Phoenix Assurance Company Op New York v. Basil, 3160.

• Decision Date: 28 March 1963
• Docket Number: No. 3160.,3160.
• Citation: 189 A.2d 365
• Parties: PHOENIX ASSURANCE COMPANY OF NEW YORK, Appellant, v. Sophie BASIL and Frank Basil, Appellees.
• Court: D.C. Court of Appeals

Page 365

189 A.2d 365

PHOENIX ASSURANCE COMPANY OF NEW YORK, Appellant, v. Sophie BASIL and Frank Basil, Appellees.

No. 3160.

District of Columbia Court of Appeals.

Argued February 4, 1963.

Decided March 28, 1963.

Robert L. Ellis, Washington, D. C., with whom Anthony J. Siciliano and John J. Daly, Washington, D. C., were on the brief, for appellant.

Richard A. Micheel, Washington, D. C., for appellees.

Before HOOD, Chief Judge, and OUINN and MYERS, Associate Judges.

QUINN, Associate Judge.

Appellees brought this action against Edward Brennan, a licensed real estate broker, and the Phoenix Assurance Company of New York, Brennan's surety, for failure to turn over monies collected by Brennan from tenants leasing property owned by appellees. The several questions raised on appeal center upon a determination of the date this cause of action accrued under Code 1961, 45-1405.¹

Brennan was engaged by appellees in 1953 to manage their property, to collect the rents and apply them to a first trust held by the First Federal Savings and Loan Association, and to remit the balance to appellees at indeterminate periods. While appellees were abroad they were notified on May 17, 1960, that three payments on the first trust had not been made. The next day they sent the following telegram to their local attorney:

"Please contact First Federal for information Loan V625. Brennan has collected rents and not paid three months. First Federal advised foreclosure intent. Please pressure Brennan."

The attorney verified that the payments had not been made and arranged a meeting with Brennan.

Some two or three weeks after receiving the cable of May 18, appellees' attorney conferred with Brennan. In response to the attorney's inquiries, Brennan said that he had had secretarial problems, that his current bookkeeping and records were in a "mess," and that he would take care of the Basil complaint and bring the account into balance as soon as he could straighten out his bookkeeping. The meeting terminated and Brennan's assurances were communicated to appellees by their attorney. In the meantime appellees balanced the mortgage account by forwarding their personal check to First Federal on June 16, 1960. On July 1, appellant terminated its bond.

Appellees sent a second cable to their attorney on October 10, 1960, to the effect that the payments for the months of August and September had not been made by Brennan and that the mortgage account was again delinquent. The attorney was instructed to remove Brennan as rental agent. Brennan was immediately discharged and the account was again balanced when appellees forwarded a personal check to First Federal.

Appellees filed suit on July 12, 1961, against Brennan and the Phoenix Assurance Company. Brennan was not served and hence was not a party to the action. The trial court accepted the uncontroverted facts set forth above and concluded that the occurrences which took place "on and around May 18, 1960, did not constitute such a demand upon the broker as would commence the running of the one year statute of limitations on the broker's bond required of him by law and filed with the Real Estate Commission." Judgment was entered for appellees in an amount stipulated by the parties, and this appeal followed.

Appellees concede that Brennan breached his agreement in May 1960 when he failed to apply the rents he collected to the first trust held by First Federal. They contend, however, that a demand upon Brennan was necessary before a cause of action could be perfected, and that this requirement was not satisfied until October 1960 when Brennan was discharged as their rental agent.

We are of the opinion that appellees' cause of action against the surety on the bond was barred by the one-year statute of limitations,² their claim having accrued in May 1960 when appellees were notified of the default and of the intention of the holder of the first trust to foreclose. Brennan was engaged by appellees to manage their property and to protect them from foreclosure by forwarding the...