Camp v. Treanor — 60 N.Y. St. Rep. 85

Majority

p. 85

William H. Camp, Resp’t, v. James J. Treanor et al., App’lts.^[1]

(Court of Appeals,

Filed June 5, 1894.)

Headnote

Í. Contract—Construction.

Where an agreement provides that out of, the payments due or to become due, all just claims for material furnished or labor performed under the said contract with the city be first paid, and should there be any surplus remaining after the payment of all just claims, then such surplus to be equally divided among the parties herein named, except the plaintiff, who is to receive as his share an amount equal to ten per cent, of the actual cost of the labor and materials used in the construction of the building as set forth and specified in the contract, and such ten per cent, shall be in full settlement of all claim the plaintiff has or shall have on account of said contract, and that at the time of the completion of the contract, if

p. 86

there is any deficiency from any cause whatever, then the said parties hereto agree to pay the same in the same proportion as the surplus was to have been divided; the plaintiff, in case of a surplus, is to have it to the extent of a certain sum measured by ten per cent, of the cost of the material and labor, and the balance is to be equally divided between the other parties in the enterprise.

2. Same.

In such case, where plaintiff, under contract, furnished a portion of the material and labor, he is entitled to recover therefor.

Appeal from judgment of the general term of the superior court of the'city of New York, entered upon an order made January 3, 1893, which affirmed a judgment in fgvor of plaintiff, entered upon the report of a referee.

The nature of the action and the facts, so far as material, are stated in the opinion.

Benjamin Yates, for app’lts; Hector M. Hitchings, for resp’t.

The plaintiff brought this action and has recovered upon a contract between the parties bearing date February 24, 1890, made under the following circumstances : In the early part of the year 1889 one Donnelly had a contract with Long Island City for the erection of a school house. He was to furnish the material and labor in the erection of the building for $28,000, payable in five equal payments specified in the contract, each when the work had reached a certain stage mentioned, and the last thirty days after completion. The plaintiff in this action, as well as all the defendants, were sub-contractors under Donnelly to furnish the'various materials necessary in the construction of the building, and each had -furnished and delivered materials of the value of several thousand dollars, when Donnelly failed and abandoned the Contract. The work had reached a stage that, except for the abandonment of the contract, about $10,000 had been earned upon it. The plaintiff and defendants in this action filed liens for their claims, but these liens probably represented nothing unless the payments coming due were earned and payable by the city. The parties to this action were interested in the completion of the building, and the city having advertised for bids for that purpose, the parties to this action all combined and agreed among themselves that they would all put in bids at various amounts, with a view of securing the contract. The motive for this was obvious, for if they or any of them obtained the contract at a low price the surplus payable on the work done by Donnelly would be-increased, and would inure to the benefit of the liens, and inasmuch as all had on hand the material they had agreed to furnish the original contractor, there was a chance to make some profit from its use in completing the building. It appears that the plaintiff’s bid was the lowest, and after consultation with the defendants, who were interested with him in the matter, he entered into a contract with the city, agreeing to complete the work for $14,000, and two of the defendants became sureties upon his bond. The parties then entered into the agreement upon which this action was based. It recites the facts before stated and is signed by the plaintiff and the defendants. They agreed between them

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selves to furnish bonds to enable the plaintiff to secure the contract ; that a committee of two be selected from the parties with power to make all agreements for labor and materials necessary in the performance of the contract, but to be purchased from the parties themselves if in their line, and to have general charge and supervision of the work. The plaintiff assigned his interest in the payments, as. they became due, to his bondsmen, who were to receive the money from the city to be used by them in defraying the expenses of performing the contract, rendering an account to all the parties. Then follows the stipulation which has given rise to this action in this language: “And it is further agreed that out of the payments due or to become due, all just claims for material furnished or labor performed under the said contract with the said city be first paid, and should there be any surplus remaining after the payment of all just claims, then such surplus to be equally divided among the parties herein named, except Mr. William H. Gamp, who is to receive as his share an amount equal to 10 per cent, of the actual cost of the labor and materials used in the. construction of the building as set forth and specified in the contract, and such ten per cent, shall be in full settlement of all claim Mr. Gamp has or shall have on account of the said contract.

“And at the time of the completion of the contract, if there is any deficiency from any cause whatsoever, then the said parties hereto agree to pay the same in the same proportion as the surplus was to have been divided.”

The learned referee has found that there was no profit made in the contract, but, on the contrary, a very considerable loss. That a commission of ten per cent, on the actual cost of the materials and labor used in the construction of the building was, nevertheless, by the terms of the contract, to be paid to the plaintiff by the defendants whether the contract resulted in a profit or loss, and such commission, amounting to more than $1,500, was awarded to the plaintiff by the judgment, and the further sum of $932, the unpaid balance on a contract which the plaintiff had with the committee for furnishing and setting the freestone used in the construction of the building. Thus it has been held that the contract imposed an absolute obligation on the defendants to pay the commissions to the plaintiff whether there was a profit or a loss. We think that this view is opposed to the language of the contract and all the circumstances of the case. The enterprise was a joint one, and the parties engaged in it, including the plaintiff, occupied with respect to each other, the relation of partners. They were to complete the building and to share the profits or bear the loss. The plaintiff’s debt against Donnelly was $2,250, and he had the first lien, and, therefore, was interested even more than the defendants in securing the unearned payments on the old contract. There was work done under that contract which had not been paid for, as the contractor had abandoned the contract before the work had reached the payment stage, but the benefit of this work would, under the new agreement, inure largely to the benefit of the plaintiff. JSTo other reason is apparent for providing a different method of measuring the plaintiff’s share than the

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one adopted as to the share of the defendants, unless as a method of compensation for services, and nothing was said upo,n that subject in the contract and there is no finding that there was any agreement to pay such compensation. Whatever was to-be paid to the plaintiff under the contract was to come from any surplus, remaining after paying for the labor and materials, and there was no such surplus. The defendants did not agree in that event to pay to plaintiff a fixed sum without regard to the result of the enterprise. If the defendants intended to bind themselves to pay this comparatively large sum in any event to the plaintiff, they would have said so in words so plain as to preclude any argument as to the meaning. The contract provided a method for dividing surplus profits anticipated but never realized. I think that the correct interpretation of the agreement is-that in case of a surplus the plaintiff was to have it to the extent of a certain sum measured by ten per cent, of the cost of the material and labor, the balance to be equally divided between the other parties in the enterprise. The reason for adopting this method of measuring the plaintiff’s interest is not quite apparent, but the words used will not permit the construction adopted by tl^e learned referee. There is nothing in the language or the circumstances upon which to build a personal promise by the defendants to pay a fixed sum as commissions in any event. It follows that so far as the judgment is based upon such an absolute undertaking it cannot be upheld.

The plaintiff contracted to furnish the freestone and to set the same for a specified sum, that is to say, for $4,000, and was paid from the payments made from time to time by the city to the bondsmen, as assignees, the sum of $3,133. No reason has been suggested why the plaintiff is not entitled to enfore this contract in the same way as any other person who furnished materials or labor for the performance of a contract between the city and the plaintiff, the latter acting, not for himself, but for the others as well. The contract in form ran to the plaintiff, but it was, in fact, and for all the purposes of the case, the contract of the defendants as well, and the plaintiff is entitled to recover anything due on it for labor or materials. It is claimed on the part of the defendants that the plaintiff, in fact, never fully performed this contract; that he failed to produce the architect’s certificate to that effect as the contract required. On the other hand, the plaintiff claims that he abandoned the contract when nearly completed in consequence of the refusal of the defendants to furnish money to go on with the work, and hence the obligation of the defendants to furnish money for the completion of the building, before the expenditure of all the payments due or to become due from the city disclosed a deficiency is involved. We will not now attempt to solve the questions arising upon this branch of the case. They can be more fully and satisfactorily examined upon a new trial.

The judgment should be reversed and a new trial granted, costs to abide the event.

All concur, except Gray, J., who dissents as to construction of the contract. Judgment reversed.