Dennis v. Graf

Cole, J.

It appears to us tbe circuit court erred in excluding tbe evidence offered on tbe part of tbe defendant to show bow much money he bad paid out for legal services in tbe col *108 lection of tRe Tliomas note. The theory of the plaintiff’s case is, that he was the owner of this note, and that it had been delivered to the defendant for the purpose of collection; in other words, that the defendant was acting for him and really as his agent in the matter. This being so, can there exist a doubt that the defendant was entitled in this action to a verdict for all reasonable and necessary expenses which he had incurred in bringing the suit which resulted in the settlement of the note ? It must be assumed, upon the facts of the case, that the action against Thomas, although in the name of the payee of the note, yet was really for the benefit of the'plaintiff. He knew of the pendency of that suit, and probably all about the settlement of it when it was made. It is obvious that this settlement was greatly for his benefit, since the statute of limitations had run upon the note. It is true, the action upon the note was brought in the name of the payee, but he was not in any way prejudiced by this. He had given the defendant no instructions as to what course should be pursued in the collection of the claim, and, if the action on the note was not brought in the name of the real party in interest, how could the plaintiff’s rights be prejudiced thereby so long as that action brought about a payment of the note? Had the action been in the plaintiff’s name, it would probably not be claimed by any one that he should then be relieved from the payment of the reasonable expenses of that litigation. And how does the case now differ, so long as the action which was brought resulted in the settlement and collection of the note ? To our minds the proposition is too plain for argument, that, where a note is placed in the hands of an agent for collection, such agent, in the absence of all agreement to the contrary, is entitled to deduct out of the moneys received all reasonable and necessary expenses which he is put to in collecting such note.

This testimony however was excluded, not upon the ground that the defendant was not entitled to these reasonable expenses, but for the reason that no counterclaim was set up in *109 the answer. It seems to ns that this was not' a' sufficient reason for excluding tlie evidence offered. The action was for money had and received to the plaintiff’s use. Of course, whatever money was in the defendant’s hands, which in equity and good conscience belonged to the plaintiff, might be recovered in the action. If the defendant had been compelled to pay out money or incur expense in the collection of the note, it is manifest the plaintiff is only entitled to recover the balance after satisfying or allowing for those proper expenditures about his business. We can see no good reason for holding that the defendant should set up a counterclaim in his answer, in order to entitle him to show what reasonable and proper expense he had been put to in collecting the note for the plaintiff. The action is liberal and equitable in its nature, the inquiry being what amount of money the defendant has in his hands which justly belongs to the plaintiff, and which he ought to pay over. Whatever expense the defendant had necessarily incurred in collecting the note should be deducted from the proceeds, and it is only the balance that the plaintiff has any claim to.

AYe do not think there was any error in excluding the declarations of old Mr. Graf about the note, after the time the defendant claimed it had been surrendered to him by the plain tiff or the plaintiff’s wife. The old man was not the plaintiff’s agent or acting for him, and therefore any declarations which he might make about the note at this time ought not to affect the rights of the plaintiff. We think that evidence was en-entirely immaterial, and that it was properly ruled out But, for the error of the circuit court in excluding the testimony offered to show the expense the defendant had been put to if) collecting the note, there must be a new trial.

By the Court. — The judgment of the circuit court is reversed, and a venire de novo awarded.