Appeal from the District Court of Stutsman County, Southeast Judicial District, the Honorable John E. Greenwood, Judge.
The opinion of the court was delivered by: Maring, Justice.
[¶1] Farmers Union Service Association of North Dakota ("Farmers Union") appeals from a judgment awarding Duane Huber $34,534 plus interest, costs and disbursements in Huber's breach of contract action to recover his retirement benefits. We conclude the district court did not err in its interpretation of the contracts between the parties and in holding the contracts were not unlawful and void as a matter of law. We further conclude the court did not err in awarding Huber prejudgment interest. We affirm.
[¶2] Huber was a licensed insurance agent in North Dakota who began selling insurance for National Farmers Union Property and Casualty Company and Farmers Union Mutual Insurance Company in 1975. Under the local agent's agreements Huber signed, Farmers Union acted as the general agent for these companies. The local agent's agreement with National Farmers Union Property and Casualty Company provided in part:
(a) The parties hereto agree that each party hereto without assigning cause may terminate this Agreement at any time upon written notice mailed certified or registered, postage fully paid, to the other parties at the address shown in this Agreement at least thirty (30) days before the date of termination. Upon termination LOCAL AGENT shall be paid all commission earnings and bonuses currently due and unpaid less any obligations due INSURER, or GENERAL AGENT, and thereafter LOCAL AGENT shall have no further interest in the contracts or policies of INSURER or commission earnings thereof and bonuses thereon whether sold by him during or before the life of this Agreement, . . . . The local agent's agreement with Farmers Union Mutual Insurance Company similarly provided in part:
14. The parties hereto agree that any party hereto may terminate this contract at any time upon written notice mailed certified or registered, postage fully paid, to the other parties at the address shown above at least thirty (30) days before date of termination. Upon termination LOCAL AGENT shall be paid all earned commissions currently due and unpaid less any obligations due INSURER or GENERAL AGENT and thereafter shall have no further interest in the policies or contracts of INSURER or commission thereon whether sold by him during or before the life of this contract . . . .
[¶3] Each local agent's agreement contained an identical agent's annuity benefit attachment. The agent's annuity benefit attachments provided that the companies would pay "an annuity benefit as described herein on the total combined commissions earned on paid-for premiums written or serviced by Local Agent for [the companies] during each calendar year, subject to the conditions and limitations stated herein, . . ." The annuity benefits payable were to be applied by the companies "to the purchase of a deferred to age 65 annuity contract for LOCAL AGENT or to fund LOCAL AGENT'S Internal Revenue Service qualified retirement plan . . . ." One of the conditions and limitations provided in the attachments was that "[t]he annuity benefits hereunder shall be payable only if this LOCAL AGENT'S Agreement and Attachment are in effect on the last day of the applicable calendar year, unless earlier terminated by death of LOCAL AGENT."
[¶4] On November 27, 2002, a federal district court jury found Huber guilty of felony charges involving money laundering, fraud, making false statements, and tax related crimes. Huber was sentenced to five years in prison and ultimately ordered to forfeit $3.9 million. See United States v. Huber, 462 F.3d 945 (8th Cir. 2006); United States v. Huber, 404 F.3d 1047 (8th Cir. 2005). These convictions were not related to Huber's work as an insurance agent. On December 2, 2002, the North Dakota Insurance Commissioner, based on Huber's federal court convictions, issued a cease and desist order preventing Huber "from soliciting, transacting, or otherwise engaging in the business of insurance." The cease and desist order further provided that if Huber failed to request a hearing "within 30 days," the cease and desist order would become "permanent." Huber requested a hearing.
[¶5] On December 5, 2002, the general manager of Farmers Union sent Huber a letter which stated in part:
This is to notify you of the termination of your local agent's agreement with the Farmers Union Companies along with any other appointments secured through Farmers Union Service Association, Ltd.
This termination is based on, but not limited to, events that are in violation of the contract, culminating with the recent "cease and desist" order from the North Dakota Insurance Department. Without a North Dakota insurance license, you will not be able to perform the functions required of a Farmers Union insurance agent.
[¶6] On December 10, 2002, the federal district court issued an order freezing Huber's accounts and assets. On July 1, 2003, Huber entered into a consent order with the Insurance Commissioner that allowed his insurance agent license to be revoked. In a letter dated September 21, 2004, Farmers Union informed the United States Attorney that it was holding $253,869.11 in "unremitted earned commissions" belonging to Huber, and in November 2005, Farmers Union issued a check to the federal government for that amount. These funds did not include the annuity benefit of $34,534 based on Huber's production for calendar year 2002. The federal court order freezing Huber's assets was lifted in March 2006.
[¶7] After Farmers Union refused to pay him his annuity benefit for calendar year 2002, Huber brought this breach of contract action against Farmers Union to recover the annuity benefit of $34,534. Farmers Union argued its contractual obligations to Huber were extinguished as a matter of law upon his federal court convictions for felony fraud and upon the Insurance Commissioner's issuance of the cease and desist order. Farmers Union also argued Huber was not entitled to the annuity benefit because his local agent's agreements were terminated on December 5, 2002, and therefore those agreements were not in effect on the last day of the calendar year.
[¶8] Through a series of summary judgment rulings, the district court rejected Farmers Union's arguments. The court held Farmers Union was obligated to pay Huber the $34,534 annuity benefit because the parties' agreements required 30 days notice before termination, Huber was not given notice of termination until early December 2002, so the 30 days did not expire until early January 2003. The court held, consequently, the local agent's agreements remained in effect on the last day of 2002, entitling Huber to the annuity benefits under the parties' agreements. The court awarded Huber $34,534 plus interest, costs and disbursements. This award included ...