Case Name: KINSTON MFG. CO. et al. v. FREEMAN
Court: United States Court of Appeals for the Fourth Circuit
Jurisdiction: United States
Decision Date: 1917-10-05
Citations: 247 F. 54
Docket Number: No. 1520
Parties: KINSTON MFG. CO. et al. v. FREEMAN.
Judges: 
Reporter: Federal Reporter
Volume: 247
Pages: 54–60

Head Matter:
KINSTON MFG. CO. et al. v. FREEMAN.
(Circuit Court of Appeals, Fourth Circuit.
October 5, 1917.)
No. 1520.
1. Work and Labor <S=>30(3)—Action by Agent for Compensation—Instructions.
By a written contract defendants authorized plaintiff to sell timber lands owned by them at a net price to them, plaintiff to receive any excess obtained above such price. Through plaintiff’s efforts a person was secured, who took an option on the land at an advanced price; hut the option was not exercised, and the contract between the parties expired. Defendants then requested plaintiff’s aid in further negotiations with the same person,' and through his efforts a sale was made at a lower price. Held, in an action to recover for his services on a quantum meruit, that defendants, having availed themselves of the labor done by plaintiff in his prior negotiations with the purchaser, were not entitled to an instruction that anything done by him under the contract should not be considered by the jury.
2. Interest @=»7—Bight to Interest—Money Due on Implied Contracts.
In such case a contract to pay plaintiff reasonable compensation for his sendees was implied, when they were requested, and on recovery plaintiff was entitled to interest from the time the sale was effected, both by tbe general law and under Revisal N. C. 1908, § 1954, which provides that money due by contract shall bear interest, which shall be distinguished from the principal in the verdict; and the fact that the jury did not make any finding as to interest, but only the value of plaintiff’s services, was a technical omission, which did not deprive him of the right to interest, or the court of the power to include it in the judgment.
Dayton, District Judge, dissenting in part.
<§^For other cases see same topic & KEY-NUMBER iii all Key-Numbered Digests & Indexes
In Errtor to the District Court of the United States for the Eastern District of North Carolina, at New Bern; Henry G. Connor, Judge.
Action by E. B. Freeman against the Kinston Manufacturing Company and the Ellington-Bryant Timber Company. Judgment for plaintiff, and defendants bring error.
Affirmed.
For prior opinion, see 233 Fed. 58, 147 C. C. A. 128.
G. V. Cowper, of Kingston, N. C., and O. H. Guión, of New Bern; N. C., for plaintiffs in error.
Walter H. Taylor, of Norfolk, Va., and A. D. Ward, of New Bern, N. C. (E. F. Aydlett, of Elizabeth, N. C., and M. T.’ Dickinson, of Goldsboro, N. C., on the brief), for defendant in error.
Before KNAPP and WOODS, Circuit Judges, and DAYTON, District Judge.

Opinion:
WOODS, Circuit Judge.
The facts appearing in the record and principles of law applicable thereto, on which this court reversed the judgment rendered in favor of defendants on -the first trial, are clearly stated in the opinion rendered by Judge Knapp, filed May 13, 1916. 233 Fed. 58, 147 C. C. A. 128. On the second trial the District Judge submitted issues to the jury in accordance with the North Carolina practice, and on the answers made by the jury entered judgment in favor of the plaintiff for $7,500 and interest from the date of the accrual of the plaintiff's alleged cause of action. The points now made in this court by defendants are: First, that there was an erroneous instruction to the jury; second, that the jury's findings of fact required a judgment for the defendants; and, third, that, even if the plaintiff was entitled to judgment, it should have been for $7,500 with interest only from the first day of the term of the court.
The action was to recover compensation for the alleged procurement by the plaintiff for the defendants of the sale of a large body of timber and a sawmill and lumber and logs in North Carolina. As his first cause of action the plaintiff set up an express written contract with the defendants which allowed him to sell the standing timber and sawmill plant for $350,000 net to the defendants, the plaintiff to receive any excess or overage in the price; negotiation by plaintiff with J. T. Deal, which resulted in the defendants, at plaintiff's instance, giving Deal an option for 60 days at the price of $390,000, of which the plaintiff was to receive $40,000, on the faith of a representation by the defendants that there were 130,000,000 feet of standing timber; a subsequent agreement that if a sale should be made to Deal for a less price, on account of shortage in the timber, the plaintiffs compensation should be $25,000; the failure of Deal to buy at $390,000 because the tract contained only 70,000,000 feet of timber; the subsequent sale to Deal in pursuance of plaintiff's efforts under his contract with the defendants. As a second cause of action, the plaintiff set up as a quantum meruit procurement of the sale by him of the property to Deal for the defendants, for which his services were reasonably worth $40,000. The answer made issues as to these allegations which were thus submitted to the jury and answered:
"1. Did defendants represent to plaintiff at or before the contract set out in Exhibits B and G that there was 130,009,000 feet of timber standing on the lands referred to in said exhibits? Answer. Yes.
"2. Was there 130,000,000 feet of timber standing on said lands? Answer. No.
"3. Did defendants on April 4, 1912, at the time the option to J. T. Deal was signed in Goldsboro, N. C., agree to pay to the plaintiff the sum of $25,000 if, because of shortage in the quantity of the timber on the land, there should he a reduction in the price of the timber? Answer. No.
"4. Did plaintiff, relying on defendants' representation in regard to the number of feet of timber on the land, comply with his part of the contract by securing a purchaser who was able, ready and willing to jmrehase the properties for $300,000 under the option, provided there, was 130,000,000 feet, or approximately that quantity, of standing timber? Answer. No.
"5. Did defendants sell the. timber to ,T. T. Deal for a smaller price than that named in the option solely by reason of the shortage of the timber? Answer. No.
"6. When was the sale of the timber to J. T. Deal made? Answer. Juno 24, 1912.
"7. Did plaintiff, by his effort, procure the sale of the timber by defendants to J. T. Deal at the price of $307,000? Answer. Yes.
"8. If so, what were plaintiff's services reasonable worth to defendants? Answer. Seven thousand and five hundred dollars."
The defendants first insist that they were entitled to the instruction, asked and refused, that the jury, in considering the seventh issue submitted as to the alleged cause of action on quantum meruit, should dis regard all services rendered under the alleged contracts for compensation of $40,000 and $25,000. The argument is this: The option given to Deal at the instance pf the plaintiff, under which plaintiff was to receive $40,000, had expired. All the work done by the plaintiff under that option was at his risk that the option would be closed by Deal; and, when Deal refused to exercise the option, the plaintiff could not require defendants to compensate him for labor performed at his own risk in the effort to sell under the option. This labor undertaken by the plaintiff under an express contract at his own risk, and lost by the failure to make the sale under the option, could not be brought over and added to services afterwards performed, even if the plaintiff after-wards procured the sale. This argument might be convincing, but for the fact that, after the option to Deal and the express contract between plaintiff and defendants had expired, the defendants asked the aid of the pláintiff. About a week before the sale was made to Deal by defendants, a meeting was arranged between Deal and the defendants in Richmond. Freeman testified, and Bryant practically admitted, that Freeman was present at this meeting at the request of Bryant, representing the defendants, to aid in the negotiation with Deal. This could only have meant that the defendants to forward the sale to Deal availed themselves of the labor performed and information obtained by Freeman in his former negotiation with Deal. Haying thus availed themselves of Freeman's former labor, the defendants were not entitled to the instruction denying plaintiff reasonable compensation for it. Nor does it matter that defendants sold against the protest of the plaintiff, made on the ground that, in his opinion, the land could be sold for a greater price. All this was involved in the question whether the plaintiff procured a purchaser who bought at a price the defendants were willing to take; and this question was answered in the affirmative.
This reasoning and conclusion go far towards disposing of the next position taken by defendants. The jury found in effect that the defendants did incorrectly represent that there was 130,000,000 feet of timber; that Freeman lost nothing by this misrepresentation under his contract with' the defendants for $40,000 over their net price of $350,000, because he did not find a purchaser ready, willing, and able to take the property for $390,000 on the basis of the representation. They also found that the defendants did not contract to pay Freeman $25,000 on a sale for less than $350,000 net. The defendants contend that, under the former opinion of this court, the legal sequence from these findings on the alleged express contracts is that Freeman could not recover under the quantum meruit count. True, it was held in the former opinion of this court that if, because of defendants' untrue representation, Freeman was unable to realize the net price of $350,-000, and an overage for himself, he could nevertheless recover if he brought about the sale at a less price. But it was not held that, as a condition precedent to recovery on the quantum meruit, the plaintiff would have to show that he could have realized $350,000 net, but for the untrue representation of the defendants upon which the original contract was based. On the contrary, the court said:
"The second count, it is true, is lacking in dearness' of statement and cannot he regarded as a model pleading, but it purports to set forth a cause of action upon quantum meruit, it states the facts with sufficient particularity and its allegations are ample in our judgment to apprise the defendants of the grounds upon which plaintiff claims the right to recover independent of the original agreement."
There was evidence supporting the jury's findings that the sale was procured by Freeman's efforts, and that the plaintiff conferred on the defendants at their request the benefit of all the work he had done in forwarding the sale.
The judgment of the District Court was for $7,500, the amount which the jury found Freeman's services were reasonably worth to the defendants and interest from June 24, 1912, the date of the sale to Deal. The defendants contend that in North Carolina interest is recoverable on an unliquidated demand only from the date of the judgment, and not from the date when the service was rendered. Section 1954, Pell's Revisal 1908, provides:
"All sums of money due by contract of any kind whatsoever, excepting money due on penal bonds, shall bear interest, and when a jury shall render a verdict therefor they shall distinguish the principal from the sum allowed as interest; and the principal sum due on all such contracts shall bear interest from the time of rendering judgment thereon until it be paid and satisfied. In like manner, the amount oí any judgment or decree, except the costs, rendered or adjudged in any kind of action, though not on contract, shall bear interest till paid, and the judgment and decree of the court shall be rendered according to this section."
The service rendered by Freeman, which the jury found brought about the sale, having been rendered at the instance of the defendants and accepted by them, there was a contract implied in fact on the part of the defendants to pay for them, as distinguished from express contract, and also from quasi contract, or an obligation imposed by law to pay for benefits received, when no promise could be implied in fact. 9 Cyc. 242 ; 6 Rul. C. L. 587, 588. The case, therefore, presents an implied contract falling under the statute.
Even where the matter is not regulated by statute, the tendency of modern decisions is to allow interest on all money owing on contracts, either express or implied, from the date it was due, whether the amount be liquidated or unliquidated. 15 Rul. C. L. 8. It is no objection to the application of the rule that the amount due under the contract is unascertained until the trial. The interest is not charged to the debtor as a penalty, but on the principle that, since he has had the use of the money which was justly due to his creditor under the contract, he should pay for the use he is presumed to have made of it from that time. This gives the creditor nothing more than his right, and imposes no hardship on the debtor. The debtor may always escape payment of interest to the creditor by tendering the sum justly due and keeping the tender good. Charlotte Nat. Bank v. Davidson, 70 N. C. 118. The statute of North Carolina was intended to express this modern rule that interest should be allowed on money owing on all contracts from the date when the creditor was entitled to receive it. This, we think, is clearly held in Bond v. Pickett Cotton Mills, 166 N. C. 22, 81 S. E. 936. It is true that interest was not allowed in that case on a balance which was unascertained until an accounting had been taken. But the refusal to allow interest on a balance which could only be ascertained by an accounting was placed on the express ground that the amount in defendant's hands-was not a debt in the sense intended by the statute, but a trust fund which the .defendant had been always ready and willing to pay as soon as the amount should be ascertained, and that therefore no default could be attributed to it. Indeed, the defendant was a mere stakeholder, having no duty of ascertaining the share of the fund in his hands due to each claimant. In the case before us the defendant denied all liability, and the jury found in effect that it owed the plaintiff on an implied contract $7,5.00 on June 24, 1912. Interest was therefore chargeable under the statute from that date.
The argument that interest cannot be allowed from the time when the money was due, because the jury failed to comply with the requirement that "they shall distinguish the principal from the sum allowed as interest," is rather technical than substantial. The finding that the plaintiff's services were reasonably worth $7,500, without doubt, meant that they were worth that when they were rendered, and that thát sum was due to the plaintiff under the implied contract to pay him when his services were completed by the sale. Interest followed from that date as a matter of law; and it was a mere omission of the jury in failing to set it down. Surely, it cannot be necessary to try the whole case over to correct this omission. No more reasonable would it be to impanel another jury and instruct them to do the mechanical act of finding the interest. Booking through and beyond mere technicality, the case is one for emphasis to be placed on the last line of the section of the statute quoted, which requires that "the judgment and decree of the court shall be rendered according to this section"; that is, that the judgment shall be rendered so as to include interest when the statute clearly requires its allowance.
Affirmed.