Zalk-Josephs Co. v. Wells Cargo, Inc.

• Decision Date: 17 November 1961
• Docket Number: ZALK-JOSEPHS,No. 4400,4400
• Citation: 77 Nev. 441,366 P.2d 339
• Parties: COMPANY, doing business as Triangle Steel & Supply Co., Appellant, v. WELLS CARGO, INC., and Travelers Indemnity Company, Respondents.
• Court: Nevada Supreme Court

Page 339

366 P.2d 339

77 Nev. 441

ZALK-JOSEPHS COMPANY, doing business as Triangle Steel &amp Supply Co., Appellant, v. WELLS CARGO, INC., and Travelers Indemnity Company, Respondents.

No. 4400.

Supreme Court of Nevada.

Nov. 17, 1961.

Rehearing Denied Dec. 26, 1961.

Berkson & Phillips, Lester H. Berkson, Las Vegas, for appellant.

Goldwater & Singleton, Las Vegas, for respondents.

BADT, Chief Justice.

The parties will be referred to by their abbreviated names. Appellant Zalk-Josephs sued Wells Cargo and Travelers by complaint containing three causes of action. The first cause of action is against Wells Cargo. It alleges that Wells Cargo was the general contractor on a certain Nevada state highway contract; that one Kaufield, as a subcontractor of Wells Cargo, ordered materials and services from appellant Zalk-Josephs of the value of $21,866.46 to be used on said state highway project; that Zalk-Josephs sold such materials and services to Kaufield of the reasonable value of said sum, no part of which has been paid; that such sum was paid to Wells Cargo by the state and was in turn paid by Wells Cargo to Kaufield, who converted all of the same to his own use and thereafter filed a petition in bankruptcy and that a general stay order of the bankruptcy court has prevented Zalk-Josephs from suing Kaufield. The meat of such first cause of action against Wells Cargo is the assertion that pursuant to the provisions of NRS 205.310 Kaufield was the agent of Wells Cargo and that the latter, as Kaufield's principal, is liable to Zalk-Josephs for the value of labor and materials.

Zalk-Josephs' second cause of action is directed against respondent Travelers alone. It realleges by reference all the allegations of the first cause of action and asserts further that Travelers was the surety on the bond furnished by Wells Cargo, under the terms of which Travelers was liable for the payment of the labor and material costs if Wells Cargo failed to pay therefor; that on or about September 9, 1959 the state highway department accepted said highway project as completed, but that Zalk-Josephs had no knowledge of such acceptance; that it had the right within 30 days after September 9, 1959 to file a claim for the unpaid balance under such project by filing a claim with the state highway department but that it failed to file such notice and perfect its claim because (1) it had no actual notice of the acceptance, (2) believed that work was still in progress, (3) was informed on several occasions from September 9, 1959 through March 1960 by Wells Cargo and by Kaufield that work was still in progress, (4) neither Wells Cargo nor Kaufield informed Zalk-Josephs that the project had been accepted as completed in fact misled Zalk-Josephs into letting its rights lapse, and because Kaufield, after September 9, continued to make partial payments on its account to Zalk-Josephs. The second cause of action finally alleged that it was by reason of such circumstances that Zalk-Josephs failed to file its notice within 30 days after September 9, 1959, and that by reason thereof Travelers owes Zalk-Josephs, under the provisions of the bond, the full sum of $21,866.46.

The trial cause of action, like the first, is against Wells Cargo. It alleges the state contract with Wells Cargo as the general contractor, and recites that Zalk-Josephs' work was performed 'without any express request from the defendant, Wells Cargo, Inc., or agreement between plaintiff and defendant, Wells Cargo, Inc., but that defendant, Wells Cargo, Inc., at all times, knew that the said work, labor and services were being performed and knew that plaintiff expected to be paid therefor, and accepted the said work and received the benefits thereof' and that the work was reasonably worth $21,866.46, no part of which has been paid.

Wells Cargo and Travelers severally moved for a dismissal upon the grounds that the complaint failed to state claims upon which relief could be granted. This appeal is from an order granting the motions to dismiss.

1. The first assignment of error is a procedural one. Appellant asserts that it alleged that Kaufield, the subcontractor, was the agent of Wells Cargo, the principal contractor; that such allegation raised an issue of fact not subject to determination on a motion to dismiss. In support, it cites McColl v. Scherer, 73 Nev. 226, 315 P.2d 807, and Parman v. Petricciani, 70 Nev. 427, 272 P.2d 492. It is however clear from the allegations contained in the first cause of action that reliance upon such agency is made upon the provisions of NRS 205.310, reading as follows: 'Contractor failing to pay for labor or material. Every person having entered into a contract to supply any labor or materials for the value or price of which any lien might lawfully be filed upon the property of another, who shall receive the full price or consideration thereof, or the amount of any account stated thereon, or part payment thereon, shall be deemed to receive the same as the agent of the party with whom such contract was made, his successor or assign, for the purpose of paying all claims for labor and materials supplied, insofar as the money so received will pay such claims.'

This section is part of NRS, Chapter 205, entitled 'CRIMES AGAINST PROPERTY,' embracing §§ 205.010 to 205.460, inclusive. The particular section relied on, namely, § 205.310 is the last of three sections concerning embezzlement. Appellant's chief reliance upon § 205.310 is upon the clause that the person receiving money for the purpose of paying for materials or labor 'shall be deemed to receive the same as the agent of the party with whom such contract was made.' He asserts that, such agency having been defined by the statute, Kaufield's principal, Wells Cargo, was liable to Zalk-Josephs for the payment of the latter's bill for materials and labor. It is unnecessary to discuss this contention at length. Appellant misinterprets the purpose, meaning, and intent of the section quoted. This criminal statute has patently no application to the situation described. It totally fails to create a liability, under the theory of agency, of Wells Cargo to Zalk-Josephs. There are other reasons why the statute does not apply but it is unnecessary to discuss them. The first cause of action was accordingly properly dismissed.

2. The second cause of action, as noted, is against Travelers on its bond, and claims that the circumstances above recited with reference to its second cause of action raised an equitable estoppel against the defense that Zalk-Josephs had failed to file a claim with the state highway department as required by statute. It relies upon its assertions that Wells Cargo and Kaufield had on various occasions stated that the project was not completed, that the work was still in progress and never informed appellant that the project had been accepted as completed by the highway department, and misled appellant into letting its rights lapse and that Kaufield continued to make partial payments on appellant's account. But no act, statement, omission, or representation of any kind by Travelers is alleged. The contention falls far short of establishing a liability on the surety even assuming the correctness of the assertions against Kaufield and Wells Cargo. The meat of the matter lies in the provisions of NRS 408.900 and...