SALE OF HOTEL

Otago Daily Times, Issue 23704, 11 January 1939, Page 4

SALE OF HOTEL

CLAIM AGAINST AGENT SUPREME COURT JUDGMENT PLAINTIFF ENTITLED TO £37! £75 ALLOWED ON COUNTERCLAIM The judgment was released yesterday of Mr Justice Kennedy in the action in which Marion Horn Carlisle Beale claimed from James Samson and Co £676 9s 6d. being a deposit of £IOOO received by the defendant for. the plaintiff less the sum of £3lrf 10s 6d commission on a sale and . valuation fees admittedly due. The defence was that a sum exceeding that retained was due by the plaintiff to. .the defendant for commissions and fees. The defendant counter-claimed for a sum claimed as remuneration for a guarantee of the plaintiff’s overdraft. The dispute arose out 'of the purchase of the lease and furniture of Barrett s Hotel, Wellington, and later the sale of it by the plaintiff anti ;of . the purchase and sale of the liquor stock. The judgment reviews the evidence .and states that the fee to which the'defend-, ant was entitled was £628 14s t ' and that on the defendant’s counter-claim he was entitled to £75. The plaintiff was entitled to judgment for £371 6s and the defendant for £75. and one judgment would be set off against the other. ' ' ■ , . The plaintiff was represented by Mr J. S. Sinclair, and Mr A. G. Neill and Mr W, J. Meade conducted the case for the. defence. Matters in Dispute The judgment states: —The matters in dispute are (a) the defendant’s claim for a sum of £225 said to be "amount promised on ingoing"; (b) a sum of‘ £514 claimed by way of commission on the Sale of an hotel lease and furniture; (c) the sum of £l2O claimed to be ingoing valuation and. expenses and trying all firms and banks for loan; and (d) the sum of £B6 described as outgoing valuation, and expenses. The plaintiff disputes the right also of the defendant to a sum of £l5O claimed as remuneration for guaranteeing the plaintiff’s account to a certain amount. The dispute arises out of the purchase of the lease and fulniture of Barrett’s Hotel, Wellington, and later out of the sale by the plaintiff of that lease and furniture, and of the purchase and later of the sale of the liquor stock. The defendant, as agent for the owner, sold the lease thereof, with approximately four years and eight months to ‘ run. to the plaintiff for £4500 with stock at valuation. On this transaction he charged his principal, the owner, the sum of £454 IOSj as commission, and he claims in addition that he was promised a further 5 per cent, on the said purchase money. by the buyer, the plaintiff, if he procured the seller to set , a lump sum, price upon the lease and furniture. The sum claimed tinder this head is £225. The sum of £514 is claimed as commission on the sale two months later of the same lease, furniture arid stock. The lease .was sold for £6500 with stock at valuation and the claim formulated as a claim for commission payable as agreed with a deduction allowed. The method of calculation was commission upon the purchase money for goodwill of the lease and furniture and the amount paid for stock with, in addition, a percentage of the first year’s rental. This sum is claimed in addition to a charge of 5 per cent, upon the stock claimed as a valuation fee. The sum of £l2O is claimed to be valuation fee on stock on ingoing and expenses. Other miscellaneous services were at the hearing alleged to be included in this charge. The sum of £B6 is a valuation fee claimed on stock on outgoing plus expenses. The accounts sales rendered by the defendant do not detail additional services relied upon at the hearing. Mrs Beale, the plaintiff, became the owner of the Green Island Hotel and sold it through the agency of the defendant. Her husband is an undischarged bankrupt. Although property may have been in her name, the husband had much to do with the business. The defendant offered them a lease of Barrett’s Hotel and finally an agreement to purchase was completed. Mrs Beale had about £3OOO cash available. but finance was required, and this the banks, when approached, were not willing to give. In the end the defendant offered and arranged to guarantee the plaintiff’s overdraft for three months up to £2500, later increased to £2900. A short time after the plaintiff had entered into possession of Barrett’s Hotel her husband gave way to excessive drinking, and the plaintiff and the defendant, as guarantor, were in agreement that the lease must be quickly gold, and this they proceeded to do, the defendant eventually finding a purchaser at £ 6500 for lease, and furniture plus stock at valuation. This agreement was completed. The claim for £225 was said to be an amount promised on ingoing. The defendant said that the first price for Barrett’s Hotel was for a lump supi price for the lease, plus furniture an 1 stock at valuation. He had acted, so he said he told the plaintiff’s husband, for the purchaser on the purchase, and the furniture, worth in his opinion about £4OOO, had been valued by a well-known Wellington valuer of experience and repute at about that sum, but £2OOO had been agreed by him as the value, to the disappointment of his principal; and that he said his services as valuer would be at he call, firstly, of the seller, and that the plaintiff’s husband had replied that that was no good to him, and he thereupon proposed that the defendant procure a lump sum price, inclusive of the furniture, whereupon the defendant raid, the plaintiff’s husband, on it being pointed out that the defendant would lose the valuation fee on the furniture out of his own pocket, offered the defendant a commission of 5 per cent, on the whole purchase price m addition to the commission payable to the agent by his principal, the seller. An Unusual Arrangement This is an unusual arrangement, which, without adequate disclosure and the consent of the seller, the min-, cipal, would be a breach of duty and an improper arrangement. The defendant said that he made it clear to the seller what had been proposed, and the seller agreed and consented to his agent charging accordingly. The arrangement and the conversation are denied by Mr Beale and by Mrs Beale, and incidental admissions said by defendant to have been made by Mr Beale and Mr Anderson were denied. It is for the defendant to establish this special arrangement, and if the matter had stood between the plaintiff and her husband on the one hand and the defendant on the other 1 should have been forced to conclude that there was no reason for preferring the defendant’s account, positive though it was, to the denials of the plaintiff and her husband. The plaintiff deposed to a conversation with the defendant in which there had been apparently some general optimistic talk about the success anticipated, in which the plaintiff’s husband is said to have said that if he made £IO,OOO by the end of the lease he would “ lay ’’ the defendant £IOOO. Some such talk did undoubtedly occur. The defendant himself referred to it. The defendant says that the matter of his charge on the ingoing was brought up at an interview at which, after a reconciliation following estrangement through the husband’s dnnking, the wife asked about the arrangement, and the defendant said he explained that he was to be paid £225 on the ingoing, being 5 per cent, on the purchase price. This was denied by plaintiff and her husband, and they related a question by the wife with reference to an arrangement and an intimation that It was an arrangement at the end of the lease which did not concern her, her husband regarding the reference as being to the talk above' referred to. The defendant claimed that he then

described the arrangement made to pay £225 and its basis of 5 per cent, of the purchase price. Subsequently,, when a price was being fixed, there was talk between plaintiff’s adviser. Mr Anderson, and the defendant, and later between Mr Anderson, the plantiff. and the defendant. Mr Anderson’s evidence was that he queried the £225 and was told that it had been promised or arranged. Mr Anderson swore that he had previously heard nothing about £225 or any arrangement and mentioned, Could the defendant justify this and other charges if Mr Beale objected? The defendant said that Mr Anderson admitted that he knew there was an arrangement but did not know" the amount, while the defendant said to the plaintiff’s husband the amount was mentioned to her and Beale admitted that £225 was right. I am not able to prefer the defendant’s statements as against Mr Anderson, the plaintiff, and Mr Beale. There was also conflict in tiie statements of the defendant and Mr Beale as to what took place at a meeting in Christchurch. I am unable to conclude lhai the defendant’s evidence should be preferred. The result is that the special arrangement to pay £225 is not proved. Reason for Sale The claim for £514 may next be referred to. The defendant procured a buyer for the lease, furniture and Vock. He was a guarantor of the plaintiff’s account. She had come to Dunedin in May, and while she was there the plaintiff’s husband was, according to report and in fact, giving way to drinking and a sale became urgent lest the police or the landlord intervened. The defendant himself had some account of the police report of Beale’s conduct and urged a sale. All agreed, and the defendant went to Wellington on Friday. By Monday night the defendant had succeeded in selling the lease and furniture for P 6500 with stock at valuation

To some extent he took charge of affairs, but he throughout acted in such a way as to fix the plaintiff with personal acceptance of the price. According to the evidence of a land agent of Wellington, and one of Dunedin, the usual charge would be £226 3s 6d. The scales produced are not very clear. It was of course open to the defendant to charge more than the usual amount, but. in that event, he must arrange for the larger fee. A sale was necessary or was believed to be necessary not only for the plaintiff, but for the defendant, and the defendant was most urgent in insisting upon it. He proceded to Wellington without any arrangement being made as to commission. At a discussion in Dunedin there was at first some talk of the plaintiff authorising the defendant to sell the premises at the best price obtainable. but finally it was arranged that the plaintiff and her adviser. Mr Anderson, an unqualified managing clerk to a solicitor in Dunedin, should go the next day to Wellington to be at hand in case a sale was made. On Sunday after arriving in Wellington Mr Anderson called upon the defendant at the Grand Hotel. Some discussion took place about fixing a price to enable the plaintiff to get her money back. Figures for that purpose were noted by the defendant on a sheet of notepaper and a note thereof was taken by Mr Anderson. The figuring was for the purpose ol fixing a price to be asked, and it was no part of the expressed* purpose to settle finally charges as between the plaintiff and the defendant, but in the discussion developing, the commission to be charged was definitely stated. In those figures the plaintiff had items £225. £l2O, and £B6 and other fees A copy, at least in substance, was later made by the defendant on Grand Hotel paper. Mrs Beale later came to the Grand Hotel. Mr Samson said she came on Sunday. The plaintiff anu Mr Anderson said on Monday Items were mentioned. There was tionably some confusion on the part of Mr Anderson as to events. On crossexamination he varied an account earlier given as to what took place when Mrs Beale was present. I have no doubt as to his honesty of purpose but I think his recollection was de-

finitely at fault, and that items were mentioned. Mr Anderson at the earlier meeting stated that he said £550 was high, and with reference to the sums of £225 and’ £l2O he asked could the defendant justify these charges if Mr Beale objected. I am satisfied that there was no question of consenting or agreeing to the figures of £225 or £l2O, and although one would not expect them to be higher than the amounts stated, the plaintiff and her adviser in agreeing to a once sutncient to cover them were not. and could not. reasonably be regarded as having consented and agreed to the propriety of the charges there mentioned. I am unable positively to conclude that Mr Anderson or Mr Beale made the admissions the defendant claims they made. The position is otherwise with regard to the £550. Defendant’s Account Accepted I accept the defendant’s account that he definitely quoted £550 as his commission and that this was in terms precise enough for it to appear thai that was definitely to be his charge and was not merely a rough estimate to work by. Both Mr Anderson and Mrs Beale' referred to the charge in a way which indicates that they were concerned about it, and I think that Mr Anderson would have been less interested in it if it was merely a rough statement by which nobody was to be bound. On Mr Anderson’s statement he queried it with Mr Samson and I have no doubt that Mr Samson justified it more or less as he says, though not possibly in the precise words which seemed to reflect the discussion of earlier evidence. I accept his evidence that there was no reference to the Wellington scale. I think there is confusion on Mr Anderson’s part and that Mr Samson did state the basis of his charge while Mr Anderson did have some discussion as to the Wellington scale but that was with Mrs Beale Mr Anderson and Mrs Beale returned to Dunedin after settlement. The relations between husband and wife, who did not join each other for some time were strained, and the husband, Mr Beale, had to go into hospital. The account sales was sent to Mr Ander-

son on June 29. Mr Beale did not come to Dunedin until a later date The defendant became aware of statements that Mr Beale had made, that he, the defendant, had overcharged, and sent for the plaintiff and asked her to sign a letter repudiating such statements and offered to pay her £55 and to make no claim on the guarantee if she would sign. Mr Anderson advised her not to sign. According to the defendant. Mrs Beale rang up, and a letter was produced. I accept the view that the defendant was endeavouring to see her as Mr Anderson’s evidence indicates. This letter the defendant later refused to produce to the plaintiff’s husband. In the account sales £550 is referreci to as “ fee on gale quoted.” The defendant’s interests were involved as well as those of the plaintiff, and he equally desired to sell. Both Mrs Beale’s adviser and Mrs Beale knew before the work proceeded exactly what Mrs Beale was to be charged for commission when the sale was made, and she cannot now claim that the defendant is limited to the scale, if that be lower. I accept the defendant’s evidence as proving that the sum £550 was definitely stated as his fee before the work was done. 'Fee on Ingoing The other fee in question Is what the defendant described as “fee on ingoing and expenses £120” On the ingoing the defendant was asked to value the liquor slock. The practice, the defendant says, is to take stock at the invoice price. The scale usually followed allows for 5 per cent The plaintiff is willing to add reasonable expenses. There is no doubt.

having regard to the nature of the service, that a fee of 5 per cent, is adequate remuneration. On this basis the defendant is entitled to £37, and, upon the plaintiff's admission, to reasonable expenses in addition. In the account sales this charge was referred to as “ ingoing valuation and expenses and trying all banks and firms in town for loan, which was turned down.” The fee then charged was the fee on valuation plus a fee in respect of seeing banks. For seeing the banks and firms £5 was in excess of a proper charge, and £2 2s is adequate. Subsequently particulars were given in which this charge is described as “ for valuing liquor stock at Barrett’s Hotel, Wellington, and obtaining the consent of the landlord of the said hotel' to the transfer of the lease thereof and for endeavouring to arrange finance to enable the plamtirt to complete her purchase of the lease of the said hotel, and for conferences and advising in respect of the conduct of the said hotel and the management thereof after the plaintiff had entered into possession.” This is obviously an additional charge to that the defendant had set out. and it is subject to this observation that the defendant had not seen fit to charge in respect of it before. Transfer of Lease As to the transfer of Re lease and the landlord’s consent, admittedly this was not the plaintiffs concern. It was said in this court that a chaige of £oo was made for reconciliation of husband and wife which is apparently referred to if at all as “conferences and consultations and advising in respect of the conduct of the said hotel and the

management thereof.” The charge is made against the wife. I am satisfied, however, that although it might be advanced that there should have been a reconciliation, the defendant was not instructed by the plaintiff upon any commercial basis and this charge 18 one which cannot be made against her. The defendant professed to charge the whole of this against the wife. All this is said in the pleadings to have been fixed by agreement “ between the plaintiff and the defendant on or about the 12th day of June, 1937.” and then referred to in the note upon Grand Hotel paper as “ valuation fee and expenses ingoing." There is no doubt that the £l2O was not earlier referred to as including any such matters as reconciliation charges. The sum of ±-*>7 plus a fee in respect of banks i s plus reasonable expenses might properly be charged. . The fee for outgoing valuation is claimed to be £B6. The stock was valued at £1047 The valuation fee 1S £52 7s. The plaintiff admits liability for this amount plus reasonable expenses. Other matters are referred to such as staying behind to arrange about accounts and a typewriter. An allowance is made in respect of such services. The defendant has given but sketchy detail of what services he did render in this regard. Guarantee by Defendant A claim is made in resect of a guarantee signed by the defendant in the following circumstances. The plaintiff had approximately £3OOO available for the purchase of. the lease of Barrett’s Hotel. The plaintiff had been encouraged by the defendant to believe that finance could easily be

arranged in Wellington. In fact, it could not and at the last moment the defendant procured finance by guaranteeing the plaintiff’s account for £2500 and an increase to £2900 was later arranged. This was for three months. , The guarantee was upon the basis-'of charge. The defendant had no especial advantages such as those which usually follow the guarantee namely the profit* following an exclusive supply. He was interested in completion. Although there was reference to a percentage of 2J per cent., it was obyiously contemplated both parties that such a sum was not sufficient, and a much .igher sum was properly payable. I think a lump sum rather than a percentage sum is reasonable. This I fix at £75. The amount was, on the defendant’s own showing, quickly to be reduced. - - ■ ■ > Judgment The defendant was entitled then to the following fees: Upon ingoing stock £37, to which is added for expenses . £l2. the plaintiff admitting a liability in addition for reasonable expenses;-, commission on sale of Barrett’s Hotel, £514; fee on outgoing valuation of stock, £52 7s, to which is added the following for miscellaneous services in connection with bar fittings, ac- . counts and typewriter, and attendance at banks, £7 7s, and extra expenses incidental to the valuation (the trip to Wellington and return being incidental to the sale of the lease), say, £6. The defendant was entitled ac- * cordingly to £628 14s. Upon the defendant’s counter claim he was entitled to £75. On the plaintiff’s claim she is entitled to judgment for £371 6s, and the defendant on his counter claim is entitled to judgment for £75. One judgment will be set off against the other. The plaintiff is allowed against the defendant os according to scale as on the amount oi the judgment, with witnesses’ expenses and disbursements to be fixed by the registrar. On the counter claim the defendant is allowed costs according to the amount of his judgment on the counter claim with the disbursements on his counter claim.