Holmes v. Potts

• Decision Date: 25 October 1957
• Docket Number: No. 9378,9378
• Citation: 132 Mont. 477,319 P.2d 232
• Parties: Doris B. HOLMES, Plaintiff and Respondent, v. Doyle S. POTTS, Defendant and Appellant.
• Court: Montana Supreme Court

Page 232

319 P.2d 232

132 Mont. 477

Doris B. HOLMES, Plaintiff and Respondent, v. Doyle S. POTTS, Defendant and Appellant.

No. 9378.

Supreme Court of Montana.

Oct. 25, 1957.

Dissenting Opinion Nov. 25, 1957.

Rehearing Denied Dec. 18, 1957.

Burke & Hibbs, Billings, for appellant.

Rexford F. Hibbs, Billings, argued orally for appellant.

Lamb & Galles, Billings, for respondent.

Franklin A. Lamb, Billings, argued orally for respondent.

CASTLES, Justice.

This is an appeal from a judgment on a verdict, a new trial having been denied. Hereafter the parties will be referred to as they appeared in the trial court.

The judgment was for the plaintiff in the amount of $6,000, with interest from February 15, 1949. The action was filed upon an account allegedly stated on that date. The plaintiff's complaint recited that the defendant was indebted to her for services which she later testified were rendered as part time bookkeeper for defendant over some seven years, followed by more than two years of full time secretarial assistance in defendant's office, there being no dispute as to this latter period.

Plaintiff's complaint also recited that a wage account was arrived at, and then stated, between plaintiff and defendant on the above date; that by this calculation defendant owed plaintiff $8,400 in back wages as of the close of the prior year; that up to the time plaintiff filed her action, defendant had made only two payments on this past due wage account, $1,000 in June 1950, thirteen months after the account allegedly was stated, and an additional $1,400 the following March, a month after plaintiff's employment ended and two months before plaintiff filed suit. Plaintiff treated these payments, and the time the alleged statement of the account had been in defendant's possession, as an admission that the account had been stated. We shall refer to these two points at the conclusion of this opinion.

Defense was a denial of an account stated. The answer admitted plaintiff's employment, but alleged that any back wages still owing were part of a running account between the parties, with offsetting credits owing to defendant, leaving a net total balance upon a total reckoning of all accounts between plaintiff and defendant of only $495.35 still due. This the defendant agreed to pay. It is observed that the answer did more than just generally deny an account stated. It affirmatively pleads a running account. The reply in turn denies the running account.

Defendant categorically denied that he had ever agreed to state any account with plaintiff. At trial defendant unsuccessfully offered testimony to prove that the writing plaintiff introduced as the prepared stated wage account was prepared for an entirely different purpose. It was also offered to prove that the discrepancies implied by defendant had existed between plaintiff's part time pay and employment, and the total balance plaintiff claimed still due her, which facts made it improbable that defendant would have stated any account with plaintiff on plaintiff's figures. The trial court treated the defendant's answer as only a plea of general denial, and the court refused to admit this testimony. Whether this was error is the problem of this appeal.

As to how the account had been stated, plaintiff testified that she met defendant at his office the evening of February 15, 1949, and discussed her wages paid and unpaid from the start of her employment in June 1941 through December 1948, during which time, except late in 1948, no wage payments to her had been made; that plaintiff made a work sheet and then gave this work sheet to defendant, who wrote in the amounts to be set down as still owing for the years 1943 through 1948; that plaintiff thereupon added the credits for all amounts paid, after which defendant subtracted these credits and added up the amount of the wages still due, the total coming to $8,400; and, finally, the plaintiff then took all the figures, transcribed them to another sheet of paper, destroyed the work sheet, gave the transcribed original to defendant, and kept the copy.

Defendant's testimony confirmed that he was present on February 15, 1949, as plaintiff alleged. However defendant insisted he was not present to state a wage account with plaintiff, but to demand that plaintiff complete, that night and without further delay, information for an audit required about defendant's business and needed the following day under a deadline in litigation. It is assumed this litigation did not involve plaintiff, but what it did involve does not appear. Defendant denied all details of plaintiff's testimony, which by plaintiff's interpretation supported her claim that the wage account had been stated.

The record shows that the original copy of the transcribed work sheet was produced at the trial by defendant's present attorney from this attorney's office files. It was admitted without objection, as plaintiff's exhibit No. 1. Plaintiff's only other exhibit was the letter quoted below and the envelope in which it was received. Plaintiff was her only witness.

The work sheet figures for the years 1943 through 1948 appear again in the trial record as part of the audit report introduced in entirety as defendant's exhibit C, and purporting to be the complete audit defendant testified was being prepared for the litigation involving defendant, out of which the deadline that prompted the meeting with plaintiff had come.

These work sheet figures indicate an annual wage of $1,200 for the years 1943 through 1946; $1,800 for 1947; and $2,400 for 1948; a total of $9,000 for the six year period; on which $600 was shown as paid in three checks between July and November 1948. With the exception of the $600 paid after full time employment began, these figures showed no wage payments whatsoever received by plaintiff between March 31, 1942, and December 31, 1948. Standing alone this is most unusual.

Defendant contended that plaintiff's true part time wages were $40 monthly, and her part time services were as bookkeeper. The latter was not controverted. Defendant also insisted that he had never seen plaintiff's wage figures contained in the audit report until they were shown to him in his present attorney's office the day before the trial for plaintiff's wages began, after plaintiff demanded they be produced at the trial.

Plaintiff testified that on several occasions following the date she assigned for stating the account, she demanded her back pay, always to be put off, except for the $1,000 and the $1,400 above noted, the $1,400 being mailed by defendant with a letter reading: 'Enclosed find Bank Draft for $1,400.00. I haven't got settled with Bill. Try and have some more a little later. /s/ Doyle'.

To the evidence directed to these points there was little objection by counsel for either party. However, thereafter when the defendant attempted to attack the entire account by offering to prove the conditions of plaintiff's employment, her hours of work, the reasons her employment was increased to full time, the causes prompting preparation of the work sheet wage figures as a part of defendant's business audit report, and the improbability that defendant would have stated an account upon the figures plaintiff alleged, plaintiff's counsel repeatedly objected that such proof could be received only upon a special plea of fraud, error or mistake. Plaintiff's objections were regularly sustained.

What has been summarized from the testimony of the parties is sufficient to show that plaintiff and the court took the position that once an account had been stated it could not be opened for fraud, or surcharged with items improperly omitted, or falsified for items improperly included, unless by way of confession and avoidance under a special plea of fraud, gross mistake or material error. This position is sound but, as will be shown, it is irrevelant to a defense which entirely denies that any account whatsoever was stated.

What has been summarized likewise sufficiently shows that the defendant's position was an attack by a plea in bar on the ground that no account had ever been stated, so there was nothing upon which a fraud, mistake or error could be surcharged, and that under such circumstances defendant required no special pleading and could impeach the account at large and in its entirety by any proof relevant under a general denial, including evidence that the circumstances were such as to render it completely improbable defendant would have agreed to state the account as alleged. This likewise is sound.

So far as we can determine, this point has never been squarely decided in this state. Counsel for both parties have ably briefed the law and argued their contentions. Among the cases counsel cite, two actions on accounts stated should be mentioned. Each involves alleged frauds perpetrated on a corporation by its officers. In each a general denial was interposed but in each case the defense was an attempt to surcharge for fraud rather than to impeach at large. In both cases no question was raised that an account had not been stated, and in neither case was there offer of proof of improbability.

The first of these cases, one on which plaintiff lays great stress, is Mayger v. St. Louis Mining & Milling Co., 68 Mont. 492, 219 P. 1102, 1103. In this action the defendant corporation answered a plea of account stated with a general denial. The litigation continued over several years and evidently involved an interfamily dispute. A later amended answer specially pleading fraud was refused as tardy. Defense was grounded on testimony inferring collusion between the corporate officers and lack of corporate authority to state the account alleged. The decision holds that corporate authority existed and that no mala fides were apparent. Speaking for a full court, in language repeated by the trial judge while stating his position in the present case, Chief Justice Callaway in...