Huntoon v. Hurley

• Decision Date: 17 November 1955
• Citation: 137 Cal.App.2d 33,290 P.2d 14
• Court: California Court of Appeals Court of Appeals
• Parties: Donald K. HUNTOON, Plaintiff and Respondent, v. Oscar HURLEY, Defendant and Appellant. Civ. 21157. . Division 2, California

Page 14

290 P.2d 14

137 Cal.App.2d 33

Donald K. HUNTOON, Plaintiff and Respondent, v. Oscar HURLEY, Defendant and Appellant.

Civ. 21157.

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

Nov. 17, 1955.

Rehearing Denied Dec. 6, 1955.

Hearing Denied Jan. 5, 1956.

Clifford W. Twombly, Los Angeles, for appellant.

Spray, Gould & Bowers, Los Angeles, for respondent.

McCOMB, Acting Presiding Justice.

From a judgment in favor of plaintiff after trial before the court without a jury in an action for an accounting to determine the amount of salary due plaintiff from defendant, defendant appeals.

Facts: ¹ On September 19, 1951, plaintiff and defendant entered into a written agreement whereby defendant employed plaintiff as manager of his appliance department for a period of one year commencing on October 1, 1951. Under the terms of the agreement plaintiff was to receive 'a salary equal to 50% of the net profits resulting from the operations of the aforementioned appliance department' and 'that the net profits shall be determined by a firm of independent Certified Public Accountants, on the basis of generally accepted accounting principles and shall in part be made up of the following: Sales: All sales of appliances, frozen foods and freezer supplies, less any sales discounts and allowances including 'food bonds,' etc.' The agreement was terminated on September 13, 1952, by defendant.

Prior to plaintiff's employment and during the period with which we are concerned the books of defendant were kept under the supervision of certified public accountants. The employment agreement was prepared by one of those accountants and contained a list of the accounts to be used in determining plaintiff's earnings. In January, 1952, an accounting for the last quarter of 1951 was made pursuant to the agreement and was discussed by both parties with defendant's accountant and was approved.

In April of 1952, an accounting for the first quarter of the year was made showing that plaintiff was entitled to $5,616.38, and in payment of this amount he received a check for $500 and a note for $5,000.

On August 1, 1952, plaintiff filed a complaint (No. 602376, in the Superior Court of Los Angeles County) against defendant for money due on the promissory note. During the course of the next 10 months plaintiff repeatedly demanded an accounting so that the amount of his wages could be determined, but none was forthcoming. July 14, 1953, he filed an action for accounting (Pasadena No. 4562, in the Superior Court of Los Angeles County). It was stipulated between the parties (a) that the action on the note and the action for accounting should be consolidated for trial, (b) that defendant's contention that the written agreement had been modified should first be determined by the trial court, and (c) that if it was deemed feasible or necessary, that the court might appoint an independent auditor, each side to pay an equal share of the costs.

The trial court determined on November 9, 1953, against defendant's contention that the written agreement had been modified and ordered a referee to take an accounting pursuant to the terms of the original agreement. Thereafter the referee held a hearing with the attorneys for the parties at which it was 'decided upon between the parties that the referee would go to the place of business of Mr. Hurley (defendant) where the records were being kept and make an examination of the books to determine and start the accounting.' After making his examination the referee held a further hearing with the parties and their respective attorneys. The items of the account were reviewed and various stipulations were made. There is no record of either hearing.

The referee filed his report and defendant filed objections to it. The objections were heard by the court, and after allowing some and denying others, the report of the referee was modified and a judgment entered in accordance with the findings of fact and conclusions of law, by which it was found that defendant was indebted to plaintiff in the sum of $8,965.96.

Questions: First: Were there substantial findings of fact of the trial court which sustained the judgment?

Yes. There were these issues before the court: (1) whether or not the written contract of the parties had been modified by an executed oral agreement; (2) whether or not an accounting was necessary, and (3) the amount, if any, owing plaintiff for his services predicated upon the accounting.

Defendant does not question the sufficiency of the findings upon the first two issues. However, he contends that the findings are inconsistent in that in paragraph XVI of plaintiff's complaint it is alleged that defendant is obligated to pay or deliver to him a sum in excess of $14,784.25, and that paragraph II of the findings of fact finds that the allegations contained in paragraph XVI are true. This is the fact. However, defendant fails to note that the court specifically finds that 'Defendant is indebted to the Plaintiff in the sum of $8,965.96' from the 13th day of December, 1952.

The rule is settled that where the court, in addition to a general finding such as the one first mentioned above, makes a specific finding as to a particular fact, as the latter finding, supra, the latter controls in the case of an inconsistency. (Howard v. Howard, 128 Cal.App.2d 180, 186, 275 P.2d 88 (hearing denied by the Supreme Court).)

Other objections of defendant to the findings are: (a) That there are inconsistent findings. An examination of the record discloses that the alleged inconsistencies are on immaterial issues and therefore must be disregarded by this court as they do not affect the judgment. (See cases cited in 7 West's Calif.Dig. (1951) Appeal and Error, § 1071(5)d, p. 578.) (b) That certain findings are in the form of negatives pregnant. The questioned findings read, 'That none of the allegations contained in paragraphs I, II, III, IV, V * * * is true.' The finding was not in the form of a negative pregnant but was a specific finding of fact. The findings contained in Austin v. Harry E. Jones, Inc., 30 Cal.App.2d 362, 367, 86 P.2d 379, 382, read, "That all the allegations * * * are not true". Manifestly there is a vast difference between the two statements.

A negative pregnant is such a form of negative expression as may imply or carry with it an affirmative. (Jordan v. Jordan, 58 Cal.App.2d 371, 374, 135 P.2d 416.) The questioned findings in the present case do not fall within this rule.

Second: Was the judgment erroneous in that it referred only to the findings of fact and conclusions of law?

No. The record discloses that the judgment explicitly refers to the findings of fact and conclusions of law and 'interlocutory judgment of accounting' and 'the report of the referee on such accounting.' Hence it is evident that the trial court predicated its judgment on the findings of fact, conclusions of law and the report of the referee which was approved as modified.

Third: Was the report of the referee as modified prepared in accordance with law; does it reflect the facts and constitute an accounting?

Yes. The record discloses that the referee made an accounting pursuant to the agreement of the parties dated September 19, 1951, and in accordance with the construction placed upon the agreement by the parties themselves when they approved the accounting rendered for the period ending December 1, 1951.

Such procedure was proper. The rule is clearly stated in Sayre v. Western Bowl, 76 Cal.App.2d 793, 798, 174 P.2d 466, 468 (hearing denied by the Supreme Court), where Justice Kincaid, speaking for the court, accourately states the rule thus:

'The trial judge, in construing the terms of the contract between the parties and in applying the evidence thereto, was justified in invoking the well-settled rule that 'a construction given the contract by the acts and conduct of the parties with knowledge of its terms, before any controversy has arisen as to its meaning, is entitled to great weight and will, when reasonable, be adopted and enforced by the court.' Woodbine v. Van Horn, 29 Cal.2d 95, 103, 173 P.2d 17, 22.'

The referee was not appointed to make an accounting pursuant to the previous stipulation of the parties, but the reference was made by the trial court pursuant to his general authority to refer accounting matters to a referee. Thus there is no merit in defendant's contention that the accounting is subject to the provisions and rules set forth in the Business and Professions Code. The record discloses that the referee, Mr. Saulque, after his appointment held a hearing at which it was agreed by the parties that he would go to defendant's place of business and examine defendant's books to 'start the accounting;' and that he completed his examination by February 16, 1954; that the books examined by the referee were defendant's books, kept by defendant's accountant and were in the custody of defendant, and that the books were examined more than a year after they had been closed.

Defendan...