Webster Drilling Co. v. Sterling Oil of Oklahoma, Inc.

1962 OK 242, 376 P.2d 236, 1962 Okla. LEXIS 477

• Court: Supreme Court of Oklahoma
• Decided: November 13, 1962
• Docket: 39697
• Status: Published

Opinions

JACKSON, Justice.

In the trial court, plaintiff Webster Drilling Company sued Sterling Oil of Oklahoma for accrued and accruing interest allegedly due to Webster as a result of certain transactions between the parties. Sterling’s demurrer to Webster’s amended petition was sustained and the cause dismissed, and Webster appeals.

Plaintiff's position is that the amended petition alleges a cause of action based upon an account stated. The pertinent facts alleged may be fairly summarized as follows : plaintiff Webster performed certain oil well drilling for Sterling pursuant to contract. After the completion of the work, and before payment was due, Webster sent statements of account to Sterling, and Sterling thereafter made partial payments over a period of about nine months, leaving the sum of $12,436.12 due to Webster. On May 31, 1958, and a little over a year after the full amount had become due, Webster sent Sterling a statement of account listing the principal sum of $12,436.12, plus interest in the amount of $1050.90, making a total remaining past due and unpaid of $13,-487.02. Sterling did not question the correctness of this account, but retained it without objection for eleven months. See 1 Am.Jur. Accounts and Accounting, § 25; 1 C.J.S. Account Stated § 37a. On May 1, 1959, Sterling paid Webster $12,436.12— the exact amount remaining due on the principal obligation. The interest demanded has not been paid.

The petition also alleged that there was a generally understood and accepted custom and usage in the industry, to the effect that amounts due under contracts such as that here concerned would bear interest at the rate of 6% per annum until paid, and that such custom and usage was intended to be, and was, an implied term of the. contract between Webster and Sterling. The prayer of the petition was for accrued interest in a specified amount, interest accruing there-after until payment, and for costs , of the - action.

Sterling’s demurrer to the petition was sustained and the cause dismissed.

In this situation, the applicable and well settled rule is that when tested by a demurrer, a petition must be liberally construed in favor of plaintiff, and all facts well pleaded, together with all inferences which may reasonably be drawn therefrom, must be taken as admitted to be true for the purposes of the demurrer. Correll v. Earley, 205 Okl. 366, 237 P.2d 1017.

On appeal, Webster contends that the petition alleges a cause of action based upon an account stated, and that the petition alternatively states a cause of action for interest earned under an implied agreement arising from custom and usage in the industry.

Sterling argues in effect that under either theory advanced by Webster, the petition shows upon its face that Webster’s claim for interest is barred by the terms of 23 O.S.1961 § 8, which provides as follows:

“Accepting payment of the whole principal, as such, waives all claim to interest.”

For reasons set out below, the quoted statute is not a bar to either of the causes of action pleaded by Webster.

An account stated is an agreement, express or implied. The amount or balance so agreed upon constitutes a new and independent cause of action, superseding and merging the antecedent causes of action represented by the particular constituent items. 1 Am.Jur. Accounts and Accounting, § 16. An account stated is a new obligation, taking the place of the obligation upon the prior account. Heenan v. Davis, 182 Okl. 237, 77 P.2d 78.

Therefore, Webster’s cause of action as for an account stated is not an action for interest, the recovery of which, under proper circumstances, might have been precluded by 23 O.S.1961 § 8. It is an action on a new and independent obligation which cannot be denominated “interest”, and it rests upon the new agreement of the parties, express or implied, that such amount is due from defendant to plaintiff.

It is not denied in the briefs that Webster’s amended petition pleads a cause of action as for an account stated. Such being the case, it is an action upon a new obligation, and is not an action for interest which might have been waived because of 23 O.S.1961 § 8.'

As an alternative cause of action, Webster pleaded that there was an implied contract, arising by reason of custom and usage in the industry, by the terms of which Sterling agreed to pay interest on past due items of the account. For purposes of the-demurrer to the petition, and in accordance with the quoted rule from Correll v. Earley, 205 Okl. 366, 237 P.2d 1017, the existence of such contract to pay interest is admitted to be true. It should be noted that under this cause of action, Webster prayed for a recovery of interest which Sterling had agreed to pay, and not for a recovery of interest as damages for breach of an obligation to pay money (23 O.S.1961 § 22).

In Ray F. Fischer Co. v. Loeffler-Green Supply Co., Okl., 289 P.2d 139, this court, held:

“[Where] the right to interest is based on a contract, it becomes a substantive part of the debt itself and is recoverable even though the principal debt has been paid and extinguished.”

Although 23 O.S.1961 § 8, is not specifically mentioned in the Fischer case, the principles of law therein applied are analogous to the case at bar. Since for purposes of the demurrer it is admitted that Webster’s right to the interest is based upon contract, the interest has become “a substantive part of the debt itself” — a part of the “whole principal” — which admittedly has not been paid. Since the “whole principal” has not been paid, 23 O.S.1961 § 8, is not applicable, and Webster has not waived the interest.

The judgment of the trial court is reversed and the cause is remanded to the trial court with directions to reinstate plaintiff’s petition and undertake such further proceedings as may be proper.

WILLIAMS, C. J., and DAVISON, HALLEY and IRWIN, JJ., concur. WELCH and JOHNSON, JJ., concur in result. BLACKBIRD, V. C. J., and BERRY, J., dissent.