Employers' Liability Assurance Corp. v. Kelly-Atkinson Construction Co.

195 Ill. App. 620, 1915 Ill. App. LEXIS 407

• Court: Appellate Court of Illinois
• Decided: December 21, 1915
• Docket: Gen. No. 20,737
• Status: Published

Opinion

Mr. Justice Barnes

delivered the opinion of the court.

1. Appellant contends that the transactions by which the amounts due upon the several policies were ascertained made them accounts stated, and as a conclusion therefrom that the original accounts were merged therein upon which no action would lie, plaintiff’s remedy being an equitable action upon the stated accounts to surcharge or falsify, for fraud or mistake, an action of which the Municipal Court of Chicago has no jurisdiction. As we cannot assent to the premise we need not discuss the conclusion.

The basis of the contention that the transactions constituted stated accounts is that plaintiff made no objection to the “settlements” and no claim that defendant’s reports were incorrect. The use of the term “settlement” is somewhat confusing. There was nothing in the transaction to justify its use in the sense that there was either an accord and satisfaction or a stated account. There was no dispute or controversy between the parties as to the amount of the pay rolls or the amount of premiums. Defendant alone knew thg former and the latter was a matter of mere calculation when the former was known. There might be some basis for the contention had there been a controversy or dispute between the parties as to the amount due on the policies and plaintiff had accepted defendant’s reports as the basis of an adjustment thereof, but these were not the facts. Reduced to its simplest form, the transaction with regard to each policy was simply this: that defendant, pursuant to its obligations so to do under the policy, reported the amount of its wages so that the premium could be computed and billed according to the rate specified in the policy. It was not something done independently of the contract forming a new consideration and a new and distinct promise to pay the amount found due, but the acts done were contemplated by the contract and essential to its complete execution, and therefore did not, as contended, have the effect to change it into one of an account stated so as to preclude recovery on the original cause of action.

Appellant finds analogy to an account stated in the claim that plaintiff acquiesced in the correctness of defendant’s reports because it made no objection thereto and rendered its bill thereon, but we think there can be no application of the rule of a stated account to this state of facts, particularly (1) because the hill rendered was for ah amount due according to a written instrument for the payment of money over which there was no dispute, and (2) because plaintiff had no independent means of verifying the information on which it was based.

In Middleditch v. Ellis, 28 Exch. (Eng.) 623, an action was brought upon an account stated where the parties to a mortgage had met and agreed upon a balance due thereon. The court said:

“The defendant is charged with nothing but the money secured by the deed; there is no consideration for the suggested new liability, except the ascertaining how much remains due on the deed. It is a perversion of language to speak of this as an account stated; it is merely a process adopted for the purpose of ascertaining how much of the original debt has been discharged; and all which is really done is to make out to what extent the defendant remains liable upon the deed. This does not entitle the plaintiff to proceed as on a new liability arising as if from an account stated.”

In Young v. Hill, 67 N. Y. 162, it was said:

“When a sum of money is secured by a deed and the balance is struck for the purpose of ascertaining how much remains due thereon, and the obligor admits the correctness of the amount and promises to pay it, an action will not lie on this account and promise, but the action must be brought on the security. ’ ’

In Valley Lumber Co. v. Smith, 71 Wis. 308, it was held that the principle of law of a stated account has no application where the claim is the subject of a special contract.

While the written instrument in each of these cases was a specialty, yet the same principle was applied in Jasper Trust Co. v. Lamkin, 162 Ala. 388, 24 L. R. A. (N. S.) 1237, and in Thomasma v. Carpenter, 175 Mich. 428, 45 L. R. A. (N. S.) 543. In the former the parties to promissory notes had met and made a calculation as to the amount due thereon, and it was held that the mere calculation of the amount did not merge the notes into an account stated. In the latter case a statement of account for personal services under an express contract to pay a specified sum for a specified service was rendered without objection, and it was held not to come within the meaning of the rule applicable to an account stated. We think the principles of these eases are applicable to the facts at bar.

But there is another reason why the transaction cannot be deemed an account stated. There was no acquiescence by plaintiff in the correctness of defendant’s reports on which the bills were rendered. The debtor had exclusive knowledge of the facts on which the bills were rendered and the creditor had no independent means of ascertaining their correctness nor grounds for objecting thereto.

In Vanuxem v. New York Life Ins. Co., 122 Fed. 107, it was held that the general rule as to admission of items of an account from failure to object thereto was not applicable where the creditor had no means within his knowledge of verifying the amount and had only before him such items as the debtor chose to submit. Attention was also called in that case to the anomaly that exists here, of the debtor instead of the creditor invoking the rule, the court adopting the language of counsel to the effect that the admission of the correctness of an account rendered from failure to object thereto and the acquiescence in an account received from retention of it without objection must be the admission and acquiescence of the party charged or indebted.

To support its contention as to an account stated, appellant relies upon State v. Illinois Cent. R. Co., 246 Ill. 188, but we think it is distinguishable from the case at bar in this essential fact, as well as others, that knowledge of the omitted items of account in that case was imputed to plaintiff.

Beaching the conclusion that there was no stated account, we need not discuss appellee’s contention for which there is ample authority, that the doctrine of an account stated does not apply where the transaction involves fraud, concealment or misrepresentation. Nor need we discuss any of appellant’s other contentions based on the doctrine of a stated account.

Appellant also urges that as plaintiff had the right to demand a view and examination of defendant’s books and to compel an examination if refused, and has waited over five years before attempting to assert its rights, it was not only guilty of laches but had induced defendant to alter its position and was thereby estopped from claiming that the reports made and accounts as settled were incorrect. The only change in defendant’s position suggested is the destruction or loss of its books, which can hardly be ascribed to anything plaintiff did. However, when this case was here on appeal before (182 Ill. App. 372), we said that the evidence disclosed nothing until just before the suit that led appellee to question the accuracy of such reports or to put it on inquiry, and that it would be a strange doctrine to hold that plaintiff was guilty of lack of diligence because it did not assume or suspect fraud where the nature of the business relation was such as to invite its confidence in defendant’s reports.

2. It is contended that it was error under the circumstances above stated to permit the witness Sierts to read from his private memorandum book the amounts of the pay rolls not produced, which he had entered therein as aforesaid. Under very similar circumstances a witness was permitted to read from a book entries showing dates and amounts of the delivery of coal in O. S. Richardson Fueling Co. v. Seymour, 235 Ill. 319. The principle upon which such testimony is admissible is stated in Diamond Glue Co. v. Wietzychowshi, 227 Ill. 338-347. It is there said:

“Another condition under which a writing may be used is where a witness, after inspecting a writing, still has no independent recollection of the facts stated therein, bnt is able to state that he correctly reduced them to writing at the time of the occurrence or within such a time afterward that he had a perfect recollem tion of them. If the witness knows that the facts were recorded at the time or when they were fresh in his memory, and that the memorandum would not have been made unless he knew the facts therein stated to be true when it was made, he will be permitted to make use of it, provided the writing is produced with an opportunity for cross-examination as to it, so that the jury may also draw their conclusion as to the fact.”

These several conditions are presented in the instant ease. If the items were correctly set forth, as testified to,—a question of fact for the jury,—they constituted the next best evidence, if not the only existing evidence, of the amounts of such pay rolls; and in view of the testimony that these items were correctly copied from such original sources and were so numerous and for such sums as to render independent memory of them practically impossible, we think they were admissible, regardless of when they were copied or whether they were copied from the pay rolls or journal. In either event, they constituted the next best obtainable evidence of items copied from defendant’s documents or books by which it would have been bound had they been produced.

Objections were made to certain questions put to Sierts on the ground that they embodied certain conclusions. We shall not repeat the questions, but what are termed conclusions seem mere references to matters in evidence to which it was sought to direct the witness’ attention.

It is also urged that it was error to refuse to give the jury a cautionary instruction to'the effect that what the witness Sierts - read from his memorandum book depended for its credibility upon the testimony and credibility of the witness himself. We think the instruction was properly refused. A general instruction relating to the credibility of witnesses was. given and the court was justified in refusing an instruction of that character which, in effect, singled out the testimony of a particular witness for applying the test of credibility. A cautionary instruction may be given as to the testimony of an accomplice, but the principle justifying it had no application in this instance.

3. Appellant complains of the exclusion of an offer to show what was the average number of its men and its pay rolls for the years in question. The ruling was proper. The real question for the jury was the actual amount of the pay rolls shown in some instances by the original pay rolls and in others by what purported to be correct copies of their totals. Defendant relied upon the accuracy of its. reports, and the rejected proof was not only uncertain and indefinite in character but did not legitimately tend to establish the correctness of defendant’s reports or to refute the testimony relied on by plaintiff, nor did it appear that the witnesses had sufficient personal knowledge of the pay rolls to testify to their amounts with any degree of accuracy.

The. policies did not cover wages paid to the employees of subcontractors. On some pay rolls in evidence, the witness Sierts had written the name of the foreman who sent them in, and because it had appeared that such foreman had on certain occasions been a subcontractor under defendant, its counsel asked the witness Sierts if the pay roll so indorsed was the foreman’s. The court sustained objection thereto. No harm was done, for it affirmatively appeared that the pay rolls of subcontractors did not come into plaintiff’s office and that the pay roll in question was one of those on which defendant recognized its obligation to pay a premium.

4. As the policies covered wages of plaintiff’s employees only and not those of subcontractors, and some policies excepted work done in certain territory, defendant requested instructions to the effect that plaintiff was required to show that each item of wages was not of wages paid by a subcontractor nor for work performed in excepted territory, but was for the particular work covered by the policies. We think the request was sufficiently covered by an instruction that it was necessary for plaintiff to show that the pay roll was one that arose under a particular policy and from the job described in the policy; but, if it was error to refuse the instructions in the form requested, it was not reversible error as the particular pay rolls plaintiff sought to prove related only to jobs defendant had reported and on which it had charged itself with the premiums. Another point urged against the refusal to give such instructions was that some pay rolls apparently included wages of employees for time taken in traveling to the jobs, which might more appropriately have been raised on a motion to exclude such evidence. If there was denial of such a motion it is not argued. But these items were relatively small and the verdict is for a much less sum than that which the jury were warranted in-finding on the proof submitted.

5. When this case was here before, we decided adversely to appellant’s contention that clauses in the policies, giving the insurer the right to defend find settle at its own costs actions for damages against the assured and forbidding settlement thereof by the assured without the insurer’s consent except at its own cost, rendered the policies illegal on account of maintenance. The law of the case as stated on the former appeal is deemed binding on us. (Hoxsey v. St. Louis & S. Ry. Co., 184 Ill. App. 410.) On this point we then adopted the reasoning in Breeden v. Franhford Marine Accident & Plate Glass Ins. Co., 220 Mo. 327, 119 S. W. 576, that liability under the policies gave the insurer an interest in the litigation affecting the liability that removed such clauses from the doctrine of maintenance. It was then and is still our opinion that the views expressed in the case cited are in harmony with prevailing opinion, which discloses a manifest relaxation of the rigor of the common law in applying the doctrine of champerty and maintenance to modern forms of business.

6. It is urged that it was error to instruct the jury that plaintiff would be entitled to statutory interest on amounts found to be due from the time they became due under the terms of the policy. The instruction was proper, as the facts bring the case within section 2, ch. 74, Hurd’s Rev. St. Each policy was “an instrument in writing” on which money became due. The money or premium became due on each policy when it expired. Defendant recognized that fact by then charging itself therewith on its books. The fact that a controversy subsequently arose as to the correct amounts of the premiums does not affect the right to interest thereon, inasmuch as plaintiff’s contracts were performed and accepted and the amount due on each policy was easily calculable at the time it expired and stands finally liquidated and ascertained as of that date. (Bauer v. Hindley, 222 Ill. 319; Elgin, J. & E. Ry. Co. v. Northwestern Nat. Bank of Chicago, 165 Ill. App. 35, and cases cited therein.)

Finding no reversible error, we affirm the judgment.

Affirmed.