Ostrer v. Schenck

364 N.E.2d 1107 (1977)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

D promulgated regulation 65 (11 NYCRR Part 202), which limits to specified maximum levels, adjusted for volume, the commissions an insurance agent may receive for life insurance policies issued on a mass-merchandising basis under plans sponsored by union-management employee welfare funds. P is a duly licensed life insurance agent who is in the business of soliciting and placing life insurance coverage for members of union-management welfare funds. P had an agency relationship with the International Life Insurance Company of Buffalo. P was to receive a commission on each individual life insurance policy he placed with the company equal to 55% of the first-year premium. The rate of commission applicable to the placement of a single policy covering a group of individuals was substantially lower. P arranged for the placement of a life insurance program to be sponsored by a Union. The assets of this union-management welfare fund were contributed pursuant to the terms of a collective bargaining agreement. P arranged with the trustees of the fund for a program whereby each member would be issued a uniform individual policy with terms prearranged by the trustees of the fund and the insurance carrier. Thus P got the higher commission rate applicable to individual policies. Regulation 65, limits P’s commission to no more than 5.2% of the annual premium of each policy. The insurance carrier refused to pay P the full commission specified in the agency agreement. P sued D to invalidate Regulation 65. The court ruled for P and the appeals court affirmed. D appealed.