Case Name: Arthur M. Wertheimer and Alvin Wertheimer, Appellants, v. James Talcott, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1907-04-05
Citations: 118 A.D. 840
Docket Number: 
Parties: Arthur M. Wertheimer and Alvin Wertheimer, Appellants, v. James Talcott, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 118
Pages: 840–845

Head Matter:
Arthur M. Wertheimer and Alvin Wertheimer, Appellants, v. James Talcott, Respondent.
First Department,
April 5, 1907.
Principal and agent — commissions of factor on damaged goods taken over by insurer — disbursements to insurance adjuster and attorney.
When a factor’s contract entitles him to a certain percentage on a sale of goods for the principal and a less percentage if the goods are-not sold by the factor but are redelivered to the principal or transferred to other parties at his request, the factorIs only entitled to the less percentage when the goods are damaged by fire and taken over by the insurer under an option in the policy. ■ The factor’s contract should he construed to mean that he is entitled to the higher commission only upon effecting a sale in the general course of business. The taking over of the goods by the insurer is in the nature of a transfer to third parties without sale.
But when such insurance is taken out both for the benefit of the principal mid the factor, the latter is entitled to be reimbursed for reasonable fees paid to an adjuster for services rendered and for legal advice.
Appeal by the plaintiffs, Arthur M. Wertheimer and another, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 1st day of June, 1904,-upon the report of a referee.
Daniel P. Hays, for the appellants.
'ArtJmr O.- Pounds, for the respondent.

Opinion:
Scott, J.:
The plaintiffs appeal from a judgment entered upon the report of a referee. The action is by a principal against his factor and involves the question as to the propriety of certain charges made by the factor.
The plaintiffs from time to time consigned goods to defendant, upon which the latter made advances and paid certain charges, being entitled, by agreement between the parties, to be reimbursed from the proceeds of sale thereof, and also to the payment of interest and of certain specified commissions. On June 26, 1900, there were in the possession and control of defendant goods consigned to him by plaintiffs, upon which he had made advances and paid charges and which he held for sale, and subject to such advances and charges
Defendant, from time to time, insured the goods consigned to him by plaintiffs against loss by fire, in his own name, but for the benefit of himself and plaintiffs according to their respective interests, the premiums therefor being ¡laid by plaintiffs. The goods held by defendant by consignment from plaintiffs were so insured on June 26,-1900, when they were injured by fire. The loss was a very considerable one, and there were a large number of insurance companies involved. Defendant employed a firm of insurance brokers and adjusters to represent and protect his interests and those of plaintiffs, and to take such steps as might be necessary to secure an adjustment, appraisement and payment of the loss occasioned by the fire. He also employed an attorney to advise concerning certain questions of law which appeared to be involved. The proceedings looking to an adjustment of the loss proceeded until the damage to the stock of goods was fixed at $165,407.84, and the actual cash value of the goods insured before the fire at $280,044.97. The insurance companies elected to exercise the option reserved to them by the terms of the policies and took the entire stock of insured goods at the amount appraised as the net cash value before the fire, and paid the amount thereof to defendant, who paid over to plaintiffs or accounted to them for the whole amount received by him, excepting the sum of $14,819.90, which constitutes the amou nt in controversy in this action. The defendant ustifies his retention of this sum as follows:
He claims to be entitled to retain the sum of $7,489.86, being three and one-quarter per cent upon the amount collected from, the insurance companies, as commissions 'agreed to be paid to him- upon the sale of the consigned goods. He claims to be entitled to retain $6,830.44, the sum paid by him to the insurance adjusters employed by him, for their services in procuring .an adjustment of the loss, and he claims to be entitled to retain $500, the expense incurred for the services of the attorney retained by him to advise concerning the claims against the companies. The learned referee has found in defendant's favor upon each of the disputed items, and this appeal challenges the correctness of his conclusions and raises practically no question of fact; By the terms of -this contract between the parties the defendant is made sole factor and selling agent for plaintiffs; all goods were to be consigned to defendant and sold by him, being invoiced to purchasers in the name of " James Talcott, Wertheimer & Company Department," "and defendant was to pay the expense of a bookkeeper to supervise the books and accounts used in the business of the agency; defendant was also to supervise the credits, keep books of account, ledger, 'etc., at his main store, Mos. 108-110 Franklin, street (not the place in which the goods were kept and sold), ahd to furnish the employees, attend to collection of accounts, correspondence and all .other necessary details connected' with the business, (?. <?,, at the main' store in Franklin street)'at his own expense. Plaintiffs were to .pay all other expenses incurred in conducting the business, including the rent of any premises which might be selected for said business, salaries of salesmen and other employees (except at defendant's main office in Franklin street), stationery, postage, telegrams and all office, selling, .packing, cartage, storage and incidental expenses, and premiums for insurances. Defendant was to have exclusive supervision and control of the sale of said consigned goods, and was to decide all questions as to credit to be given to purchasers.
It clearly appears from the contract as a whole that, while the legal control and constructive custody of the goods was to be in-defendant, the plaintiffs and their employees were to perform the actual work, and furnish the necessary means for making sales, the defendant for the protection of his advances retaining a supervision- over credits, and collecting bills when due. The clause in the contract respecting defendant's compensation reads as follows: " For his services as such factor and selling agent, James Talcott shall receive three and one-quarter (3J) per cent commission to he computed upon the net amount of sales of the said consigned goods. In case all the goods so consigned shall not be sold by said James Talcott and the part remaining unsold shall be redelivered to Wertheimer '& Company, or transferred to other parties at their request, whether on the termination of this agreement or otherwise, Wertheimer & Company shall pay to James Talcott for his services in connection with said unsold goods a commission equal to one and one-half (1-J) per cent of the amount of advances outstanding at the time the consignment account is closed, plus one per cent of the net market value of the said goods so redelivered or transferred." • The defendant's claim, which has been upheld by the referee, is that the exercise by the insurance companies of their option under the policies to take the whole stock of goods, paying the actual cash value thereof as it was prior to the tire, constituted a sale thereof to the companies within the meaning of the contract, and that the defendant thereupon became entitled to full commissions of three and one-quarter per cent thereon. With this view we are unable to agree. While the taking over of the whole stock by the companies comprised some of the elements of a sale, such as a transfer of title and possession, and a payment of consideration therefor, we do not consider that it amounted to a sale of the property within the meaning of the contract between the parties to this action. The contract of insurance is primarily and essentially a contract for indemnity, and while the usual form of policy leaves to the insurer an option as to the manner of making indemnity between paying the amount of damage, leaving the damaged goods to the insured, and paying the total value of the goods, and taking what is left of them by way - of salvage, the contract still remains one of indemnity and not of purchase. We think that it is very evident, reading the ' contract between plaintiffs and defendant as a whole, that by the sales of goods upon which defendant was to receive a full commission of three and one-quarter per cent were meant and intended commercial sales in the regular course of business, for which precise and elaborate provision was made in the contract, including the services of salesmen, the packing and shipping of goods, the scru tiny and supervision of credits, and the discount and collection of bills. The fact is that in consequence of the fire the goods were disposed of otherwise than by such a sale as was contemplated by the contract, and for such a disposition tlie contract nia'kes provision. It is provided that if unsold goods are transferred to other parties than defendant at the request -of Wertheimer & Co., the defendant shall receive '-one and one-half per cent upon Lis advances, and one per cent on the net market value of the goods. It plainly appears that the pdaintiffs were not only willing that.the loss should be adjusted by the taking over by the insurance companies of the whole stock of goods, hut. preferred that method of adjustment, and their expressed desire in that regard may well he. considered as equivalent to a request that the goods be transferred to the companies. We consider that the intent of the contract will he carried out if the defendant be held to be entitled to retain the percentages provided for in case the goods remaining unsold be transferred at the request of pdaintiffs to other parties than defendant.
As to the fees paid to the' adjusters we think that the case was rightly decided by the referee. The judgment in the action brought by the adjusters against defendant, and of which plaintiffs undertook the defense, did not perhaps determine, as between these piarties, that the amount which defendant agreed to pay the adjusters was reasonable, but even if that question was left open there is nothing which requires us to hold that it was unreasonable.. It was right and piroper to engage the services of a skilled adjuster, and while the evidence shows that there was no fixed rule for the compensation of adjusters, and that other persons than those employed by defendant would have done the work more cheaply, it is not shown that defendant was guilty of negligence or of bad faith in employing the adjuster whom he did employ, or in agreeing with him as to the rate of compensation. We find nothing else in the case requiring discussion or criticism.
The judgment should, therefore, be so modified as to restate the ' account between the parties by allowing to the defendant commis-' sions upon the amount received from the insurance companies at the rate provided for in the contract in case unsold goods shall be transferred at the request of pdaintiffs to parties other than purchasers in the regular course of trade with the appropriate adjust ment of interest, and as so modified should be affirmed, without costs.
Patterson, P. J., McLaughlin, Houghton and Lambert, J J., concurred.
Judgment modified as directed in opinion, and as modified affirmed, without costs. Settle order on notice.