Stockton Theatres, Inc. v. Palermo

360 P.2d 76, 55 Cal. 2d 439, 11 Cal. Rptr. 580, 1961 Cal. LEXIS 224

• Court: California Supreme Court
• Decided: March 2, 1961
• Docket: Sac. 7100
• Status: Published

Opinions

PETERS, J.

— Stockton Theatres, Ine., appeals from two orders made after judgment, one entered on January 20, 1959, taxing an item of costs as effective on that date, and the other entered on April 30, 1959, which, in legal effect, overruled plaintiff’s motion that such item of costs be allowed as of December 17, 1954, with interest from that date.

This litigation has been before the appellant courts on at least seven prior occasions.¹ The basic action was brought by plaintiff to secure a restitution of profits. The plaintiff obtained a judgment in 1949. Both sides appealed. The appellate court materially increased the amount of the judgment and expressly ordered that “the appellant theatre company to recover costs on appeal.” (Stockton Theatres, Inc. v. Palermo, 121 Cal.App.2d 616, 632 [264 P.2d 74].) The plaintiff, after the issuance of the remittitur, filed in the trial court its memorandum of costs on appeal. Several of the items totaled $1,097.37. In addition, an item of $6,980.49 was listed, it being the admitted cost to the plaintiff of a surety bond given to preserve a certain attachment on appeal. The defendants challenged this last item. The trial court, on December 17, 1954, disallowed it, but allowed as costs the items totaling $1,097.37. The trial court disallowed the amount of the bond premium as costs because it ruled that section 1035 of the Code of Civil Procedure² was not applicable to costs on appeal.

The defendants did not appeal from the allowance of $1,097.37, and that portion of the award has long since become final. The plaintiff appealed from the order disallowing the $6,980.49. The plaintiff was successful on that appeal. This court held that section 1035, supra, did provide for bond premiums on appeal to be included in the costs when such premiums were reasonably “necessary” to preserve rights on appeal. The actual order of this court was that the order was “reversed and the trial court directed to determine the necessity for the bond required to preserve the attachment pending appeal, and, if it is determined that such bond was necessary, allow the amount of the premium paid therefor as an item of the costs on appeal to which plaintiff is entitled.” (47 Cal.2d 469, supra, at p. 478.)

This, it will be noted, was a reversal in the legal sense. Up to this point it had been determined that such bond premiums were recoverable as a cost on appeal, but only when such expenditure was “necessary.” There had as yet been no hearing on the necessity for such bond. Neither party had presented any evidence on that issue.

After the reversal, the trial court, as directed, held a hearing to determine whether the expenditure for the bond was “necessary.” Both parties offered evidence on the issue. The trial court found that the expenditure was “unnecessary,” and on April 12,1957, entered its order denying the allowance of this item as a cost on appeal. Plaintiff again appealed, and again was successful. The majority of this court held that the evidence produced at the hearing demonstrated “as a matter of law” that the challenged expenditure was “necessary.” The last paragraph of the majority opinion reads as follows:

‘ ‘ Having concluded as a matter of law that the record shows that a bond was necessary to preserve the attachment within the meaning of section 1035 of the Code of Civil Procedure, the order is reversed with directions to the trial court to allow the premiums on said bond as a cost on appeal.” (51 Cal.2d 346, supra, at p. 352.)

Thereafter, the trial court ordered the cost of the premium on the bond taxed as an item of costs on appeal, but made its order effective only from the date of its entry, January 20, 1959. This meant, of course, that the award was to bear interest only from that date. The plaintiff moved to vacate the order and for the allowance of the bond item as a part of the costs on appeal as of the date when costs were originally taxed, December 17, 1954. Such an allowance would authorize the running of interest on the amount of the bond premium from that date. (In re Kennedy, 94 Cal. 22 [29 P. 412]; Dalzell v. Kelly, 115 Cal.App.2d 60 [251 P.2d 343].) Upon the denial of the motions plaintiff appeals.

The sole question presented is, on what date did interest start to run on the award? The defendants contend that interest on a judgment for costs on appeal begins to run from the date of entry of the judgment, and that in the present case there was no judgment taxing the bond premium as a cost on appeal until January 20, 1959. The plaintiff contends that the original order taxing costs was made on December 17, 1954; that the trial court first erred on that date in failing to tax the bond premium as a cost on appeal; that after several appeals the error was corrected; and that the effect of these reversals was to modify the original order of December 17, 1954. Based on these premises, plaintiff urges that interest should have been allowed as of December 17, 1954.

We have concluded that neither contention is sound, and that the proper date from which the interest should run is April 12, 1957. That is the date the trial court entered its order denying the bond premium as an item of costs based on its finding that such expenditure was unnecessary. On the resulting appeal this court in 51 Cal.2d 346, supra, determined that on that date, as a matter of law, the trial court should have allowed the item involved.

There is no controlling authority to which we have been referred, or found, that deals with this particular subject. But the law applicable to the effect of reversals or modifications on interest on judgments generally would seem, by analogy, to be applicable. (Dalzell v. Kelly, supra, 115 Cal. App.2d 60, 62.)

A judgment bears legal interest from the date of its entry in the trial court even though it is still subject to direct attack. (Bellflower City School Dist. v. Skaggs, 52 Cal.2d 278, 280 [339 P.2d 848].) When a judgment is modified upon appeal, whether upward or downward, the new sum draws interest from the date of entry of the original order, not from the date of the new judgment. (Beeler v. American Trust Co., 28 Cal.2d 435, 438 [170 P.2d 439]; Barnhart v. Edwards, 128 Cal. 572, 575 [61 P. 176]; 1 A.L.R.2d 479, 510-512, 520-521.) On the other hand, when a judgment is reversed on appeal the new award subsequently entered by the trial court can bear interest only from the date of entry of such new judgment. (Cowdery v. London etc. Bank, 139 Cal. 298, 303 [73 P. 196, 96 Am.St.Rep. 115].)

A judgment for costs should be governed by the law applicable to judgments generally. Such awards are, in fact, separate and complete judgments in themselves. (Supera v. Moreland Sales Corp., 28 Cal.App.2d 517, 521 [82 P.2d 963].) Costs on appeal are provided for in section 1034 of the Code of Civil Procedure, and are therein made enforceable by execution in the same manner as a final judgment.

How do these rules apply to the present case ? First, there was the order of December 17, 1954. The trial court disallowed on that date, the item of costs here involved. On appeal that order was reversed with instructions to the trial court to pass on the question of the necessity for the bond (47 Cal.2d 469, supra). That, as already pointed out, was a legal reversal. It did not modify the order of December 17, 1954. Quite to the contrary it directed the trial court to hold a hearing on the necessity for the expenditure, and to make its award of costs depend upon the outcome of that hearing. Up until this point no award of costs for this item could have been made because there had been no hearing or finding on the issue of necessity for the bond. If the court found the expenditure to be “necessary,” then it was directed to award the amount of the bond premium as costs. Under the general rule applicable to judgments, such an award would bear interest not from December 17, 1954, but from the date that this last order was made.

The trial court held such a hearing, and found the expenditure unnecessary, and on April 12, 1957, entered its order disallowing the challenged item. On appeal (51 Cal.2d 346, supra) this court held that, as a matter of law, the evidence demonstrated that the expenditure was necessary, and that on April 12, 1957, the court should have allowed this item of costs. The legal effect of this “reversal” was to make the order of April 12, 1957, state what it should have stated on that date. In a very real sense, in legal effect, it increased the original amount awarded as costs, and determined that, after showing necessity, plaintiff was entitled to this award as of April 12, 1957. Instead of reversing with directions, by allowing the item and then affirming the order as modified, this court “reversed.” This “reversal” obviously was, in law and in fact, a modification. When the facts are considered in their entire context this conclusion is inescapable. On December 17, 1954, the court allowed as costs on appeal the sum of $1,097.37, but denied the cost of the bond premium totaling $6,980.49. At that time it held no hearing on the necessity of such expenditure. A finding on that issue is a condition precedent to the allowance of such expenditure. The December 17, 1954, ruling was reversed and the trial court ordered to hold the requisite hearing. On April 12, 1957, after the hearing, the trial court found the expenditure to have been unnecessary. But on appeal, in 51 Cal.2d 346, supra, this court held that on April 12, 1957, the trial court, as a matter of law, should have entered its order allowing the bond premium as an item of costs. The result of that order, couched in terms of a "reversal,” was to hold that on April 12, 1957, plaintiff was legally entitled not only to the costs totaling $1,097.37 that had not been contested, but was entitled to an additional $6,980.49, making the total amount of costs on appeal to which plaintiff is entitled the sum of $8,077.86. That was the legal effect of the order of "reversal” contained in the opinion in 51 Cal.2d 346, supra. Although the order in that case was couched in terms of a reversal with directions, it had the legal and practical effect of modifying the original award. When, on January 20, 1959, the trial court, pursuant to directions, entered its order allowing the bond premium as a cost on appeal, it was necessarily deciding, pursuant to the order contained in the opinion in 51 Cal.2d 346, supra, that not only was such item recoverable, but that it should have been recoverable as of April 12, 1957. Thus, assuming that the rules applicable to interest on judgments generally should be applied to interest on awards of costs on appeal, the rule that is applicable is that such award when modified on appeal, whether upward or downward, bears interest from the date of entry of the original order, not from the entry of the new judgment. As applied to the facts of this ease this means that the award should bear interest from April 12, 1957.

It is contended that, regardless of how logical this conclusion may be, it is contrary to the rule announced in Cowdery v. London etc. Bank, supra, 139 Cal. 298. It is urged that the rule of that case compels the conclusion that interest on this award should not commence until January 20, 1959. In this connection defendants rely on some general language in that opinion which they contend supports their contention. An examination of that case demonstrates that the general Ianguage relied upon, while applicable to the facts of that case, has no application at all to the facts here presented.

That case did not involve any question of interest at all. The facts were that one Bandmann mortgaged his property to the London Bank. The bank foreclosed. A sale under the foreclosure was had and the bank purchased at the sale. The sale resulted in a deficiency of $3,574.34. A deficiency judgment was entered in that amount against Bandmann on December 7, 1895. In the meantime, Bandmann, on May 1, 1895, had sold the land to Cowdery. Bandmann appealed from the deficiency judgment. In the ease of London and S.F. Bank v. Bandmann, 120 Cal. 220 [52 P. 583, 65 Am.St.Rep. 179], this court reversed the deficiency judgment “with directions that the trial court enter judgment in accordance with the views here expressed.” (120 Cal. at p. 225.) Among the “views” expressed in the opinion was one that under the findings in the deficiency judgment action there was no finding (the case had been appealed without including the evidence) that a certain $1,000 obligation was owed by Bandmann personally. Por that reason the court was of the opinion that on the record before it the $1,000 had been improperly included in the deficiency judgment, and hence reversed with directions.

No further proceedings of any kind were directly taken in the deficiency judgment action. After the decision in 120 Cal. 220, supra, had become final, Cowdery instituted an independent action against the bank on July 15, 1898, in which he prayed that the order of sale under the foreclosure decree be set aside and annulled. In that action the trial court ordered that the original deficiency judgment “be modified and reduced” by $1,000, and refused to set aside the order of sale. This was the order appealed from involved in the appeal in 139 Cal. 298, supra. The question was whether or not the “modification” by the trial court in the Cowdery action was substantial compliance with the mandate of the Supreme Court reversing with directions the deficiency judgment in the Bandmann action. It was properly held that it was not. It was in this connection that the Supreme Court used the language relied upon by defendants about the legal effect of a reversal. (139 Cal. 298, supra, at p. 303.) It was in this connection that the court pointed out that the legal effect of the reversal as to Cowdery was to vacate the judgment and render it void. The theory was that rights vested upon the reversal which could not be taken away by treating the reversal as a modificatian. It was held that the trial court in the Cowdery action had no legal right to modify something that did not exist.

This case has no application to the instant one. Not only did the Cowdery case not involve any question of costs, or of interest on costs, but it involved what the Supreme Court held was an indivisible judgment. That judgment was reversed. Hence it no longer existed. Here the order allowing the $1,097.37 has existed since December 17, 1954, and has long since become final. That allowance of costs has never been vacated. The legal effect of the so-called “reversal” was not to reverse the allowance of costs, but to add to that allowance. Hence the Cowdery case is not in point.

The orders appealed from are modified so as to provide that the item of $6,980.49 allowed as a cost on appeal shall bear interest at the legal rate from April 12, 1957, to the date of payment. As so modified the orders are affirmed, the plaintiff to recover its costs on this appeal.

Gibson, C. J., Traynor, J., and Dooling, J., concurred.

1 Stockton Theatres, Inc. v. Palermo, 109 Cal.App.2d 616 [241 P.2d 54]; 121 Cal.App.2d 616 [264 P.2d 74]; 124 Cal.App.2d 353 [268 P.2d 799]; 179 Cal.App.2d 323 [3 Cal.Rptr. 767]; 47 Cal.2d 469 [304 P.2d 7]; 51 Cal.2d 346 [333 P.2d 10]; Palermo v. Stockton Theatres, Inc., 32 Cal.2d 53 [195 P.2d 1]. Five of these seven appeals involved, in whole or in part, the very item of costs here involved.

2 The section provides: “Whenever in this code or by other provision of law costs are allowed to a party . . . such costs shall include the premium on any surety bond which was procured by the party entitled to recover costs in connection with the action or proceeding unless the court determines that the bond was unnecessary.”