## Facts

- In 1926, Philadelphia insurance brokers offered to place reinsurance business with a reinsurer in exchange for a 5% commission on all reinsurance premiums the reinsurer received from a specified insurer’s treaty business.
- The reinsurer’s agent negotiated in New York, stated he needed authority from the home office, and later telephoned the broker to accept the offer.
- The reinsurer entered into the reinsurance treaty with the specified insurer and, from 1926 through 1953, paid the brokers the 5% commissions.
- In 1953, the reinsurer notified the brokers it did not consider itself further obligated and stopped accounting for and paying commissions on premiums received from that treaty business.
- The brokers sued in 1954 seeking an accounting for commissions on premiums received after the reinsurer’s discontinuance.
- In an earlier appeal, the court held that, for a telephone acceptance, the place of contracting is where the acceptance is spoken, and remanded for a jury determination of where the agent was located when he accepted by telephone.
- On remand, the jury found the acceptance was not spoken in New York; the trial court treated the oral contract as valid and ordered the reinsurer to account and pay commissions; the reinsurer appealed.

## Issues

1. Whether the oral commission agreement was enforceable given the jury’s finding that the acceptance was spoken outside New York.
2. Whether an agreement with no stated duration requiring continuing commission payments was terminable at will after a reasonable time.
3. Whether an accounting was a proper remedy to determine and recover commissions on premiums received after termination.

## Decision

- The court affirmed the judgment ordering the reinsurer to account and pay commissions.
- The jury’s finding that acceptance was spoken outside New York supported applying non–New York law and sustaining the contract’s enforceability.
- The court rejected the argument that the agreement was terminable at will after a reasonable time, because the brokers had fully performed by procuring the business and the reinsurer’s remaining obligation was continuing payment of agreed commissions.
- An accounting was proper because the reinsurer controlled the premium-receipt information needed to calculate commissions owed.

## Legal Principles

- For contract formation by telephone, acceptance occurs where the acceptor speaks the words of acceptance; the contract is “made” in that location for choice-of-law purposes.
- A statute-of-frauds challenge tied to the place of contracting depends on the fact-finder’s determination of where acceptance was spoken when acceptance is by telephone.
- The general rule that contracts of indefinite duration are terminable at will after a reasonable time does not apply where one party has fully performed and the other party’s duty is to pay continuing commissions for the business obtained.
- When the defendant exclusively possesses the financial data necessary to compute amounts due under a continuing payment obligation, equitable accounting may be ordered to determine and enforce the obligation.

## Conclusion

The court enforced the oral 5% commission agreement and held the reinsurer could not end the obligation as an at-will, indefinite-duration contract after enjoying the benefit of the brokers’ completed performance; the reinsurer was required to provide an accounting and pay commissions on applicable premiums received after it stopped payments.


Linn v. Emp'rs Reins. Corp., 397 Pa. 153, 153 A.2d 483 (Pa. 1959)