Vance v. Supreme Lodge of the Fraternal Brotherhood
Before: James
Synopsis
Fraternal Insurance—Organizer of Lodges Employed by Supreme Lodge—Compensation—Percentage of Assessments—Monthly Statements—Accounts Stated.—Where the .supreme lodge of a fraternal brotherhood, insuring its members on the assessment plan, employed an organizer of subordinate lodges, with a compensation consisting of a percentage of assessments received from their members, monthly statements of which were reported to him by the supreme lodge, which were accepted by the organizer as correct, such statements constituted accounts stated between the parties, the correctness of which can afterward be questioned only upon a sufficient showing of fraud or mistake.
Id.—Nature and Effect of Account Stated.—An account stated, being an agreed balance of accounts examined and accepted by the parties, implies an admission that the balance is due and owing from the one party to the other; and its effect is to establish prima facie the accuracy of the items without other proof, and to constitute a new contract on which an action will lie.
Id,—Effect of Misrepresentation-—Relations of Parties—Trust and Confidence.—While the misrepresentation by a debtor to the creditor of the amount due, where no relation of trust or confidence exists, requiring a full disclosure of the facts to be made, is not ordinarily considered as a fraud upon the creditor, which entitles him to re-examine an account stated, yet where any relation of trust and confidence exists between the parties which demands that the information communicated respecting the subject of their dealings be full and complete, any concealment or misrepresentation will amount to a fraud sufficient to entitle the party injured thereby to an action for re-examination of an account stated.
Id.—Relation of Principal and Agent—Supreme Lodge Agent of Organizer to Obtain Knowledge of Assessments.—Under the contract between the parties, the supreme lodge was the agent of the organizer to obtain and furnish accurate and full information as to the assessments received from subordinate lodges as the basis of his compensation, and he had the right to rely upon the correctness and truthfulness of their statements as to the amount of assessments collected therefrom, and notwithstanding he might have inspected the books in the office of the supreme secretary of defendant, he was not required to do so, and if they misrepresented the facts, plaintiff is not bound by the accounts stated, and upon discovery of the facts may sue to have the accounts opened and re-examined.
Id.—Excusable Failure to Make Inquiry.—When no duty was imposed by law upon the plaintiff to make inquiry, and where, under the circumstances, “a prudent man” would not be put upon inquiry, the mere fact that means of knowledge are open to him, and he has not availed himself of them, does not debar him from relief on the ground of fraudulent concealment, when he shall thereafter make actual discovery thereof.
JAMES, J.
An appeal is taken from a judgment entered in favor of plaintiff for the principal sum of $1,770, and from an order denying a motion made by defendant for a new trial.
Defendant is a fraternal insurance organization. In July, 1900, it employed plaintiff as a general organizer of the order. Among other duties, plaintiff under his contract was required to organize and institute lodges, secure members therefor and instruct the officers thereof. The contract of employment was in writing and contained a clause providing for the compensation to be paid plaintiff as follows:
“7. My compensation to be certificate registration and charter fees of all members secured by me or persons working under me and 50% first twenty-four (24) assessments paid by said members; to be paid monthly by supreme secretary, when received by him.”
Plaintiff entered upon the employment under the terms of the agreement and continued therein until July, 1905. During the period of his service a statement was sent him each month from the office of the supreme secretary showing what moneys were due him at the several dates which the statements bore. On these statements, under a heading of “Suspended, died, or for whom commission is all paid,” a list of names of persons who had been brought into the order through plaintiff’s efforts would be appended. Under his contract plaintiff was entitled to have apportioned to him one-half of all assessments collected from members whom he had per
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suaded to join the order for the first twenty-four months of their membership. If such a member died or was suspended, no further credit was given to plaintiff on account of assessments, for in that case payment of assessments would cease upon the death or suspension of the member. So when plaintiff examined the monthly statements sent to him from the supreme secretary’s office, he would be informed that certain members had either been suspended, died, or that the full amount of commissions to which he was entitled on their account had been paid. The statements, however, would not apprise him as to what the exact case was; that is, whether the members named therein had been suspended, or whether they had died, or whether they belonged to the class on account of whom he had been paid his full commissions. Accompanying each of the monthly statements was a check for the balance shown to be due plaintiff. These checks were regularly accepted and cashed by the plaintiff. After June, 1902, defendant in rendering statements made allowances on account of commissions due on but twelve assessments collected from members procured by plaintiff, instead of twenty-four assessments, regardless of whether or not the member had continued in the order. The statements did not disclose this change in any other way than that there would appear under the heading mentioned the names of members whenever the twelve assessments had been collected and one-half the amount thereof had been credited to plaintiff’s account. In April, 1906, plaintiff for the first time discovered that the statements rendered to him after June, 1902, were incorrect, and that a considerable sum of money by way of commissions on assessments which his contract provided should be paid to him had not been paid. After negotiating for a number of months with the defendant in the endeavor to secure an adjustment of the dispute, he brought this action in February, 1908. In his complaint he set out the history of his employment with defendant and the manner of making settlements. He further alleged the facts respecting the furnishing to him of incorrect statements and of his failure to discover the same until April, 1906. Defendant in its answer alleged and sought to prove that the reason why no credits were given plaintiff after June, 1902, on account of more than twelve assessments collected from the members, was because the contract of employ
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