Arbaugh v. Shockney

On Petition for Rehearing.

Roby, J.

Appellant Arbaugh’s testimony was in part as follows: “Well, he said, 'Mr. Arbaugh, I am at the point where-1 am going to have to cut off this $15 a week expense. The business does not justify it, and I have got a big payment to make right here the middle of the month to the home office-, and I can not afford to- pay this money any longer.’ Well, I said, 'Is it your idea that we cancel the contract V *275He said, ‘That is exactly the point.’ And he says ‘I will make a contract on a strict commission basis. I will give you as good a contract as I have got.’ I says, ‘I don’t want to stand in your way; if you are in that position I will not hold you to the contract. You write up a new contract and I will examine it.’ ” There is no doubt but the court was authorized to find that the provision for written notice to terminate the contract was waived. Huber Mfg. Co. v. Busey (1896), 16 Ind. App. 410.

4. To “advance” is “to supply beforehand,” “to pay before the equivalent is received,” “to pay before the proper time.” Powder Co. v. Burkhardt (1877), 97 U. S. 111, 24 L. Ed. 973; Vail v. Vail (1850), 10 Barb. 69; Gihon v. Stanton (1854), 9 N. Y. 476; Balderston v. National Rubber Co. (1893), 18 R. I. 338, 27 Atl. 507, 49 Am. St. 772. The term may be used to characterize a loan, or a gift, or money to be repaid conditionally. Chase v. Ewing (1868), 51 Barb. 597-613; Northwestern, etc., Ins. Co. v. Mooney (1888), 108 N. Y. 118-124. An advance is something which precedes. It might be, as between these parties, made in anticipation of expected commissions, and, in such event, would no more create a debt than would an advancement made by a father to a son in anticipation of the expected inheritance by the latter. In re Atwood (1896), 38 N. Y. Supp. 338; Gihon v. Stanton, supra; Balderston v. National Rubber Co., supra.

5. If the contract in terms contains a promise by the agent to repay the sums advanced, the transaction would amount to no more than a loan, and the right to judgment be undoubted. The primary contract contains no reference to any advances made or to be made. In the supplemental contract it is stipulated that “said advances shall be a first lien on all commissions or renewals then due you, or that hereafter may become due you, and that I am authorized to deduct any advances made by me from any money in my hands due or to become due you, and that after deducting. *276all money clue to me for money advanced, together with the net premium or premiums and internal revenue on any and all business reported by you, I will remit to you any balance on demand, except that I shall not be bound to pay any commission on any note taken by yo-u for premiums until said note or notes become due and are paid by the makers thereof. It being understood and agreed that whenever there is any commission due, the same shall constitute and form a part of the amount hereby agreed to be advanced. It is also agreed that if in any week the commissions earned and paid to you exceed $15, then only such sum shall be advanced in the following week or weeks as may be necessary to bring your total income up to the said sum of $15 per week from the date of this letter to that time. It being the intent of this proposition simply to provide you with ready money for current expenses, and it being specifically agreed that you shall remain in my employ, at my option, so long as you are in debt to me.” The purpose of the proposition is also otherwise stated as: “In order to enable you to devote your entire time and energy to securing business as set forth in your contract.”

With deliberate care, appellee, in this letter written by himself, provides for every contingency which might prevent the application of earned commissions to the payment of advances, and stipulates that they shall be so paid with certainty and exactness, but wholly omits to mention any personal obligation on the part of the agent to repay such advances. Tf the intention was that the advances should constitute a loan, it is difficult to understand such omission. It is not only stipulated that the commissions earned shall be used to pay advances, but it is “specifically agreed that you shall remain in my employ, at my option, so long as you are in debt to me,” a stipulation strongly tending to show an intention to rely upon the commissions to be earned to meet the advances, and inconsistent with the idea of personal liability. The use of the word “debt” is not contra*277dictory of the preceding stipulations. “The word ‘debt’ is of large import, including not only debts of record, or judgments, and debts by specialty, but also obligations arising under simple contract, to a very wide extent; and in its popular sense includes all that is due to a man under any form of obligation or promise.” Burrill’s Law Diet. Its use with reference to advances does not imply any different method of repayment than is in terms provided for.

As suggested by counsel for appellee, the agent evidently had no funds, and no experience as a life insurance agent. He was to be paid by commissions, not likely to come at once. The business of both would suffer from the agent’s lack of funds. The proposition to advance $15 per week was made by appellee for his own advantage. He was not bound to continue such advances longer than his own interest dictated. The fund to be created by the agent’s labor was the primary source from which both parties understood that the principal should be •reimbursed. The agent risked the loss of all his time, the principal of $15 a week. Had the venture succeeded, both would have gained; when it failed, they both lost. That the appellee cared anything about the personal promise of the agent is unlikely, and that the agent agreed to assume the entire risk of the enterprise is not shown.

Neither does an implied promise to pay arise upon the making of advances as shown by the contract between these parties. Lang v. Kaiser (1876), 34 Mich. 317-319; Northwestern, etc., Ins. Co. v. Mooney, 108 N. Y. 118.

In the Michigan ease just cited the defendant let a contract to the plaintiff for the making of tubs out of materials furnished by defendant. He gave evidence tending to show that he assisted in making the tubs, and sought to have credit upon the contract for the reasonable value of the services so rendered. The court said: “There was no evidence. given by defendant tending to show that plaintiff had ever requested such assistance to be given, or that he had *278agreed to pay for the same. Row whatever the rule may be as between strangers, where one performs valuable service for another, with his knowledge and assent, we think in cases like the present the relation existing between the parties precludes any implied promise to pay for such services, and that the charge of the court in this respect was correct.”

In Northwestern, etc., Ins. Co. v. Mooney, supra, suit was brought upon a bond given by an insurance agent, as in the case at bar, it being alleged that it had been agreed that the company should advance “to the said Mooney the sum of $1,200, which was to remain a first lien upon all the business and renewal interest secured to said Mooney under the contract, until repaid by said Mooney, with interest at seven per cent.;” and that the plaintiff did accordingly advance to him said sum, which he'has not paid. It was said, “the plaintiff’s contention in this action is, that the clause relating to advances of money in the contract named provides for a loan to Mooney to be repaid by him absolutely and unconditionally.” In reversing a judgment for the plaintiff the court said: “In the first place there is no express agreement on the part of Mooney to pay back the money; there is no agreement that its advance shall create’ an indebtedness on his part; no words signifying that he is to be a borrower, nor that the plaintiff will lend to him any money. These omissions in an agreement so fully and minutely defining the duties and contract obligations of the agent, and the contract rights of the company, are of great significance. It would have been much more natural to> insert words signifying that to be the true character of the transaction, if it was so intended, than to omit them, and much easier to say directly that Mooney assumed a personal liability, if that were the fact, than-to use words which require an extended argument on the part of counsel to satisfy a referree or court that such liability, although not expressed, may be inferred.”

*279Again: “Bnt the contract goes further. It is added that, the amount advanced ‘is to remain a first lien upon all the business and renewal interest secured to the said Mooney under the contract, until repaid with interest at seven per cent. These circumstances ai*e not inconsistent with the view already expressed, nor are they inconsistent or in contradiction of the meaning attributed to the promise of the company to make the ‘advance.’ They constitute an agreement that the advance made shall be a lien on the interest of the agent under the contract, but that involves no personal liability. It is an advance of money upon personal security, but not upon personal credit. * * * Nor in this case can the fact that the duration of the lien is provided for until the amount ‘is repaid,’ allow a different conclusion. It is clear that it does not imply an agreement on Mooney’s part to be personally bound for its payment. Salisbury v. Philips [1813], 10 Johns. 57.”

6-. This is an action founded upon a bond executed by Arbaugh as principal and by appellants Daniel Lesley and Joseph T. Grist as his sureties, in accordance with the provision of the primary contract that he should execute a satisfactory bond for the faithful performance of his duties and obligations as such agent. One of the conditions of the obligation is that the principal shall pay over all moneys which he owes, or may hereafter owe, on account of advances made t to him or otherwise. In determining whether such a default is shown upon the part of the principal as renders the sureties liable under the terms of the bond, they have the right to stand upon the strict terms of the contract, and their liability can not be extended by implication. Town of Salem v. McClintock (1896), 16 Ind. App. 656, 59 Am. St. 330. Proof of such default must be made. It does not follow that because the. terms of the bond are broad enough to include liability for a certain default, therefore such default is shown. *

The petition for a rehearing is overruled.