Rumsey v. Livers

Urner, J., delivered the'opinion of the Court. The appellants contracted with the Bolivar Light, Heat and Power Company to furnish and install for it an electric light plant at the village of Bolivar in Westmoreland County, Pennsylvania, and the appellee entered into a sub-contract with the appellants to perform the construction work and provide part of the materials contemplated by the main contract. In consideration of this service the appellants agreed' to pay the appellee fifteen hundred dollars. It was provided, however, that payment should be made “in the like manner ⁵⁵⁰ of the contract attached when payments are received b'y the party of the first part” (appellants).

The contract thus referred to was that between the appellants and the company. It was further agreed by the appellee, in’ case of the failure of the appellants to receive the contract price “upon non-payment or from any other cause, to stand his ratio of loss to the amount of contract, and if suit is brought, to stand the ratio of expense.” .’ . . The contract price stipulated to be paid by the company to the appellants was $11,307.75 payable in designated installments. Immediately upon the execution of the contract, which occurred on March 6th, 1906, the company executed to the appellants three judgment notes aggregating the sum to accrue under the contract, and on the same day judgments by confession for the amounts of the notes were entered in the Court of Common Pleas for Westmoreland County in favor of the appellants in pursuance of the authorization in the notes for that purpose.

The appellee proceeded to the performance of his sub-contract and completed the work on July 15th, 1906. Payments to the amount of $2,181.13, the last being on September 9th. 1906, were made by the.company to the appellants on account of their contract. The appellee received a due proportion of these sums according to the ratio which his claim against the appellants bore to their claim against the company. His total receipts amounted to $274.82.

He was chargeable also with $258.75 for poles which he was to furnish but which the company itself supplied and for which it was credited by the appellants. Independently of these, items the appellee’s claim under his sub-contract remains unpaid. ■ The plant was put in operation when the appellee completed his work. The contract had then been fully performed on the part of the contractor, the various instalments of the contract price were then payable, the - judgment notes were all matured and the judgments, constituting first liens on the company’s property, were enforceable. Ho execution was ever issued-on the judgments by the appellant firm, but on ⁵⁵¹ June 17th, 1907, immediately after they received a letter from the appellee stating that he had placed his claim in the hands of his attorney, they assigned the judgments to the Rumsey Electric Company, limited, a sejwate partnership composed of the appellants and others and the assignees issued execution on October 31st, 1908.

It does not appear from the record that the execution has ever been pressed to a sale of the property covered by the judgment liens. In the meantime, prior to the assignment of the judgments, the appellee had written the apj>ellants repeatedly urging settlement with the company and the payment of his claim. He brought the present suit as a foreign attachment proceeding on December 10th, 1907. The appellants^ as defendants below, appeared to the short note case, the trial of which resulted in a verdict and judgment for the appellee for the balance of his claim and interest.

A demurrer filed by the defendants to the whole, and each of the two counts, of the amended declaration presents the primary question for our consideration. The first count declares in common form for money payable for work and labor done and materials furnished. The second alleges that the contract and sub-contract to which we have referred and then avers that the plaintiff fully performed his contract according to its terms and that the work so done and the materials so furnished were 'accepted by the defendants as a complete performance of the contract; that by its terms he was entitled to be paid in -the like manner in which the defendants were to receive payment from the company under their contract with it; and that from time to time the defendants paid to him on account of his contract the sum of $533.57, leaving a balance due him of $966.43, which balance the defendants by the exercise of reasonable diligence could have long since collected by the execution upon certain judgments given to them by the company for the whole amount of their claim against it; which included the sum due by them to the plaintiff, but that the 'defendants have failed and refused to take steps to enforce and' collect ⁵⁵² the judgments by execution, and have failed and refused to exercise due and reasonable diligence to collect the amount of the judgments, but on the contrary; without the consent of" the plaintiff, have elected to defer and delay the collection of the judgments and to give unreasonable indulgence to the company upon the judgments, which by the exercise of reasonable diligence the defendants could have collected, to the great loss and injury of the plaintiff, etc. We have no difficulty in approving the action of the Court below in overruling the demurrer, as we are clearly of the opinion that the allegations in question set forth a good cause of action. The full performance of the sub-contract by the plaintiff and the acceptance of its results by the defendants undoubtedly created the relation of creditor and debtor between the parties; but-as the agreement contained the unusual provision that the debt should be due when payments were received by the defendants under the principal contract, it was essential to the plaintiff’s recovery that he should aver and prove not only the existence of the debt but also that it had become payable either on account of the actual receipt by the defendants of the sums due them from the company or as a result of such conduct on the part of the defendants as would preclude them from relying upon the provisions suspending the maturity of the plaintiff’s claim.

As the defendants agreed to pay their indebtedness to the plaintiff upon the receipt by them-of a fund to which they were entitled and to secure the payment of which they had obtained judgments which were enforceable, they must, upon the plainest principles of justice, to be held to have incurred the implied obligation to the plaintiff to utilize the means of their command for the performance of the stipulated condition precedent. The payment of the compensation he had earned from the defendants could not be perpetually postponed merely because the company refrained from paying its debt to the defendants or because they omitted or refused to enforce its collection. They could insist upon their right to withhold payment from the plaintiff until their receipt of ⁵⁵³ funds from the company only by asserting their right under their contract with the company to the payment of the sums to which they were entitled, especially in view of the fact that this contract was specifically referred to in the sub-contract in relation to the maimer in which the payments were to he received. It is manifest from the provision for an apportionment of the costs of suit against the company that the active prosecution of the defendants’ rights under the original contract was contemplated, and the plaintiff was entitled to rely upon such action as a condition of his agreement to have the payment of his claim deferred.

If the defendants committed a breach of this condition in consequence either of neglect or affirmative election, both of which are charged in the declaration, we see no reason why the stipulation in question should still remain available to them as a ground for postponing the payment of the plaintiff’s demand. In Vermont Marble Co. v. Mann; 36 Vt. 697 , the plaintiff furnished for the defendant certain marble for use by the latter in the performance of a contract with the United States Government. It was agreed that the plaintiff should be paid when the defendant received his pay under the contract. Objection to the plaintiff’s recovery was made on the ground that the term of credit had' not expired at the commencement of the suit.

In dealing with this situation and sustaining the plaintiff’s right to recover the Court said: “If the defendant did any act or entered into any new arrangement which had the effect to postpone the receipt of the money from the government, the plaintiff’s .claim might become payable before the actual receipt of the money by the defendant.” The Supreme Court of Massachusetts, in White v. Snell. 26 Mass. 16 , held that a promise by the defendant for value received to pay to the plaintiff a sum of money if and when the defendant shall collect his demands against a third person implies that the defendant will use due diligence to collect such demands; and in an action upon such promise it is not necessary to prove that the plaintiff requested the defendant to make collection. “If,” said the Court, “the d'e ⁵⁵⁴ fendant had power to neglect looking np those demands and thus to get rid of his contract, the law would aid him in the commission of a fraud. • Negligence .shows a breach of his contract, as much so as a refusal to pay the plaintiff in case the demands had been collected.” In Crooker v. Holmes, 65 Maine, 195, a second mortgagee, under a mortgage securing a note payable when the mortgagor should' sell the.- property on which he .was then living, filed a bill to redeem the mortgaged land from the lien of the first mortgage. The mortgagors’s equity of redemption had, subsequently to the making of the note,- been sold under execution for another debt. It was urged against the suit to redeem that the note secured by the second mortgage was not payable because the maker had not sold, and could not sell, the property. The Court said: “The debt is due in presentí.

Its payment is postponed to a future time, but the debt none the less exists. The debt-is absolute, the time of its payment indefinite * * * If a party puts it out of his power to perform his -contract, his liability at once accrues. It matters not whether by his neglect this be so, or whether it be intentional.” The indebtedness was, therefore, held to be payable notwithstanding the condition precedent for its payment had not been fulfilled. The general principle of the cases to which we have thus particularly referred is recognized also in Nunez v. Dautel, 19 Wall. 560 ; Sears v. Wright, 24 Me. 278; Hicks v. Shouse, 17 B. Mon.

(Ky.) 483; Noland v. Bull, 24 Ore. 479 ; Williston v. Perkins, 51 Cal. 554 ; Lee v. Decker, 6 Abb. Prac. (N. S.) 392. In discussing the questions presented by the demurrer we have had in view also those raised by the exceptions taken by the appellants to the rulings of the Court below in granting and refusing certain instructions to the jury.

The plaintiff offered three, and the defendants eleven prayers. All of the plaintiff’s prayers and' the defendants’ second and tenth prayers were granted, while the remainder of the'defendants’ prayers were rejected. ⁵⁵⁵ The plaintiff’s first prayer asked an instruction to the effect that if the defendants took the judgment notes and obtained the judgments to which reference has been made, and that their contract with the company was fully performed in 'July, 1906, and that the judgments were then due and payable, then within a reasonable time thereafter it wás the duty of the defendants to proceed to enforce payment thereof by execution, provided the jury should find that any part of the judgments could have been realized1 upon execution: and if the jury should find from the evidence that the defendants, did not proceed to collect by execution the amount of the judgments, then the plaintiff is entitled to recover from the defendants his proportionate part-of whatever the jury should find might have been recovered by the defendants under such execution, with interest in the discretion of the jury, from the time when the jury should find they could1 have collected the amount of the judgments. The second prayer of the plaintiff proceeded upon the theory that if the defendants, without the consent of the plaintiff, elected that they would not issue execution, but would indulge the company in the payment of the judgments, and continued to indulge them without the plaintiff’s consent, then the defendants thereby made themselves liable to pay to the plaintiff the amount which the jury should find from the evidence was then due by the defendants to the plaintiff under the contract between them, with interest from that time, in the discretion of the jury. By the plaintiff’s third prayer the Court was asked to instruct the jury that if they should find that the assignment of the judgments by the defendants' to the Rumsey Electric Company, the separate partnership heretofore mentioned, was made without the consent of the plaintiff, then such assignment constituted a wrongful conversion by the defendants of the judgments to the extent of the interest of the plaintiff therein, and the plaintiff is entitled to recover his pro