Hart v. L. D. Garrett Co. — 84 N.Y.S. 774

Majority

p. 774

HART v. L. D. GARRETT CO.

(Supreme Court, Appellate Division, First Department.

November 20, 1903.)

Headnote

1. Action at Law—Contracts—Compensation—Accounting.

Plaintiff alleged that defendant contracted to pay him a part of the net profits realized by defendant on a sale of any insurance company’s .stock to a purchaser procured by plaintiff; that plaintiff procured a purchaser for the stock of an insurance company; that the sale was consummated, and defendant realized a net profit thereon of about a specified sum; that thereafter defendant paid him a part on account; that the parties entered into an agreement reciting that a payment had been made on the contract, and providing that the' balance, if any, should be determined and paid to plaintiff within 90 days, plaintiff reserving all his rights under this contract; that after the lapse of the 90 days plaintiff demanded payment of the balance; that the same was not paid, and that there was owing to plaintiff a specified sum. Held, that plaintiff’s remedy was at law, the second agreement not rendering an accounting necessary, though it was essential for plaintiff to prove

p. 775

the compensation received by defendant, and the expenses which it was entitled to deduct in arriving at the balance on which plaintiff's compensation might be computed.

Van Brunt, P. J., dissenting.

Appeal from Trial Term, New York County.

Action by Arthur W. Hart against the L. D. Garrett Company. From an order striking the cause from the jury calendar, plaintiff appeals. Reversed.

Argued before VAN BRUNT, P. J., and McLAUGHLIN, PATTERSON, O’BRIEN, and LAUGHLIN, JJ.

William B. Ellison, for appellant.

Lewis L. Delafield, for respondent.

The only ground upon which this motion was based is that this is a suit in equity, and not an action at law. We are of opinion that the plaintiff was entitled to a jury trial of the issues upon the ground that this is an action at law. It is alleged in the complaint that the defendant contracted in writing with the plaintiff to pay him one-fifth of the net profits realized by the defendant on a sale of any insurance company or any insurance company’s stock to a purchaser procured by him, such payment to be made as soon as the defendant received its compensation or commission for effecting the same, provided that, if defendant was not paid in cash, it was to pay the plaintiff in cash, less the usual bank discount for the period of credit which it was obliged to extend; that the plaintiff did procure a purchaser for the stock of the Orient Fire Insurance Company of Hartford, Conn.; that the sale was consummated, and defendant realized a net profit thereon of about $140,000; that thereafter the defendant paid the plaintiff $6,500 on account, and thereupon the parties for a good and valuable consideration entered into an agreement, in words and figures following:

“Received upon within contract the sum of six thousand five hundred dollars ($6,500). The balance under this contract, if any found to be due, shall be determined and paid to the within named A. W. Hart within (90) ninety days from the date hereof by said L. D. Garrett Co., the said A. W. Hart reserving all his rights under this contract.

“New York, June 25th, 1900. A. W. Hart.

“L. D. Garrett Co.,

“By L. D. Garrett, Prest.”

—That after the lapse of 90 days from the making of the last-mentioned contract, and prior to the commencement of the action, the plaintiff demanded payment of the balance “due as aforesaid,” but that the same was not paid, and there remains due and owing to the plaintiff the sum of $21,500, together with interest.

It is clear that the original contract constituted an agreement on the part of the defendant to compensate the plaintiff for his services in procuring a purchaser for the insurance company or its stock, the compensation to be determined by a proportion of the commissions received by the defendant after deducting its expenses. The parties were not partners, and there was no joint venture. The plaintiff had no direct interest in the commissions or compensation to be

p. 776

received by the defendant. Such commissions or compensation merely served as a basis for determining the amount that plaintiff was to receive for his services. In these circumstances a suit in equity for an accounting would not lie, and the plaintiff’s remedy is an action at law. Smith v. Bodine, 74 N. Y. 30 ; McCullough v. Pence, 85 Hun, 271 , 32 N. Y. Supp. 986 ; Chaurant v. Maillard, 56 App. Div. 11 , 67 N. Y. Supp. 345 ; Lee v. Washburn, 80 App. Div. 410 , 80 N. Y. Supp. 1040 ; Everett v. De Fontaine, 78 App. Div. 219 , 79 N. Y. Supp. 692 ; Schantz v. Oakman, 163 N. Y. 148 , 57 N. E. 288 . Indeed, the learned counsel for respondent concedes that under the original agreement the plaintiff could maintain an action at law; but he contends that the receipt herein quoted constituted a new agreement, which renders an accounting necessary. Although the receipt seems to have been prepared with considerable formality, we find therein no waiver or cancellation of any right the plaintiff had under the original agreement, except an extension of time for the payment of the balance owing to him. Upon default in making such payment within 90 days, the plaintiff was at liberty to proceed by an action at law upon the original contract. It will be essential for the plaintiff to prove the commissions or compensation received by the defendant, and the necessary expenses which it is entitled to deduct in arriving at a balance upon which the amount of his compensation may be computed; but this in no sense constitutes an equitable accounting. It is the mere proving of an account as a basis for a re» covery in an action at law.

It follows, therefore, that the court erred in striking the cause from the jury calendar, and the order should be reversed, with $10 costs and disbursements, and the motion denied, with $10 costs. All concur, except VAN BRUNT, P. J., who dissents.

VAN BRUNT, P. J. I dissent. The prayer for judgment was for equitable relief.

Cases cited

Smith v. Bodine 74 N. Y. 30 N.Y. 1878-05-28 p. 776
Schantz v. Oakman 163 N. Y. 148 N.Y. 1900-05-15 p. 776