Bott v. American Hydrocarbon Corporation

Decision Date11 April 1972
Docket NumberNo. 71-3206.,71-3206.
Citation458 F.2d 229
PartiesG. R. BOTT, Plaintiff-Appellant, v. AMERICAN HYDROCARBON CORPORATION, Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

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Alan M. Mund, Beverly Hills, Cal., Akin, Gump, Strauss, Hauer & Feld, Michael Lowenberg, Dallas, Tex., Fulop, Rolston, Burns & McKittrick, Beverly Hills, Cal., for plaintiff-appellant.

Dean Carlton, Donnie R. Duplissey, Carlton & Duplissey, Dallas, Tex., for defendant-appellee.

Before BELL, DYER and CLARK, Circuit Judges.

DYER, Circuit Judge:

This is an appeal from the district court's refusal to award pre-judgment interest to Bott on unpaid wages and indebtedness due him from American Hydrocarbon Corporation (AHC). We reverse.

During 1964 and 1965, while Bott was employed by the AHC, he advanced money to others in its behalf. There were no written memoranda between Bott and AHC evidencing these transactions. After repeated demands for repayment AHC did acknowledge the loans and promised repayment.1 Bott also claimed that AHC owed him wages for services rendered. The loans and services were all performed in the state of California.

After failing in his attempts to collect these debts Bott brought suit in the United States District Court for the Northern District of Texas. A few months later he also filed suit in a California state court which was removed to the United States District Court for the Central District of California. The latter case was transferred and consolidated with the case in Texas.

The jury found that AHC was indebted to Bott for $15,000 he had paid to a bank on December 30, 1964 for an AHC overdraft, and for $4,000 he paid to a stock registrar for AHC. It also found that AHC owed Bott $6,527.28 in wages for his services from April 1, 1964 to May 22, 1965. The court subsequently granted AHC's motion for judgment n/o/v on the ground that the Texas statute of limitation barred these claims.

On appeal this court reversed the judgment and remanded the case for entry of judgment for Bott. We held that the California, not the Texas, statute of limitation applied and that it had not yet run. Bott v. American Hydrocarbon Corp., 5 Cir. 1971, 441 F.2d 896. The district court, in accordance with the mandate, entered judgment for Bott but declined to award him pre-judgment interest.

Bott argues that he is entitled to pre-judgment interest under California law and AHC contends that the district court's judgment was proper under Texas law. Both parties alternatively contend that under either California or Texas law the issue should be decided in their favor. We must follow the Texas conflict of laws rules to determine which state law applies. Klaxon Co. v. Stentor Elec. Mfg. Co., 1941, 313 U.S. 487, 61 S. Ct. 1020, 85 L.Ed. 1477; Schewe v. Bentsen, 5 Cir. 1970, 424 F.2d 60, 62. Texas considers interest damages a substantive matter controlled by the law of the state where the cause of action arose. Corrosion Rectifying Co. v. Freeport Sulphur Co., S.D.Tex.1961, 197 F.Supp. 291, 293; Cf. Seale v. Major Oil Co., 428 S.W.2d 867, 869 (Tex.Civ.App.—Eastland 1968, no writ). Because this cause of action arose in California we apply that state's law.2

Calif.Civ.Code § 1914 (West 1954) provides:

Whenever a loan of money is made, it is presumed to be made upon interest, unless it is otherwise expressly stipulated at the time in writing.

In the circumstances of this case it is clear that Bott's payment to the stock registrar and to the bank were loans of money. Because there was no writing at the time expressly stipulating that interest was not to be paid, interest at the legal rate is presumed to begin from the time the money was loaned.3 See Harlan v. Ott, 1954, 126 Cal.App.2d 590, 272 P.2d 522, 525 ; Williams v. Kinsey, 1946, 74 Cal.App.2d 583, 169 P.2d 487, 499 ; New York Cloak & Suit House of Los Angeles v. Coston, 1928, 94 Cal.App. 94, 270 P. 695.

Bott is also entitled to interest on his wage claim if the amount awarded was a sum certain and vested in him on a particular day. Calif.Civ.Code § 3287(a) (West 1970) ;4 Union Sugar Co. v. Hollister Estate Co., 1935, 3 Cal.2d 740, 47 P.2d 273, 280 ; Robey & Co. v. City Title Ins. Co., 1968, 261 Cal.App.2d 517, 68 Cal.Rptr. 38, 43. AHC argues that neither the amount nor the time the amount was due is certain because these are precisely the issues that were litigated at the trial. AHC offered no evidence at the trial, hence we do not accept its contention that these issues were in dispute. In any event, this reasoning, if accepted, would emasculate the statute. It is tantamount to saying that any time this issue is litigated there can be no pre-judgment interest. That this was not the legislature's intent in enacting the statute is perspicuous. The fact that an obligor contests liability does not make the amount uncertain under the statute. Continental Bank v. Blethen, 1970, 7 Cal.App.3d 178, 86 Cal.Rptr. 485, 491; Rabinowitch v. California Western Gas Co., 1967, 257 Cal.App.2d 150, 65 Cal.Rptr. 1, 7.

Although both the amount and the time it is due must be certain or capable of being made certain by calculation, the crucial question is not how the damages are calculated but whether the debtor has enough information to enable him to compute them. Republic Indemnity Co. v. Maier Brewing Co., 1967, 249 Cal.App.2d 495, 57 Cal.Rptr. 670, 674. If the amount due is computable from fixed data, interest is recoverable even in an action for the reasonable value of services. Burns v. Renaker Co., 1932, 119 Cal.App. 578, 6 P.2d 967, 968.

In his first amended complaint Bott alleged that AHC owed him $25,000.00 for services rendered between April 1, 1964 and June 15, 1965. The jury found that he was entitled to $6,527.28 in wages for that period of time. The discrepancy in amounts is due to the uncertainty concerning how many salary payments were made during that period. Bott claimed he had not been paid at all during 1964 and 1965 ; however, in his income tax returns for those years he reported wages received from AHC. The jury was not called upon to calculate a disputed wage rate but to decide how many payments at the predetermined rate were not made.

Uncontested evidence revealed that Bott was entitled to a salary of $20,000.00 per annum prior to July 1, 1964 and $21,000.00 thereafter. The amount that was due was therefore calculable. He is therefore entitled to prejudgment interest at the legal rate from May 22, 1965.

Assuming arguendo that interest can be awarded, AHC asserts that it is solely within the court's discretion to do so, and where, as here, there has been no abuse of discretion, the failure to award pre-judgment interest cannot be set aside. We disagree. Section 1914, supra, provides on its face that interest is to be presumed. If AHC has not overcome this presumption, surely the district court cannot do so by an exercise of discretion. Under section 3287...

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