Groom v. Holm

• Decision Date: 17 December 1959
• Court: California Court of Appeals Court of Appeals
• Parties: W. D. GROOM, Plaintiff and Appellant, v. Fred HOLM, Holm Solbeck Lumber Company, Hold Timber Industries, et al., Defendants and Respondents. Civ. 18396.

Page 410

1 Cal.Rptr. 410

176 Cal.App.2d 310

W. D. GROOM, Plaintiff and Appellant, v. Fred HOLM, Holm Solbeck Lumber Company, Hold Timber Industries, et al., Defendants and Respondents.

Civ. 18396.

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

Dec. 17, 1959.

Robert L. Bostick, Oakland, for appellant.

William Steinberg, Abraham Berry, San Francisco, for respondents.

TOBRINER, Justice.

Appellant prosecutes this appeal from an adverse decision in which the court found any debt of respondents owing to appellant to be barred by the statute of limitations and held respondents not to be indebted to appellant within the last four years upon an 'account stated in writing,' upon a 'mutual, open and current account stated in writing,' or upon an 'open book account stated in writing.' The court declared that within the four years prior to the filing of the complaint appellant had not demanded to respondents any sum upon an open, current and mutual account in writing.

The major issue in this appear turns on whether or not appellant proved a mutual, open and current account. Appellant urges as his sole contention that 'the course of dealings between the parties gave rise to a mutual open and current account'; hence, we do not discuss the pleadings which differently state the claim. A subsidiary issue involves the effect of testimony that appellant agreed to haul respondents' timber for less than the established Public Utilities Commission rates.

The facts fall into three categories: the nature of the oral agreement for hauling charges entered into by the parties; the status of the charges of trucking proffered by appellant trucker to respondents; and the effect of the so-called 'advances' of respondent shipper.

The parties entered into an oral lumber-hauling agreement in March, 1953, but the evidence conflicts as to whether appellant agreed to charge less than Public Utilities Commission rates. When appellant transported lumber from respondents' mill, appellant, or his drivers, received a shipping tag from the mill which indicated the amount of the load and its destination. These shipping tags were made out in triplicate, the mill kept one copy; the customer, the second copy; appellant, the third copy. Subsequent to delivery, appellant computed the hauling charge on his copy and submitted it to respondents twice a month.

Whether or not the charges on the shipping tags indicated the agreed price remains in dispute between the parties. Respondent's office manager, Mrs. Solbeck, testified that she placed the figures on the tags for the sole purpose of paying the Public Utilities Commission taxes; that with appellant's help she computed the amounts which appellant was to receive. In any event these amounts fell below the Public Utilities Commission rates; a number of the tags showed one figure on the front and another on the back, generally lower, which was the amount respondents actually paid. Moreover, the figures on the back of these tags were computed on so much per 1,000 feet of lumber. Such a practice violates Public Utilities Commission rules.

The factual background of the claimed advances begins in March, 1953, when respondents extended $850 to appellant so that he could get his truck repaired and commence hauling; during the subsequent period from March, 1953, to December, 1954, appellant constantly obtained advances from respondent. Fred Holm testified: '* * * Mr. Groom could not wait until payday on the first or the fifteenth. And he was constantly after Mrs. Solbeck for draws and advances between paydays. And if he drew $5,000 on the 10th day of September when * * * [Mrs. Solbeck] settled with him on the 15th day, she would pay him in full for what we owed him and take all draws into consideration. And I also find out in consulting with our office that Mr. Groom was constantly overdrawn, constantly.' Mrs. Solbeck stated that such advances or draws were not loans to appellant, but payments to offset the hauling charges.

In addition to the shipping tags, appellant sometimes presented statements to respondents which were paid 'on his regular rate.' Appellant claims that this course of dealings resulted in respondents' becoming indebted to appellant for the year 1953 in the amount of $4,118.12 and for the year 1954 in the amount of $25,992.17. Mrs. Solbeck categorically denies any such indebtedness.

Since plaintiff filed his complaint on February 26, 1957, and since the parties entered into the agreement in March, 1953, which was performed from that date until December, 1954, the principal issue which the trial court faced was the application of the statute of limitations. After trial without a jury, the court found that it was not true that within the last four years respondents became indebted to appellant upon an open, current and mutual account in writing; that any claim of appellant against respondents was barred by the two-year statute of limitations under section 339, subdivision 1, of the Code of Civil Procedure.

To escape the statutory bar upon an oral agreement and to find refuge in the four year provision for a mutual open and current account, appellant must prove the account remained open. Since the parties 'struck a balance' here on a bimonthly basis, the 'open' account terminated.

The authorities clearly call for a mutual account which is open and current. The striking of a balance by the parties closes the open account, transforming it into an account stated. The early California case of Norton v. Larco, 1866, 30 Cal. 126, puts the matter succinctly: 'Where there are demands on each side, the striking of a balance converts the set-off into payment (Ashby v. James, 11 Mees. and Wlsby, 542,) and from the time the balance is ascertained by the parties and is admitted to be due from the one to the other, the account is at an end, and the ascertained balance is immediately subjected to the operation of the statute, as an original and separate demand. (Angell on Lim., Chap. 14, sec. 8.)' At page 130.

The encyclopedias uniformly impose the same requirement; 1 Am.Jur., Accounts and Accounting, section 4, page 268, sets out a typical statement: 'Until a balance is struck, a mutual account is open and current, but parties having mutual dealings may, at the option of either party, terminate the mutuality at any time, either by an actual ascertainment of the balance and a settlement thereof, by a statement of account by either party for the purpose of terminating it, or by any act plainly showing to the other party that he means no longer to deal that way.' See also 1 Cal.Jur.2d Accounts and Accounting, section 8, page 322.

The trial court's finding that defendants were not 'indebted to the plaintiff * * * upon a mutual, open and current account' impliedly held that the account was not open; the...