Zinn v. Fred R. Bright Co.

• Decision Date: 09 April 1969
• Citation: 76 Cal.Rptr. 663,271 Cal.App.2d 597
• Court: California Court of Appeals Court of Appeals
• Parties: , 46 A.L.R.3d 1317 Rex ZINN, Administrator of the Estate of Charles Kano, Deceased, Plaintiff and Respondent, v. FRED R. BRIGHT COMPANY, Inc., Defendant and Appellant. Civ. 9309.

Page 663

76 Cal.Rptr. 663

271 Cal.App.2d 597, 46 A.L.R.3d 1317

Rex ZINN, Administrator of the Estate of Charles Kano, Deceased, Plaintiff and Respondent, v. FRED R. BRIGHT COMPANY, Inc., Defendant and Appellant.

Civ. 9309.

Court of Appeal, Fourth District, Division 1, California.

April 9, 1969.

[271 Cal.App.2d 599] Wien, Thorpe & Sutherland and Lowell F. Sutherland, El Centro, for appellant.

Ewing, McKee & Kirk and Russell J. Kirk, El Centro, for respondent.

OPINION

AULT, ^* Associate Justice Pro Tem.

By amended complaint, the plaintiff, as Administrator of the Estate of Charles Kano, deceased, sued to recover the sum of $3,045.73 from the defendant Fred R. Bright Company, Inc. The amended complaint is in two causes of action, each in the form of a common count. The first count is framed as an account stated; the second seeks recovery on an open took account. After trial, the court found for the plaintiff on both counts and judgment was entered against the defendant in the amount prayed for in the complaint. From this judgment the defendant appeals.

The record reveals that in November 1962, the decedent, Charles Kano, was an employee of the defendant, Fred R. Bright Company, Inc. As an employee, he was entitled to a bonus based upon his employer's profit for the preceding crop-year. The amount of that bonus was computed by defendant's accountant to be the sum of $5,073.93. To pay this obligation the defendant employer issued and delivered two checks to Mr. Kano. The first check bore the number 19865 and was in the amount of $1500. This check was presented and paid. The second check was dated November 14, 1962, bore the number 19866 and was in the amount of $3,045.73. An entry on the face of the check indicated the total amount due was $3,573.93. A second entry, also on the face of the check, showed that the sum of.$528.20 had been previously advanced to Mr. Kano and was deducted from the total amount due. The face amount of the two checks, when added to the sum advanced, is equal to the bonus due as computed by defendant's accountant. The second check bore the printed notation: 'If not cashed in 60 days this check is void.'

The second check was retained by decedent and was never presented to the bank for payment. He died on September 19, 1966, and the uncashed check was found among his papers. It was stipulated that had the check been presented within 60 days of its date, defendant's account contained sufficient funds to pay it.

Plaintiff has not sued directly on the check. He does, however, rely on the check to establish an account stated. At the trial the check was offered and received in evidence over objection. It is appellant's primary contention on appeal that the check, issued to decedent and never presented by him for payment, cannot become the basis for an account stated.

A pre-existing obligation may be converted into an account stated by the use of a check (Levy v. Prinzmetal, 134 Cal.App.2d Supp. 919, 923, 286 P.2d 1023; 1 C.J.S. Account Stated § 36, pp. 714--715, and cases cited therein), but we have found no case where the question of failure to present the check for payment was involved.

The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due. (Bennett v. Potter, 180 Cal. 736, 745, 183 P. 156; Hansen v. Fresno Jersey Farms Dairy Co., 220 Cal. 402, 408, 31 P.2d 359; 1 Cal.Jur.2d Accounts and Accounting, § 43, p. 317.)

We believe these criteria have been met and that the check together with other evidence establishes an account stated. Requirements (1) and (3) listed above are obviously satisfied and need no comment. The only arguable question is whether there is sufficient evidence that decedent agreed to and accepted the amount set forth in the check as the amount due him from the defendant.

The agreement of the parties necessary to establish an account stated need not be express and frequently is implied from the circumstances. In the usual situation, it comes about by the creditor rendering a statement of the account to the debtor. If the debtor fails to object to the statement within a reasonable time, the law implies his agreement that the account is correct as rendered. (California Bean Growers Ass'n v. Williams, 82 Cal.App. 434, 442, 255 P. 751; Luse v. Peters, 219 Cal. 625, 629, 28 P.2d 357; Shapiro v. Equitable Life Assur. Soc., 76 Cal.App.2d 75, 91, 172 P.2d 725.) The novelty of the present case is that it presents the opposite of the usual situation. Here it is the debtor who has rendered the account by issuing its check in payment. The precise question to be answered becomes: Can the creditor's assent to the account as stated in the check be implied where he does not present the check for payment?

We find no explanation in the transcript of why the check was not cashed, and that mystery remains. We do find evidence, however, which refutes the proposition that decedent's failure to cash the check resulted from any disagreement with the amount. Mr. George Lockett, Jr., who was the defendant's office manager and accountant in 1962 and who issued and signed the check involved, testified at the trial. In response to questions on cross-examination by defendant, he stated that he had discussed the matter of the check with Mr. Kano on only one occasion and that was approximately five or six months after the check had been issued. He inquired because 'the check kept turning up on the outstanding checks during the time of reconciliation'. The final questions and answers on the subject are significant:

'Q What remarks did you address to Mr. Kano with regard to the check?

'A To the best of my recollection, I merely asked why he did not cash the check and if he would cash the check.

'Q What was his response?

'A Also to the best of my knowledge (sic), I don't remember whether he said he had or whether he would cash it.'

If, at the time of this confrontation with a responsible employee of the defendant company, decedent had felt that the check did not represent the true amount due him from defendant, we think he would have said so. The answer he gave indicates acquiescence in the amount of the check and not objection thereto.

Whether the decedent acquiesced or agreed to the amount due him from the defendant as set forth in the check is a question of fact. (Hemenover v. Lynip, 107 Cal.App. 356, 363, 290 P. 1089.) The failure to present the check is a fact to be considered in arriving at the appropriate conclusion. Also to be considered in this connection is the fact that decedent accepted the check, retained it for a long period of time and made no protest to the defendant concerning it. From this conduct, an inference arises that he agreed the amount set forth in the check was the amount due him from the defendant. (California Bean Growers Ass'n v. Williams, Supra, 82 Cal.App. 434, 442, 255 P. 751; Luse v. Peters, Supra, 219 Cal. 625, 629, 28 P.2d 357; Shapiro v. Equitable Life Assur. Soc., Supra, 76 Cal.App.2d 75, 91, 172 P.2d 725.) Under well-established rules governing appellate review, we must assume that the trial court drew the latter inference and concluded it outweighed the contrary inference of nonagreement which might arise from the failure to present the check for payment.

'Where two or more inferences may reasonably be deduced from a certain state of facts or circumstances, a reviewing court is not permitted to substitute its deductions for those of the trial court.' (Wilbur v. Wilbur, 197 Cal. 1, 7, 239 P. 332, 325; see also Cottle v. Gibbon, 200 Cal.App.2d 1, 4, 19 Cal.Rptr. 82.)

There is substantial evidence in the record to support the trial court's finding that an account was stated between decedent and defendant on November 15, 1962, wherein it was agreed that defendant was indebted to decedent in the sum of $3,045.73.

Defendant also contends on appeal that in permitting the check to be used as the basis for an account stated, it was unfairly deprived of defenses which would have been available had the suit been on the check itself or upon the underlying obligation. It complains that the statute of...