Shead v. Henman

California Supreme Court Sep 2, 1898 No. L. A. No. 377Published

Before: Chipman

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Holding. The court held that a collection contract providing for a percentage-based fee is to be construed as applying only to the amount actually collected, rather than the face value of the note. Furthermore, the court affirmed the trial court's findings that no subsequent oral agreement modified the contract and that no fees were owed for services not rendered.

Issues

Whether a collection contract providing for a 25 percent fee entitles the agent to a percentage of the note's face value or only the amount actually collected.
Whether the trial court's findings regarding the absence of a new oral agreement and the lack of rendered services should be disturbed on appeal.

Disposition. affirmed

Quotations verified verbatim against the opinion

“We do not think there can be any doubt that the true meaning of the contract, to be derived from its terms alone, is that plaintiff was to pay twenty-five per cent of the amount collected.”

“It would be an unreasonable construction of the contract to say that by its terms plaintiff agreed to pay $1,250 for the collection whether more or less than $5,000.”

Synopsis

Agency—Collection of Note—Contract for Percentage.—A contract with agents for the collection of a note, which stipulated, that the collection charges on the note were to be twenty-five-per cent, is to be construed, not as importing twenty-five per cent of the face of the note at all events, but as importing: only twenty-five per cent of the amount collected, if less than, the face of the note.

Id.—Compromise—New Oral Agreement—Attorney’s Fees—Appeal—Conflicting Evidence.—A claim by the agents that a new oral agreement respecting the percentage was made at the-time of a compromise of the note while in suit, and that certain attorneys not appearing in the suit were to be paid, cannot be sustained upon appeal, where the evidence Is conflicting and there is evidence to sustain findings against the existence of such agreement, and against the rendition of any services by such attorneys, and the payment of any money thereto by the-agents.

CHIPMAN, C. This is an action to recover money from defendants as plaintiff’s agents to which they make claim for commissions. Plaintiff had judgment, from which and from the-order denying motion for a new trial this appeal is prosecuted and comes here on a statement of the case.

Plaintiff held a promissory note for five thousand dollars, principal, against one Parsons, then living in Detroit, Michigan. The court found that defendants as collectors undertook to collect this note upon the terms and conditions of a certain written Contract, the body of which reads as follows:

"Los Angeles, Cal., June 4, 1894.

"Received from L. A. Shead, via E. Densmore, 1840 E. 2nd [71]street, city, for collection, subject to the terms and conditions specified on the back hereof, the following: jSTo. 4692. L. B. Parsons, note $5,000.00. GRAVES & PILE.

“Our collection charges upon above will be 25 per cent.”

On the back of the contract were several conditions printed, one of which provided for payment of a reasonable attorney’s fee and court costs if suit is brought.

Upon the face of the contract defendants contend that they were to receive all costs and expenses, including attorney’s fees, and in addition twenty-five per cent of five thousand dollars, whether that amount was collected or not. Plaintiff claims that defendants were entitled only to twenty-five per cent of the amount actually collected. It appears that the note was sent by defendants to an attorney in Detroit who brought suit- upon it. Pending the action the maker of the note paid $2,500 on compromise, in discharge of the indebtedness. The court allowed defendants for the Detroit attorney $450 as fees, and $50 for court costs and expenses, and $5.80 for telegrams paid out by defendants. The court disallowed the claim of $325 claimed as fees for attorneys in California; and allowed defendants $625 commissions, being twenty-five per cent on the sum collected, to wit, $2,500, malting $1,130.80 cents in all, and gave plaintiff judgment for $1,369.20. Defendants claim that they should have recovered $325 for fees of attorneys in California and twenty-five per cent of $5,000, leaving due plaintiff $419.20, which they tendered plaintiff before suit.

We do not think there can be any doubt that the true meaning of the contract, to be derived from its terms alone, is that plaintiff was to pay twenty-five per cent of the amount collected. The note was given to defendants for collection; and the charges-were for collection, to be measured by the amount collected at the per centum named. It would be an unreasonable construction of the contract to say that by its terms plaintiff agreed to pay $1,250 for the collection whether more or less than $5,000. There was accumulated and accumulating interest on the note. If it had been paid in full, principal and interest, defendants would have been entitled, by a reasonable construction, to the-stipulated per cent upon the whole amount collected; and a like*

Shead v. Henman

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