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Tony George Arwshan & another vs. Najeeb N. Meshaka

Massachusetts Supreme Judicial Court1934-09-21
288 Mass. 31

Summary

Holding. The interlocutory decree sustaining the agent's exception to the master's report was erroneous, and the final decree awarding the full balance unconditionally is reversed. The case is remanded for entry of a new decree that conditions payment of the $1,461.38 on the agent's satisfaction of the outstanding obligations for which the principals would otherwise face double liability.

An agent who managed land for the owners under a power of attorney sought an accounting and was found to be owed a balance by the owners. Of this balance, approximately $1,461 represented obligations the agent had personally incurred for labor and materials in constructing a building on the property. The master's report conditioned the agent's right to receive this portion of the balance on his first paying these outstanding obligations. The trial judge struck this condition and awarded the agent the full amount unconditionally.

The owners appealed on two grounds. First, they argued that the agent's assignment of his claim to his own counsel during the litigation should defeat the suit entirely. The court rejected this argument, finding that modern procedural rules allow straightforward amendments to substitute an assignee as a party, and that in accounting cases both parties remain actors in the suit regardless of assignment. Second, the court addressed the substantive issue of whether an agent can recover unpaid expenses. The court held that where an agent's contracts bind the principals directly, the principals face the risk of double payment if they pay the agent without assurance the agent will satisfy the underlying obligations. Accordingly, the agent may not demand payment without satisfying these debts.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether an agent's assignment of his claim pendente lite abates a suit
  • Whether an agent can recover from principals for unpaid obligations the agent incurred on the principals' behalf when those obligations bind the principals directly
  • Protection against double payment liability in accounting actions between principals and agents

Procedural posture

The plaintiffs appealed from a final decree in an accounting action brought against their land manager, challenging both the trial judge's reversal of the master's conditions on payment and the underlying award to the agent.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Lummus, J.

This is a bill for an accounting, brought by the owners of land against one who managed it for them under a sealed power of attorney. A master found that there was due from the plaintiffs to the defendant a balance of $3,449.44, of which $1,461.38 consisted of obligations to various persons for labor and materials in erecting a building on the land for which the defendant had incurred personal liability but which he had not paid. The master found that the defendant is entitled to this balance only upon payment of “the existing unpaid obligations incurred by him.” The judge sustained the defendant’s exception to the master’s report, based on his objection numbered 1, to the foregoing condition of the defendant’s right to payment of the balance, and awarded the defendant $3,449.44 unconditionally. The plaintiffs appealed from the final decree.

The plaintiffs contend that because the defendant, pendente lite, assigned his claim against them to his counsel conducting the present suit, the claim of the defendant abates, he no longer having any claim to relief. It is true, that under the original equity practice a complete assign- ment pendente lite by a sole plaintiff did abate a suit in the sense that it could not be further prosecuted until the assignee, by bringing an original bill in the nature of a supplemental bill, substituted himself as plaintiff. Fulton v. Greacen, 17 Stew. (N. J.) 443. Campbell v. New York, 35 Fed. Rep. 14. Pittsburgh, Shawmut & Northern Railroad v. Fiske, 178 Fed. Rep. 66, Carson v. American Smelting & Refining Co. 11 Fed. Rep. (2d) 764. Doak v. Hamilton, 15 Fed. Rep. (2d) 774, 777. But the learning once expended on that point of practice is now obsolete. A simple amendment now suffices to bring in the assignee as a party and to substitute him for the plaintiff. Rule 16 of the Superior Court (1932). Equity Rule 21 (252 Mass. 606). Even that, in the present case, would be the merest form. In a bill for an accounting, both parties in a sense are actors, and relief may be given either way, without any need of counterclaim. Hale v. Hillcrest Realty Co. Inc. 276 Mass. 63, 71. An assignment by one party does not put him out of the case, for both parties remain entitled to have his liability or nonliability determined by the decree. In a case where, as in the present case, the defendant sought affirmative relief and assigned its claim pendente lite, it was said, an assignment by a defendant of his interest in a litigation does not necessarily defeat a suit. His assignee taking pendente lite is bound by what is done against him. The assignee may, at his own election, come in by an appropriate application, and make himself a party, so as to assume the burden of the litigation in his own name, or he may act in the name of his assignor. A pendente lite assignment carries with it an implied license by the assignor for the use of his name in the cause by the assignee to protect the rights assigned. Of this, the plaintiffs in the action cannot complain, because the assignee is bound by all that is done, whether a party by name or not.” Ex parte South & North Railroad 95 U. S. 221, 226. This answers completely the objection made by the plaintiffs. See also Stone v. Jenkins, 176 Mass. 544; Henri Peladeau, Lte. v. Fred Gillespie Lumber Co. 285 Mass. 10; Rogers v. Murch, 253 Mass. 467, 470, 471; Friedberg v. Jablon, 287 Mass. 510, 513-514; State of Russia v. National City Bank of New York, 69 Fed. Rep. (2d) 44.

The important question is whether the defendant can require payment to him of amounts for which he has become . obligated but which he has not yet paid. Where damages include indemnity against expense occasioned by a wrong, as in cases of bodily injury through negligence, a plaintiff may recover for obligations incurred whether he has satisfied them or not. Sibley v. Nason, 196 Mass. 125, 131. Driscoll v. Gaffey, 207 Mass. 102, 108. Cassidy v. Constantine, 269 Mass. 56. Malloy v. Carroll, 287 Mass. 376, 387. In such cases, the party paying the damages is not directly liable upon the obligations, and is in no danger of being twice mulcted even though the plaintiff fail to satisfy them. In this case, however, contracts made by the agent appear to. be binding on the principals, and the agent may not require payment to him without satisfying his obligations. Brown v. Mechanics & Traders’ Bank, 16 App. Div. (N. Y.) 207, cited with apparent approval in Schubert v. August Schubert Wagon Co. 249 N. Y. 253, 258. Walkof v. Fox, 90 Misc. (N. Y.) 338. Brand v. Henderson, 107 Ill. 141, 146, 147. Compare Hornblower v. Abbot, 252 Mass. 291, 299. There was error in sustaining the exception to the master’s report, and in ordering payment of the entire sum of $3,449.44 without protecting the plaintiffs against the danger of having to pay a part of it a second time. The finding is that “the obligation to pay these bills [for $1,461.38] was assumed by the defendant.” Although there was no appeal from the interlocutory decree sustaining the exception to the master’s report, the error in that decree affected the final decree, and the appeal from the latter decree opened both decrees. G. L. (Ter. Ed.) c. 214, § 27. Cawley v. Jean, 189 Mass. 220, 227. Compare Canning’s Case, 283 Mass. 196, 199.

Nothing here decided affects the equitable right of an agent to require the principal to discharge the unpaid obligations directly, and thus relieve the agent from ha bility (Evans, Coleman & Evans, Ltd. v. Pistorino, 245 Mass. 94, 100), or the right of an agent to retain goods of the principal until such obligations have been discharged. Stevens v. Robins, 12 Mass. 179. Vail v. Durant, 7 Allen, 408, 409. No such rights are set up in the bill or the answer, or dealt with in the decree.

Interlocutory decree modified by overruling defendant’s exception based on his objection numbered . 1.

Final decree reversed.

Case remanded to the Superior Court for the entry of a new decree not inconsistent with this opinion.