Young v. Sorenson

• Decision Date: 02 May 1975
• Citation: 121 Cal.Rptr. 236,47 Cal.App.3d 911
• Parties: Irene B. YOUNG, Plaintiff and Appellant, v. Charles M. SORENSON et al., Defendants and Respondents. Civ. 44467.
• Court: California Court of Appeals Court of Appeals

Page 236

121 Cal.Rptr. 236

47 Cal.App.3d 911

Irene B. YOUNG, Plaintiff and Appellant, v. Charles M. SORENSON et al., Defendants and Respondents.

Civ. 44467.

Court of Appeal, Second District, Division 2, California.

May 2, 1975.

Bernard A. Leckie, Los Angeles, for plaintiff and appellant.

Gerald B. Yam, Hollywood, for defendants and respondents Charles and Marcille Sorenson.

Philip J. Scott, Burbank, for defendant and respondent Ralph J. Rowe.

FLEMING, Associate Justice.

Action on a promissory note.

In January 1963 Charles and Marcille Sorenson gave a promissory note to Red Rowe Productions for $11,500 at seven percent interest, principal and interest payable in installments of $100 a month. In February 1963, as part of a divorce settlement between Ralph Rowe and Irene Young, Ralph Rowe caused Red Rowe Productions to assign the Sorensons' promissory note to Young, and he guaranteed payment of the note 'to the extent of $10,000 only.' Thereafter, Ralph Rowe made monthly payments of $100 to Young. The Sorensons made sporadic payments on the note, but made them to Red Rowe Productions. In 1964 Young offered to sell the note back to the Sorensons at a discount, but the Sorensons declined, stating they preferred their present payment arrangements. The Sorensons continued intermittent payments to Red Rowe Productions until November 1969. In June 1971 Rowe made his one-hundredth $100 payment (a total of $10,000) to Young. Including accumulated interest, more than $7,000 remained due on the note. Neither Rowe nor the Sorensons made further payments.

In September 1971 Young brought the present action against Rowe, Red Rowe Productions, and the Sorensons to recover the balance due on the note. In a nonjury trial the court found her action against the Sorensons barred by the statute of limitations and her claim against Ralph Rowe as limited guarantor of the note satisfied by his payment of $10,000.

Young appeals the judgment contending (1) payments by the Sorensons to Red Rowe Productions tolled the statute of limitation on her action against them, and (2) the trial court erred in admitting in evidence a document claimed to be a reporter's transcript of the Rowe-Young divorce proceedings and relying upon it to limit Ralph Rowe's guarantee to $10,000.

1. Code of Civil Procedure section 337 provides a four-year period of limitation for commencing an action on a promissory note. However, 'part payment of a debt or obligation is sufficient to extend the bar of the statute. The theory on which this is based is that the payment is an acknowledgment of the existence of the indebtedness which raises an implied promise to continue the obligation and to pay the balance.' (Martindell v. Bodrero, 256 Cal.App.2d 56, 59, 63 Cal.Rptr. 774, 776.) Code of Civil Procedure section 360 provides that 'any payment on account of principal or interest due on a promissory note made by the party to be charged shall be deemed a sufficient acknowledgment or promise of a continuing contract to stop, from time to time as any such payment is made, the running of the time within which an action may be commenced upon the principal sum or upon any installment of principal or interest due on such note, and to start the running of a new period of time . . ..'

Young contends the Sorensons' payments to Red Rowe Productions, the latest in November 1969, constituted a sufficient acknowledgment under section 360 of their obligation on the promissory note to stop the running of the four-year period of limitation and validate the timeliness of her action started in September 1971. The trial court rejected this contention, apparently concluding that after assignment of the note to Young, the Sorensons' payments to Red Rowe Productions did not amount to legal acknowledgment of their obligation on the note.

Ordinarily, payments by a debtor to a stranger or predecessor creditor are not interpreted as recognition of a continuing obligation to the holder of a promissory note. But this is not the ordinary case. The Sorensons told Young they were making payments to Red Rowe Productions on account of the note held by Young. When the Sorensons told Young they preferred that arrangement, Young had little ground or motive to object, for she was receiving all she could require under the note, $100 a month from Ralph Rowe as mandated by the divorce settlement. 'Conduct on the part of a debtor which leads the creditor to believe that a payment made to a third person by the debtor was intended as a payment on the debt which he owed to the creditor, which would have the effect of arresting the running of limitations, in reliance upon which the creditor refrained from suit, has been held to estop the debtor...