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contractors, and, in addition, 7 per cent thereof as general contractor's profit, it was held that the general contractor was not entitled to charge for depreciation of the equipment used.

But to the contrary is Hoggson Bros. v. Spiekerman (1916) 175 App. Div. 144, 161 N. Y. Supp. 930, in which it is held that a building contract, providing for a percentage to the contractors upon the cost to them of the completion of the work, includes a proportion of the overhead charges of the contracting firm; that is, part of the general cost to the firm of doing business.

Where the principal contractor sublets part of the work, the owner should not be required to pay double commissions, or profits, but the principal contractor should be permitted to charge only his percentage upon the actual material and labor furnished by the subcontractors, and not upon the profit of the subcontractors. Grafton Hotel Co. v. Walsh (1915) 142 C. C. A. 461, 228 Fed. 5; Bushnell v. Brand (1916) 199 III. App. 542.

To the contrary, however, is Hamilton v. Coogan (1894) 7 Misc. 677, 28 N. Y. Supp. 21, affirmed without opinion (1896) 148 N. Y. 753, 43 N. E. 987. where the contract called for the payment of the cost of labor and material used in the building, and 10 per cent added thereto as profit it being held that 10 per cent could be charged upon the entire amount paid to subcontractors, even where they did the work on a cost plus basis.

In Isaacs v. Reeve (N. J.) supra, involving the charges to be made against the original contractor of a building, who abandoned the work before it was finished, for work done by subsequent contractors upon a cost plus 10 per cent basis in completing the building, it was held that he could not be charged with the cost of plumbing and painting, which were finished by subcontractors under the original contract, nor with the 10 per cent for the second contractors upon those amounts. Nor could he be charged

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In Westendorf v. Dininny (1905) 103 App. Div. 593, 92 N. Y. Supp. 858, where a contractor was to be reimbursed for expenditures upon a building, and paid a percentage thereon, it was held that items for carfare and board of men who were brought from New York city to work upon the building should not be allowed, as the owner did not know of the custom to pay such expenses, nor was he chargeable with notice of such custom.

In Westinghouse, C. K. & Co. v. Long Island R. Co. (1914) 160 App. Div. 200, 145 N. Y. Supp. 201, affirmed without opinion (1915) 216 N. Y. 697, 110 N. E. 1051, it was held that the amount to be paid to contractors engaged to electrify certain lines of defendant's railroad, for which they were to be paid the actual cost, with 10 per cent added, the term actual cost being defined by the contract to include miscellaneous charges, such as fire and casualty insurance and cost of accidents, it was held that the contractors were entitled to be reimbursed for a sum paid upon a judgment for per< sonal injuries by an employee, which exceeded the amount of casualty insurance carried. It appears that the contractors did not claim their percentage upon this disbursement; but it is pointed out by presiding Justice Ingraham, in a dissenting opinion, that if it was proper to allow this charge it would necessarily follow that the contractors would also be entitled to charge their commissions upon the amount.

In Payne v. Cunningham (1917) 175 Cal. 166, 165 Pac. 531, it was held that -a provision in a contract for the superintendence of the alteration and

construction of buildings that, should the superintendent fail to keep within the maximum cost fixed in the contract, "no charge shall be made for such superintendence for such excess," was construed to entitle the superintendent to commissions upon the maximum fixed in the contract, but not upon the cost of construction exceeding that amount, the owner having contended that the superintendent was not entitled to any commission, because he exceeded the maximum cost.

Where part of the work was not properly done, the contractor is not entitled to charge for the cost of doing the work over; but the proper basis for his charge is what the work would have cost if it had been done properly in the first place. Hoggson Bros. v.

Spiekerman (1916) 175 App. Div. 144, 161 N. Y. Supp. 930.

In Priest v. Bircher (1877) 3 Mo. App. 565 (abstract), it was held that, where the superintendent of construction was to receive a percentage on any amount paid out for materials used or work performed in erecting a building, he was not entitled to a commission upon materials owned by the builder before the contract was made.

In Westendorf v. Dininny (1905) 103 App. Div. 593, 92 N. Y. Supp. 858, it was held that, where the contractor arbitrarily and unnecessarily raised the wage of a carpenter from $2.75 to $3 per day, he should not be allowed to charge for the increase, as he was bound to make the best terms he could for the builders. R. L. S.

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An agent who collects money belonging to his principal has no right to set off against it an antecedent debt or claim owing to him by the principal, without first showing that the principal has agreed that he might so apply it.

[See note on this question beginning on page 132.]

Headnote by ROBERTS, J.

APPEAL by defendant garnishee from judgments of the District Court for Chaves County in favor of plaintiffs in proceedings to collect claims against Nelson Brothers in which funds in possession of the Dexter State Bank, and alleged to belong to defendants, were garnished. Affirmed. The facts are stated in the opinion of the court.

(— N. M. —, 175 Pac.. 868.)

Mr. H. C. Maynard, for appellant: Under the contract between the defendants Nelson Brothers and the ap

pellant bank, there was simply a rela

tion of debtor and creditor created.

Davis v. Lenawee County Sav. Bank, 53 Mich. 163, 18 N. W. 629; Butcher v. Butcher, 134 Mo. App. 61, 114 S. W. 564; Killen v. Barnes, 106 Wis. 546, 82 N. W. 536.

The bank had a right to purchase claims, and had a good right to offset them.

Nix v. Ellis, 118 Ga. 345, 98 Am. St. Rep. 111, 45 S. E. 404; Bramblett v. Slemp, 32 Ky. L. Rep. 1329, 108 S. W. 339; 34 Cyc. 751.

A garnishee can be held in garnishment proceedings by plaintiff in garnishment only to the extent of the judgment debtor's claim against garnishee.

Bank of State v. Bredlow, 31 Mo. 523.

Messrs. Hiram M. Dow and Tomlinson Fort, for appellees:

Where an agent collects the funds of his principal, he has no right to buy up or arrange for the payment of outstanding claims due by his principal

to third persons, and to pay such claims without permission of his principal, and contrary to his directions.

Smuller v. Union Canal Co. 37 Pa. 68; Middletown & H. Turnp. Road v. Watson, 1 Rawle, 330; Tagg v. Bowman, 108 Pa. 273, 56 Am. Rep. 204. Roberts, J., delivered the opinion

of the court:

The same identical questions are involved in each of the above cases, and upon stipulation of counsel they are submitted upon the same transcript and briefs. The facts out of which the litigation arose may be briefly stated, as follows:

Nelson Brothers were partners, engaged in farming and stock raising. They were indebted to the Dexter State Bank in the sum of $492.50. They advertised a sale of their personal property, naming on the printed advertisements the Dexter State Bank as clerk of the sale and certain parties as auctioneers. After posting notices of the sale Nelson Brothers executed to the bank a bill of sale, covering all the property advertised for sale, for the purpose of securing the indebted

2 A.L.R.-9.

ness which they owed the bank. The arrangement between the bank and Nelson Brothers, as we understand the evidence, was that the bank was to act as clerk of the sale; that it was to discount the notes taken at the sale, and to pay the expenses of the sale, and turn over to Nelson Brothers the net proceeds of the sale, less the discounts, expenses, and its commission. The bank was to deduct from the proceeds the amount of the indebtedness owing the bank by Nelson Brothers. The bank, after the sale, had on hand aping to Nelson Brothers. They gave proximately $1,309.50 net, belongthe bank a check covering the amount owing it. This amount the bank placed to their credit, and honored the check.

Either immediately prior to the sale, or after the sale, the bank purchased certain claims against Nelson Brothers. At the sale, so the representative of the bank testified, certain parties purchased property belonging to Nelson Brothers, and set off the purchase price with claims which they they held against Nelson Brothers. The bank also paid out certain moneys on mortgages and judgments against Nelson Brothers. It asked that it be allowed an offset on the claims which it had purchased and held against Nelson Brothers, and the moneys paid out on such judgments, mortgages, etc. The trial court held that the bank was not entitled to the offsets and credits claimed, and gave judgment for the appellees. To review such judgments the appeals are prosecuted.

There is no contention as to the money paid the bank on the note owing by Nelson Brothers, secured by the bill of sale. This was paid, as stated, by Nelson Brothers' check. The question is as to the right of the bank to an offset on the claims purchased by it, and its claimed credits for the moneys paid out on the mortgage, judgments, etc. Appellant contends that, under the agreement between the bank and Nelson Brothers, there was created

simply the relation of debtor and creditor; hence, the bank had a right to purchase claims against Nelson Brothers, and set off such claims against the demand of Nelson Brothers. If appellant is correct in this contention, undoubtedly the bank would have the rights claimed for it. But here the bank was the agent of Nelson Brothers, and by virtue of such agency collected the money in question. An agent who collects money belonging to his principal has no right to set off

Set-off-by agent.

against it an antecedent debt or claim owing to him by the principal, without first showing that the principal has agreed that he might so apply it. Mechem Agency 2d ed. § 1349. In the case of Tagg v. Bowman, 99 Pa. 376, the court said: "An agent cannot avail himself of an advantage given by his agency, to apply it to his own benefit, to the injury of his principal."

In the case of Tagg v. Bowman, 108 Pa. 273, 56 Am. Rep. 204, the court said: "The receipt of money by one person from another, to be applied to a specific purpose, implies an agreement on the part of the former not to apply it to any other use, and of course not to his own by pleading a set-off. Smuller v. Union Canal Co. 37 Pa. 68; Bank of United States v. Macalester, 9 Pa. 475; Ardesco Oil Co. v. North American Oil & Min. Co. 66 Pa. 375, 380, 8 Mor. Min. Rep. 589. In Simpson v. Pinkerton, 10 W. N. C. 423, we held that an attorney at law or in fact, employed to collect a claim, when he has received the money, has no right to set off an antecedent debt or claim of his own against his constituent, without first showing that the latter agreed he might retain his demand out of the money. It was also ruled, in Middletown & H. Turnp. Road v. Watson, 1 Rawle, 330, that an agent of the company, who had received money to its use, could not, in a suit against him, set off debts of the company which he had paid without showing he had authority to pay them. It is there

said: 'As long as the agent acts within the scope of his authority, and no longer, he is protected. It was the duty of Watson to collect and pay over the funds as they came into his hands. It was for the company to direct the application of the money, when in the treasury or under their control, to the discharge of their debts, the repair of the road, or whatever purposes they might suppose most beneficial to the corporation. This they have been prevented from doing by an assumption of power by their agent and a misapplication of the funds of the company. If such a breach of trust should be permitted, it would, in practice, lead to great abuses, by in. troducing a scene of speculation and fraud the most disastrous, and of the most secret and dangerous nature."

The trial court evidently refused to allow the bank credit for the money paid out by it on the judgment and mortgage, on the theory that it had no right to make the payments without specific authority of its principal, and further because the bank failed to show that these liens were legal and valid. It made no attempt to show this, going no further than to show that it had made the payments on a mortgage and a judgment. Nor did it attempt to show that the offsets which it had allowed purchasers of property at the sale were valid and legal debts owing by Nelson Brothers.

Finding no error in the proceedings, the judgments in each of the causes will be affirmed; and it is so ordered.

Hanna, Ch., J., and Parker, J.,


A petition for rehearing having been filed, Foberts, J., on November 21, 1918, handed down the following additional opinion:

Counsel for appellant has filed a motion for rehearing, supported by an acrimonious brief, in which he asserts that the doctrine of law announced by the court is preposterous, and that the court failed to

(—— N. M. —, 175 Pac. 868.)

read the record. The burden of his
complaint now seems to be that the
court committed a grievous error in
not giving the bank credit for
$107.16, which it alleged that it had
paid to Martin and Sweeney, alleged
to have held a chattel mortgage on
four head of horses.
He now as-
serts that the evidence shows that
Nelson Brothers authorized this
payment and further that the mort-
gage was valid and binding.

First, as to the accusation made by counsel that the court failed to read the record: The record was read with great care by the writer of the former opinion. In fact it was necessary to read the record in full in order to arrive at any intelligent understanding as to the facts in the case. Appellant's assignments of error were as follows:

"(1) The court erred in rendering judgment against the appellant upon its answer filed herein.

"(2) The court erred in rendering judgment against the appellant in favor of said appellees.

"(3) The court erred in rendering judgment against the garnishee herein, for the reason that said judgment is not supported by the evidence.

"(4) That said judgment rendered herein is contrary to law and not supported by the evidence."

Under the rule announced by this court in the case of Farmers' Development Co. v. Rayado Land & Irrig. Co. 18 N. M. 1, 133 Pac. 104, the court might well have declined to go into the merits of the case; but, as appellee had raised no question as to the sufficiency of the assignments of error, the court kindly refrained from noticing the deficiency of its own motion, and read the record in connection with appellant's brief, in order to enable it to determine the merits of the controversy.

It is well to state that, in the argument advanced by appellant in support of his claim that the cause should be reversed, the only language that might be construed as advancing the proposition which he

now urges in his motion for rehearing is the following: "Our contention is we did not owe the judgment debtor, except a small amount, which has been taken care of in the judgment, and that we should be allowed to set off the amounts as set out in this brief and shown by the evidence."

In his statement of the facts in the case the only reference to the matter, other than the itemized list of the claims, is as follows: "The testimony is undisputed that the $107 paid to Martin and Sweeney was by virtue of an existing chattel mortgage and at the express wish of Nelson Brothers, given prior to said sale."

Appellant sets out in his brief on the motion for rehearing excerpts from the testimony, which he claims show that Nelson Brothers authorized the bank to pay the $107.16 on the mortgage. The cashier of the bank was on the stand, and he was asked: "Upon whose orders did you pay this $107.16?" His answer was: "That is hard to state; partly on Nelson's, and partly on my own." The witness further testified that the mortgage was a valid and subsisting lien upon the horses, but did not produce the mortgage, nor did he testify as to the amount called for by the same. The same witness later, however, testified that Nelson Brothers had asked them to place the proceeds of the sale to their credit, less the amount owing the bank under the bill of sale, and that Nelson Brothers themselves be permitted to check out the money and pay the various claims, and that Nelson Brothers never did consent for the cashier of the bank to pay the claims out of the moneys derived from the proceeds of the sale.

The trial court, in view of the equivocal statement that Nelson Brothers had "partly" authorized them to apply the money on the mortgage, and the unequivocal statement to the effect that they had refused to authorize them to pay out any of the money, evidently elected to believe the latter, and this court

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