Douglas Aircraft Co. v. Cranston

• Decision Date: 02 October 1962
• Citation: 24 Cal.Rptr. 851,374 P.2d 819,58 Cal.2d 462
• Court: California Supreme Court
• Parties: , 374 P.2d 819, 98 A.L.R.2d 298, 46 Lab.Cas. P 50,639 DOUGLAS AIRCRAFT COMPANY, Inc., Plaintiff and Respondent, v. Alan CRANSTON, as State Controller, Defendant and Appellant. L. A. 26426

Page 851

24 Cal.Rptr. 851

58 Cal.2d 462, 374 P.2d 819, 98 A.L.R.2d 298,

46 Lab.Cas. P 50,639

DOUGLAS AIRCRAFT COMPANY, Inc., Plaintiff and Respondent, v. Alan CRANSTON, as State Controller, Defendant and Appellant.

L. A. 26426.

Oct. 2, 1962.

Stanley Mosk, Atty. Gen., John F. Hassler and Bonnie Lee Martin, Deputy Atty. Gen., for defendant and appellant.

Louis Lieber, Jr., Elmer J. Stone and William D. Craig, Santa Monica, for plaintiff and respondent,

TRAYNOR, Justice.

In 1959 the Legislature enacted the Uniform Disposition of Unclaimed Property Act. (Code Civ.Proc. §§ 1500-1527.) The act defines abandoned property (§§ 1502-1508) and requires that its holder shall report (§ 1510), and pay or deliver it to the State Controller (§ 1512). The statute of limitations is not a defense to such reporting and payment or delivery (§ 1515), and the act applies to property that was abandoned before it took effect (§ 1510, subd. (g)). It provides for notice to the owner by publication and otherwise (§§ 1510, subd (e), 1511). The owner may appear at any time and claim the property from the Controller after it has been delivered to him (§§ 1517- 1520). Delivery to the Controller is a defense to any action by the owner against the holder. (§ 1513.) The objectives of the act are to protect unknown owners by locating then and restoring their property to them and to give the state rather than the holders of unclaimed property the benefit of the use of it, most of which experience shows will never be claimed.

After the act became effective, Douglas Aircraft Company brought this action against the Controller for declaratory relief with respect to over $17,000 in unpaid wage claims for work done in California on which the statute of limitations had run before the effective date of the act. Douglas performs government and private contracts. In the past it has credited unclaimed wages arising out of its contracts with the United States to the United States, and the Controller makes no claim that such wages should be reported or paid to him. He contends, however, that Douglas is required to report and pay unclaimed wages arising out of work done on nongovernment contracts to the extent that such wages are ascertainable from the available records of Douglas (§ 1510, subd. (g)) whether or not the statute of limitations had run on the claims for such wages before the effective date of the act. The trial court held that Douglas could not constitutionally be required to pay wage claims to the Controller on which the statute of limitations had run before the effective date of the act. The Controller appeals.

Douglas contends that the California Constitution precludes the Legislature from abrogating the defense of the statute of limitations after the statute has run. (See Chambers v. Gallagher, 177 Cal. 704, 708-709, 171 P. 931; Chambers v. Gibson, 178 Cal. 416, 417, 173 P. 752.) It further contends that even if the generally applicable California rule were otherwise, the due process clauses of the United States and California Constitutions would preclude requiring it to report and pay wage claims on which the statute of limitations had run under the circumstances of this case. In this respect it asserts that owing to its reliance on the statute of limitations, it has not kept records that would enable it, except at unreasonable expense, to invoke the act's protection against double liability (§ 1513) and contends that to expose it to such liability would deny due process of law. (See Standard Oil Co. v. New Jersey, 341 U.S. 428, 442-443, 71 S.Ct. 822, 95 L.Ed. 1078; Western Union Tel. Co. v. Pennsylvania, 368 U.S. 71, 82 S.Ct. 199, 201, 7 L.Ed.2d 139.)

The Controller contends that the rule of Chambers v. Gallagher, 177 Cal. 704, 171 P. 931, that the defense of the statute of limitations cannot be abrogated after the statute has run should be limited to cases in which a prescriptive title has been acquired or the liability was created by statute. (See William Danzer Co. v. Gulf R. R., 268 U.S. 633, 637, 45 S.Ct. 612, 69 L.Ed. 1126.) With respect to contract claims he urges that we adopt the rule of the United States Supreme Court that the due process clause does not prohibit abrogating the defense of the statute of limitations after the statute has run. (See Campbell v. Holt, 115 U.S. 620, 628, 6 S.Ct. 209, 29 L.Ed. 483; Chase Securities Corp. v. Donaldson, 325 U.S. 304, 315-316, 65 S.Ct. 1137, 89 L.Ed. 1628.) He also contends that the act adequately protects Douglas from the risk of double liability and that there are no special circumstances in this case that would make the abrogation of the defense of the statute of limitations a denial of due process to Douglas.

We need not resolve these conflicting constitutional contentions unless it clearly appears that the act provides for the retroactive abrogation of the defense of the statute of limitations. Section 3 of the Code of Civil Procedure provides that 'No part of it is retroactive, unless expressly so declared.' (See also DiGenova v. State Board of Education, 57 A.C. 183, 188-189 18 Cal.Rptr. 369, 367 P.2d 865; Corning Hospital Dist. v. Superior Court, 57 A.C. 529, 535, 20 Cal.Rptr. 621, 370 P.2d 325.) The law governing changes in the statute of limitations is summarized in Evelyn, Inc. v. California Emp. Stab. Comm., 48 Cal.2d 588, 592, 311 P.2d 500, 503: 'The extension of the statutory period within which an action must be brought is generally held to be valid if made before the cause of action is barred. Weldon v. Rogers, 151 Cal. 432, 90 P. 1062. The party claiming to be adversely affected is deemed to suffer no injury where he was under an obligation to pay before the period was lengthened. This is on the theory that the legislation affects only the remedy and not a right. Mudd v. McColgan, 30 Cal.2d 463, 183 P.2d 10; Davis & McMillan v. Industrial Acc. Comm., 198 Cal. 631, 246 P. 1046, 46 A.L.R. 1095; 31 Cal.Jur.2d 434. An enlargement of the limitation period by the Legislature has been held to be proper in cases where the period had not run against a corporation for additional franchise taxes (Edison Calif. Stores, Inc. v. McColgan, 30 Cal.2d 472, 183 P.2d 16), against an individual for personal income taxes (Mudd v. McColgan, supra, 30 Cal.2d 463, 183 P.2d 10), and against a judgment debtor (Weldon v. Rogers, supra, 151 Cal. 432, 90 P. 1062). It has been held that unless the statute expressly provides to the contrary any such enlargement applies to matters pending but not already barred. Mudd v. McColgan, supra, 30 Cal.2d 463, 183 P.2d 10.'

These rules afford warning to potential defendants that until the statute of limitations has run it may be extended, whereas after it has run, they may rely upon it in conducting their affairs. The keeping of records, the maintenance of reserves, and the commitment of funds may all be affected by such reliance, particularly in a well-organized enterprise that seeks to operate efficiently. To defeat such reliance does more than deprive obligors of windfalls; it deprives them of the ability to plan intelligently with respect to stale and apparently abandoned claims. In view of these considerations, we believe that in enacting the Uniform Disposition of Unclaimed Property Act the Legislature would have expressed itself in unmistakable terms had it rejected the established rules governing the interpretation of statutes of limitations.

Section 1515 of the Code of Civil Procedure provides that 'The expiration of any period of time specified by statute or court, order, during which an action or proceeding may be commenced or enforced to obtain payment of a claim for money or recovery of property, shall not prevent the money or property from being presumed abandoned property, nor affect any duty to file a report required by this chapter or to pay or deliver abandoned property to the State Controller.' This section does not expressly provide that it shall be retroactive or apply to claims that were already barred when it was enacted. Accordingly, under section 3 of the code and the rules set forth in the Evelyn case it must be interpreted as applying only to claims on which the statute of limitations had not run on the effective date of the act. As to such claims, and as to claims that will arise in the future, however, it prevents the running of the statute applicable between the holder and the owner from barring the duty of the holder to report and pay to the Controller.

There is nothing in subdivisions (e) and (g) of section 1510 that compels giving section 1515 a different interpretation. Subdivision (e) provides: 'If the holder of property presumed abandoned under this chapter...