168 A.D. 569 | N.Y. App. Div. | 1915
Lead Opinion
Present—Ingraham, P. J., McLaughlin, Laughlin, Dowling and Hotchkiss, JJ.; Hotchkiss, J., dissented.
The following is the opinion of the referee:
The defendant is a corporation of the State of Pennsylvania, located in Scranton in that State, and during the times
The action is in equity for an accounting between the parties in respect of all the matters set forth in the complaint, and in its answer the defendant “. concedes that the action is within the cognizance of a Court of Equity and admits that the accounts passed between the plaintiff and the defendant should he opened and the respective rights of the parties readjusted.”
For a first cause of action the plaintiff alleges that his agency for the defendant, under the agreements mentioned above, came to an end on the 2d day of March, 1908, and that he then gave up to the defendant “the local office, office properties and the records of the business transacted during the period from the 2d of March, 1906, to the 2d of March, 1908, as well records covering the period from March, 1904, to March 2, 1906; ” that there then remained uncollected premiums on business procured in the plaintiff’s territory amounting to $59,000, to twenty-five per cent of which, less deductions for commissions (if any) paid to brokers and cosureties, the plaintiff was entitled; that after making all proper deductions, there will, on an accounting, be found due to the plaintiff at least the sum of $12,000, no part of which has been
Eeference to the 5th clause or section of the said agreements is necessary to a correct understanding of this counterclaim. It reads as follows:
The defendant’s contention is that by this clause the plaintiff guaranteed to the defendant the payment of all premiums on all bonds issued by him as the defendant’s agent, and became personally liable to pay to the defendant the premium on each bond within sixty days after the bond was issued. The clause is, perhaps, if strained and separated from the context, susceptible of such a construction, but in my judgment, reading the clause in the light of the facts disclosed by the testimony, such a construction is neither reasonable nor fair, and would not truly express the meaning and intention of the parties "to the contract. The learned counsel for the defendant says in his brief: “The circumstances are that Clausen was granted extraordinary powers and extraordinary compensation, which were so great that they can only be explained by his guaranty of all premiums. He was allowed to write any bonds in his own discretion, but he guaranteed the collections, and for this he was granted extraordinary pay and extraordinary allowance of expenses; ” but I have found no proof in the case that either the powers or the compensation granted to Clausen were in any particular unusual or in excess of powers and compensation granted by the defendant to other agents under similar conditions. It is true that Mr. Watres, the president of the defendant, testified that it was always his understanding “ that during the running of the first contract Mr. Clausen was the guarantor of the premiums,” and “I never had any doubt in my mind as to the meaning of the contract in that regard,”
Clause 5 provides first, that the plaintiff shall collect all premiums for bonds issued by him, and second, account for and make monthly statements and remittances of his collections. Then follows the provision in dispute: “ Provided, however, the premiums for all bonds issued shall be accounted for and paid by the agent to the company within the second calendar month succeeding the issue of the various bonds.” The usual or common meaning of the word “provided,”
It is substantially true that from the beginning and during the entire terms of the contracts the plaintiff did not account for and pay to the defendant the premiums for all bonds issued by him within two calendar months “ succeeding the issue of the various bonds. ” The record shows that during the entire period of the agency the overdue and unpaid premiums on the Clausen bonds aggregated large sums, and that urgent appeals to collect and remit were being continually made to Clausen by the home office, and that neither by letter nor otherwise was any demand made by the defendant upon him to make good the premiums which were in default or any claim made or intimation given that he was personally liable for such premiums or for any premiums beyond those actually collected by him. Just what the defendant did claim and insist "upon will appear by reference to a few of the letters written to the New York office. On October 24, 1905, Gott, the manager of its surety department, wrote Bayley, the resident manager in New York, referring to an indebtedness to the defendant of $11,000 due the defendant from the Empire State Surety Company, and saying: “ Was it not possible to collect something from them, or did the amount which you collected from them go to the pay
When the plaintiff’s employment as agent came to an end on March 2, 1908, the New York office and all of its records, accounts and business were turned over to and taken possession of by the defendant. At that time there were unpaid and outstanding premiums on bonds issued by the plaintiff, amounting, according to the third supplemental account filed herein by the defendant, to $58,621.75. Of these premiums, the larger part, amounting to $43,316.48, has since and prior to November 1, 1912, been collected by the defendant. The plaintiff claims that he is entitled to the agreed commission of twenty-five per cent on the amount so collected. This the defendant denies, and rests its denial upon the proposition that “no commissions under the contract were earned except as to premiums collected and accounted for by the plaintiff.” I do not assent to this proposition. It is too broad. It was inevitable, in the nature of things, that some premiums on bonds issued by the plaintiff should remain uncollected at the termination of the agency. His right to collect or receive them ceased when his agency ceased. It was not, I am sure, the intention of the parties that the plaintiff should suffer a loss of commission on premiums uncollected when his contract of agency expired, but which were subsequently received by the defendant. As to premiums which would accrue and be collected by the defendant after the expiration of the contract, it was expressly agreed that twenty per cent thereof should be paid to the plaintiff. As stated above, on March 2, 1908,
The plaintiff’s second alleged cause of action is for a percentage of premiums on bonds issued by him which became due after March 2, 1908, and were collected by the defendant. It is based on the 8th clause of the contract which reads as follows: “The company shall also pay to the said Clausen twenty (20) per cent of all premiums that accrue after the termination of this agreement and which are received by the company on bonds issued during the continuance of the agreement in said territory.” The defendant does not deny that such premiums, to a considerable amount, have been collected by it, and that the plaintiff is entitled to twenty per cent thereof. In the third supplemental account filed by the defendant, it admits that from March 2, 1908, to October 31, 1912, the plaintiff’s twenty per cent on collections so made by it, “less premium paid to co-sureties,” amounts to $12,647.52, and that he is also entitled to a share of “co-sureties’ proportion of renewal premiums,” between the said dates, amounting to $3,525.63. Against these sums the defendant charges the plaintiff with $1,218.51 for his “share of brokerage paid on renewals collected from March 2, 1908, to October 31, 1912;” and with $3,622.82 for his “ share of co-surety commissions paid on renewal premiums collected ” between those dates; and with $179.09 for
For a third cause of action the plaintiff alleges that in rendering monthly accounts to the defendant errors were made in charging and crediting the plaintiff with shares or percentages of cosurety commissions, whereby plaintiff was damaged in the sum of $!00. The defendant concedes that such errors were made and that plaintiff is entitled, therefore, upon this accounting, to an allowance of $618.14, which the plaintiff accepts.
For a fourth cause of action it is alleged that between March 2, 1906, and March 2, 1908, or during the existence of the second contract, “bonds of insurance and guarantee business were, in truth and in fact, issued by defendant from its head office in the State of Pennsylvania, covering business in the said territory of the boroughs of Manhattan, Brooklyn, Bronx, Richmond, Westchester county and New Jersey, and also some that did pass through the New York office, none of which was included in the accounts heretofore rendered and passed between plaintiff and defendant; ” that the plaintiff had no
By the 1st clause of the agreement of March 2, 1906, the defendant employed and appointed Clausen its general agent for its surety or guaranty business for the several boroughs of New York city, and for the county of Westchester, and for the State of New Jersey, when the defendant should be authorized to do business in that State, and it was agreed that “ the agency granted hereunder shall be exclusive, and all bonds issued by the company in the above mentioned territory shall pass through the office of the agent, and be subject to the terms of this agreement.” Proof was made of the issuance by defendant of numerous bonds on applications presented by agents other than Clausen, some in cases where the contracts related to work to be done in Clausen’s territory — others to cases where the contractors resided or kept offices within, but the work was to be done without, that territory. I do not understand that the plaintiff lays claim to commissions or percentages on the latter class of bonds, for his learned counsel, in construing the language quoted above, to wit, “ all bonds issued by the company in the above mentioned territory,” says: “ This can only mean that where the work to be performed, upon which the bond is required; is in this territory, the plaintiff is entitled to the commissions.”
It appears that during the entire period of the plaintiff’s agency there was in force a rule of the company, of which the plaintiff had knowledge, relating to bonds of the kind embraced in this fourth cause of action. It was in these words: “ Contract bonds to be executed and delivered in the territory of another agent. It often occurs that application for a contract bond is made to an agent in one city, while the bond is to be executed and delivered in another city. When this happens the course to be pursued is as follows:
“ The agent to whom the application is made wires the home office, stating the conditions surrounding the risk * * * and requests that the agent at the city or town where the bond is required be authorized to execute the same. If the business
My opinion is that this rule is a complete answer to the plaintiff’s claim. He admits its binding force by his complaint and by the brief filed in his behalf. In his complaint he asks that the defendant be required to render an account of “ all such bonds and indemnities so issued, to the end that plaintiff may receive Ms proportion of the premiums arising therefrom; ” and in his brief he asserts his right to recover “ ten per cent of whatever sum it may be decided represents the premiums on bonds written in plaintiff’s territory.” And Bayley, plaintiff’s witness, testified: “It is customary when one agent invaded another agent’s territory, that the agent controlling the business, receiving- the application, in other words, should receive fifteen per cent commission, whereby the agent executing the bond, or whose territory has been invaded, received ten percent.” It is plain that the defendant is not liable to the plaintiff for these part commissions. The plaintiff must look to the agents who secured the business and to whom the full commissions were paid.
In its answer the defendant has set forth two counterclaims “to the entire complaint.” The first is based upon its contention that by clause 5 of the contracts the plaintiff became a guarantor and personally liable to the defendant for all the premiums on all the bonds issued by him as its agent. At the time the answer was filed the defendant had received $36,687.68 of the premiums unpaid on March 2, 1908, when the agency terminated, and there remained $21,934.07 of such premiums still uncollected. Of this latter sum, the defendant claimed to recover seventy-five per cent, or $16,450.55. I have already stated my opinion' that the plaintiff did not assume or incur a personal liability for the premiums as guarantor or otherwise, and this item of the counterclaim is disallowed.
A third item of $807.25 is for brokerage and cosurety commissions which it is alleged “have not been paid, although the same are due and payable by defendant to the several brokers and co-sureties to whom the same were allowed ” by the plaintiff on bonds, the unpaid premiums on which amounted to the said sum of $21,934.07. This item, by reason of collections made by defendant since the answer was filed, and prior to November 1, 1912, has been reduced to $281.66, and seems to be a proper charge against the plaintiff.
The second counterclaim “to the entire complaint” is for $18,414.57 and interest, and arises out of the following facts, which are not in dispute. By the 3d clause of the contracts it was agreed as follows: “The company shall appoint George G. Clausen resident vice-president, and shall be authorized by the company to execute jointly with the resident secretary, to be appointed by the company, judicial, official, contract and fidelity bonds and other bonds and undertakings without the same being referred to the company’s home office.” And by the 7th clause it was provided that, after deducting from the gross premiums the sum of $12,000 for office expenses, “the balance of such premiums shall be apportioned and disposed of as follows: seventy-five per cent thereof shall be accounted for and paid by the agent to the company; twenty-five per cent thereof shall be retained by the agent as his commission and compensation, as general agent thereunder.” During the four years of the plaintiff’s service as agent, many of the bonds executed by him were for large amounts in which
“ The Williams Engineering and Contracting Company was principal on a bond for $450,000. There were three surety companies on this bond. The premium on the whole bond was $4,500 — $1,500 going to each company. The plaintiff took twenty-five percent of the entire $4,500. He remitted $3,000 to the other two companies and sent the balance, or $375, to the defendant. If the plaintiff had followed clauses five and seven of the contract, he would have remitted $3,000 to the other two companies, retained twenty-five per cent of the defendant’s share of the premiums ($1,500)', or $375, and remitted seventy-five per cent thereof to the defendant.
“Thomas J. Brady and Company was principal on a bond for $300,000. There were four surety companies on the bond, each receiving $750 of the total premiums of $3,000. The plaintiff took twenty-five per cent of the total premium, or $750, leaving nothing for the defendant. On this bond there was brokerage paid, and commissions were received from the other companies, because the defendant was the procuring company. These were divided as provided in clause nine. The
“ The Snare & Triest Company was principal on a bond for $400,000. There were four surety companies on the bond. The defendant’s share of the total premium of $6,000 was $1,850. Instead of taking twenty-five percent of the $1,850, the plaintiff took twenty-five per cent of the $6,000, or $1,500, leaving $350 for the company, instead of the seventy-five per cent to which it was entitled by the contract. There was the usual brokerage and commissions, which were divided according to clause nine of the contract—the net result being that the plaintiff got $1,665, or seventy-seven and a half per cent, and the company got only $415, or twenty-two and a half per cent.”
The total premiums which should have gone to the defendant, but which were retained by the plaintiff under his erroneous construction of clause 5 of the contract, amounted to $18,414.57, and for this sum and interest the plaintiff should account to the defendant. The plaintiff alleges as a defense that this method of apportioning and disposing of premiums on cosurety bonds was shown in the monthly statements rendered by him to the defendant during the entire term of his agency, and that payments were made to the defendant on the basis of such statements, and were received and accepted by the defendant “as a full accord and satisfaction of the claim embraced in said second counterclaim, without question or dispute,” and that no question was raised by the defendant as to the correctness of such statements or of plaintiff’s said method of apportioning said cosurety premiums until about the end of his agency, “and that was after all payments thereunder had been made and accepted as a full accord and satisfaction, as aforesaid.” This, I think, is not tenable. I agree with the defendant’s counsel that this is not a case of accord and satisfaction, or of an estoppel, or of an account stated. Moreover, the plaintiff himself asserts.that there were errors to his prejudice in the accounts rendered by him to the defendant, and as part of the relief sought by him demands “ that there he had a full accounting between plaintiff and defendant respecting any and all of the matters set forth in the several causes of action set forth in the complaint, according to the respective rights
That account is brought down to October 31, 1912, and is divided into two parts. In the first part “ The above-named defendant credits itself with: ”
Item 1. Amount of uncollected premiums on March 2, 1908 — $58,621.75. This does not enter into this accounting.
Item 2. Plaintiff’s share of brokerage and cosurety commissions on premiums uncollected' on March 2,1908, and still uncollected—$281.66. This is allowed.
Item 3. Plaintiff’s share of brokerage paid on “ renewals ” collected since March 2, 1908 — $1,218.51. This is allowed.
Item 4. Plaintiff’s share of cosurety commissions paid on “ renewal” premiums since March 2, 1908 — $3,622.82. This is allowed.
Item 5. Twenty-five per cent of premiums paid to cosureties and erroneously retained by plaintiff — $18,414.57. This is allowed.
Item 6. Share of brokerage on “renewals” omitted from former statement—■ $179.09. This is allowed.
Item 7. Share of cosurety commission “ renewals ” omitted from former statement —■ $228.70. This is allowed.
Item 8. Twenty-five per cent of cosurety premiums, erroneously retained by plaintiff and omitted from former statement
— $86.25. This is allowed.
Item 9. Erroneous credit to plaintiff for uncollected premiums—$65. This is allowed.
Item 10. Erroneous credit to plaintiff — $26.63. This is allowed.
Item 11. Share of commissions on premiums credited to
Item 12. Adjustment of commissions in matter of George W. Kearney — $505.73. This needs explanation.
Item 13. Interest on premiums uncollected on March 2, 1908, but collected by defendant prior to December 31, 1908 — $1,203.48. This is not allowed.
Item 14. Interest on premiums uncollected on March 2,1908, but collected by defendant prior to February 28,1910 — $328.86. This is not allowed.
Item 15. Interest on premiums uncollected on March 2, 1908, and remaining uncollected on February 28, 1910—$1,105.81 This is not allowed.
Item 16. Estimated interest on uncollected premiums from February 28,1910, to October 31, 1912 — $1,055.18. This is not allowed.
Item 17 and item 18. Interest on premiums referred to in item 5. The defendant is entitled to interest from dates of retention to date of report, but not to interest on interest.
Item 19. Excess interest allowed plaintiff on bond 2278 — $916.63. This needs explanation.
In the second part of the account “ The above-named defendant charges itself with: ”
Item 1. Premiums uncollected on March 2, 1908, but collected by defendant since and prior to October 31, 1912 — $43,316.48. This charge is made on the theory that the plaintiff was personally liable to defendant for the $58,621.75. It will be disregarded on this accounting.
Item 2. Twenty-five per cent of premiums remaining uncollected on October 31,1912 — $1,568.75. This also will be disregarded for the same reason.
Item 3. Twenty per cent of “ renewal ” premiums collected by defendant from March 2, 1908, to October 31, 1912 — $12,647.52.
Item 4. Plaintiff’s share of cosurety commissions received on cosurety’s proportion of renewal premiums from March 2, 1908, to October 31, 1912 —$3,525.63.
Item 5. Errors as to cosurety commission $678.14. This is the claim set forth in plaintiff’s third cause of action.
Item 7. Net commissions on premiums on final bonds, etc.— ' $57.68.
Item 8. Plaintiff’s share of additional premiums omitted from former statement—$45.
Item 9. Deduction from the $58,621.75 — $9,901.90. This will not enter into this accounting.
Item 10. Deduction from share of cosurety commissions, etc. — $252.16.
Item 11. Twenty per cent of additional premiums collected by defendant prior to February 28,1910, and omitted in former statement — $521.09.
Item 12. Plaintiff’s share of cosurety commissions collected by defendant prior to February 28, 1910 — $334.69.
The defendant should also be charged with twenty-five per cent commissions on premiums which were unpaid on March 2, 1908, but were collected by defendant prior to October 31,1912, amounting to $10,829.12.
Each party is entitled to interest upon his or its claims against the other from the dates when said claim became due respectively, until the date of the referee’s report.
For the purpose of correcting any errors in figures, and of considering further the question of interest, and of receiving explanations of some items with which the defendant has credited itself in the said supplemental account, I appoint Tuesday next, October twenty-eighth, at two p. M., for a hearing herein.
Dissenting Opinion
I dissent. Conceding that defendant had the right to open the account for fraud, or under such circumstances as would constitute mistake according to its legal definition, there was no proof of either. The original contract was made .on March 2, 1904, and ran for two years. At the end of this period a new contract was .entered into for a further term of two years. At an early stage of the first contract differences arose between the parties as to its proper construction with respect to plaintiff’s percentage in cases of co-surety con