SHERMAN & ELLIS, INC. (Managing C) v. INDIANA MUTUALCASUALTY CO.

FACTS:

INDIANA MUTUAL CASUALTY CO. is a company engaged in the business of writing

casualty insurance and adjusting the losses growing out of such insurance
SHERMAN & ELLIS is an Illinois C that transacted a large business in casualty
insurance.

INDIANA MUTUAL entered into a Management Contract w/SHERMAN & ELLIS for
a period of 20-years. The MC provides that: “That for and during the period of 20
years from the date hereof, [SHERMAN & ELLIS, INC. (Managing C)] will supply xxx
The underwriting and executive management xxx in the person of its president,
Frank Ellis, or such other of its officers as it may from time to time designate”
“….during said 20 year period” the CASUALTY CO. shall elect the officer furnished
by SHERMAN & ELLIS, INC. (Managing C) for its underwriting manager who “shall
have general supervision and charge of the underwriting affairs of the C.”

INDIANA MUTUAL CASUALTY CO. terminated its Management Contract after

some difficulties had arisen between SHERMAN & ELLIS and the Indiana State
Department and after an unsuccessful attempt has been made by the state to
have a receiver appointed for the CASUALTYCO.

SHERMAN & ELLIS filed an Action for Specific Performance w/Damages against
the CASUALTY CO. to enforce the contract .

Defense: The agreement is void as against public policy, and therefore its breach
created no liability on the part of the CASUALTY CO.

ISSUE: WON the Mutual Contract is void?

HELD: The Mutual Contact IS VOID.

Such an agreement negatives the thought that SHERMAN & ELLIS (Managing C)
was merely the soliciting agent of the CASUALTY CO. It contemplated the
substitution of the Managing C for the officer of the CASUALTY CO. What was the
CASUALTY CO. business? To write casualty insurance and adjust the losses
growing out of such insurance. If there existed a conflict of opinion between the
Board and SHERMAN & ELLIS (ManagingC), whose voice under this contract would
control? Obviously SHERMAN & ELLIS’s.

The length of time (20 years) during which the agreement was to operate likewise
indicated that not only managerial powers, were delegated, but the entire policy
of the CASUALTY CO. business was to befixed and determined by SHERMAN &
ELLIS (Managing C).Hence, the CASUALTY CO. was to be merely an instrumentality
through w/c SHERMAN & ELLIS (Managing C) was to conduct a casualty insurance
business in the state of Indiana.