Fidelity & Deposit Co. of Maryland v. John Gill & Sons Co.

Decision Date10 October 1924
Docket NumberNo. 23905.,No. 23906.,23905.,23906.
CourtMissouri Supreme Court
PartiesFIDELITY & DEPOSIT CO. OF MARYLAND at al. v. JOHN GILL & SONS CO. et al.

Appeal from St. Louis Circuit Court; Franklin Ferriss, Judge.

Action by the Fidelity & Deposit Company of Maryland and others against the John Gill & Sons Company, the Equitable Surety Company, and others. From a judgment for certain defendants, plaintiffs and first-named defendant appeal. Affirmed.

A. E. L. Gardner and C. E. Morrow, both of St. Louis, for plaintiffs appellants.

W. Christy Bryan and Seneca C. Taylor, both of St. Louis, and Dustin, McKeehan, Merrick, Arter & Stewart, of Cleveland, Ohio, for defendant appellant.

Nagel & Kirby and E. G. Curtis, all of St. Louis, for respondent Heine Safety Boiler Co.

Jones, Rocker, Sullivan & Angert and Vincent L. Boisaubin, all of St. Louis, for respondents Western Electric Co., Inc., and B. F. Sturtevant Co.

HIGBEE, C.

The appellants' statement is, in part, as follows:

"As the interests of the plaintiffs (appellants) and defendant the John Gill & Sons other things, that for any materials furnished by the said defendant materialmen, or any of them, which entered into the construction of the capitol building, said defendants and each of them accepted payment and security for payment from the Hanley-Casey Company and its successor, and extended credit and time for payment of said accounts, and intermingled in the accounts upon their books the accounts for labor and material furnished the Hanley-Casey Company and its successor for other work, all of which was inconsistent with any claims they had or might have had, if any, against the Gill Company and its sureties, the plaintiffs herein.

"It was further alleged in answer to said claims that the Gill Company was obliged to pay the Hanley-Casey Company on monthly estimates, all of which was known to the defendant materialmen, but, notwithstanding this, the materialmen stood by and, instead of insisting on and demanding payment by the Hanley-Casey Company of any amounts due them from that company, they accepted other considerations and securities, extended credit and time for payment, intermingled their accounts for labor and material on the Missouri state capitol with, other accounts, and consented and acquiesced in the Hanley-Casey Company and its successor using for other purposes funds so obtained from the Gill Company, thereby releasing the Gill Company and the plaintiffs from any obligation they or any of them might have had to pay such materialmen or any of them for any material so furnished by them for the Missouri State Capitol.

"Issues were joined on the above claims and defenses, and the cause was referred by the court to honorable Clarence T. Case as referee, who heard the cause and filed his report therein, together with a transcript of the evidence taken before him. The referee, among other things, found in favor of and recommended judgment against these appellants and in favor of the Western Electric Company for $9,872.49, the B. F. Sturtevant Company for $7,806.01, and Heine Safety Boiler Company for $10,683. Exceptions were duly filed thereto and overruled, and the court entered the respective judgments. Thereupon appeal was duly perfected to this court."

The referee found in favor of each of the materialmen and recommended that judgment be rendered in favor of each of them for the sums so severally found due them against the Equitable Surety Company, and that it be required to pay said sums and all costs, and to exonerate appellants from all liability therefor. The Equitable Surety Company filed exceptions to the report, which were sustained by the learned trial court on the ground that, after the execution by it as surety of the contract between the' Gill Company and the Hanley-Casey Company, they, the said Gill Company and Hanley-Casey Company, attached thereto a rider, materially altering the terms thereof, and it was not the instrument executed by the Equitable Surety Company. The court overruled all other exceptions, dismissed the action as to the Equitable Surety Company and Benjamin C. Hyde, superintendent of insurance, then in charge of said company, dismissed the cross-bill of the Gill Company, and rendered judgment against the Gill Company and the plaintiffs for the penalty of the bond, to be satisfied by payment of the sums severally found due each of the materialmen, and taxed the costs, one-half against the John Gill & Sons Company and one-half against the plaintiffs. After the appeal was perfected it was voluntarily dismissed as to the Equitable Surety Company and Hyde, superintendent of insurance, and all the materialmen except the Western Electric Company, Heine Safety Boiler Company, and B. F. Sturtevant Company.

Appellants' statement continues:

"The total charges made by the Western Electric Company for material so furnished for the Missouri state capitol amounted to $13,230.90, upon which the claimant had credited certain items in a total sum of $3,358.41, leaving a balance of $9,872.49, according to the account of the claimant. There is no dispute between the parties that the materials were furnished and were of the value charged by the claimant.

"The account of this claimant with the Hanley-Casey Company appears upon Plaintiff's Exhibits A-500 to 506, being a ledger account which includes items covering material furnished for the Missouri state capitol as well as material furnished for other jobs, but the ledger account did not distinguish between charges made for the materials furnished to the Missouri state capitol and material furnished for other work."

Here appellants have prepared and set out a statement taken in part from items of the ledger account and in part from items of the account of "goods furnished for Jefferson City job," filed with claimant's cross-petition, indicating, as they contend, that claimant furnished materials for the capitol of the value of $8,598.21; materials not relating to the capitol, $2,069.36; total, $10,667.57. They then claim eight credit items, footing $13,729.91, which exceeds the total value of materials furnished for the capitol by $499.01. Among these credits are two items, one of July 30, 1915, for $3,000, another of September 23, 1915, of $8,060.34. They also claim credit for three cash payments of $1,000 each. Applying these various credits, totaling $14,060.34, and other credits, it is asserted there is a balance due on materials furnished for the capitol of only $1,627.29. Appellants' statement then proceeds:

"Under date of September 23, 1915, an entry appears on the ledger account in the form of a credit item of $8,060.34, designated by the letter I, and represented by promissory notes. Under date of December 24, 1915, this amount was charged back, designated by the letter L, and a credit of $10,000 was entered on said date (Exhibit 504). The credit item of $10,000 included renewals of the notes of $8,060.34, which were then canceled.

"The separate notes making up the item of $10,000 were dated December 13, 1915, and were due on the 25th days of January, February, and March, 1916, respectively (Exhibits 507-509), and are still held by this claimant.

"This claimant did not take notes until the accounts covered thereby were due, and by taking the notes gave extensions for time of payment; notes are still outstanding and unpaid. The materialmen knew about the contract and bonds and that the amounts due subcontractors were paid in regular installments."

1. It is conceded that the credit item of $8,060.34 of September 23, 1915, represents two notes given by Hanley-Casey Company to claimant that were not paid. This item was charged back December 24, 1915, with $110.15 accrued interest. These notes were canceled and surrendered and three notes given by the Hanley-Casey Company, one for $3,000 and two for $3,500 each, due on the 25th days of January, February, and March, 1916, respectively, and a credit entered for $10,000. The Hanley-Casey Company failed August 10, 1916, and went into bankruptcy. The notes were proven against the bankrupt estate, and no dividends have ever been paid.

The credit of $3,000, July 30, 1915, also represented a note given by the Hanley-Casey Company. This note was paid as follows: September 22, 1915, $1,000; October 30, 1915, $1,000; and November 16, 1915, $1,000. The credit of $3,000 was allowed to stand on the ledger account, but the statement of account filed by claimant with his cross-petition showed the three cash credits of $1,000 each, instead of the note. So it is apparent that Hanley-Casey Company was entitled to credit for $3,000 on the items mentioned, and not for $14,060.34, as claimed by appellants. Other credits claimed need not be considered. Appellants have not called our attention to any evidence in the voluminous record showing that any payment actually applied as a credit was thereafter changed and applied differently without the consent of the debtor. The evidence is that the payments were' applied as directed by the debtor. The plaintiffs, sureties on the bond of the Gill Company, have no right to direct the application of the credits. That is a matter controlled by the debtor and creditor. "Third persons, such as guarantors, sureties, indorsers, and the like, secondarily liable on one of the debts, cannot control the application of a payment by either the debtor or the creditor, and neither the debtor nor the creditor need apply the payment in the manner most beneficial to such persons." 30 Cyc. 1251.

2. It appears that the Western Electric Company sold materials to the Hanley-Casey Company that went into the construction of the state capitol, the Statler Hotel in St. Louis, the Schenley High School at Pittsburg, and buildings in other localities. The ledger entries do not indicate the building or...

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