Auzerais v. Naglee

15 P. 371, 74 Cal. 60, 1887 Cal. LEXIS 746

• Court: California Supreme Court
• Decided: November 5, 1887
• Docket: No. 8798
• Status: Published

Opinions

Searls, C. J.

The complaint in this cause contains three counts, or causes of action. One upon an account stated, as of January, 1880, and the others for goods, wares, and merchandise sold and delivered to defendant subsequent to said last-mentioned date.

The action was brought July 29, 1881.

Defendant, in addition to the denials contained in his answer, interposed a plea of the statute of limitations to the first count, claiming the cause of action to be barred by the provision of section 339 of the Code of Civil Procedure (two years).

Plaintiff had a verdict and judgment for $1,531.82, from which, and from an order denying a new trial, defendant appeals.

After service of summons and complaint, the defendant demanded in writing a copy of the account mentioned as sued upon in the first count of the complaint; and in reply to such demand, plaintiff furnished to defendant an account, in which defendant was charged with amount due on stated account January 1, 1880, $2,674.90, to which interest was added, and from which sundry payments were deducted, etc., but without giving in detail the items of the original account going to make up the amount.

Defendant moved the court for a further account, which was refused, upon the ground that in an action on an account stated, no account need be furnished under the law. To this ruling the defendant excepted, and the action of the court is assigned as error.

The first count or cause of action set out in the complaint, and upon which a copy of the account was demanded, is upon an account stated.

A stated account is an agreement between both parties that all the items are true; but this agreement may be implied from circumstances, as where merchants reside in different places, and one sends an account to the other, who makes no objection to it within a reasonable time. (Stebbins v. Niles, 25 Miss. 267; 1 Wait’s Actions and Defenses, 191-198.)

In such cases, the action is based upon the agreement, which has all the force of a contract. The original account becomes the consideration for the agreement, and it is not necessary to prove the items of such account; nor can they be inquired into or surcharged except for some fraud, error, or mistake, and such grounds must be, according to the weight of authority, set forth in the pleadings. (Kronenberger v. Binz, 56 Mo. 121; Threlkeld v. Dobbins, 45 Ga. 144; Sutphen v. Cushman, 35 Ill. 186; Huran v. Lang, 11 Tex. 230; Philips v. Belden, 2 Edw. Ch. 1; Hawkins v. Long, 74 N. C. 781; Kock v. Bonitz, 4 Daly, 117; Slee v. Bloom, 20 Johns. 669.)

The balance found due upon a stated account is principal; it cannot be re-examined (except for fraud or mistake) to ascertain the items or their character. (McClelland v. West, 70 Pa. St. 183.)

The object of a bill of particulars is to apprise a party of the specific demand of his adversary. (People v. Monroe Common Pleas, 4 Wend. 200; Matthews v. Hubbard, 47 N. Y. 428.)

This being true, it is difficult to discern how, upon principle, a defendant is entitled, under section 454 of our Code of Civil Procedure, to a copy of the original account upon which the contract in an action on a stated account is based.

The term “stated account” is but an expression to convey the idea of a contract, having an account for its consideration, and is no more an account than is a promissory note, or other contract, having a like consideration for its support.

The Code of Civil Procedure (section 454), by its terms, makes it unnecessary for a party declaring upon an account to set forth the items in his pleading, but requires him, on demand, to furnish a copy of the account thus pleaded, under penalty of being precluded from giving evidence thereof, in case of refusal.

In an action on an account stated, it is not necessary to prove the account, or any of its items, but the proof' in such a case is directed to the fact that the parties have accounted together, and agreed upon the balance-due (insimulcomputassent)] and in an action on the original account, it has been held that a plea of an account stated, if supported, will bar a recovery. (Driggs v. Garretson, 25 N. J. Eq. 178.)

In the language of Wait, in his work on Actions and Defenses (vol. 6, p. 430), an accounting, “when accomplished, does not necessarily exclude all inquiry into the -/rectitude of the account. The parties may still impeach it for fraud or mistake; but so long as it is not impeached, the agreed statement serves in place of the-original account as the foundation of an action. It becomes an original demand, and amounts to an express promise to pay the actual sum stated. The creditor be-, comes entitled to recover the agreed balance in an action based upon the fact of its acknowledgment by the-debtor upon an adjustment of their respective claims.”

The penalty for refusing to furnish an account is, that the party refusing to so furnish it shall be precluded from proving it; but it can have no application to a. case where, as in an action on an account stated, he is-not required to prove the account.

We are therefore of opinion the court below did not err in denying defendant’s motion for a further account.

Again, as before stated, the object in requiring an account is to enable the opposite party to make a defense to the cause of action based on such account.

The defendant in this cause, as appears by the record, was in possession of the original accounts rendered him by the plaintiff, and on notice of the latter, produced them in court.

If, therefore, we concede the court to have been wrong in its ruling, the defendant was not injured thereby, and the judgment should not for that cause be reversed.

It is next urged that the court erred in permitting the witness Pomeroy to explain “ what was the meaning of the word (unsettled/ as used by him in his letter of July 26, 1880.”

Defendant, on cross-examination of this witness, had presented him with exhibit “ Q,” being a letter from plaintiff and his grantor to defendant, as follows: —

“Gen. H. M. Naglee: We would call your attention to your unsettled account, the balance due us being ;$2,326.35.

“ Please call and settle same, and oblige.

“ Yours very truly,

“Auzerais & Pomeroy.”

“ The firm of Auzerais and Pomeroy having been dissolved, we are anxious to have all our accounts settled, and we will be greatly obliged if you give us above.

“ E. Auzerais, Liq. P.”

The testimony was further directed to showing that "the unsettled account referred to in the letter was the very account which plaintiff had claimed and testified was settled.

On redirect examination, the witness was permitted to explain that he used the term “ unsettled ” in the sense of “ unpaid,” and the term “ settle ” in the sense of “pay.”

Bouvier defines the word “settle,” “to adjust or ascertain; to pay. Two contracting parties are said to settle an account when they ascertain what is justly due by one to the other; when one pays the balance or debt due by him he is said to settle such debt or balance ”; citing 11 Ala., N. S., 419.

We think there can be little doubt but that the term “ settle ” has a double meaning, and is used alike to denote an adjustment of a demand and a payment.

This being so, it was proper for the author of the letter containing the declaration to explain in which of the two senses he used the expression. In other words, there was an ambiguity upon the face of the instrument which it was competent not to contradict, but to explain. (Chicago v. Sheldon, 9 Wall. 50; Atlantic R. R. Co. v. Bank, 19 Wall. 548; Jenny Lind Co. v. Bower, 11 Cal. 194; Harnickell v. Brown, 45 N. Y. Sup. Ct. 850; 2 Wharton on Evidence, secs. 954, 955.)

There is in this view nothing in conflict with the provisions of sections 1858, 1859, and 1861 of the Code of Civil Procedure.

It is further urged that the court erred in holding that Jhe cause of action accrued at the date the account was stated between the parties (if in fact stated), and that therefore the statute did not apply to any item after January 81, 1878, two years before the alleged statement, and that the court also erred in holding that by silence or acquiescence, or concurrence by unwritten words in the correctness of the account, the defendant could become liable to pay larger interest than seven per cent per annum.

An open account already barred by the statute of limitations cannot be relieved from the bar of such statute by an oral statement of such account, for the reason that under our code (Code Civ. Proc., sec. 360) no acknowledgment or promise is sufficient evidence of a new or continuing contract by which to take the case out of the operation of the statute, unless the same is contained in some writing signed by the party to be charged thereby.

Where, however, the demand is not barred at the date of the account stated, although the statement is verbal, the statute begins to run upon the new cause of action thus brought into existence from the date of the settlement and new promise arising thereunder; and if verbal, an action may, under subdivision 1 of section 339 of the Code of Civil Procedure, be brought within two years ofter such settlement.

In the language of Angelí (Angelí on Limitations, sec. 150), “ for the moment it becomes a stated account, it is at an end; and the balance, which is ascertained and admitted to be due from one party to the other, is immediately subjected to the operation of the statute as an original" and separate demand; .... when the parties have stated, liquidated, and adjusted their accounts, and thus ascertained the balance, it ceases to be an account, and has lost the peculiar attributes of an account. What was before an implied promise to pay what was reasonable, by such liquidation and stating of account, at once becomes an express promise to pay a sum certain. (McLellan v. Crofton, 6 Me. 337.)

The statute begins to run- in cases of adjustment when the adjustment is made. (Ex parte Storer, 1 Daveis, 294; Higgs v. Warner, 14 Ark. 192; Brackenridge v. Baltzell, 1 Ind. 333.)

So, too, the balance of an old account, when found and assented to, may become the first item in a new account. It was said by Chief Justice North, in Farrington v. Lee, 1 Mod. 270: “If, after an account stated, upon the balance of it a sum appear due to either of the parties, which sum is not paid, but is afterward thrown into a new account, it is now dipped out of the statute again.” (Union Bank v. Knapp, 3 Pick. 96; 15 Am. Dec. 181; Angell on Limitations, sec. 151; Clarke v. Jenkins, 3 Rich. Eq. 318.)

There was also evidence showing that on the eighth day of December, 1880, the defendant paid to plaintiff upon the account rendered him the sum of one thousand dollars, which is evidenced by a receipt on the back of the account in the handwriting of defendant (except the .signature thereto), as follows: —

“ Received December 8, 1880, of Henry M. Naglee, one thousand dollars on account of the within.

“E. Auzekais, Liquidating Partner.”

Respondent contends that this part payment, evidenced by a writing in which the name of Naglee appears under his own hand, is a sufficient signing under the statute (Code Civ. Proc., sec. 360) to suspend its operation; and in support of his contention cites Barron v. Kennedy, 17 Cal. 574; Pena v. Vance, 21 Cal. 142; Fairbanks v. Dawson, 9 Cal. 80; Rowe v. Thompson, 15 Abb. Pr. 377; Holmes v. Mackrell, 3 Com. B., N. S., 789; Johnson v. Dodgson, 2 Mees. & W. 653.

The part payment was evidenced by a writing. It was in the handwriting of defendant. His signature was contained therein.

The statute does not require the party to subscribe his 'name, and it is sufficient if it be evident from any part of the instrument of acknowledgment that the debtor named in it has given to it his assent, and as was said in Rowe v. Thompson, supra: “As the legal definition of the word ‘signed’ is the act whereby a person gives or declares assent by name, sign, or mark, it follows that it is enough if it appears in the body or upon the margin, or elsewhere of the instrument, that such assent has been given. If the attestation appears anywhere upon the face of the writing, it is sufficient, and the party thus attesting is bound as effectually as if he had subscribed his name at the foot.”

Johnson v. Dodgson, supra, was a case under the statute of frauds, in which the latter, it appeared, had. made out a memorandum in his own handwriting, and required it to be signed by the vendor, as follows: —

“Leeds, October 19, 1836.

“ Sold John Dodgson,—

“ 27 pockets Playsted (hops), 1836, Sussex, at 103s., etc.

“ Signed for Johnston, Johnston & Co.,

“ D. Mooke.”

This was held sufficient to charge Dodgson, as the body of it was in his handwriting, and contained his name.

Upon the same principle, we may say here, the body of the instrument showing a part payment is in the handwriting of defendant, who is the party charged, and contains his name.

We think the evidence was sufficient to bind defendant. Next, could the defendant become liable under the evidence, upon a stated account, for a rate of interest in excess of legal interest?

It appears from the record that interest at the rate of one per cent per month was charged, and is included in the stated account.

There was also a question as to a further sum charged as compound interest, but which was deducted by plaintiff upon protest of defendant, and that question is nobt necessarily involved.

In Marye v. Strouse, 6 Saw. 205, a case in most respects similar to this, Hillyer, J., held that where a statute like our own, which does no more than prohibit a recovery of interest beyond the legal rate, when the contract is not in writing, but does not otherwise make the rate of interest unlawful, interest in excess of that rate may be included in an account stated and recovered.

The case proceeds upon the theory that the interest as charged, being knowm and assented to by the debtor, and not being in violation of any positive law, affords a sufficient consideration for the new promise involved in an account stated.

The custom of merchants in Pittsburg and Philadelphia to charge interest on their accounts after six months is judicially noticed in the Pennsylvania courts. (Koons v. Miller, 3 Watts & S. 271; Watt v. Hoch, 25 Pa. St. 411; Adams v. Palmer, 30 Pa. St. 346.)

And evidence of usage has rendered charges for interest under such circumstances recoverable at law. (Rensselaer Glass Factory v. Reid, 5 Cow. 611; Knox v. Jones, 2 Dall. 193.)

In Raymond v. Isham, 8 Vt. 263, it was said: “ From the practice which has generally obtained in this state [Vermont], from the known usage and custom of Mr. Raymond [the creditor], as well as other merchants, to cast interest on their accounts after six months, we think there was an implied contract on the part of Dr. Isham to pay interest after the usual time of credit.”

In McAlister v. Reab, 4 Wend. 483, the court said: “ We do not think the charge of interest on any part of the account objectionable. The plaintiff proved that the defendant was one of his customers, and that he always charged interest on his accounts after ninety days.”

The uniform custom of a merchant or manufacturer is presumed to be known to those who are in the habit of dealing with him, and in their dealings are supposed to act with reference to that custom. (Meech v. Smith, 7 Wend. 315; Reab v. McAlister, 8 Wend. 109; Backus v. Minor, 3 Cal. 231.)

Where a banker and his customer have carried on their business for a series of years in a particular way, it will be assumed there is an agreement to that effect, and the principle involved will be held binding in any subsequent disagreement between them. (Mosse v. Salt, 32 Beav. 269; Clancarty v. Latouche, 1 Ball & B. 420.)

These were cases in which only legal interest was charged, but it was allowed upon unliquidated demands where, but for the custom or pursuant to an agreement, no interest could have been recovered.

The deduction is, that, there being no positive law to the contrary, the payment of interest may be the subject of contract, express or implied, in cases where but for such contract no interest could be recovered.

In this state we are of opinion that when, as in the present case, it is shown to be the universal custom of a merchant to charge interest after thirty days upon monthly balances due upon open account, and where such account showing the interest charged up regularly is received by the debtor and fully understood by him, and where such account becomes stated, either by the prolonged failure of the debtor to object thereto or by a settlement and adjustment thereof between the parties, a new contract arises between such parties, and the debtor is bound to pay the balance found due, and no inquiry is permissible as to the items beyond the defense of the statute of limitations, and that of fraud, error, or mistake.

There is no plea of fraud, error, or mistake, and no showing in support of such plea had it been interposed.

It follows from these views that the instructions given were correct.

The testimony upon the question of an accounting, was conflicting, and the verdict of the jury is conclusive in this court.

We are of opinion the judgment and order appealed from should be affirmed.

McFarland, J., and Sharpstein, J., concurred.