Kugler v. Northwest Aviation, Inc.

• Decision Date: 05 July 1985
• Docket Number: No. 14914,14914
• Parties: John B. KUGLER, Plaintiff-Appellant, v. NORTHWEST AVIATION, INC., Defendant-Respondent.
• Court: Idaho Court of Appeals

Page 922

702 P.2d 922

108 Idaho 884

John B. KUGLER, Plaintiff-Appellant, v. NORTHWEST AVIATION, INC., Defendant-Respondent.

No. 14914.

Court of Appeals of Idaho.

July 5, 1985.

John B. Kugler, pro se.

Clark Gasser (argued) and Steven Richert (Green, Service, Gasser & Kerl) Pocatello, for defendant-respondent.

BURNETT, Judge.

This is an appeal by an attorney from a judgment entered in his suit to collect fees from a former client. The district court held that part of the attorney's claim was barred under a statute of limitation and that the remainder was offset by a debt owed to the client. On appeal the attorney has raised a host of issues. Two of them are dispositive: (1) Was the statute of limitation properly pleaded and correctly applied? (2) Does the evidence support the district court's findings of fact? As explained below, we vacate the judgment and remand the case.

Prefatorily, we deal with a question raised concerning appellate jurisdiction. The attorney's notice of appeal, filed on January 18, 1983, recites that the appeal is taken from an amended "memorandum decision" dated November 28, 1982. It fails to mention the judgment entered in the meantime. A district judge's memorandum decision is not appealable unless it disposes of an appeal from the magistrate division. When a district court acts as a trial court, an appeal may be taken only from a final judgment or as otherwise provided in Idaho Appellate Rules 11 and 12.

However, our Supreme Court has stated:

Under I.A.R. 21, timely filing of the notice of appeal is the only jurisdictional requirement. All other steps in the appellate process are not jurisdictional, and failure to timely take these steps is only grounds for imposing sanctions where, because of delay and potential prejudice, the court deems them appropriate.

Neal v. Harris, 100 Idaho 348, 350, 597 P.2d 234, 236 (1979). The notice of appeal in this case was timely in relation to the judgment. It simply contained an improper designation of the "judgment, order or decree appealed from." I.A.R. 17(e). Accordingly, we hold the defect to be nonjurisdictional.

We now turn to the merits of the case. The attorney, John B. Kugler, served as counsel for Northwest Aviation, Inc., as well as other enterprises owned or controlled by the late Leslie L. Mitchell, a Pocatello businessman. The attorney-client relationship began in 1967 when Mitchell hired Kugler to represent a business known as Mitchell Construction. In 1974 Kugler was engaged by Mitchell to serve as counsel for Northwest Aviation, the defendant in this case. In 1978 Northwest became embroiled in a dispute with an organization known as the Gate City Flyers. Because Kugler was an officer of that organization, he agreed to terminate his services as counsel for Northwest Aviation. He sent Northwest a bill for legal services rendered since 1974. In 1979 he submitted a supplemental statement, listing additional expenses. No payment was made. Kugler sued in 1981.

Northwest initially answered with a general denial. However, one week before trial Northwest sought leave to amend its answer by asserting a defense based upon I.C. § 5-217, which requires suits on unwritten contracts to be filed within four years. At trial, over Kugler's objection, leave to amend was granted.

Kugler now contends that the statute of limitation, as an affirmative defense, should have been deemed waived because it was not asserted in the first responsive pleading. Of course, if an affirmative defense is raised for the first time at trial, and if it unfairly prejudices the opposing party, the amendment should not be allowed. Keller Lorenz Co. v. Insurance Associates Corp., 98 Idaho 678, 570 P.2d 1366 (1977). However, pretrial motions for leave to amend pleadings are left to the sound discretion of trial judges. Fajen v. Powlus, 98 Idaho 246, 561 P.2d 388 (1977). Amendments to pleadings should be freely allowed when justice so requires. I.R.C.P. 15(a). The record in this case fails to show surprise concerning the statute of limitation nor any prejudice other than the potential impact of the statute itself. We hold that the trial court's ruling was not an abuse of discretion.

Kugler further asserts that the trial court improperly applied the statute by barring recovery for any services before 1977. Kugler concedes that his contract with the client was unwritten. It would appear, on the surface, to invoke the four-year limitation period. However, Kugler invites our attention to special rules governing the application of statutes of limitation to accounts stated and open accounts.

Clearly, the theory of an account stated is inapposite here. An account stated requires a writing, coupled with mutual consent or acquiescence, showing the balance owed by one party to the other. It is, in essence, a new contract distinct from any original arrangement. The writing ordinarily indicates that it is mutually intended to be a final settlement to date. O'Harrow v. Salmon River Uranium Development, Inc., 84 Idaho 427, 373 P.2d 336 (1962); Davidson Grocery Co. v. Johnston, 24 Idaho 336, 133 P. 929 (1913). No such writing appears in the record here.

On the other hand, an open account is simply an account with a balance which has not been ascertained. The account is kept open in anticipation of future transactions. Where an open account exists the parties are deemed to intend that individual items on the account will not be viewed separately but that the account will be considered as a connected series of transactions. See generally 1 AM.JUR.2d Accounts and Accounting § 4 (1962). When an open account is unilateral--that is, with all charges made by one party against the other--the majority rule appears to be that a statute of limitation will run from the date of each item. Id. at § 15. But if an open account is mutual--with both parties charging each other--the courts have treated the statute of limitation as running from the date the last item proven by either party. Id. at § 16.

Employment relationships may give rise to mutual open accounts. Thus in McCarthy v. Paris, 46 Idaho 165, 267 P. 232 (1928), our Supreme Court held that where a farmhand was paid at irregular intervals and for items furnished by the employer, a mutual account existed. The farmhand, who sued for unpaid wages, was allowed to recover for work extending beyond the period of limitation.

In the present case, the district court did not address the questions whether an open account existed and, if so, whether it was unilateral or mutual. We believe such a determination is necessary to proper application of I.C. § 5-217. When a trial court has failed to make findings of fact and conclusions of law on a material issue, "[t]he absence of [such] findings and conclusions may be disregarded by the appellate court only where the record is clear, and yields an obvious answer to the relevant question." Pope v. Intermountain Gas Co., 103 Idaho 217, 225, 646 P.2d 988, 996 (1982). (Emphasis original.) Otherwise, a remand is required. Id.

Our examination of the record does not disclose an obvious answer to the open account questions. The testimony is conflicting as...