Love Brothers v. Mardis

• Citation: 176 N.W. 616,189 Iowa 350
• Decision Date: 10 March 1920
• Docket Number: 33134
• Parties: LOVE BROTHERS, Incorporated, Appellee, v. J. C. MARDIS, Appellee, et al., Appellant
• Court: Iowa Supreme Court

176 N.W. 616

189 Iowa 350

LOVE BROTHERS, Incorporated, Appellee, v. J. C. MARDIS, Appellee, et al., Appellant

No. 33134

Supreme Court of Iowa, Des Moines

March 10, 1920

REHEARING DENIED JULY 6, 1920.

Appeal from Polk District Court.--THOMAS J. GUTHRIE, Judge.

SUIT to foreclose a mechanics' lien. There was a decree for the plaintiff, and the defendant Iowa Congregational Hospital Association has appealed.

Affirmed.

Craig T. Wright and L. M. Grimes, for appellant.

Halloran & Starkey, for appellee.

EVANS J. WEAVER, C. J., PRESTON and SALINGER, JJ., concur.

OPINION

EVANS, J.

I.

The defendant Mardis is known in the record as the "contractor," and the Hospital Association as the "owner." In August, 1914, they entered into a contract for the construction of a hospital building in the city of Des Moines. Mardis, as contractor, undertook the construction for the Hospital Association as owner. The plaintiffs furnished certain material and performed certain labor in the erection of stairways and elevators in said improvement, pursuant to contract with Mardis. The contract between the Hospital Association and Mardis is denominated in the record as a "percentage contract:" that is to say, Mardis did not agree to construct the building for any fixed price. He did agree to construct the same for actual cost, plus a profit to himself of ten per cent of such cost. The contract constituted Mardis as the agent of the Hospital Association, for the purpose of employing all labor and purchasing all material to be used in the performance of the contract. All his contracts of employment and purchase were to be subject to the approval of the building committee of the Hospital Association. One of such contracts entered into by Mardis was with the plaintiff herein, and out of such contract this suit has arisen. The contract was entered into by Mardis in his own name, and not in the name of his principal. At the time it entered into such contract with Mardis, the plaintiff supposed that it was dealing with him as a contractor. Later, it discovered the terms of the contract between Mardis and the Hospital Association. Thereupon, it claimed to recover from such Hospital Association as its principal debtor. It also filed a mechanics' lien. It claims its right to a lien, either as a principal contractor or as a subcontractor.

The general nature of the defense set up is that the plaintiff had chosen to enter into a contract personally with Mardis, and that it must look to Mardis alone for payment; that defendant is not liable to plaintiff as an undisclosed principal, because Mardis did not assume to act as agent in such transaction, and because, further, Mardis was not authorized as agent to enter into such a contract in his own name; that, in October, 1917, the plaintiff rendered a statement of account to Mardis for an amount then accrued on its contract, being the sum of $ 1,200, and that the defendant thereupon paid such amount to Mardis, in the belief that the plaintiff was looking to Mardis for payment. The sum total of plaintiff's contract was $ 2,011, of which amount, the sum of $ 1,500 has been paid. Defendant pleads also an election by plaintiff to look to Mardis as its debtor, and pleads an estoppel by reason of the defendant's payment to Mardis while the plaintiff was treating Mardis as its debtor.

To put the argument of defendant in a very few words, it contends that, though Mardis was constituted its agent under its contract, he did not act as such agent in his contract with the plaintiff; that the defendant cannot be held as an undisclosed principal, because Mardis had no authority to represent it as an undisclosed principal, or to enter into contract for defendant in his own name. The briefs on both sides have been devoted largely to the nature and extent of the liability of an undisclosed principal. We may as well assume, preliminary to further discussion, that the defendant would not be liable as an undisclosed principal, unless the contract with the plaintiff was entered into by Mardis pursuant to his contract with the Hospital Association, and unless it was fairly authorized by the defendant, either by the terms of the contract or by the subsequent acceptance of benefits thereunder. There is no question of apparent agency involved. The plaintiff did not enter into the contract in reliance upon any supposed agency, because it knew none. We turn, therefore, to the facts in the record.

The pivotal question of fact is: Did Mardis intend to enter into the contract with plaintiff for the benefit of the defendant, and pursuant to his contract with it? If yea, did he exceed his authority by entering into such contract in his own name? We may set forth here sufficient of the contract to throw light upon this question, without assuming to set it out at length:

"This agreement made this 22d day of August, 1914, by and between J. C. Mardis Company, as party of the first part, hereinafter designated the 'contractor,' and the Iowa Congregational Hospital Association of Des Moines, Iowa second party, hereinafter designated the 'owner,' witnesseth: That in consideration of the mutual agreement herein contained the parties agree with each other as follows:

"First: The contractor agrees that he will construct in the most substantial and workmanlike manner, the following described work, to wit: A 3-story and basement and subbasement, fire-proof hospital building at Fourteenth and Clark Streets, Des Moines, Iowa. Alternate No. 3 may be accepted by the owner provided he does so within a reasonable length of time. Alternates No. 2, No. 5 and No. 7, are a part of this contract. * * *

"Sixth: The owner hereby appoints the contractor his duly authorized agent for the employment of all labor and purchase of all material necessary for the construction of the work and authorizes the contractor to purchase all said materials for the owner's account. The owner agrees to pay the weekly pay rolls and all material and other bills direct when same have been passed for payment by the contractor, subject to the conditions set forth in Section eleven (11) of this contract.

"Seventh: The contractor shall receive all material and check same as to quality and quantity. * * *

"Eleventh The contractor agrees that he will not purchase any materials for the owner's account for use in the construction of the work unless, or until, the price and quantity thereof has been approved by the owner. He will furnish the owner a statement of the prices of all materials he proposes to purchase; and if within five (5) days from delivery thereof to the owner, the same shall not have been disapproved in writing by the owner, the price or...