North Carolina Lumber Co. v. Spear Motor Co.

CofNOb, J. The vital question involved in this appeal is the relationship between Spear Motor Company and R. L. Blalock & Son with respect to the work to be done by the latter for the former, under the written contract. There is no controversy as to the execution of the contract by the parties thereto, or as to its terms. Plaintiff contends that under the contract R. L. Blalock & Son were agents of Spear Motor Company, and as such agents purchased from plaintiff the lumber which was used as material in remodeling the building; that Spear Motor Company is liable for the purchase price of said lumber, as principal, and that plaintiff has a lien on the lot and building of Spear Motor Company for the amount of the purchase price of said lumber by virtue of notice filed in the office of the clerk of the Superior Court. Defendants, Spear Motor Company, contend that R. L. Blalock & Son were independent contractors, with respect to the work done in remodeling its building, and that the company is not liable for said purchase price; that plaintiff, having failed to give said company notice as required by statute, before it had, settled with said contractor, acquired no lien upon its property by the notice and claim of lien filed in the clerk’s office. The issue raised by these contentions is one of law, to be determined by the court, and not of fact, to be submitted to the jury. It is clear that Spear Motor Company would have been liable, upon the principle of respondeat superior, for a tort committed by R. L. Blalock & Son in doing the work which they had undertaken to do, under this contract, for it is expressly provided therein that R. L. Blalock & Son shall remodel the building on the lot owned by Spear Motor Company “in accordance with such plans and specific instructions as may be furnished by the owner.” Spear Motor Company reserved the right not only to direct the manner in which the work should be done, but also to specify what material should be used. The right to control the work in every detail, and at every stage, was retained by Spear Motor Company. This has been declared the vital test for de *381 termining whether a person employed to do work for another is an independent contractor, in actions to recover damages for a tort, where liability was denied by the party for whom the work was done, upon the ground that the tort feasor was an independent contractor and not the agent or servant of such party. Greer v. Construction Co., 190 N. C., 632; Aderholt v. Condon, 189 N. C., 748; Cole v. Durham, 176 N. C., 289; Simmons v. Lumber Co., 174 N. C., 220; Gadsden v. Craft, 173 N. C., 418; Vogh v. Geer, 171 N. C., 672; Embler v. Lumber Co., 167 N. C., 457; Harmon v. Contracting Co., 159 N. C., 22; Hopper v. Ordway, 157 N. C., 125; Denny v. Burlington, 155 N. C., 35; Young v. Lumber Co., 147 N. C., 26; Craft v. Timber Co., 132 N. C., 151. It is further provided in the contract that on or about the first of each month E. L. Blalock & Son shall submit to Spear Motor Company all invoices for materials received by E. L. Blalock & Son during the previous month, and that Spear Motor Company shall immediately pay to E. L. Blalock & Son the amount of said invoices. Upon completion and acceptance of the work, Spear Motor Company, in addition to the amounts paid for material and labor, agreed to pay E. L. Blalock & Son an amount equal to ten per cent of the total cost of the work. This latter sum is manifestly the compensation which E. L. Blalock & Son were to receive for their services, to be rendered under the contract. The mode of payment provided in the contract is sometimes an important element to be considered in determining whether a party who has agreed to do work for another is an independent contractor, but it is not controlling. The circumstance that the workman is to receive no compensation until the satisfactory termination of his employment does not require that he be classed as an independent contractor. 14 R. C. L., p. 74, sec. 11. "Where the facts with respect to the relationship of the parties to a contract for work are disputed, upon an issue submitted to the jury, the method and manner of payment may properly be considered by them in determining the issue (Minor v. Stevens, 65 Wash., 423, 42 L. R. A., N. S., 1178), but where the contract of employment is in writing, and is unambiguous, the question whether the employee is a servant or an independent contractor is for the court and not for the jury, and the method and manner by which the employee is to be paid is immaterial. Ann. Cas., 1918C, p. 632, and cases cited. Where the party who agrees to do the work is not an independent contractor, but a servant or agent, the party for whom the work is to be done, is liable as master, or principal, for torts of his servant or agent committed while prosecuting the work, upon the principle of respondeat superior; where the servant or agent, as authorized by the contract of employment, purchases material to be used in the perform- *382 anee of the contract, the master or principal is liable for the purchase price of the material upon the principle of qui facit per alium, facit per se. In Hardware Co. v. Banking Co., 169 N. C., 744, defendant Banking Company, in order to get its building completed, had agreed with its codefendant, who agreed to do the work, that it would pay for all materials which thereafter should be purchased by said eodefendant, and used in completing said building. It was held that materials furnished by plaintiffs became the direct obligations of the Banking Company and not those of the original contractor. It is said in the opinion of Brown, J.: “It is immaterial whether the plaintiffs knew of the new agreement made in August, 1912, although it is found that they had knowledge of it. The liability of the agent is not exclusive. Although the plaintiffs extended credit to Carr in ignorance of the fact that he was acting for the Trust Company, the plaintiffs had the right to hold the undisclosed principal liable when discovered. It is well settled that an undisclosed principal is bound by executory simple contracts made by the agent and by the acts of the agent, done in relation thereto, within the scope of his authority and in the course of his employment. 31 Cyc., p. 1574, and cases cited in the notes. Nicholson v. Dover, 145 N. C., 18; Combes v. Adams, 150 N. C., 68; Peanut Co. v. R. R., 155 N. C., 148.” Under the contract between Spear Motor' Company and R. L. Blalock & Son, which was in writing, and unambiguous in its terms, it must be held as matter of law that the relationship between them was that of master and servant, or principal and agent, and not of owner and independent contractor. Upon the principle stated in Hardware Co. v. Banking Co., supra, Spear Motor Company, although an undisclosed principal, is liable to plaintiff for the purchase price of the lumber ordered by R. L. Blalock & Son and used in remodeling the building. The right of plaintiff to recover judgment against Spear Motor Company, upon the facts of this case, is not barred by the judgment by default rendered in its favor against R. L. Blalock & Son, the agent of the undisclosed principal. The agency was denied by Spear Motor Company in its answer; it is expressly ordered in the judgment by default that the “cause be calendared in due course for trial on the issues raised by the pleadings according to the custom of the court.” 21 R. C. L., 891, sec. 63 and sec. 68. The agency was not only not disclosed before the action was begun; it was denied by Spear Motor Company in its answer to the complaint. The facts in this case differentiate it from Rounsaville v. Ins. Co., 138 N. C., 191. In that case it was held that a- creditor who has recovered judgment against the agent of *383 an undisclosed principal, bas thereby elected to bold tbe agent for bis claim and cannot thereafter recover judgment against tbe undisclosed principal. Upon tbe facts of this case, we think it clear that plaintiff did not make an election to bold tbe agent which barred bis right to judgment against bis principal. If E. L. Blalock & Son were independent contractors, as contended by Spear Motor Company, or if they were agents for a principal, whom they bad not disclosed, they were personally liable to plaintiff. 21 R. C. L., p. 895, sec. 95. Plaintiff cannot be held to have made an election, until tbe issue involving their relationship, raised by tbe answer of Spear Motor Company in tbe action in which both tbe agent and tbe principal were defendants, bad been determined. Notice and claim of lien for amount due for material furnished by plaintiff to defendant, Spear Motor Company, was filed as required by C. S., 2469 and C. S., 2470; tbe action was begun within six months from tbe date of tbe filing of tbe notice; plaintiff therefore bas a lien on tbe lot and building of Spear Motor Company for tbe amount of tbe purchase price of tbe lumber for which Spear Motor Company is liable on tbe contract of purchase made by its agents. In Rose v. Davis, 188 N. C., 355, it was held that a furnisher of material, which was used in tbe building by a contractor, acquired no lien on tbe building, under our statutes, by notice to tbe owner, filed after tbe owner bad paid to tbe contractor tbe full contract price; and that it was immaterial that payment in full bad been made in advance, in accordance with tbe contract between tbe owner and contractor. This principle bas no application to tbe instant case, for we bold' that plaintiff was not a sub-contractor or furnisher of material to tbe contractor ; be is a creditor of tbe owner, by virtue of a contract made with tbe agent of tbe owner, and not a creditor of tbe contractor. It is not necessary, therefore, for us to consider or determine whether tbe delivery of two automobiles, valued at between $9,000 and $10,000, by Spear Motor Company to E. L. Blalock & Son was a payment on account or not, in excess of amount due at time of notice to Spear Motor Company that plaintiff’s claim bad not been paid by E. L. Bla-lock & Son. Plaintiff’s lien was acquired, not under C. S., 2437, but . under C. S., 2433. Tbe lien was perfected under C. S., 2469, and C. S., 2470, and not under O. S., 2438. There was error in denying plaintiff’s motion for judgment. There must be a New trial.