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QUIRK V. QUIRK.

(Circuit Court, E. D. Pennsylvania. July 10, 1907.)

No. 44.

1. EQUITY-OBJECTIONS TO JURISDICTION-TIME FOR TAKING.

In a suit in equity for an accounting by an agent, the objection that equity is without jurisdiction because of the adequacy of the remedy at law can only be interposed in the earlier stages, and will not be considered after the case is at issue and has been heard by a master.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 19, Equity, § 495.] 2. WORK AND LABOR-PARENT AND CHILD-SERVICES BY SON TO FATHER

IMPLIED PROMISE TO PAY.

Services rendered by a son to his father in the collection of rents do not raise an implied promise on the part of the father to pay for them.

[Ed. Note. For cases in point, see Cent. Dig. vol. 37, Parent and

Child, g 17.) 3. PRINCIPAL AND AGENT-RIGHT OF AGENT TO COMPENSATION-FORFEITURE BY

MISCONDUCT.

Where a son who was agent for his father to collect rents and deposit the same in bank to the father's credit kept no proper account of his collections, and did not deposit all of the money collected, but mixed a part with his own funds and converted the same to his own use, he thereby lost his right to any allowance for his services if otherwise entitled thereto.

[Ed. Note.--For cases in point, see Cent. Dig. vol. 40, Principal and

Agent, $$ 211, 212.] 4. SAME-ACCOUNTING BY AGENT.

An agent on an accounting for money collected for his principal will not be allowed for disbursements claimed to have been made by him where he failed to keep proper accounts, and the testimony in support

of his claim is vague and unsatisfactory. 5. GIFT-FORGIVENESS OF DEBT-EVIDENCE TO ESTABLISH,

While a creditor may make a present to his debtor of the amount due him, nothing less than a delivery of the note or a receipt for the amount will support such gift.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 24, Gifts, 88 95-99.)

In Equity. Final hearing on exceptions to master's report.
Maurice G. Belknap and E. Spencer Miller, for complainant.
Edgar W. Lank, for respondent.

J. B. MCPHERSON, District Judge. I have read attentively all the evidence in this case, and have considered it in the light of the exceptions filed by the respective parties, but in my opinion none of the exceptions should be sustained. When it is remembered that the master saw and heard the witnesses, his valuation of their testimony should receive much respect, and, so far as I am able by reading the stenographer's notes to judge of the weight that should be given to what they have said, I agree fully with his estimate.

The exceptions are accordingly dismissed for the reasons given by the master, whose reports are adopted as the opinion of the court. A decree may be entered for the sum recommended in the supplemental report. The master is directed to give the parties notice and make a recommendation on the subject of costs on or before July 25th. The reports of the master (Henry B. Robb, Esq.) are as follows:

Report of Master. To the Honorable the Judges of Said Court:

The master appointed by your honorable court in the above proceeding to state an account begs leave to make the following report:

That in pursuance of his appointment, attached hereto, marked "Exhibit A,” he served 10 days' notice upon counsel for plaintiff and defendant. That in pursuance of said notice a meeting was held at the office of Maurice G. Belknap, Esq., northeast corner Thirteenth and Chestnut streets, Philadelphia, May 18, 1901, at 3 p. m., and subsequent meetings were held from time to time, at which counsel for the plaintiif and defendant with their witnesses were present. After several meetings, at which testimony was taken, the plaintiff and defendant each filed with the master an account of the transactions between them, exceptions were filed to both the accounts, and subse quent meetings were held from time to time for the purpose of taking further testimony. Your master has carefully reviewed the testimony and the arguments of counsel, and respectfully submits his findings herewith.

The bill of complaint (Exhibit B) sets forth in the first three paragraphs that the plaintiff is a citizen of the state of Maryland, and the defendant a citizen of the state of Pennsylvania; that the plaintiff on the 15th of July, 1899, appointed the defendant his agent to collect his (plaintiff's) share of the personal estate of John Quirk, deceased; that on or about the 20th of November, 1900, plaintiff became the owner of premises 2041-43 Mt. Vernon street, in the city of Philadelphia, and authorized the defendant to collect the rents of the said houses, and that it was agreed that the moneys collected by the defendant should be deposited at the Union Trust Company in the name of the plaintiff ; that the defendant received money from time to time to be so deposited, had charge of the deposit book, which he retained, together with all checks drawn against it by the plaintiff and returned to the defendant at the various settlements of the account with the bank.

The fourth paragraph sets forth that he loaned the defendant certain sums of money out of the said funds deposited at the Union Trust Company, and delivered to the defendant in September of 1902 $375 additional in cash for deposit to his credit in the said account.

In the fifth paragraph plaintiff alleges that he demanded an account, the surrender of the bank deposit book and the checks, which were refused by the defendant.

The sixth paragraph sets forth the execution of a bond and warrant of attorney in the sum of $6,500 by the plaintiff in favor of the defendant, alleg. ing undue influence.

The seventh paragraph alleges that the amount involved in this suit is upward of $2,000, and that he has no adequate remedy at law.

The prayers of the bill are, first, that the defendant, John S. Quirk, be required to state an account of money received by him from the plaintiff or on his account, and of all rents and income from the property, and all taxes and repairs paid on account thereof, and pay the balance thereof to the plaintiff ; second, that he be required to deliver up to the plaintiff the paid checks described in the bill; third, that the alleged bond and warrant of attorney be declared null and void and delivered up for cancellation; fourth, general relief.

The bill was amended by leave of court on the Sth day of March, 1905 (Exhibit C), by striking out all of the sixth paragraph and the third prayer thereof.

The answer of the defendant (Exhibit D) admits the facts set forth in the first three paragraphs of the bill as amended, admits the loan of $1,500 set forth in the fourth paragraph, but claims a set-off, denies the loan of $100 therein mentioned, and further denies that he is indebted to the plaintiff in any sum, and avers that the plaintiff is indebted to him in the sum of $8.75. The defendant further admits that he collected as rents $2,465.50, and appends a statement of the same without the names of the persons from whom received. He admits the receipt of the several sums collected from the estate of John Quirk, deceased, claiming, however, that he deposited them in the plaintiff's account at the Union Trust Company. He denies the allegations in the sixth paragraph of the bill which becomes immaterial by the aforesaid amendment. Plaintiff filed a general replication (Exhibit D12).

At the argument counsel for defendant raised the question of jurisdiction, and based his argument upon the fact that the bill does not allege there is any money due from defendant to him, and that plaintiff has an adequate remedy at law. No formal motion was made at any time during the proceedings to dismiss the bill, but a great amount of testiniony was taken on both sides, and formal accounts were filed by both parties.

Your master finds this to be a case for an accounting upon the authorities hereafter mentioned; that the defect in the bill, if there is one, may be cured by amendment since he finds a balance to be due plaintiff by defendant; and that this is a case where want of jurisdiction can only be interposed in the earlier stages of the proceeding after the bill is filed, and before the cause has been fully heard by the master.

In Bank of U. S. v. Biddle, 2 Parsons, Eq. Cas. (Pa.) 31, Parsons, J., at page 56, states one of the rules governing such cases to be:

“In cases arising ex contractu or quasi ex contractu, but involving accounts, courts of equity have exercised a general jurisdiction, among which arising from the cognizance of this court are agencies, claims against attorneys, consignees, receivers, and stewards.

In agencies of a simple nature, such as a single consignment, or the delivery of money to be laid out in the purchase of an estate, or in a cargo of goods to be paid over to a third person, although a suit at law may be maintainable, yet, if the thing lie in privity of contract and personal confidence the aid of a court of equity is often indispensable, it may be exceedingly convenient and effectual and prevent a multiplicity of suits and the party in such case often has an election of remedy, 1 Story, 443."

A bill in equity was sustained against an agent for account in Persch v. Quiggle, 57 Pa. 247.

In Bradly v. Jennings, 201 Pa. 475, 51 Atl. 343, the court held that a bill would lie as against one of the defendants on the ground of agency.

In Fowle v. Lawrason, 5 Peters (U. S.) 503, 8 L. Ed. 204, Mr. Chief Justice Marshall says:

"In all cases in which an action of account would be the proper remedy at law, and in all cases where a trustee is a party, the jurisdiction of a court of equity is undoubted. It is the appropriate tribunal.”

See, also, Mitchell v. Great Works, 2 Story, 648, Fed. Cas. No. 9,662.

In Kilborn v. Sunderland, 130 U. S. 505, 9 Sup. Ct. 594, 32 L. Ed. 1005, Mr. Chief Justice Fuller says:

Where it is competent for the court to grant the relief sought, and it has jurisdiction of the subject-matter, this objection should be taken at the earliest opportunity and before the defendants enter upon a full defense.

There cannot be real doubt that the remedy in equity, in cases of account, is generally more complete and adequate than it is or can be at law.” 1 Story's Eq. Jur. § 450.

After the defense has been filed, it was held that the court is not obliged to entertain an objection to the jurisdiction, even though if taken in limine it might have been worthy of attention. Reynes v. Dumont, 130 U. S. 354, 9 Sup. Ct. 486, 32 L. Ed. 934.

Objection that the proceeding should have been begun on law side will not be entertained, unless made within a reasonable time after the bill is filed. Dorff v. Schminck, 197 Pa. 301, 47 Atl. 113; Shillito v. Shillito, 160 Pa. 167, 28 Atl. 637; Penna. v. Bogert, 209 Pa. 589, 59 Atl. 100.

In Mintz v. Brock, 193 Pa. 294, 44 Atl. 417, after answer filed and while the court below was hearing testimony in support of a prayer for preliminary injunction, it was agreed by the parties that the defendant should file an account within 30 days. After the accounts were filed and testimony taken for and against exceptions to the said account, the defendant moved to dismiss the bill, which was refused. The court said:

66 *

“The question of the defendant's liability to account, etc., as prayed for in the bill, is thus definitely settled by this decree to which both parties consented. *

* * At the trial the burden of sustaining his account was on the defendant. The result was unsatisfactory to him, and he therefore took this appeal.”

It was held the court was not in error in refusing to dismiss the bill.

Taking up the merits of the controversy: After several meetings at which testimony was taken, the parties each voluntarily filed accounts with your master.

The plaintiff's account (Exhibit E) shows a balance due him by the defendant in the sum of $3,371.79, to which exceptions (Exhibit F) were filed by defendant, and a counter account (Exhibit G) was then filed by the defendant, showing a balance due him by plaintiff in the sum of $236.33, to which exceptions (Exhibit H) were filed by plaintiff. The case was therefore reduced to one of accounts, and the subsequent testimony submitted by plaintiff and defendant was confined to the items of the said accounts, and the exceptions thereto. By the testimony subsequently taken, all of the items in both accounts to which exceptions were filed were satisfactorily proved by vouchers or admitted by counsel for the respective opposite parties, except as hereinafter set forth, and counsel for all parties conceded that the only questions (so far as the merits are concerned) to be considered are the following exceptions:

"(1) Plaintiff excepts (No. 1) because defendant failed to charge himself with the following item: '1901. Mar. 18. To cash one-half of two years and 2 mos. rent at $25 per mo. for premises 920 Fairmount Ave., $325.00. This is the basis of defendant's first exception to plaintiff's account.

"(2) Plaintiff excepts (No. 2) to each and all of the following items of credit in the rent account and asks that the same shall be proved (all of which were admitted and proved except): 1903. Dec. 5. By cash paid commissions on collections $3,089, $154.45.'

"(3) Plaintiff excepts (No. 4) to each and all of the following items of credit in the 'general account,' and asks that the same shall be proved (all of which were proved and admitted except): '(a) 1899. Apr. By money's advanced by J. S. Quirk in the matter of contest of the will of John Quirk, deceased, $489.60. (b) 1902. Nov. 26. By gift from B. B. Quirk of balance due on accounts, $1,489.94.'”

Your master has carefully considered said exceptions, and his conclusions thereon are as follows:

1. Plaintiff excepts (No. 1) because defendant failed to charge himself with the following item: "To cash one half of two years and two months rent at $25 per mo. for premises No. 920 Fairmount Avenue $325.00”-and defendant excepts (No. 1) to plaintiff making such charge in his account.

Upon this point your master finds as a fact that there was not any express agreement by the defendant to pay the plaintiff any rent for premises No. 920 Fairmount avenue during the two years and two months they were occupied by him after the death of his grandfather, John Quirk.

He further finds that the evidence upon this point is vague and indefinite, and not sufficient to base a claim against the defendant for the use of the premises.

The only evidence upon this question was that given by Alfred Moore and the plaintiff, which was vague and indefinite. The sum of the testimony of Alfred Moore was that in the settlement between one John B. Quirk and Benjamin B. Quirk, plaintiff, in the division of the property of the estate of John Quirk, deceased, $325 was deducted by John B. Quirk from the sum due Benjamin B. Quirk, who was represented by John S. Quirk, the defendant. There was no evidence to show the terms of the whole settlement between John B. Quirk and John S. Quirk. The defendant, John S. Quirk, was the agent for the plaintiff, with full power to make the best settlement he could in the adjustment of the estate of John Quirk, deceased, the grandfather of the defendant, and in the discharge of his duty in this respect there never had been any complaint by the plaintiff. In fact, he has been well satisfied with the way the settlement of the estate was conducted by the defendant and his counsel. T'he evidence further shows that 920 Fairmount avenue was originally owned by the grandfather and occupied by the grandson, John S. Quirk, the defendant, prior to his grandfather's death, and after his death until the settlement of his estate. No claim is made in the bill for this item. While we concede that the mere fact that no claim is made in the bill for this rent would not preclude the plaintiff from recovering it, the fact that the plaintiff omitted to claim this item in his bill, or by an amendment to charge fraud against the defendant in the settlement of the estate of John Quirk, deceased, raises a strong presumption against the claim of the plaintiff, and looks as if it were but an afterthought. The plaintiff himself says on pages 114, 115, 116, and 117 that he was not the owner of the property, and that the defendant occupied the premises under an arrangement with his grandfather during his lifetime in consideration of free board for a brother and sister of defendant, children of plaintiff, and he himself had no knowledge whether defendant paid John B. Quirk rent while he occupied the premises. John B. Quirk was not called. He surely must have been able to throw more light on the question than any of the witnesses who were called, and it would be unjust to the defendant to allow the plaintiff to recover upon such uncertain and vague evidence, especially when the absence of better testimony is not accounted for.

Your master finds that the exception (No. 1) of the plaintiff should be dismissed, and the first exception of the defendant be sustained.

2. Plaintiff excepts (No. 2) to the commission on collection $3,089.

Your master finds as a fact that the defendant was agent to collect rents for his father, and that he did not keep any books of account, that he mingled the moneys of the plaintiff with his own and did not deposit all of the moneys collected as rent in the Union Trust Company in accordance with the agreement between the parties, but converted part of the money to his own use, and, when called upon for an account, omitted items amounting to more than $600.

This credit is based upon a claim for commission of 5 per cent of the amount of the rent which it is agreed by both parties was collected by the defendant. The plaintiff objects to this item on the ground, first, that the services having been rendered by a son to a father do not raise an implied promise to compensate in money; and, second, because he has forfeited his right to them by bad faith to his principal.

There was no special promise to pay the defendant for his services in collecting rents and taking care of the plaintiff's real estate, and this exception might be ruled upon the authority of Hertzog v. Hertzog, 29 Pa. 468, which holds that services performed for a parent by a son do not give rise to an implied promise to pay for them. The conduct of defendant, however, was such that, even though a promise to pay the defendant for his services were implied, the master is of the opinion that he has forfeited his right to commissions by bad faith to his principal. The reason is that defendant attached to his answer what purported to be an accounting of his rent collections from February 7, 1900, to December 5, 1903, wherein he shows the amount collected to be $2,465.50, which he states to be to the best of his knowledge, remembrance, information, and belief, but after the evidence was partly taken, and it was discovered that accounts must be filed and it was shown how much had been received by him, in his counter account he charged himself with rents collected in the sum of $3,089, being the identical sum charged against him in the account filed by the plaintiff, thereby showing a discrepancy of something over $600 which he had previously omitted. Although he agreed to collect the rent and deposit the money to the plaintiff's account in the Union Trust Company, defendant never kept any books showing the sums of money received as rent, and did not deposit the money regularly in the bank as he agreed to do, but mingled it with his own. He tried to shift the responsibility of keeping the books and depositing the money upon his sister Nellie, but her testimony is clear that she was simply his clerk, and he cannot charge to her his own misuse of trust moneys and negligence in not seeing that she kept books for more than two years.

In Berryhill's Adm'x's Appeal, 35 Pa. 245, it was held that misconduct in a trustee is always followed by a loss of commissions, especially when it is

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