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liability of Midwest (or Whitco).2 ITT maintained accounts to
document the advance commissions that it had paid to its agents,
as well as to monitor the later events that would affect these
commissions.
ITT, Midwest, and petitioner terminated their business
relationship in July 1983. On August 3, 1983, ITT filed suit
against petitioner, Midwest, and Whitco (collectively referred to
as Defendants), for repayment of advance commissions and loans
(ITT litigation). ITT alleged, in part, that Midwest owed ITT:
(1) Approximately $237,000 in advance commissions, derived from
policies which were under imminent threat of cancellation by the
policyholders, (2) $32,068 with respect to two loans,3 and
(3) $100,000 in exemplary and punitive damages. Petitioner was
named as a defendant because he guaranteed all of Midwest’s
obligations to ITT.
In or about September 1983, the Defendants answered the
complaint, generally denying each material allegation therein.
On or about July 23, 1984, the Defendants filed a counterclaim
2 Under the Agent's Contract and the Agreement, ITT could
cancel its policies and refund the corresponding premiums, and
Midwest would be liable for repayment of the unearned commissions
on the premiums.
3 On or about Nov. 11, 1982, Midwest had borrowed $4,700
from ITT, and on or about Feb. 9, 1983, Midwest had borrowed
$30,000 from ITT. The $4,700 loan was repayable (with interest)
in 12 monthly payments of $413.20, the first payment due on
Jan. 1, 1983. The $30,000 was repayable (without interest) on
demand, but the entire loan would be forgiven if Midwest met
certain life and health insurance quotas.
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Last modified: May 25, 2011