Ingalls v. INGALLS IRON WORKS COMPANY

• Decision Date: 22 September 1958
• Docket Number: No. 16841.,16841.
• Citation: 258 F.2d 750
• Parties: Ellen Gregg INGALLS, Appellant, v. INGALLS IRON WORKS COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

258 F.2d 750 (1958)

Ellen Gregg INGALLS, Appellant, v. INGALLS IRON WORKS COMPANY, Appellee.

No. 16841.

United States Court of Appeals Fifth Circuit.

July 23, 1958.

As Modified on Denial of Rehearing September 22, 1958.

J. A. Simpson, Reid B. Barnes, Birmingham, Ala., Lange, Simpson, Robinson & Somerville, Birmingham, Ala., of counsel, for appellant.

Charles W. Greer, Birmingham, Ala., for appellee.

Before RIVES, JONES and WISDOM, Circuit Judges.

RIVES, Circuit Judge.

This appeal is from a judgment for the plaintiff in an action on an account stated. The close but pivotal question is whether the evidence was sufficient to establish an account stated, or whether the district court erred in not granting the defendant's motion for a directed verdict. The district court was of the opinion that the evidence presented a jury question on the issue of whether the account was stated.

The facts are fully stated and many of the Alabama decisions reviewed in the able opinion of the district court, reported as Ingalls Iron Works Company v. Ingalls, N.D.Ala.1957, 152 F.Supp. 523. After careful consideration, however, we find ourselves in disagreement with the conclusion there reached.

The question of account stated or open account is not a mere matter of procedure or of different forms of action, but is also a substantive question as to different kinds of claims. In Alabama, actions upon a stated account must be commenced within six years,¹ while the limitation as to open accounts is only three years.² The plaintiff has the burden of proving each debit item of an open account,³ while, on a stated account, he need prove only the statement of the balance due⁴ and the defendant has the burden of impeaching any item by proof limited to fraud, mistake, or lack of consideration.⁵ Truly, an account stated is "a new cause of action with a new term of limitation," R. H. Stearns Co. v. United States, 1934, 291 U.S. 54, 65, 54 S.Ct. 325, 329, 78 L.Ed. 647.

A stated account has been best described, we think, by Mr. Justice, afterward Chief Justice, Gardner speaking for the Alabama Supreme Court in his collection of the pertinent Alabama cases in Walker v. Trotter Brothers, 192 Ala. 19, 68 So. 345, 346:

"`To make an "account stated," there must be a mutual agreement between the parties,\' as to the allowance of their respective claims, and to establish such an account there must be proof of `assent to the account as rendered. To maintain the action as averred in the complaint, the plaintiff must prove an account stated; that, and nothing else, will support his allegations. "An account stated is an account balanced and rendered, with an assent to the balance, expressed or implied, so that the demand is essentially the same as if a promissory note had been given for the balance." Loventhal v. Morris, 103 Ala. 332, 15 So. 672.\' Moore v. Holdoway, 138 Ala. 448, 35 So. 453.

"`In order to create a stated account, there must not only be a meeting of the minds as to correctness of the statement, but there must be a promise by the debtor, expressed or implied, for the payment of same. * * * The mere admission that the items of an account are correctly stated is not sufficient, unless it appears that the debtor expressly or impliedly agreed to pay it. * * * It is true that, if one renders another an account, which he promises to pay or which he retains without objection, it becomes a stated account, because of an express promise to pay in the first instance, or of an implied promise in the second, arising out of the retention of same without objection; but the mere admission of the correctness of the items of an account, with a denial of liability, would not make it an account stated. In other words, in order to render one liable as upon an account stated, he must not only admit its correctness, but must expressly or impliedly admit his liability.\' Moore v. Maxwell, 155 Ala. 299, 46 So. 755."

The plaintiff claimed that the account sued on became stated because of a communication signed by the defendant and forwarded to Messrs. Ernst and Ernst, accountants for the plaintiff, verifying the balance of the account as of close of business December 31, 1951. The carefully written opinion of the district court states the facts so fully as to relieve us from going further into detail.

The district court found the case nearest in point to be Sinclair Refining Co. v. Robertson, 32 Ala.App. 212, 23 So.2d 869, 871; Id., 247 Ala. 260, 23 So.2d 872, 873. The question in that case was whether the plaintiff, not the defendant, was entitled to a directed verdict. The jury had returned a verdict for the plaintiff in an action upon a stated account and the trial court had granted the defendant's motion for a new trial on the ground that the verdict was contrary to the great weight of the evidence.

The account was for fuel oil, and the defense was that the fuel oil was defective. The plaintiff sought to preclude that defense by suing upon a stated account, and it insisted that it was entitled to a directed verdict (affirmative charge under Alabama practice) upon the theory that the account had become stated. The acknowledgment of the account had been sent to the plaintiff itself rather than to its accountants, but had stamped across its face the statement: "This is not a request for payment." The actual holding of the Alabama Courts was that the jury could "infer all this statement was (was) a bookkeeping matter to balance accounts and no acknowledgment of correctness otherwise," (23 So.2d at page 873) and, hence, that the plaintiff was not entitled to a directed verdict. It by no means follows that the defendant was not so entitled. Indeed, to the extent of the actual holding, the decision tends in the defendant's favor. The question was not presented as to whether the inference held to be reasonable was the only reasonable inference that could be drawn from the evidence. That question is presented in this case, where we are called upon to decide whether the defendant was entitled to a directed verdict. We think the Supreme Court of Missouri came closer to deciding that question when it held that a defendant, under a similar factual situation, was entitled to a judgment on the pleadings. Cammann v. Edward, 1936, 340 Mo. 1, 100 S.W.2d 846, 849. We may observe further that here the facts are more favorable to the defendant than they were in either the Alabama case or the Missouri case, just mentioned, for in each of those cases it is apparent that the usual business practice of presenting periodic statements prevailed.

Where the agreement is that the account should remain open for future dealings between the parties, and where no periodic statements are rendered or times of adjustment agreed on, a balance must be struck under such circumstances as will constitute a final adjustment, a closing of the account up to that time and a promise, express or implied, to pay that balance and to convert it into a different kind of claim.

Plainly, we think, that did not occur in the setting of the dealings between these parties. Mrs. Ingalls was requested by the Company merely to advise its accountants, Messrs. Ernst and Ernst "whether or not this statement is correct." That request was accompanied by the assurance, "This is not a dun but simply a request for...