111 Wash. 439 | Wash. | 1920
In June, 1917, the respondent, Hurley-Mason Company, entered into a contract with the government of the United States for the construe
On July 10, 1917, the construction company, with the approval of the constructing quartermaster of the post, sublet, the work of conducting the commissary to the appellant Pacific Commissary Company. By the terms of the contract, the commissary company agreed to buy all of the provisions and supplies necessary to be used in the work, prepare and serve meals to the construction company’s employees, and to do the janitor work connected with the lodging places. The construction company, on its part, agreed to pay the costs of the provisions and supplies, and, as a consideration to the commissary company for its services, agreed to pay it for each meal served, prices ranging from one and
This contract, like the one between the construction company and the government, made no provision for charging the construction company’s employees with the meals supplied them. Such a charge, however, was made, and the sums collected thereon were turned over to the construction company, or credited to its account. The charge made was thirty cents per meal, which was afterwards -found to he less. than the actual cost by fifteen cents per meal.
The government had on the grounds at all times an accounting officer, denominated a “field auditor.” To prevent “duplication of forces,” this officer took charge of the accounting between the construction company and the commissary- company. He established a commissary warehouse in which all supplies purchased for the use of the commissary were received and from which they were disbursed as required for the immediate uses of the commissary company. The construction company seemed to have no connection therewith other than the duty of paying the hills. The method of operation, as described by. the bookkeeper of the construction ccompany, was substantially this; As .a particular commodity became low in the warehouse, a request for an additional supply would he made by the commissary company on the field auditor. H he approved of the purchase, he would make-out a requisition and send it to a purchasing agent. This agent would-make the purchase and cause the commodity purchased to he shipped to- the warehouse, where it would he examined as to quality and checked with the requisition. If -found correct in these respects an order would he sent to the construction company authorizing payment. That company would thereupon send its- check t<? the seller of-the commodity for the amount of the purchase.
These conditions continued until some time in December, 1917, when the construction company completed its contract with the government. The field auditor at that time cast the accounts relating to the commissary between the construction company and the government. He found that the gross loss to the construction company in the operation of the commissary had been $130,260.74. Of this sum he conceived that $7,768.08, which the construction company had paid, represented items properly chargeable to the commissary company because of the independent businesses conducted by it, and disallowed the same, leaving a net balance due from the government to the construction company of $122,492.66.
From the first statement of the account submitted by the auditor it is impossible (for us at least) to gather the items that make up the total of the amount disallowed. In part the items were the following:
Construction work on buildings.............. $623.24
Overhead on expense account' (proportion)... 2,517.80
Overhead on salaries account (proportion)... 4,906.82
Meals to employees of commissary company.. 1,400.85
Salaries.................................. 600.00
The item deducted for construction work was the cost paid by the construction company for labor and material used in fitting certain buildings (constructed for other purposes) with shelves, counters and other fixtures for use by the commissary company as stores. The items for overhead were a one-fourth part of the
From the total of the disallowances, certain fees for the service of meals were deducted, leaving the balance as stated.
A copy of the account was given the commissary company, whereupon its officers protested against the charges. It was then made the subject of further inquiry by the department at Washington and the account was recast. On the recast the finals remained the same, but there was a material change in the items making up the deductions. In the account as finally approved, the items were listed as follows:
Merchandise ............................. $1,801.50
Proportion of overhead expense........... 1,876.31
Proportion of overhead salaries........... 4,419.34
Meals to employees....................... 1,400.85
Truck services........................... 118.50
Repairs to buildings...................... 623.34
Making a total of.....................$10,239.84
From this was deducted fees.............. 2,467.65
Leaving a Ixet balance of $7,772.19
In this action the construction company seeks to recover from- the commissary company the amount of the disallowances made by the government auditor. In its complaint it set forth its contract with the government, its subcontract with the commissary company, and alleged in substance that the commissary company used the privileges accorded by the subcontract in the carrying on of businesses for its own benefit and emolument, other than the business provided for in its contract, causing the bills incurred in the operation of such businesses to be presented to and paid by it, along with other bills covered by-the terms of the agreement between them, thereby becoming indebted to it in the sum of ten thousand two hundred thirty-nine dollars and eighty-four cents, no part of which had been paid, except the sum of two thousand four hundred sixty-seven dollars and sixty-five cents, and that the balance was due and owing. It further alleged that, on April 13, 1918;. an account
In its answer the commissary company put in issue the allegations of the complaint tending to show liability on its part. It also set up an affirmative defense which heed not be set out in detail. In substance, the defense was that the contracting company, in consideration of a receipt given it by the commissary company, promised to present a claim for the items sued upon in its own name to the government for allowance; that it failed so to do, although leading the officers of the commissary company to believe to the contrary; that, if the claim had been presented, it would have been allowed and paid, and that its loss was due solely to the negligence of the construction company. •
The action was tried to the court sitting without a jury. The trial judge found that the commissary company had contracted, and the construction company had paid, the obligations which make up the items the auditor refused to allow the construction company in its settlement with the government, and that the obligations were incurred by the commissary company in the conduct of its private business, with which the
“The defendant sought to estop the plaintiff by showing that plaintiff had undertaken to present and prosecute a claim for the above mentioned balance to the government, and thereby procure its own reimbursement, and that it had not done so; but the court does not find that plaintiff did so undertake, and finds that if it had done so there was no consideration for its undertaking, and no bar therein to the prosecution of this action.
“Prior to the commencement of this action, defendant was an insolvent corporation, and was indebted to sundry creditors, not including plaintiff, for sums aggregating about $40,000; and to secure the payment of such indebtedness assigned all of its property to the intervenor, E. Gr. Lindberg, who took and now retains*449 all of said property except such as lie has paid to said creditors, and has been and now is carrying on defendant’s'business, as such assignee, for the benefit of said creditors who were not yet fully paid.
“Said Lindberg, from time when he took possession of the property of defendant, being informed' of the claim of the plaintiff to be considered a creditor of defendant, kept and reserved in his possession, out of the receipts coming to him from the business of defendant, a sum-proportioned to the sums he paid to the other creditors, to be paid to the plaintiff in case it established its debt against defendant by this action; which sum, on the 17th day of January, 1918, amounted to $4,663.31, and which sum he stipulated to retain for the use of plaintiff, to abide the event of this action. ’ ’
No direct finding was made on the issue of an account stated, but it is inferable from the findings as a whole that the issue was determined against the construction company.
On these findings the court entered a judgment for the amount deducted by the auditor, this being four dollars and eleven cents less than the total of the items making up the amount. From the judgment so entered, the commissary company and the intervener prosecute this appeal.
The appellants first contend that the respondent’s cause of action is founded wholly upon an account stated, and that there is in the record no evidence, or inference arising from evidence, from which it can be found that this account ever became an account stated between the parties. From this the conclusion is drawn that there was a failure of proof, and that the judgment is erroneous, since, in effect, it is a judgment unsupported by evidence. But to this we think there are at least two sufficient answers. The first is that the complaint states facts sufficient to constitute
The second answer is that to hold 'with the appellant’s conclusion would be to deny the respondent the benefit of the statutes relating to amendments of pleadings. If the allegations of the complaint were wholly upon an account stated, and the evidence failed upon that ground but justified a recovery upon another, the respondent would have been entitled to amend so as to make its allegations conform to its proofs. This court is required, in appealed causes tried to it de novo, to regard all amendments as made which could have been made. Rem. Code, § 1752. The effect of the rule is to compel us, in all cases where there is a variance between the allegations of the pleadings and the proofs in evidence, to disregard the pleadings and treat the evidence as stating the issues between the parties. So, here, if it were true that the complaint was based wholly upon an account stated, and the proofs showed a right to recover upon another ground, the variance
The trial court found, it will be remembered, that the appellant commissary company, in May, 1918, agreed in writing to pay to the respondent the amount found due by the field auditor. This finding was based on a letter dated May 8,1918, written by one Nathaniel Paschall to the accounting agent of the respondent in answer to letters from the agent demanding payment of the account. In this letter Mr. Paschall stated that he was endeavoring to get into communication with the officer of the government who had authorized the use of the facilities which resulted in the account, and his cooperation in presenting to the government a claim for reimbursement; adding:
“If this is allowed us, of course, we will make immediate settlement of your claim against our company. If, however, we are unsuccessful we will make partial settlement and will advise you when we can pay the balance. ’ ’
It was shown by other proofs that Mr. Paschall was a stockholder in the appellant corporation and its duly elected secretary. But it was shown, also, that the letter was written after the corporation had become insolvent, after it had assigned its property for the benefit of its creditors, and after its assets had been taken into possession by the assignee named in the assignment. The appellant contends, we think correctly, that this evidence does not justify the finding. It is a general rule that contracts and agreements made by an officer of a corporation on behalf of the corporation are binding upon it only when the officer at the time represents the corporation and is authorized to act on its behalf. At this time Mr. Paschall did not represent the corporation in the sense that he
Whether the letter was admissible as a declaration or admission on the part of the corporation that the obligation sued upon was a just obligation of the corporation incurred prior to the assignment, so as to be chargeable'against the property in the hands of the assignee and thus independent evidence of the fact sought to be proved, is a more troublesome question. In our opinion it was not. This, for the reason that it was not the act of the corporation, but the act of an officer who did not then represent its interests. Doubtless the officers of the corporation could testify that the obligation was just and was a proper charge against the property in the hands of the assignee. So, also,could they testify to the contrary. And had this par
It remains to inquire whether there was other evidence in the record from which the trier of fact can find that the indebtedness was established. As to the item for merchandise, the item for meals furnished employees, and the item for repairs of buildings, there is abundant evidence in the record to show that services of this sort were furnished, and that the obligations incurred thereby were obligations incurred for the private use of the appellant corporation. Since the appellant corporation caused them to be paid by the respondent, there arose on its part an implied promise that it would make the loss good to the respondent. The difficulty arises with the items themselves; that is, whether there is evidence from which it can be found that the items are just and represent the true balances due for articles delivered and services performed for which payment has not been made. The field auditor was not sworn, nor did any of the ■witnesses on the part of either party have knowledge of the true state of the account. But the auditor, in keeping the account, was the agent of both parties. Both assented, or at least acquiesced, in his so doing, and it was necessarily intended that, at the termination of the transaction, he should state the account 'between them. His statement is, therefore, as between the immediate parties to the transaction, and as between either of the parties and the assignee of one of them, admissible as evidence for or against either of them. No doubt the statement was subject to dispute
We have not overlooked the testimony of an officer of the appellant corporation 'to the effect that his corporation paid by its own checks for all of the items of merchandise taken from the commissary and applied to the private -use of the corporation. It is no doubt true that the corporation did make payments on the account as they were called for by the field auditor, but as its information as to the state of the account from time to time was derived wholly from the auditor, it could not be known by any of the officers whether or not the payments made were payments in full. The account as a whole was large. It involved transactions approximating a half million of dollars. Much material was on hand when the account was ready to close, and its true state could hardly have been known, even to the auditor himself, until the final balance was struck. In view of these facts, we cannot think the evidence of the officer impeaches the auditor’s statement.
In this connection the appellant contends that the rate charged for the meals furnished its employees is too large, since the cost is fixed at forty-five cents per meal instead of thirty cents, the rate charged the respondent’s employees. But the rate was fixed at the
The items for overhead, in which must be included the item for truck services, stand upon a different footing. These were incurred, for the greater part at least, under a direct agreement with the government that the appellant could make use of the facilities which give rise to them without cost to itself. By the terms of the contract between the government and the respondent, the government had an interest in the facilities used in these operations, and had agreed to reimburse the respondent for its expenditures in conducting the operations. The government, therefore, had such a direct interest therein as to empower it to make contracts with reference to their use by another. Since it agreed with the appellant corporation that it could make use of them in messing the officers sent to the army post on the government’s business, without charge, and agreed with the respondent that it should suffer no loss by reason thereof, there could arise no promise, either direct or implied, that the appellant would reimburse the respondent for such use, should the government repudiate its promise and charge the cost to the respondent, or, what is the same thing, refuse to allow the cost thereof in its settlement with it. It is not a ease referable to the rule which permits a loss, which one of two innocent parties must suffer, to be charged to the party whose act causes the loss. In this instance the appellant is equally innocent with the respondent in act and promise. Both acted on the promise of the government’s representative that no charge would be made for the use of the facilities which gives rise to the loss. The appellant, because thereof, did not seek to protect itself against it; in fact,
With regard to the matter referred to in the sixteenth finding of the court, before quoted, we think the court in error in its findings of fact, but correct in its conclusions with regard thereto on the facts as they appear in the record. The respondent, as we read the evidence, did promise that, as soon as its own accounts with the government were finally adjusted, it would present this claim to the government in its own name on the appellant’s behalf, and we think, further, there was a sufficient consideration for the promise. But we cannot conclude that the respondent intended thereby to relieve the appellant from its obligation, or postpone the time of its payment. On the contrary, it contended at all times that the obligation was the obligation of the appellant, but was willing to use its name and its friendly offices in an endeavor to have the government make good the loss to the appellant. The record shows in this connection that- these claims had not been adjusted at the time of the trial, and hence no breach of the promise had then occurred.
The foregoing considerations lead to the conclusion that the respondent is entitled to recover from the appellant corporation the sum of the items set forth in the auditor’s account under the heads “merchandise,” “meals to employees,” and “repairs to buildings,” but that it is not entitled to recover for the other items listed. A proportionate share of the judgment is payable, of course, from the funds in the hands of the assignee.
Holcomb, C. J., Main, Mount, Mitchell, Parker, Bridges, and Mackintosh, JJ., concur.