
    Quayle & Son, Respondent, v. Brandow Printing Company, Appellant.
    Third Department,
    November 14 1906.
    Contract — action for percentage by sub-contractor — evidence establishing agreement that sub-contractor was not to be paid until moneys were collected by contractor — jurisdiction — counterclaim for sum not alleged to be due at the commencement of action—amount thereof insufficient to oust court of jurisdiction.
    Action by a sub-contractor against contractor for sums alleged to be due for services.
    The defendant having a contract for State printing entered into an agreement with the plaintiff whereby the latter was to perform a certain portion of the work for a percentage of the sum received from the State. The defendant contended that the plaintiff’s percentage was not due under the terms of the agreement until the "defendant had actually received the moneys from the State, while the plaintiff claimed that there was no agreement as tp the terms of payment.
    Upon this issue it appeared that the plaintiff and defendant had had similar contracts in which admittedly the plaintiff was only entitled to payment when the moneys were received by the defendant from the State. The plaintiff testified merely that as to the last contract no terms were made, while the defendant’s testimony was to the effect that the agreement was that the work was to be done by the plaintiff on the same terms as the former contracts. In addition to
    . this the plaintiff wrote to the defendant when inclosing several bills stating that the amount was to be paid upon the receipt of the moneys by the defendant “from the State.’’
    In the light of the whole evidence,
    
      Held, that the defendant’s contention as to the terms of the agreement was established beyond a peradventure, and that a finding of the trial court to the contrary was against the weight of evidence; ' ■
    That although the defendant had received the moneys from the State subsequent to the commencement of the action, the plaintiff’s" right to judgment must depend upon the circumstances existing at the time of the commencement of the action;
    That the plaintiff was only entitled to recover for that portion of the work for which the defendant had actually received payment prior to the action;
    That counterclaims setting out claims not alleged'to be due at the time of the commencement of the action were inadmissible to show that the total sum in controversy exceeded the jurisdiction of the court;
    That evidence of a counterclaim founded on tort was properly excluded, as sucb claim was not a proper offset in an action upon contract,
    Kellogg, J., dissented, with memorandum.
    
      Appeal by the defendant, the Brandow Printing Company, from •a judgment of the County Court of Albany county in favor of the plaintiff, entered in the office of the clerk of the county of Albany on the 15th day of May, -1906, upon an order of xsaid .Comity- Court, entered on the 15th day of May, 1906, affirming a judgment of the City Court of Albany, rendered on the 20th day of February,. 1906, and also-from the said order of "the County Court.
    
      Montignani & Elmendorf [John F. Montignani of counsel], for the appellant.
    
      Rosendale & Hessberg [J. Murray Downs of counsel], for the respondent.
   Smith, J.:

The plaintiff, and defendant are -both domestic corporations. Prior to December, 1905,' the -plaintiff’s incorporators were doing work as a copartnership under the name of Quayle & Sons. Plaintiff obtained title to its’ cause of action by assignment from tiffs copartnership.

In -1904 the defendant had secured certain .contracts with the. State for-public printing. Part of the work to be performed under those contracts was turned over to Quayle & Sons. Plaintiff has recovered judgment for, services in the performance of part of this. work. No question is made as to the performance of the work or as to the value of the: services.. The claim is first, resisted upon the ground that the moneys were not to become due for such services' until they were collected by the defendants from the State, and that such moneys had not been collected from the State at the time of the commencement of this action. The defendant also asserts 'ertai.n counterclaims, and further insists that the accounts in con-, trove'rsy exceeded the sum. of $2,000, which fact ousts the City Court of jurisdiction.

Plaintiff claims that this work was' done without any contract as to the price to be paid therefor or as to the terms of payment. Defendant claims, on the contrary, that this work was to be done under an arrangement whereby -after the performance thereof the bills were to be submitted to the defendant, which was to collect the same forthwith from the State, and after haying retained fifteen per cent of the collection the remaining eighty-five per cent was to be paid over to the plaintiff as its compensation. Upon this question there is some conflict of' evidence, and the trial court is presumed to have found with the plaintiff. In our judgment, however, such conclusion is so strongly overborne by the evidence, both oral and documentary, that such conclusion should not stand.

Upon the conceded facts, in 1897, when the defendant had a similar State contract, part of the work was done by Quayle & Sons under a written agreement whereby the defendant was to collect the money from the State and eighty-five per cent of such collection was to be paid to Quayle & Sons when received from the State. In 1899 the defendant obtained another contract for public printing and work was done “by Quayle & Sons thereupon under a written agreement precisely similar to that of 1897. From 1902 to 1904 the defendant did not have this contract for the public printing but the contract was obtained by the Albany Evening Union. In 1904, when the defendant again obtained the contract for public printing, O. A. Quayle, one of the members of the firm, came to defendant’s business office and had a conversation in reference to the work. The evidence of the defendant’s witnesses is to the effect that Quayle asked if they" could not do the work under the-terms under which work was done under" the former contracts, and that Mr. Brandow, the president of the company, stated that those terms were perfectly satisfactory to him. The testimony of Mr. Quayle himself as to that conversation is entirely unsatisfactory. Much of it he fails to remember, and while at the last he swears that no terms were made, the fact remains that shortly thereafter work was sent by the Brandow Company and "done by Qiiayle & Sons, for part of which this recovery is sought. Mr. Brandow, himself a witness, after stating that he had replied that the terms were satisfactory to him personally, says that nothing definite was stated. However, the sending of the work by the Brandow Company thereafter to Quayle & Sons after the proposition made, in view of the former contract relations, would seem to establish beyond a per-ad yen turc the understanding of both parties that the" work was to be done in accordance with the terms of the former contracts. It is extremely improbable that this work should be turned over by the Brandow Company to Quayle & Sons without any understanding as to how ranch was to be charged or how payment was to be made. The natural and reasonable inference, and we' may say the irresistible inference, from all the surrounding circumstances is that both parties understood that the terms óf the contract that had formerly existed between the parties were to determine their right of compensation for the work that- was then done. .

If the determination of this question depended solely upon the evidence of the witnesses it is possible that this court should affirm the judgment of the court below based upon the conclusion that no contract was ever made about the compensation or the terms of payment. But- the determination of the question does not rest alone, upon the evidence of these witnesses as to what occurred in the office of the defendant upon the visit of Hr. Quayle. Subsequent-written documents passing between the parties'to the contract establish unquestionably the understanding for which the defendant here contends. Upon March 13, 1905, the Brandow Company were short of moneys and to assist them Quayle & Sons gave their note for $750,, and upon the giving of this note the following receipt was delivered by the Brandow Company to Quayle & Sons;

“ Received of Quayle & Sons their note dated March 13, 1.905, payable three months after date, for $750, which, when paid shall be applied, on account of commissions and charges for printing, numbering and binding liquor tax certificates for 1905-6.
“ We agree to render bill against the State of New York for said work as soon as memorandum of samé is rendered to us by Quayle & Sons, and as soon as paid to us by the State we will pay to Quayle & Sons amount received, less our commissions and charges as above stated, after crediting on said commissions and charges the amount of said note of $750. . . • '
“BRANDOW PRINTING COMPANY,
“-By A. S. Brandow, Pres't”'■

1 Again, differences thereafter arose between the Brandow Company' and Quayle & Sons: It was claimed' by Quayle & Sons that, the Brandbw Company did not turn over eighty-five per cent, and- ■ Mr. Drake and Mr- Hallenbeck, directors of the .defendant; met Mr. Quayle, and Mr. Hallenbeck agreed orally that he would see to it that eighty-five, per cent of the moneys when. collected from the State should be turned over forthwith to Quayle & Sons, and thereupon Quayle & Sons sent to the Brandow Company certain bills which had been withheld for some time, that the Brandow Company might collect the same from the State: Accompanying those bills, upon September 18, 1905, Quayle & Sons wrote to Mr. Drake the following letter:

“QUAYLE & SONS.
“Albany, New York, 9-18-05.
“Mr. John Drake, Albany, N. Y.:
“My Dear Mr. Drake.— I am.enclosing several bills in accordance with my understanding with yourself and Mr. Hallenbeck, which is that the sum represented by the bills, less 15%, is to be . paid to us upon the receipt of said amounts by the Brandow Printing Co. from the State, under the Department Printing Contract. We have transcribed all of the other bills and was expecting to have them in your hands in another week.
“ Our firm would like it very much if Mr. Hallenbeck would recite our understanding in this matter in some simple form, say in the form of a Gentleman’s agreement in writing.’ I was very sorry'not to have seen you to-day when I called. I went over the matter and explained the facts in connection with the inclosed bills to your Mr. Evory.
“Very truly yours,
“Dic. O. A. Q. QUAYLE & SONS.”

There is considerable evidence of oral admissions of Mr. Quayle to the effect that this work was being done under this contract. The two papers quoted would seem, however, to remove the last vestige of doubt that such was the understanding under which this work was done. So strong was this proof that the plaintiff’s attorneys upon the trial offered to and did allow fifteen per cent to the defendant upon the value of the work claimed, which was the price that the Brandow Company was to receive from the State for said printing. This was not offered for a compromise, and it is clearly confirmatory of the fact established both by oral and written evidence that this work was being done under the terms _ of the old contract. ' .

Plaintiff contends, however, that assuming this fact to be proven by the concession upon the trial of the fifteen per cent, the defendant gets the benefit of the commissions claimed, and o's it appears in the case that the money has been received by the Brandow Company from the State, that the judgment is right and should stand. This is a legal action, and the judgment must depend upon the right of action at the time of its commencement. It is no. answer to say that by reason of the fact that these moneys have been received after the commencement of the action the defendant has not been harmed by the. result. This judgment stands as an adjudication that this work was not done-under " the terms of the former contract, and it is impossible for us how to tell to what extent such an adjudication may cause injury to the defendant upon other transactions which áre not involved in this suit. While the plaintiff did not allege in its complaint that the moneys had been received hy the Brandow Company before the comméncement of the action, it appeared in the defendant’s proof that part of the moneys for the work sued for under the contract were in fact received before the commencement of the action, to wit, the sum of $172.56, for work , furnished the Adjutant-General’s office, and $228.85 for the State. Engineer’s account. The claim of $9.20 for.-lithographing was not paid until December thirteenth and the claim of $273.75 for work done in connection with the Lewis &r Clark exposition was not ¡laid until December nineteenth. The action was commenced on December twelfth. To the extent that this judgment "includes moneys not received by the Brandow Company prior to the commencement of the action the judgment mtist be modified.

Defendant’s second contention, is that the City Court committed error in not allowing proof of the counterclaims alleged in the answer. Defendant contends that if proof had been allowed it would have appeared -that the accounts between the parties amounted to more, than $2,000 which would have ousted the City Court of jurisdiction. A careful examination of these counterclaims, however,. shows that they are faulty in not alleging that the claims existed at the time of the commencement of the action. For aught that therein appears all. moneys claimed to have been due thereunder may have become due after the commencement of the action ,and prior to the verification of the answer. As to the cause, of action assumed to be alleged in paragraph 10 it may also be answered that the cause of action sought therein to be alleged is oné in tort which could not be offset against a cause of action in contract upon which the plaintiff seeks to recover.

All concurred, except Kellogg, J., dissenting in memorandum.

Kellogg, J.

(dissenting):

When objected to at tlie trial a pleading should be liberally construed with a view of doing substantial justice between the parties. So construed, I think the ninth answer sufficiently foreshadowed a counterclaim.

Judgment reversed and new trial granted, with costs to appellant to abide event, unless plaintiff stipulates to reduce the judgment so, as to include eighty-five per cent of the amounts received by defendant from the State prior to the commencement of the action. If plaintiff so stipulates judgment may be so modified and as modified affirmed, without costs to either party. New trial ordered at a time to be designated by Justice Chester, by whom the form of this decision may be settled on two days’ notice.  