Mo. 1974): National Rejectors,
—_—
Inc. v. Trieman, 409 S.W. 2d 1, 26 (Mo. 1966). (Em-
phasis added. )
The rule derived from the Thau-Nolde and National Re-
jectors cases are not dispositive of the questions presented in
this case. There was no evidence in the record nor did the
Court of Appeals refer to any evidence that the purpose of the
activities engaged in by Crown, Klostermeyer, Blair and Brad-
ley was aimed at setting up an enterprise to merely compete
with Salomon but rather those activities were intended to, and
in fact did, eliminate Salomon as a Crown Agent and take
over the Crown Agency and its business which Salomon had
established and nurtured for some 26 years. It was not, there-
fore, erroneous for the District Court to conclude that the ac-
tions of Crown were tortious, for they were not the permissable
actions of a competitor seeking to enhance his competitive po-
sition relative to the person whose employees he was recruiting.
While it is true. as noted above, that an appellate court has
more leeway in reviewing conclusions of law, where the appel-
late court's conclusion is based solely on an exceedingly broad
re-writing of the findings of fact, the review of the legal issues
can be no stronger than the weak procedural foundation upon
which they are laid. The review of legal issues in light of the
de novo review of the facts completely negates and disregards
the function of the District Court.
The points discussed above relate to those portions of the
Court of Appeals opinion which is addressed to the main action
by the Salomon plaintiffs against Crown Life, (No. 75-1537
below). Because the Court of Appeals changed all the find-
ings of fact in that case, it reversed the District Court's con-
clusion that Crown was not entitled to injunctive relief because
it had come into court with unclean hands in the suit by Crown
against the Salomon Agency (No. 75-1538 below). Therefore.
any review of the former action will necessitate a review of
the latter because the factual issues are basically the same.
—
CONCLUSION
The record in the District Court was enormous, involving
thousands of pages of testimony and hundreds, perhaps thou-
sands, of pages of exhibits. It is astonishing to find an appel-
late court, at best confined to personal reading of this record
in its entirety, embarking on a fact finding mission involving
the judicial rehabilitation of testimony discarded by the trial
court as not credible and the rejection of or the ignoring of
all of the evidence persuasive to the trial court, and favorable
to the petitioners, in its effort to sustain a conclusion which
completely repudiates the validity and the purpose of the long
and complex proceedings before the District Court. The re-
jection of the trial court here is unwise, unwarranted and can-
not be supported through any review of the record which is
either scholarly or fair.
The District Court’s opportunity to view the witnesses first
hand and assess their credibility is especially important in a
case such as this where so few of those witnesses were unbiased
or impartial. That the Court of Appeals took it upon itself to
exactly reverse the assessment of the credibility of the witnesses
in a complete repudiation of the District Court certainly makes
this a proper case for a writ of certiorari as it involves issues
of significant importance not just to these litigants but to the
maintenance and preservation of the proper roles of courts ex-
isting within the structure of the federal judiciary. These cases
fall squarely within the purview of Rule 19-1(b) of the Rules
of this Court because the Court of Appeals has so far departed
from the accepted and usual course of judicial proceedings, as
to call for an exercise of this court’s power of supervision.
A review of the opinions filed by the Court of Appeals’ de-
ciding cases appealed from the Eastern District of Missouri in
the past 14 months indicates that 32% of the civil cases have
been reversed. The Report of Administrative Office of United
— en
States Courts shows that in fiscal year 1975 only 19.3% of
the United States civil cases and 18.6% of the private civil cases
appealed from all Districts were reversed or dismissed. This
fact coupled with the clear example of improper de novo re-
view in this case, indicates a need for this Court to exercise
its supervisory powers.
Wherefore, for the reasons stated a writ of certiorari should
issue to review the judgment and opinion of the United States
Court of Appeals for the Eighth Circuit.
JAMES J. BARTA
818 Olive Street, Suite 434
St. Louis, Missouri 63101
Attorney for Petitioners
Of Counsel:
GUILFOIL, SYMINGTON AND PETZALL
THOMAS J. GUILFOIL
JIM J. SHOEMAKE
JOHN W. O'’NEIL, JR.
818 Olive Street, Suite 434
St. Louis, Missouri 63101
For Petitioners,
Sidney Salomon, Jr. and
Sidney Salomon, Jr. &
Associates, Inc.
P. TERRANCE CREBS
7733 Forsyth Boulevard
Suite 1800
St. Louis. Missouri 63105
For Petitioner, Portnoy.
Tessler & Associates,
Inc.
APPENDIX
—_—*
APPENDIX A
United States Court of Appeals
For the Eighth Circuit
No. 75-1537
Sidney Salomon, Jr., et al.,
Appellee,
Crown Life Insurance Company,
Appellant.
No. 75-1538
Crown Life Insurance Company,
Appellant,
Sidney Salomon, Jr. & Associates, Inc..
et al.,
Appellees.
No. 75-1544
Sidney Salomon, Jr. and Sidney Salomon.
Jr. & Associates, Portnoy-Tessler &
Associates, Inc.,
Appellant,
Crown Life Insurance Company,
Appellee.
4
+
Appeals from the
United States Dis-
trict Court for the
Eastern District of
Missouri
~~ - ———__ - -——
Se — -
Submitted: March 8, 1976
Filed: June 23, 1976
— pee
Before LAY, ROSS and STEPHENSON, Circuit Judges.
STEPHENSON, Circuit Judge.
The central issue on these combined appeals concerns a claim
of tortious interference with contractual and business relations
under Missouri law. The district court,’ sitting without a jury
in this diversity case, found that Crown Life Insurance Com-
pany (Crown), a Canadian corporation doing business in Mis-
souri, had tortiously interfered with certain contractual relation-
ships between Sidney Salomon, Jr. and Sidney Salomon, Jr. &
Associates), (Salomon Associates), an insurance broker and
general agent for Crown, and three of their employees by con-
spiring with these employees while they were in Salomon As-
sociates’ employ to terminate their contractual and employment
relationship with Salomon As#ociates and to set up a superseding
insurance agency to act as general agent for Crown in Missouri.
Salomon v. Crown Life Insurance Co., 399 F. Supp. 93 (E.D.
Mo. 1975). A judgment of approximately $900,000 actual
damages and $750,000 punitive damages was entered by the
court against Crown. The district court denied any relief on a
similar claim of tortious interference brought by intervenor
Portnoy-Tessler & Associates, Inc. Crown’s action for the re-
covery of certain insurance records from the joint venture in-
volving the Salomon appellees was denied.
We reverse the district court's damage award, having con-
cluded upon the record that plaintiff has failed to establish its
claim of tortious interference under Missouri law. We also re-
verse the trial court’s denial of Crown's demand for the insur-
ance records kept by the joint venture. The district court's de-
nial of relief to intervenor Portnoy-Tessler & Associates, Inc.
is affirmed.
' The Honorable H. Kenneth Wangelin, United States District
Judge for the Eastern District of Missouri.
— <
I
Our disposition of the tortious interference claim against
Crown is based upon our firm conviction after a review of the
entire record that a mistake has been committed. We are, of
course, guided by the well established proposition that as an
appellate court we must take that view of the evidence and ac-
cept such reasonable inferences therefrom as tend to support the
trial court’s conclusions. See Lindsay v. McDonnell Douglas
Aircraft Corp., 485 F.2d 1288, 1289 (8th Cir. 1973); Higgins
v. Kitterman, 257 F.2d 861, 866 (8th Cir. 1958). Extensive
specific reference will be made to that record throughout this
opinion. However, at the outset we shall provide as a back-
ground a summary of the relevant facts and the procedural his-
tory of this litigation.
Appellant Crown Life Insurance Company is a Canadian
corporation which has, since 1946, been engaged in the sale of
life insurance in the greater St. Louis area. Appellee Sidney
Salomon originally became a general agent for Crown in 1946.
His business relationship with Crown continued until August 9,
1972, at which time Crown terminated the general agency with
which he had been most recently associated. Salomon’s busi-
ness relationship with Crown during that 26 year period took a
number of different corporate and business forms. From 1946
to 1949 a company which Salomon owned jointly with appellant
Joyce Portnoy was the sole Crown general agent in St. Louis.
In 1949, Robert Hannegan became a party to a new general
agency contract with Crown in conjunction with Salomon and
Portnoy. That general agency contract was in effect until 1957,
at which time Crown entered into two separate general agency
contracts. one with appellant Sidney Salomon, Jr. & Associates
(Salomon Associates), the other with appellant Portnoy-Tessler
& Associates, Inc.
On May 15, 1971, a joint venture under the name Sidney
Salomon, Jr. Life Assurance Agency was formed between Salo-
—
mon Associates and Insurance Consultants, Inc. (ICI), for the
purpose of representing Crown under a general agency contract.
The prior general agency contract between Salomon Associates
and Crown was terminated voluntarily by Sidney Salomon that
same year. The general agency contract issued to the joint ven-
ture was Officially terminated by Crown on August 9, 1972, un-
der the 30 day notice provisions of the contract. That action
precipitated this lawsuit.
During the course of the Salomon-Crown relationship, Sidney
Salomon, Jr. was involved in a wide range of activities in addition
to the sale of life insurance. At various times he owned inter-
ests in three baseball teams including the St. Louis Cardinals.
From 1967 to the present time he has been chairman of the
board of the St. Louis Blues hockey team. Salomon has also been
an active participant in Democratic party politics. He has served
as national treasurer and as a national committeeman for Mis-
souri. In addition, Salomon owns a hotel in Miami, commercial
property in St. Louis, and a farm in Missouri where he is per-
sonally involved in the breeding and raising of show horses.
Salomon asserts that all of these activities contributed to his
considerable success as a life insurance agent inasmuch as he
employs a “center of influence” approach to the sale of insur-
ance. This theory is based upon the concept that insurance sales
will be enhanced by activities which not only bring the agent in
contact with a broad spectrum of influential people, but also
make the purchase of insurance from that agent more attractive
and advantageous. Through the use of this method, Salomon
became a top producer for Crown. Over the years, the cor-
porate entities with which he was associated received numerous
commendations from Crown for their sales efforts.
One aspect of Salomon’s approach to the sale of life insur-
ance involved the recruiting of brokers to be trained at Salo-
mons expense for the purpose of handling the business that
Salomon attracted. Two such men were James T. Blair III
er
—
and Robert Klostermeyer. They began working for Salomon
in 1957 and 1961 respectively. After their training period, each
man became a broker for the successive general agencies in
which Salomon had an interest. Once trained, their primary
compensation derived from commissions earned on the sale of
life insurance policies. These two men, along with W. Andrew
Bradley, became the focal point of the controversy between
Salomon and Crown which arose in the summer of 1972.
In 1970, Salomon Associates, a general agent for Crown at
that time, moved its business offices into the general head-
quarters of ICI, a large insurance brokerage in St. Louis County,
Missouri. Salomon maintained an office at ICI but, as the rec-
ord reveals, he spent the majority of his time at his office in the
Arena, a sports complex which he owned and which was used
by the St. Louis Blues hockey club.
In the spring of 1971, Salomon Associates and ICI entered
into a joint venture for the purpose of representing Crown as
general agent under the name Sidney Salomon, Jr. Life Assur-
ance Agency. Under the joint venture agreement, ICI was man-
aging partner of the enterprise and provided it office space
within its general headquarters. Profits were to be shared equally
after ICT's initial $20,000 c. tal investment was recouped.
By mid-April 1971, the joint venture had been approved
by the respective boards of directors and shareholders. Blair,
Klostermeyer and Bradley became brokers for the joint venture.
In addition, Klostermeyer served as business manager and Brad-
ley as bookkeeper and cashier. Brokers contracts were issued
accordingly, appointing these men as brokers for the general
agent, the joint venture doing business as Sidney Salomon, Jr.
Life Assurance Agency.
€rown was initially informed of the creation of the joint ven-
ture in May 1971. The general agency contract to the joint
venture by Crown was dated September 13, 1971. The prior
—.
general agency contract with Salomon Associates had been can-
celled on July 26, 1971, pursuant to a letter requesting such
cancellation by Sidney Salomon, Jr.
By June 30, 1972, little more than a year after its creation,
the joint venture had lost about $35,000. At about this time,
Sidney Salomon, Jr. and ICI President Lee Kling met to discuss
the future of the joint venture. What was decided as a result
of these discussions is in dispute. Sidney Salomon, Jr. contends
that he and Kling decided to “make some different arrange-
ments” in order to “let him operate his ICI operations [and]
I would operate my operations.” According to Salomon’s testi-
mony, Kling gave him “carte blanche to do anything I wanted
to do,” including seeking separate general agency contracts with
Crown for ICI and Salomon Associates. Salomon indicated that
future plans with regard to the employment of Klostermeyer,
Blair and Bradley were not discussed. Kling’s deposition testi-
mony” indicates that he and Salomon agreed to financially bi-
furcate the operations of the joint venture pending approval of
two separate general agencies by Crown. However, a memo-
randum circulated by Kling among ICI personnel shortly after
this meeting stated flatly: “Effective July Ist, Insurance Con-
sultants will take over the complete management and operation
of the Joint Venture life insurance agency. The profit and loss
of same will be the 100% responsibility of Insurance Consult-
ants.”
On July 5, 1972, joint venture business manager Kloster-
meyer, at the invitation of Crown, traveled to the Toronto home
offices of Crown for a series of meetings with various officers.
Just prior to his departure from St. Louis, Klostermeyer was
called into Kling’s office and informed of the discussions he had
had with Salomon with regard to the termination of the joint
- The trai court indicated that the deposition testimony was
clearly admissible in the lawsuit against the joint venture and re-
served ruling as to its admissibility against Salomon Associates.
—— +
venture. Kling testified that he informed Klostermeyer as to the
substance of the memorandum he had prepared outlining the
changes in the joint venture, including the fact that Klostermeyer
would no longer be on salary from the joint venture, but would
instead receive a commission on the life insurance placed by
all ICI brokers. He wanted Klostermeyer to be informed as to
the situation so that he would not be caught unaware if the
subject came up while he was in Toronto. Kling did not re-
member whether he told Klostermeyer that all these changes
were contingent upon Crown's approval. Klostermeyer’s testi-
mony basically confirms Kling. He stated that Kling informed
him that the joint venture was terminated, that he had been fired
as business manager of the joint venture, and that he could con-
tinue to work for ICI on a commission basis. Blair testified
that Kling told him on that same day that “Sid [Salomon]
wants out and we're going to take over the operation of the life
insurance business.”
Upon arrival in Toronto, Klostermeyer informed Crown of-
ficials that the Salomon Associates-ICI joint venture had been
terminated by agreement of the parties. He stated that the source
for this information was ICI President Kling. During the course
of these conversations, Klostermeyer indicated that he was
interested in participating in whatever new general agency setup
Crown arranged in St. Louis to supersede the reportedly defunct
joint venture. On or about July 7, 1972, Klostermeyer con-
tacted Blair and Bradley to determine whether they would be
interested in applying for a new general agency contract with
Crown in St. Louis. Shortly thereafter, Klostermeyer directed
Bradley to begin looking for office space to house the tentative
new general agency.
There is evidence in the record as to three significant phone
conversations in July between Crown officials and Miss Ruth
Hall, Salomon’s private secretary and assistant, which are re-
lated to the tortious interference claim. On July 6, Hall called
—_
Mr. David Williams, a Crown official in Toronto, and informed
him that both Salomon and ICI wanted general agency con-
tracts. Later that day Williams informed Hall by telephone that
ICI would not be given a contract. According to Hall's testi-
mony, Williams also stated that “Sidney could always have one.”
Klostermeyer, who was in Williams’ office during both phone
conversations with Hall, testified he heard no such remark by
Williams. Williams’ deposition indicates that Miss Hall in-
formed him during the initial telephone conversation that the
joint venture had been terminated, that two general agency con-
tracts were requested and that the brokers formerly with Salo-
mon would probably be working with ICI. Subsequently, on or
about July 11, 1972, Miss Hall spoke by telephone with William
Bowden of Crown and relayed the message that Salomon, in the
face of Crown’s refusal to grant a general agency contract to
ICI, would give ICI a sub-general agency contract under his
contract. Hall stated that Bowden replied “that was different
from what I heard” but did not elaborate.
On July 24, 1972, Clarke Lloyd, Crown's senior vice presi-
dent for United States agencies, conferred with Sidney Salomon,
Jr. in Salomon’s St. Louis Arena offices. Notes made during that
meeting indicate that these men discussed Salomon’s future with
Crown. It is apparent from these notes that no final accord was
reached at that time. A number of different corporate and fi-
nancial configurations involving Crown and Salomon were sug-
gested during the course of the all-day meeting. However, Salo-
mon indicated that his post-joint venture relationship with
Crown was contingent upon the formation of a new general
agency in St. Louis bearing his name and with him as president.
Salomon stated that he would invest no capital in the agency
nor would he be responsible for its management. But, he wanted
to receive 25% of the gross profits in addition to retaining his
full renewal commissions and collection fees. These terms were
to be relayed by Lloyd to the Crown home office for considera-
tion.
—*
Following this meeting, there is evidence that the Crown of-
ficials discussed Salomon’s demands and determined that they
did not wish to comply with them. The role to be played by
Sidney Salomon in any future Crown general agency in St. Louis
was left to be determined by Klostermeyer as the primary mov-
ing force in a new general agency. Klostermeyer ultimately re-
jected the terms upon which Salomon conditioned his continuing
association with Crown.
On July 28, 1972, Klostermeyer. Blair and Bradley incor-
porated Crown Associates of St. Louis, Inc., the eventual re-
cipient of a general agency contract from Crown. On August 9,
1972, Crown sent letters of termination to the joint venture ad-
dressed to the Sidney Salomon Life Assurance Agency. The
general agency contract between Crown and the joint venture
was terminable upon 30 days notice by either party. A similar
letter of termination was sent to appellant Portnoy-Tessler &
Associates, Inc. Crown Associates of St. Louis, Inc. was ap-
pointed general agent for Crown on September 28, 1972. That
contract made the appointment retroactively effective to August
15, 1972. Despite the termination, Sidney Salomon continues to
receive certain vested renewal commissions from Crown.
This action was commenced by the Salomon appellees in Sep-
tember of 1972. The matter came on for trial by the court in
October 1974. Orders and a memorandum were filed on March
4. 1975. awarding Sidney Salomon & Associates a judgment
against Crown in the amount of $894,784.44 actual damages,
and $750,000 punitive damages. Judgment was entered for
Crown against intervenor Portnoy-Tessler & Associates, Inc.
These appeals followed.
In this diversity case we are, of course, applying the substan-
tive law of Missouri. The theory of recovery in the instant case
is based upon tortious interference with contractual or business
— A-10 —
relations. In order to establish a claim of tortious interference
under Missouri law, the following elements must be established:
(1) A contract or a valid business relationship or expect-
ancy (not necessarily a contract) ;
(2) Defendant's knowledge of the contract or relation-
ship;
(3) Intentional interference by the defendant inducing or
causing a breach of the contract or relationship;
(4) The absence of justification; and,
(5S) Damages resulting trom defendant's conduct.
See Harber v. Ohio Nat'l Life Insurance Co., 390 F. Supp. 678,
683 (E.D. Mo. 1974), aff'd, 512 F.2d 170 (8th Cir. 1975).
See also Clark-Lami, Inc. v. Cord, 440 §.W.2d 737, 741 (Mo.
1969): Downey v. United Weather Proofing, Inc., 253 S.W.2d
976 (Mo. 1953).
The essence of the district court's finding that Crown was
liable to Salomon for tortious interference with his contractual
or business relations is as follows:
It is obvious to the Court that defendant Crown con-
spired with certain of plaintiffs Salomon’s employees to
end the relationship which had existed between the parties
for a number of years. Such a termination is certainly not
wrong, and was well within the rights of defendant Crown,
however, defendant Crown injured the plaintiffs Salomon
by its successful subversion of plaintiff Salomon’s employees
and agents prior to the termination of the contract. Such
subversion clearly constituted what this Court feels is a
tortious interference with contractual relationships. The
overall demeanor of the defendant Crown in this matter
was one of underhanded and deceptive dealing. It must be
noted that the Court finds no wrong in terminating the con-
— A-1ll —
tract between the parties, the Court finds the wrong in the
defendant Crown's dealing with plaintiffs Salomon’s agents
before the termination of the contractual relationship.
399 F. Supp. at 99. Basically, the scope of our review in this
appeal is confined to that general finding and the various specific
findings of fact that relate to it.
The standard of review to which we adhere in evaluating the
district court's findings of fact is well established.
Our review is limited by Rule 52(a), Federal Rules of
Civil Procedure. We cannot review the case de novo. We
view the evidence in the light most favorable to the prevail-
ing party, and we cannot reverse the trial court unless we
should find that its findings are clearly erroneous.
Mears v. Olin, 527 F.2d 1100, 1103 (8th Cir. 1975). In ad-
dition, as this court stated in Cole v. Neaf, 334 F.2d 326, 329
(8th Cir. 1964):
We have repeatedly and consistently held, at least subse-
quent to the Supreme Court's decision in Commissioner of
Internal Revenue v. Duberstein, 363 U.S. 278, 291, 80
S.Ct. 1190, 4 L.Ed.2d 1218, that the clearly erroneous
standard applies to reasonable inferences to be drawn from
stipulated or undisputed facts and that it is for the trial
court rather than this court to draw legitimate and per-
missible inferences.
(Citations omitted.) See Jarvis v. Montgomery Ward and Co.,
525 F.2d 1267 (8th Cir. 1975); Moorhead Construction Co. v.
City of Grand Forks, 508 F.2d 1008, 1012 (8th Cir. 1975);
Wellner v. Minnesota State Junior College Board, 487 F.2d
153, 156 (8th Cir. 1973); Jackson v. Hartford Accident and
Indemnity Co., 422 F.2d 1272 (8th Cir.). cert. denied, 400
U.S. 855 (1970). Further. we recognize that
the complaining party has the burden to clearly demon-
strate error in the court's findings. This is a strong burden
ay pe
where, as here, the findings are primarily based upon oral
testimony and the trial judge has viewed the demeanor and
credibility of witnesses. Chalk v. Beto, 429 F.2d 225, 227
(Sth Cir. 1970); St. Louis Typographical Union No. 8 v.
Herald Company, 402 F.2d 553, 557 (8th Cir. 1968),
and cases cited therein.
Snodgrass v. Nelson, 503 F.2d 94, 96 (8th Cir. 1974).
Nevertheless, our careful analysis of the entire record in light
of these standards leaves us “with the definite and firm convic-
tion that a mistake has been committed.” United States v. United
States Gypsum Co., 333 U.S. 364, 395 (1948). See also Zenith
Corp. v. Hazeltine, 395 U.S. 100 (1969); Smith v. Anchor
Building Corp., No. 75-1554 (8th Cir., May 13, 1976); Bird-
well v. Hazelwood School District, 491 F.2d 490, 494 (8th
Cir. 1974). The district court’s finding that the requisite ele-
ments of tortious interference by Crown were established in the
instant case is clearly erroneous.
Il
Before analyzing the district court findings that specifically
relate to the elements of a cause of action for tortious inter-
ference, it is essential that we carefully define the scope of our
inquiry so as to eliminate any consideration of irrelevant facts
which may tend to color the issues herein involved. The sole
contention by the Salomon appellees is that Crown wrongfully
conspired with Klostermeyer, Blair and Bradley to terminate
their relationship with Salomon and set up a superseding in-
surance agency, thus interfering with and inducing a breach of
his contractual and business relations with these employees.
No claim has been made with regard to any wrongful termi-
nation by Crown of the general agency contract held by the
joint venture doing business as Sidney Salomon, Jr. Life As-
surance Agency. The district court specifically found that such
a yo
termination was valid under the terms of the contract. 399 F.
Supp. at 99. That finding is clearly established.
Further, although Klostermeyer, Blair and Bradley are al-
leged to have wrongfully conspired with Crown, they are not
made defendants in this suit. Thus, evidence of any bad faith
or malice toward Salomon by them, including their personal
desire to become general agents for Crown, cannot be imputed
to Crown unless the existence of some wrongful act done by
Crown for the purpose of injuring Salomon is demonstrated.
Missouri law provides that employees whose contracts are ter-
minable at will have the right to terminate their employment
for the purpose of competing with their employer. Addition-
ally, they are allowed to plan and prepare for this competitive
enterprise prior to their termination without revealing their
plans to the employer. See Thau-Nolde, Inc. v. Krause Dental
Supply and Gold Co., 518 S.W.2d 5, 9-10 (Mo. 1974); Na-
tional Rejectors, Inc. v. Trieman, 490 §.W.2d 1, 26 (Mo. 1966).
See generally Morton Buildings of Nebraska, Inc. v. Morton
Buildings, Inc., 531 F.2d 910 (8th Cir. 1976); Metal Lubri-
cants Co. v. Engineered Lubricants Co., 411 F.2d 426, 428-30
(8th Cir. 1969); Motorola, Inc. v. Fairchild Camera and In-
strument Corp., 366 F. Supp. 1173, 1180-81 (D. Ariz. 1973).
Likewise, an employer may offer employment to such appli-
cants if legal and proper means are used in acquiring their
services. National Rejectors, supra, 409 S.W.2d at 34.
In Metal Lubricants Co. v. Engineered Lubricants Co., su-
pra, 411 F.2d at 429, this court observed:
As noted by the Missouri Supreme Court, we are dealing
with two conflicting public policies. One policy seeks to
protect a business from unfair competition. The other pol-
icy favors free competition in the economic sphere. The
court explained:
“It is necessary that there be a balancing of the
equities between these two rights, for if the former
wn fp 6 an
is carried to its extreme it will deprive a man of his
right to earn a living; while conversely, the latter
right if unchecked, would probably make a mockery
of the fiduciary concept, with its concomitants of
loyalty and fair play.. Comment, The Obligation of
a High-Level Employee to his Former Employer: The
Standard Brands Case, 29 University of Chicago Law
Review 339, 351-352. See Wexler v. Greenberg, 399
Pa. 569, 160 A.2d 430. In that case the court stated
(160 A.2d 435): ‘Were we to measure the sentiment
of the law by both English and American decisions
in order to determine whether it favors protecting a
businessman from certain forms of competition or
protecting an individual in his unrestricted pursuit of
a livelihood, the balance would heavily favor the
latter” ~ 409 S.W.2d at 39.
In this case, it is clear that Klostermeyer took the lead in
attempting to create a new Crown general agency in St. Louis
following the July termination of the joint venture. It is un-
controverted that Klostermeyer was responsible for recruiting
Blair and Bradley and convincing them to join with him in
the effort to obtain an agency contract. None of these acts by
the three brokers constitute actionable wrongs. The only acts
of relevance here are those of Crown. In this action the Salo-
mon plaintiffs had the burden of proving something more than
the tact that Klostermeyer, Blair and Bradley wanted to fur-
ther their own post-joint venture economic livelihood by secur-
ing a general agency contract from Crown. It was incumbent
upon the plaintiffs below to prove that Crown “maliciously
or without justiable cause” induced the breach of the relation-
ship between Salomon and his three brokers. Under appli-
cable Missouri law. “(t]he term ‘maliciously’ in this connec-
tion alludes to malice in its technical legal sense, that is, the
intentional doing of a harmful act without justification or ex-
cuse.” Downey v. United Weather Proofing, supra, 253 S.W.
—_~
2d at 980. Accord, Gerstner Electric, Inc. v. American Insur-
ance Co., 520 F.2d 790, 794 (8th Cir. 1975); Cady v. Hart-
ford Accident and Indemnity Co., 439 S.W.2d 483, 485 (Mo.
1969).
We have found no evidence of malice on the part of Crown
toward Salomon in this record. Nor have we been able to dis-
cern the existence of a conspiracy involving Crown for the
purpose of wronging Salomon by attempting to subvert Salo-
mon’s brokers. The district court's findings to the contrary are
clearly erroneous.
Specifically, the district court found that the conspiracy was
furthered by the May 1972 visit to St. Louis by Crown officer
David Williams. 399 F. Supp. at 96. This is the only finding
of fact by the district court that charges Crown with private
negotiations with the alleged conspirators preceding the dis-
puted July 1 termination of the joint venture. However, the
district court’s basis for presuming a conspiratorial motive in
this visit is unclear. The only evidence of the May visit to St.
Louis by Williams is Williams’ own deposition in which he
states that he visited the agency as part of his routine duties
as senior vice president for United States agencies.
Nevertheless, the district court’s fact finding on this St. Louis
visit by Williams indicates that it was the product of Bradley's
“Trojan Horse” role.* We find no evidence to support this
‘* The district court found that W. Andrew Bradley was a “Trojan
Horse” sent into the Salomon camp by Crown for the purpose of
subverting the general agency relationship. This finding is clearly
erroneous. Salomon testified that he requested of Crown executives
the recommendation of a qualified individual “who could be a
cashier, but could be trained to help with agency work and adminis-
trative work and to relieve the agency of that responsibility.” There-
after upon the recommendation of a Crown official, Salomon nego-
tiated with and obtained the services of Bradley who began working
for Salomon Associates in late 1970. Bradley had had experience in
the office management and the administration of insurance business.
Just prior to his employment by Salomon Associates Bradley was
— A-16 —
conclusion. It appears that Williams’ May 1972 visit was not
known to Sidney Salomon, Jr. We do not discern conspira-
torial inferences from this fact. Williams openly visited with
the brokers at the joint venture’s offices at ICI headquarters.
Salomon’s lack of knowledge could very well ve attributed to
his infrequent contact with those offices and with the brokers
during the time in question.*
One product of the May visit by Williams was an invitation
that Klostermeyer received to visit the Crown home office in
Toronto. There is no evidence that this invitation was offered
to Klostermeyer as part of any conspiracy. It was a restatement
of an offer to visit the home offices which had been made to a
number of Crown brokers in St. Louis the previous fall by W. N.
Bowden, a Crown officer who had visited at that time. Brokers
Pierce Liberman and Rod Susman had gone to Toronto pur-
suant to that invitation a few months prior to Kiostermeyer’s
visit. Thus we find no basis for the district court's finding of a
conspiratorial intent or a wrongful purpose in David Williams’
May 1972 visit to St. Louis.
In addition, the district court found that Clarke Lloyd, an
officer of Crown who was senior vice president for the United
employed by Crown in one of its Toronte branches. There is abso-
lutely no evidence to support the contention that Bradley was acting
in concert with Crown against Salomon’s interests. None of the
evidence suggests any “Trojan Horse” role for Bradley, nor have we
been able to discern any “camouflaged actions” by him. The refer-
ence to Bradley as an “insider” relates to the fact that he was in an
office administration position within the agency as opposed to being
a producer of insurance business. He served as cashier for the
joint venture until its termination. After a short term as secretary-
treasurer of the new agency he sold his stock and assumed the duties
of cashier.
* Sidney Salomon, Jr. testified that he maintained an office at the
IC] building but that he spent litthe time there. He felt that his
Arena offices “had a litthe more glamor.” Klostermeyer testified that
he saw Salomon a total of three or four times during the year of the
joint: venture.
—_
States agencies at that time, “made a determination to terminate
the business relations” that had existed between Salomon and
Crown as of July 6, 1972. 399 F. Supp. at 96. As a conse-
quence of this finding, Lloyd’s July 24, 1972, meeting with
Salomon in St. Louis at which Salomon’s future role with Crown
was discussed would necessarily be interpreted as a sham and
a coverup of the conspiracy. The only credible evidence in the
record on this specific factual finding is the testimony of Clarke
Lloyd in which he indicates that he was informed by Williams
on July 6 via a long distance telephone call that the joint ven-
ture in St. Louis had been terminated. The court's statement
regarding Lloyd's decision to terminate the joint venture general
agency on that date wholly disregards this testimony and places
an entirely different emphasis on the facts that exists in the
record.
According to the evidence in the record on this point, the
sole “determination” made by Clarke Lloyd on July 6 was that
the joint venture had in effect resigned its general agency, “a
determination” which prompted the conversation with Kloster-
meyer and the meeting with Salomon on July 24 at which possi-
ble new corporate formats were discussed. Mr. Lloyd’s testi-
mony at trial was that the decision to terminate the joint venture
general agency was not made until after that meeting. The
court's attribution to Lloyd of a decision to terminate Salomon
as of July 6 suggests motives on Crown's part which are un-
supported by the factual record.
Although we have found no evidence of a conspiracy between
Crown and the brokers to wrong Salomon, there is evidence in
this record suggesting contact between Crown and Klostermeyer,
Blair and Bradley during the period following the July 24 meet-
ing with Salomon in St. Louis and the August 9 termination
letter. The substance of these contacts appears to have been
related to the inclusion or non-inclusion of Sidney Salomon, Jr.
in the proposed new general agency for St. Louis. In addition,
— A-18 —
there is a suggestion in the record, based on inter-Crown memo-
randa, that limited discussions with Klostermeyer took place
shortly after the Klostermeyer visit to Toronto in early July.
Finally, Clarke Lloyd testified that he spoke on the telephone
with Klostermeyer three or four times and with Bradley two or
three times in the weeks between July 7 and August 9, 1972. It
is our view that these contacts were part of an overall course
of conduct by Crown during this period that was justifiable as
an effort to protect its valid economic interests in maintaining
a viable insurance agency in St. Louis.
Our examination of the record convinces us that the Salomon
appellees failed to establish an absence of justification as re-
quired under the Harber formulation. Harber, supra, 390 F.
Supp. at 683. See also Gerstner Electric, Inc. v. American In-
surance Co., 520 F.2d 790, 794 (8th Cir. 1975); Harber, supra,
§12 F.2d at 175-76: Cady v. Hartford Accident and Indemnity
Co., 439 §.W.2d 483. 485 (Mo. 1969). See generally Morton
Buildings of Nebraska, Inc. v. Morton Buildings, Inc., 531 F.
2d 910 (8th Cir. 1976). Justification for intentional interfer-
ence such as is alleged in this case can be provided through
proof that the efforts were undertaken to protect a valid eco-
nomic interest. Leo Speer Const. Co. v. Fidelity and Casualty
Co., 446 F.2d 439, 445 (2d Cir. 1971); Zoby v. American
Fidelity Co., 242 F.2d 76, 79-80 (4th Cir. 1957). See also
Johnson v. McKee Baking Co., 398 F. Supp. 201, 207 (W.D.
Va. 1975).
The Restatement of Torts states that liability for purposeful
interference with business relations will arise unless a privilege
to so act is shown. Of special relevance to the case before us
is the following language from that Restatement section:
The issue in each case is whether the actor's conduct is
justifiable under the circumstances; whether, upon a con-
sideration of the relative significance of the factors involved,
— A-19 —
his conduct should be permitted despite its expected effect
of harm to another.
Comment a, Restatement of Torts § 767. This section was en-
dorsed by the Missouri Supreme Court in Downey v. United
Weather Proofing, Inc., 253 S.W.2d 976, 982 (Mo. 1953).
Applying these legal principles to the facts in the instant case
convinces us that the district court's finding of a lack of justi-
fication for Crown’s action was clearly erroneous.
On July 5, 1972, Crown officer David Williams was informed
that its primary general agent in St. Louis, the joint venture
between Salomon Associates and ICI doing business as Sidney
Salomon, Jr. Life Assurance Agency, had in the words of one
witness “resigned their contract.” Crown had no reason to doubt
the veracity of this information. It came from Robert Kloster-
meyer, the business manager of the joint venture and a long-
time Crown broker who had announced to Williams that “the
joint venture had broken up, had been dissolved” and that he
was “out of a job.” Further, Klostermeyer’s source for this in-
formation was Lee Kling, president of ICI, the managing partner
of the joint venture. Thus, as of July 5 Crown had discovered
somewhat indirectly yet from credible sources that the joint
venture acting as general agent in St. Louis had been terminated
without its knowledge.
Crown's Williams received collateral substantiation of this
development the next day in a phone call from Ruth Hall, sec-
retary to Sidney Salomon, Jr. for a period of 27 years and a
long-time acquaintance of many of the Crown officials. While
the wecific details of this conversation are in dispute, it is clear
that Miss Hall informed Williams that both Salomon Associates
and ICI were requesting general agency contracts from Crown.
Given these facts. Crown’s subsequent actions constituted in our
view a rational response to an unexpected occurrence. Faced
with the resignation of a major general agent in an important
urban area, Crown reacted by discussing with Klostermeyer,
— A-20 —
who had been known to Crown over a number of years, whether
he would be interested in any future general agency arrange-
ment in St. Louis. Following this initial contact, it was Kloster-
meyer, not Crown, who contacted Blair and Bradley for the
purpose of enlisting their support. These facts demonstrate that
as of July 5. 1972, Crown was operating under the reasonable
assumption that the general agency contract with the joint ven-
ture was no longer valid and that Klostermeyer, Blair and Brad-
ley were, in effect, free agents.
At the time when this first information relating to the breakup
of the joint venture was relayed to Crown by Klostermeyer, the
undisputed evidence reveals that Sidney Salomon, Jr. was in
Miami, Florida, attending the Democratic Netional Convention
as a delegate. On July 6, Clarke Lloyd attempted to reach
Salomon at his hotel in Miami but was unsuccessful. As the
result of a July 14, 1972. phone conversation between Clarke
Lloyd and Ruth Hall, the meeting with Salomon in St. Louis
was arranged for July 24, 1972.
Lloyd came to St. Louis for the July 24 meeting without pre-
conceived notions as to what if any future Sidney Salomon, Jr.
would have with Crown. The testimony of Lloyd and the depo-
sition of David Williams indicate that Crown felt that the joint
venture general agency contract was no longer valid. Inter-office
memeranda circulated prior to the July 24 meeting indicate that
Crown officials were considering a Salomon role in the forma-
tion of a new general agency to supplant the joint venture.
These alternatives were discussed with Salomon on July 24.
The result of these discussions was a list of dernands by Salomon
upon which his future relations with Crown would be condi-
tioned. In effect, the proposed new agency would have Salomon
as president receiving 25‘c of the profits plus all renewal com-
missions and collection fees on business written by the agencies
with which he had been associated up to that time. Commenting
on these demands. Lloyd stated that he. along with a number
—~
of other Crown officials, felt that “Crown Life cannot sanction
the arrangement as required by S. Salomon.” The tenor of this
August 9 memorandum clearly indicates that Lloyd went into
the July 24 meeting in good faith for the purpose of resolving
the situation that existed between Salomon and Crown Life as
a result of the termination of the joint venture. While it is clear
that Crown envisioned a new general agency, possibly involving
Klostermeyer, Blair and Bradley, it is also clear that they an-
ticipated a continuing role for Sidney Salomon, Jr. Salomon’s
demands made such a future relationship unworkable. But it
was only after the July 24 meeting that Crown finally deter-
mined to appoint a new general agency in St. Louis that did not
include the participation of Sidney Salomon, Jr.
We conclude that the district court was in error in finding that
the facts of this case showed a lack of justification for Crown's
actions. Further, we find no evidence of malice toward Salomon
on this record. Instead, the facts reflect that Crown was moti-
vated by a desire to protect its valid economic interests in the
St. Louis market. It had reasonably concluded based upon the
facts presented to it that the joint venture had resigned and
that Klostermeyer, Blair and Bradley were not committed to
Sidney Salomon, Jr. in any contractual or fiduciary sense. Even
if it is assumed for the sake of argument that there is evidence
to support the district court's findings that the other elements of
the Harber test were satisfied, the factual record in this case as
developed by the Salomon appellees does not show an absence
of justification for the actions taken by Crown.”
* In view of our finding that no liability was established on the
tortious interference claim we do not reach the damage issue in this
case. We note, however, that the Salomon appellees had the bur-
den in the district court to prove some damage attributable to the
wrong they suffered at the hands of Crown. The district court’s find-
ing was that Crown wrongfully subverted and brought about a breach
in the relationship between Salomon and the three brokers. Thus,
any showing of damage must necessarily arise from the loss occa-
sioned by Crown's acts. However, the actual damage award by the
district court relied exclusively upon expert testimony and economic
— A-22 —
In summary, after extensive analysis of the entire record be-
fore the district court and with full realization that it is our
duty on appeal to give great deference to the factual findings of
the trial court, we conclude that no cause of action for tortious
interference with contractual or business relations under Missouri
law was established in the instant case. In reaching its decision
to the contrary, the district court placed great reliance upon
this court’s decision in Falstaff Brewing Corp. v. lowa Fruit
& Produce Co., 112 F.2d 101 (8th Cir. 1940). Such reliance
was misplaced. In Falstaff the court found that the defendant
brewer had wrongfully breached a non-cancellable distributor-
ship contract which it held with the plaintiff and had established
a rival beer distributorship run by three men who had formerly
comprised plaintiff's entire sales staff. /d. at 107-08. Two ac-
tionable wrongs were found to have been committed by the
defendant in Falstaff: the procuring of the breach of contract
through conspiratorial means and the hiring of the plaintiff's
employees in an attempt to ruin its business. It is the existence
of these wrongful acts that completely distinguishes Falstaff
from. the instant case. In this record we have been able to find
no wrongful act committed by Crown. See Morton Buildings of
Nebraska, Inc., supra, 531 F.2d at 914-16. The district court
conceded that the termination of the general agency contract
was valid. Even if we assume a contractual or employment re-
lationship between Salomon and the three brokers following the
July 1 termination of the joint venture, Missouri law gave them
the right to plan a competing enterprise while still under con-
projections which were premised upon the cortinuation of the gen-
eral agency contract over a period of 20 years. We find no basis
for the use of such a standard. The use of the general agency con-
tract as the basis for the damage award does not square with the
district court’s finding that the termination of that contract was in
fact valid according to its terms. We also find no basis for the use
of a 20 year period. It is undisputed that the general agency contract
was terminable upon one month notice by either side. Further, ordi-
nary renewal commissions are paid for a period of 10 years. Simi-
larly. we find no basis whatsoever for the district court’s award of
$750,000 in punitive damages.
— A-23 —
tract. The facts as they appeared to Crown during July and
August of 1972 afforded it the privilege to negotiate with Klos-
termeyer, Blair and Bradley with a view toward a possible
general agency contract in order to protect its economic in-
terests in the St. Louis market. The evidence in this case reveals
that both sides were guilty of inadequate communication, mis-
understanding, and a lack of complete candor with each other.
However, the record does not indicate the bad faith, malice,
and wrongful conduct that is necessary to establish a cause of
action for tortious interference with business or contractual
relations.
IV
Two other issues were raised on this appeal which deserve
only passing reference. Intervenor Portnoy-Tessler & Associates,
Inc. brought a claim for tortious interference with contractual
relations against Crown based upon the fact that its general
agency contract with Crown was cancelled as a result of the
same acts which led to the cancellation of the joint venture’s
general agency contract. The district court found that “plaintiff-
intervenor has shown no damage arising out of the cause of
action of plaintiffs Salomon against defendant Crown.” As a
result, relief was denied. We affirm that denial.
Further, appellants sought from the joint venture the return
of certain business records which were said to relate to their
life insurance business and which were properly returnable to
them under the terms of the cancelled general agency contract.
The district court found from the evidence adduced at trial
that Crown had the records that it sought available to it within
its Own computer system and that those records were “easily
obtainable through electronic data retrieval methods.” This
fact. coupled with the court's finding that Crown had “unclean
hands,” resulted in a denial of relief on that basis. We are con-
amo OO me
vinced from our examination of the record that the district
court's finding of Crown’s unclean hands is clearly erroneous.
In addition, the fact that Crown may have the sought-after rec-
ords within its computer banks is irrelevant. The general agency
contract between Crown and the joint venture which the district
court found to be validly terminated provided as follows:
All records, letters or other documents relating to the
business to be transacted under this Agreement shall be
open to inspection by the Company at any time, and, at
the termination of this Agreement, shall be turned over to
the Company together with any other of the Company's
property then in the General Agent's possession.
In view of this language and the district court's finding that the
termination of the contract was valid, we find no basis for the
denial of these records to Crown.
We hereby reverse the judgment entered against Crown that
is before us in 75-1537 and remand the case for entry of judg-
ment in favor of Crown on the Salomon appellees’ claim of
tortious interference. Further, we reverse the district court's
determination in 75-1538 with regard to the records sought by
Crown from the joint venture. We affirm the district court's
judgment in 75-1544.
A true copy.
Attest:
Clerk, U. S. Court of Appeais, Eighth Circuit.
— A-25 —
APPENDIX B
In the United States District Court for the
Eastern District of Missouri
Eastern Division
Crown Life Insurance Company,
a Corporation,
Plaintiff,
VS.
Sidney Salomon, Jr. & Associates, Inc.,
a Corporation, ' No. 72 C 582 (3)
and
Insurance Consultants, Inc., a Corpo-
ration, d/b/a “Sidney Salomon, Jr.
Life Assurance Agency”,
Defendants. |
ORDER
In accordance with the Memorandum of this Court filed this
date in this action and incorporated herein,
It Is Hereby Ordered that the defendants, Sidney Salomon,
Jr. & Associates, Inc., and Insurance Consultants, Inc., a cor-
poration, d/b/a “Sidney Salomon, Jr. Life Assurance Agency”,
have judgment against the plaintiff, Crown Life Insurance Com-
pany; and
— A-26 —
It Is Further Ordered that plaintiff, Crown Life Insurance
Company, pay costs.
Dated this 4th day of March, 1975.
/s/ H. KENNETH WANGELIN
United States District Judge
In the United States District Court for the
Eastern District of Missouri
Eastern Division
Sidney Salomon, Jr. and Sidney Salo-
mon, Jr. & Associates, Inc., a Cor- |
poration,
Plaintiffs, |
j
and
Portnoy-Tessler & Associates, Inc., a No. 72 C 547 (3)
Corporation,
Plaintiff-Intervenor, |
VS.
Crown Life Insurance Company, |
Defendant. |
ORDER
In accordance with the Memorandum of this Court filed this
date in this action and incorporated herein,
It Is Hereby Ordered that the plaintiffs, Sidney Salomon, Jr.
and Sidney Salomon, Jr. & Associates, Inc., a corporation, have
judgment against the defendant, Crown Life Insurance Com-
— A-27 —
pany, for the amount of Eight Hundred Ninety-Four Thousand,
Seven Hundred Eighty-Four Dollars and Forty Four Cents
($894,784.44) as actual damages; and
It Is Further Ordered that the plaintiffs, Sidney Salomon, Jr.
and Sidney Salomon, Jr. & Associates, Inc., a corporation, have
judgment against the defendant, Crown Life Insurance Com-
pany, for the amount of Seven Hundred Fifty Thousand Dollars
and No Cents ($750,000.00) as punitive damages; and
It Is Further Ordered that defendant, Crown Life Insurance
Company, have judgment against plaintiff-intervenor, Portnoy-
Tessler & Associates, Inc.: and
It Is Further Ordered that defendant, Crown Life Insurance
Company, pay costs attributable to the action of plaintiffs,
Sidney Salomon, Jr. and Sidney Salomon, Jr. & Associates, Inc.;
and
It Is Further Ordered that plaintiff-intervenor, Portnoy-Tes-
sler & Associates, Inc., shall pay costs for that portion of its
claim against defendant, Crown Life Insurance Company.
Dated this 4th day of March, 1975.
s/ H. KENNETH WANGELIN
United States District Judge
—s
In the United States District Court for the
Eastern District of Missouri
Eastern Division
Sidney Salomon, Jr. and Sidney Salo- )
mon, Jr. & Associates, Inc., a Cor- |
poration, :
Plaintiffs, |
and
Portnoy-Tessler & Associates, Inc., a » No. 72 C 547 (3).
Corporation,
Plaintiff-Intervenor,
VS. |
Crown Life Insurance Company, |
Defendant. |
Crown Life Insurance Company, a )
Corporation,
Plaintiff,
VS.
Sidney Salomon, Jr. & Associates, |
Inc., a Corporation, . No. 72 C 582 (3).
and
Insurance Consultants, Inc., a Corpo-
ration, d/b/a “Sidney Salomon, Jr. —
Life Assurance Agency”,
Defendants. /
MEMORANDUM
This action is before the Court for a decision on the merits
following the trial to the Court sitting without a jury.
— A-29 —
Plaintiffs, Sidney Salomon, Jr. and Sidney Salomon, Jr. &
Associates, Inc. (herein plaintiffs Salomon) initiated this action
(Nv. 72 C 547 (3)) alleging tortious interference . ‘th business
relations, and seeking to restrain and enjoin the u-fendant,
Crown Life Insurance Company (herein defendant Crown), i1.7m
using plaintiffs’ Salomon’s business records and for actual and
punitive damages. In the related case (No. 72 C 582 (3)),
plaintiff Crown seeks to require defendants Salomon and Insur-
ance Consultants, Inc., d/b/a Sidney Salomon, Jr. Life Assur-
ance Agency, to deliver certain records, to prohibit the use of
said records, and damages.
Portnoy-Tessler & Associates, Inc. (herein Portnoy) was
granted leave to intervene as party plaintiff in No. 72 C 547 (3).
The cases were consolidated and tried before this Court.
For the sake of simplicity, the Court’s opinion will deal with
the causes of action in three parts. The findings of fact and con-
clusions of law concerning Salomon and Crown in No. 72 C
547 (3) will be separately stated as will findings of fact and con-
clusions of law for Portnoy and defendant Crown. No. 72 C
582 (3) will be dealt with as a separate entity.
The Court being fully apprised of the premises hereby makes
the following findings of fact and conclusions of law.
Findings of Fact
Sidney Salomon, Jr., et al.
VS.
Crown Life Insurance Company
No. 72 C 547(3)
1. This Court has jurisdiction over the subject matter of this
suit and the parties hereto pursuant to 28 U.S.C. $1332.
— A-30 —
2. Plaintiff, Sidney Salomon, Jr., is an individual residing in
St. Louis County, Missouri, and plaintiff, Sidney Salomon, Jr.
& Associates, Inc., is a corporation organized under the laws of
the State of Missouri, having its principal place of business in
St. Louis County, Missouri.
3. Defendant, Crown Life Insurance Company, is a life in-
surance company organized by an act of the Canadian Parlia-
ment, with the principal place of business in Toronto, Canada.
Defendant Crown commenced the sale of life insurance in the
State of Missouri in 1946.
4. At all times since 1946, plaintiff, Sidney Salomon, Jr.,
was a broker on behalf of Crown and operated a general insur-
ance agency by appointment of Crown under the following legal
entity names: Portnoy-Salomon and Company; Salomon, Han-
negan, Portnoy & Associates, Inc.: Sidney Salomon, Jr. & Asso-
ciates, Inc.; Sidney Salomon, Jr. Life Assurance Agency; a joint
venture comprised of Sidney Salomon, Jr. & Associates, Inc. and
Insurance Consultants, Inc.
5. Since 1946, plaintiffs Salomon’s method of sales and pro-
motion in the life insurance business has remained unchanged
and the relationship between plaintiff, Sidney Salomon, Jr.,
and defendant, Crown Life Insurance Company, continued
uninterrupted until 1972.
6. Plaintiff, Sidney Salomon, Jr., was and is a well-known
national personality in the fields of business, sports and politics,
and is active in educational, civic and charitable endeavors
locally and throughout the United States. Through favorable
publicity and the adoption of the “center of influence” method
of selling, plaintiff, Sidney Salomon, Jr., without financial con-
tributions from defendant Crown, conducted advertising and
promotional campaigns to bring recognition to defendant Crown
and to enhance the sale of life insurance to Crown's benefit.
— A-31 —
7. As a result of the activities mentioned in the previous
paragraph, plaintiff. Sidney Salomon, Jr., developed a very suc-
cessful life insurance sales business. As a result of these en-
deavors plaintiff, Sidney Salomon, Jr., and the corporate en-
tities as described in finding of fact paragraph number 4. received
numerous awards as one of the top insurance agencies of de-
fendant Crown.
8. At their own expense, plaintiffs Salomon recruited and
trained life insurance agents, brokers and administrative person-
nel including Robert V. Klostermeyer, James T. Blair, III, and
W. Andrew Bradley.
9. Klostermeyer was recruited by plaintiffs Salomon in 1961
and from that date was a broker and administrative employee
of the general agency. Blair was recruited by plaintiffs Salomon
in 1957 and received compensation through August 1, 1972.
Prior to November 15, 1970, W. Andrew Bradley was an
employee of defendant Crown and entered the employ of plain-
tiff. Sidney Salomon, Jr. & Associates, Inc., as an administrative
employee and broker and received compensation therefor.
10. Mr. Bradley was suggested as a possible employee to
plaintiffs by defendant Crown. The events subsequent to his
employment by plaintiffs Salomon indicate to the Court that his
role was to be a “Trojan Horse” for the defendant Crown to
further their plans for the later termination of plaintiffs Salo-
mon's contract.
11. As a result of the camouflaged actions of Mr. Bradley,
David Williams, an officer of defendant Crown, visited Klos-
termeyer, Blair and Bradley in May of 1972, at plaintiffs Salo-
mon’s offices in St. Louis, Missouri. On July 6, 1972, Kloster-
meyer met with executives of defendant Crown in Toronto,
Canada, and discussed the termination of the St. Louis general
agency and entered into negotiations with defendant Crown
executives for the acquisition and appropriation of the existing
= ian
and future business of the St. Louis agency for defendant Crown.
The St. Louis business until that time had been exclusively han-
dled by the plaintiffs as the agents of defendant Crown.
12. On or before July 10, 1972, under express instructions
from Klostermeyer, Bradley began a search for office space for
the new St. Louis agency of Crown Insurance Company, while
he was then in the employ of Sidney Salomon, Jr. Life Assur-
ance Agency.
13. On July 6, 1972, Clark Lloyd, an officer of defendant
Crown, made a determination to terminate the business relations
that existed between plaintiff, Sidney Salomon, Jr., and the
defendant Crown which had existed for a period of 26 years.
After having concluded on July 6, 1972 to terminate the said
business relations, Clark Lloyd met with plaintiff, Sidney Salo-
mon, Jr., ostensively to discuss the continuation of business re-
lations under a new format. Lloyd offered plaintiffs Salomon
25% of the profits generated by the agency under the new
format and suggested that defendant Crown would run the
agency, with the capital stock being held by Charles Burns,
Chairman of the Board of defendant Crown. Charles Burns is
a citizen of Canada.
14. July 28, 1972, Klostermeyer, Blair and Bradley, while
under brokerage contracts with Sidney Salomon, Jr. Life As-
surance Agency, and while receiving compensation therefrom.
formed a corporation known as Crown Associates of St. Louis,
Inc., for the sale of life insurance for the defendant Crown. On
August 1, 1972, Klostermeyer, Blair and Bradley passed a reso-
lution providing compensation to each as officers of the Crown
Associates of St. Louis, Inc. Crown Associates of St. Louis,
Inc. filed its 1972 Income Tax Return which disclosed that
50% or more of the capital stock of Crown Associates of St.
Louis, Inc., is owned by an alien.
15. On various occasions during the months of July and
August of 1972. with the knowledge that Crown Associates of
— A-33 —
St. Louis, Inc. was incorporated or was in the process of be-
ing incorporated, officers of defendant Crown were in the process
of encouraging and enticing Klostermeyer, Blair and Bradley to
violate their fiduciary relationship with Salomon, to terminate
the general agency agreement, and encouraging the acquisition
of the general agency contract by Klostermeyer, Blair and Brad-
ley. These actions being done with the knowledge that the
said Klostermeyer, Blair and Bradley were performing services
for, and receiving compensation from, the Sidney Salomon, Jr.
Life Assurance Agency.
16. By letter dated August 9, 1972, defendant Crown termi-
nated the Sidney Salomon, Jr. Life Assurance Agency effective
30 days after the mailing of that letter. As a member of the joint
venture, said termination letter effectively terminated the busi-
ness relationship that existed between plaintiffs Salomon and
defendant Crown. In the event plaintiffs Salomon resisted thie
termination of the general agency agreement, defendant Crown
was prepared to use certain political pressures to prevent him
from collecting the renewal fees.
17. Defendant Crown knew that the termination of the Sid-
ney Salomon, Jr. Life Assurance Agency, with the resulting ef-
fect of effective termination of the business relationship between
Sidney Salomon, Jr. and Sidney Salomon, Jr. & Associates, Inc.,
would, along with the acquisition by Crown Associates of St.
Louis, Inc. [as new general agent] of the key personnel of the
prior general agency, result in irreparable damage and injury
to the plaintiffs, and knew that the plaintiffs could not continue
to operate successfully.
18. For many years prior to this termination, officers of de-
fendant Crown represented to Sidney Salomon, Jr. that he, Sid-
ney Salomon, Jr., could always have a general agency contract
and, therefore, declined to provide a pension for him. The
general agency agreement provides for vested renewals to the
on fe St<
tenth year of premium payments and 3% of the renewals there-
after. As a result of the termination of the general agency agree-
ment, defendant Crown knew that the promised vested renewal
commissions in the amount of “3% thereafter” could not be
realized by plaintiffs Salomon. The “3% thereafter” renewal
commissions have been paid to Crown Associates of St. Louis,
Inc. since its appointment of the new general agent.
19. Defendant Crown designated an agency code number
370 as a form of identification of the general agency known as
Salomon, Hannegan, Portnoy & Associates, Inc.; Sidney Salo-
mon, Jr. & Associates, Inc. was identified as agency code num-
ber 371; Sidney Salomon, Jr. Life Assurance Agency was desig-
nated agency code no. 372. Until the date of termination of
the general agency agreement, Sidney Salomon, Jr. was the bene-
ficiary of renewal commissions and other compensation for gen-
eral agencies designated code numbers 370, 371 and 372. The
actuarial value of projected compensation on renewals on insur-
ance in force for a period of 20 years to the year, 1992, dis-
counted to the year, 1972, was established by expert testimony
and is as follows:
Agency Code Number 370:
Salomon, Hannegan, Portnoy &
I, TE, oc once seeveees $130,778.00
Agency Code Number 371:
Sidney Salomon, Jr. & Associates, Inc. . 367,680.00
Agency Code Number 372:
Sidney Salomon, Jr. Life Assurance
ME ceccraceesecnecseeseys 37,193.00
Total . .$535,651.00
20. The average annual volume of new business of a con-
tinuing agency was established by expert testimony, as pro-
— A-35 —
jected actuarily based upon past performance, in this case to
be in the amount of $4,375,000.00. The expert actuarial evi-
dence further showed that the value of projected compensation
for a continuing agency such as the one run by plaintiff in
this case would be in the amount of $920,093.00 for a period
of 20 years to the year, 1992, discounted to present values for
the year, 1972.
21. The total reasonable actuarial projected computed value
of compensation for a general agency such as operated by plain-
uff based on a period of present and future business for 20
years is in the amount of $1,455,734.00.
22. The cost of collection of the premiums and policies in
force on December 31, 1972, was in the approximate amount
of $5,000 annually.
23. Each general agency agreement such as the one exist-
ing between plainuffs Salomon and defendant Crown provided
that the agreement would terminate automatically upon the
death of the general agent, or the termination of the general
agent's license. The agreement further provided that if it was
terminated and not replaced by a new agreement between the
general agent and the company, the company would pay the
general agent, if living, otherwise to his executors or admin-
istrators, certain designated bonuses and renewal commissions
to the tenth policy year less a scheduled collection fee.
24. The net worth of defendant Crown Life Insurance Com-
pany, as revealed by its annual statement on December 31,
1972, is in the amount of $65,909,000.00.
— A-36 —
Findings of Fact
Portnoy-Tessler & Associates
VS.
Crown Life Insurance Company
No. 72 C 547 (3)
1. As stated in finding of fact number 4 for plaintiffs Salo-
mon v. defendant Crown above, plaintiff-intervenor, Portnoy-
Tessler & Associates, was a corporate entity which plaintiff,
Sidney Salomon, Jr., was a shareholder.
2. Plaintiff-Intervenor’s complaint alleges that defendant
Crown engaged in disparate treatment of it with regards to
plaintiffs Salomon. It is also alleged by Portnoy that defend-
ant Crown has become unjustly enriched due to its activities
against plaintiffs Salomon.
3. The Court finds no evidence that plaintiff-intervenor has
been wronged or grieved by the actions of defendant Crown
in regards to plaintiffs Salomon.
4. This Court sitting as the trier of fact is of the opinion
that no wrong has been suffered by plaintiff-intervenor due to
the conspiratorial acts of defendant Crown directed towards
plaintiffs Salomon.
—<
Findings of Fact
Crown Life Insurance Company
VS.
Sidney Salomon, Jr. & Associates, Inc.
and
Insurance Consultants, Inc.. d/b/a
Sidney Salomon, Jr. Life Assurance Agency
No. 72-582 (3)
1. As stated in this Court’s findings of facts for the com-
plaint of plaintiffs Salomon, defendant, Sidney Salomon, Jr.,
acting through corporate entities has represented plaintiff
Crown Life Insurance in the sale of life insurance since 1946.
2. Since 1946, defendant Salomon has obtained pertinent
personal and confidential information from policyholders pur-
suant to the conduct of his life insurance business.
3. Sidney Salomon, Jr. is the owner and Chairman of the
Board of Sidney Salomon, Jr. & Associates, Inc. On May 15,
1971, Sidney Salomon, Jr. & Associates, Inc. and Insurance
Consu!tants, Inc., d/b/a Sidney Salomon, Jr. Life Assurance
Agency as members of a joint venture and plaintiff Crown
entered into a contract with each other. Notice of the termi-
nation of said contract dated August 9, 1972, was mailed to
the defendants Salomon.
4. Said contract contained the provision as follows:
“20. All records, letters, or other documents relating to
the business to be transacted under this agreement shall
be open to inspection by [Crown Life Insurance Company]
at any time, and, at the termination of this Agreement,
—_—
shall be turned over to the company together with any
other of the company’s property then in the general agent’s
possession.”
5. That defendants on August 9, 1972, and until the present
time have had in their possession the documents described in
Schedule B of plaintiff's complaint:
A. Premium Record Cards.
Numerical Index Cards.
Alphabetical Index Cards.
Status Cards.
Files of Correspondence.
7m on ®
Files of Group Insurance Records.
6. That demand for the records was made on September 11,
1972, not on either of the defendants named herein but on one
Mary Cronin.
7. The records sought contain information which has been
compiled by Sidney Salomon, Jr., in the operation of his various
life insurance agencies over a period of approximately 25 years
and consist of personal and confidential information.
8. Plaintiff Crown provided the basic forms and supplies, on
which the information sought is contained, but that the in-
formation contained thereon as a result of the time and efforts
of Sidney Salomon, Jr. and his associates personally for a period
of approximately 25 years.
9. Any information which was recorded by the plaintiff and
held by defendants was of a compilation and recording nature
rather than an original product of defendants.
10. The defendants have previously complied with this Court's
Orders and have tendered to plaintiff Crown all those documents
he 0 ht
— A-39 —
and records which are necessary to provide a high level of serv-
ice to plaintiff's policyholders.
11. Certain records sought by plaintiff Crown were repro-
duced for the convenience of its general agents, herein the
defendants. Those records were reproduced not for plaintiff
Crown's use but for the use of the defendants
12. All information which is presently sought by plaintiff
Crown is presently maintained by means of electronic data
storage in plaintiff's computer system, and is available through
ordinary data retrieval methods to plaintiff by plaintiff's own
employees at plaintiff's own headquarters.
General Findings of Fact
The present case, due to its complicated posture and numerous
parties, does not lend itself particularly well to specific point-by-
point factual analysis. Since this is a bench-tried matter the
Court is faced with the dual responsibility of determining both
findings of fact and conclusions of law.
As the finder of fact, the Court like a member of the jury
impaneled to hear a case is allowed to draw by reasonable infer-
ences from the admissible evidence what the facts surrounding
the case are. The Court is also allowed to consider in its own
mind the credibility of the various witnesses which testify before
it. In case No. 72 C 547 (3), it is overwhelmingly certain that
a wrong has been done to plaintiffs Salomon. The general im-
pression drawn from the evidence is that defendant Crown con-
spired with certain of plaintiffs’ employees to subvert a busi-
ness relationship which had existed for more than 25 years and
had been extremely profitable to all parties concerned. The
evidence brought torth by defendant Crown to counter the claims
of plaintiffs Salomon is simply not credible to this Court.
— A-40 —
It is obvious to the Court that defendant Crown conspired
with certain of plaintiffs Salomon’s employees to end the rela-
tionship which had existed between the parties for a number
of years. Such a termination is certainly not wrong, and was well
within the rights of defendant Crown, however, defendant Crown
injured the plaintiffs Salomon by its successful subversion of
plaintiff Salomon’s employees and agents prior to the termina-
tion of the contract. Such subversion clearly constituted what
this Court feels is a tortious interference with contractual rela-
tionships. The overall demeanor of the defendant Crown in
this matter was one of underhanded and deceptive dealing.
It must be noted that the Court finds no wrong in terminating
the contract between the parties, the Court finds the wrong in
the defendant Crown's dealing with plaintiffs Salomon’s agents
before the termination of the contractual relationship.
With regards to the complaint of plaintiff-intervenor, Portnoy,
Tessler & Associates, Inc., the Court finds that no damage was
done to plaintiff-intervenor. Plaintiff-intervenor may have suf- ©
fered a diminution of income but this is due to the lawful
termination of the contractual relationship between plaintiffs
Salomon and defendant Crown. Even by the use of inference,
the Court finds no basis for saying that plaintiff-intervenor was
damaged by defendant Crown's conspiratorial actions.
In case number 72 C 582 (3), the Court finds plaintiff Crown's
claims for certain of defendants Salomon’s records to be totally
without merit. The factual evidence is quite clear on its face
that the records which plaintiff Crown seeks are readily avail-
able to plaintiff within its own data processing system. This
combined with the obviously unclean hands of Crown Life due
to its conspiratorial actions in case No. 72 C 547 (3) clearly bars
the equitable relief sought by plaintiff Crown Life, and the
damages sought.
0 et
— A-4] —
Conclusions of Law
I
In a bench tried case such as this, there is a two step test to
be made before the plaintiff may recover. The plaintiff must
first establish that according to law he has a cause of action
which may be maintained. Once that question of law has been
met, the plaintiff must then carry his burden of proof as to the
factual questions before the Court or a jury as the case may be.
In case number 72 C 547 (3), plaintiffs’ legal theory is that
defendant Crown tortiously interfered with certain contract rela-
tions between plaintiffs Salomon and plaintiffs’ employees,
namely the employment as insurance agents of Messrs. Kloster-
meyer, Blair and Bradley by defendant Crown. It has long
been held that such interference with business relations con-
stitutes an actionable tort. 86 C.J.S., Torts, § 44.
Defendant Crown has placed great emphasis on the fact that
its contractual relationship with the plaintiffs was terminated
pursuant to the provisions of the contract between the parties.
While this is true, defendant overlooks its conduct prior to the
termination of its contractual relationship with the plaintiffs
Salomon. The facts are uncontroverted that defendant Crown
conspired with Klostermeyer, Blair and Bradley while they were
under brokerage contracts with the plaintiffs to set up a super-
seding insurance agency to act as the Missouri general agent
for defendant. In a similar factual situation the 8th Circuit
held that such a conspiracy is an actionable tort. Falstaff Brew-
ing Corp. v. lowa Fruit & Produce Co., 111 F.2d 101 (8th
Cir., 1940). That case involved, as the present case before the
Court, a sales agency contract between one party for exclusive
sales within a given geographic area. The defendant in Fal-
staff, supra, solicited the employment of plaintiffs, three sales
personnel, and thereafter dissolved the contract between plain-
tiffs and defendant and set up a similar distributorship employ-
—S
ing plaintiffs’ previous sales force. As the Missouri courts have
also stated, a person who conspires with another to induce an
unjustified violation of his contract with a third person com-
mits an actionable wrong. Downey v. United Weather Proof-
ing, 253 S.W.2d 976 (Mo., 1953); Mills v. Murray, 472 S.
W.2d 6 (Mo., Ct. of App., 1971). A further requirement for
recovery under this theory of tort law in Missouri is that the
absence of justification for the defendant's conduct must be
shown. Cady v. Hartford Accident & Indemnity Co., 439 S.W.
2d 483 (Mo., 1969). This view of the law of tortious in-
terference with contract relations has been reaffirmed by the
Eighth Circuit in Harber v. Ohio National Life Insurance Co.,
No. 74-1637, Feb. 26, 1975.
The factual similarity between Falstaff, supra, and the pres-
ent case is striking. Defendant Crown asserts that its actions
were not tortious since it was merely seeking the employment
of certain parties, namely, Klostermeyer, Blair and Bradley.
Such competitive solicitation of other persons’ employees is cer-
tainly permissible under the free market system upon which
the American economy operates. However, there are certain
factual distinctions which render the defendant's actions torti-
ous. Here, Klostermeyer, Blair and Bradley set up a Missouri
corporation with the encouragement of defendant Crown to be
ready to take over the business of plaintiffs as soon as defend-
ant Crown terminated its contract with plaintiffs Salomon. It
is significant to the Court that the negotiations between de-
fendant Crown and Klostermeyer, Blair and Bradley took place
while those gentlemen were within the employ of plaintiffs
Salomon. The “Trojan Horse” nature of Mr. Bradley's actions
further indicates the culpability of defendant Crown's activi-
ties. Also, the facts in this case support a reasonable inference
that these activities were of a surreptitious nature and were
actively concealed from the knowledge of plaintiffs.
Here. the situation is one of where valued employees and
agents of the plaintiffs have served the defendant Crown for
ee ray
—_~ a
a period of twenty-five years and produced significant amounts
of income as recognized and awarded by the defendant, and
for some reason, upon which the Court will not speculate, the
defendant Crown saw fit to reward the plaintiffs by conspiring
with two of plaintiffs’ employees through the aid of a camou-
flaged servant, namely, Bradley, to set up a surreptitious cor-
poration to take over plaintiffs’ business. The record produced
at trial is perfectly clear that the actions of defendant Crown
were without any justification.
This Court is satisfied that an actionable wrong was cre-
ated by defendant Crown's conduct and as the findings of fact
amply show, plaintiffs Salomon are entitled to recovery.
The Court’s computation of damages was arrived at after
careful and close consideration of the voluminous expert testi-
mony which was adduced at trial concerning the future income
possibilities of plaintiffs Salomon had the contractual relation-
ship between the parties continued. The general rule for de-
termining damages in an action for tortious interference with
business relations is that the plaintiff will be entitled to re-
cover as damages, the loss, which, except for such interference,
the plaintiff would have been able to attain or enjoy, including
such loss of profits as the plaintiff can prove to have resulted
directly and proximately from the wrongful acts, 45 AM.JUR.
2d; Interference, $57. The Missouri Supreme Court has adopted
this general rule in Coonis v. Rogers, 429 S.W.2d 709 (Mo.,
1968). Since this is not a breach of contract action, but rather
One sounding in tort, the determination of damages is not sub-
ject to a precise mathematical computation. The damages are
computed in accordance with the Court's sitting as the finder
of fact and are in light of the Court's view of what a typical
juror would have assessed had this case been tried before a
jury. “Once the fact of damage has been established, courts
are allowed considerable leeway in arriving at the amount of
damages.” Dean Foods Company v. Albrecht Dairy Company,
396 F.2d 652, 660 (8th Cir., 1968). |
— A-44 —
Plaintiffs Salomon have prayed for punitive damages in this
matter, and considering the overall actions of defendant Crown
concerning this matter, it is this Court’s opinion that punitive
damages are well warranted. Such damages have been held
permissible for tortious interference actions such as the one
presently at bar. Mills v. Murray, supra. It is apparent to this
Court that defendant Crown’s attitude towards plaintiffs Salo-
mon, while the activities complained of were taking place, was
one of concealment and deceit. Since the theory of exemplary
damages is punishment and deterrence, they are particularly ap-
propriate here. Ford Motor Credit Company v. Hill, 245 F.
Supp. 796 (E.D.Mo., 1965).
II
With regards to the claim of plaintiff-intervenor, Portnoy-
Tessler & Associates, Inc., it is this Court’s determination that
as a question of fact plaintiff-intervenor has shown no damage
arising out of the cause of action of plaintiffs Salomon against
defendant Crown. Accordingly, judgment will be entered for
the defendant Crown upon the plaintiff-intervenor’s claim.
lil
In this part of the consolidated action in case number 72 C
582 (3), plaintiff Crown seeks from the named defendants cer-
tain business records in the possession of defendants which sup-
posedly relate to the life insurance business of plaintiff Crown
Life. As the findings of fact discussed above clearly show that
defendants in this action have tendered unto plaintiff Crown
those records ordered by this Court, no further relief will be
granted. The denial of relief is based upon several conclusions.
The first being that the records plaintiff Crown seeks are clearly
not “relate[d] to the business to be transacted” under the gen-
— A-45 —
eral agency agreement between the parties, but are records re-
lated to the past and future business of defendants Salomon,
containing personal and confidential information of policyhold-
ers. The facts as shown by the evidence adduced at trial clearly
show that plaintiff Crown has available the records that it seeks
within Crown Life’s own computer system, and that those rec-
ords are easily obtainable through electronic data retrieval
methods. Finally, considering the verdict and the actions of
plaintiff Crown in case number 72 C 547 (3), it is apparent that
plaintiff Crown has entered this Court with unclean hands, and,
the ancient maximum that he who has unclean hands shall not
recover, will be followed. Accordingly, in case number 72 C
582 (3) judgment will be entered for the defendants Salomon.
Dated this 4th day of March, 1975.
s H. KENNETH WANGELIN
United States District Judge
—_—
United States Court of Appeals
for the Eighth Circuit
September Term, 1975
No. 75-1537
Sidney Salomon, Jr., et al.,
Appellees,
vs.
Crown Life Insurance Company,
Appellant.
Ne. 75-1538
Crown Life Insurance Company, etc.,
Appellant,
VS. ‘
Sidney Salomon, Jr. and Associates,
Inc., etc., et al.,
Appellees.
No. 75-1544
Portnoy-Tessler & Associates, Inc..,
Appellant,
VS.
Crown Life Insurance Company,
Appellee. |
Appeals from the
United States Dis-
trict Court for the
Eastern District of
Missouri.
The Court having considered petitions for rehearing en banc _
filed by counsel for appellant and appellees and, being fully ad-
vised in the premises, it is ordered that the petitions for rehear-
ing en banc be, and they are hereby, denied.
Considering the petitions for rehearing en banc as petitions
for rehearing, it is ordered that the petitions for rehearing also
be, and they are hereby, denied.
July 16, 1976
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.