Martindell v. Bodrero

• Court: California Court of Appeals
• Writing for the Court: ROTH
• Citation: 256 Cal.App.2d 56,63 Cal.Rptr. 774
• Parties: Joseph E. MARTINDELL and Mary Martindell, Plaintiffs and Respondents, v. Llewellyn G. BODRERO, Darrell D. Pearson, Horace W. Sant, Walter H. Karnes and Boyd G. Jensen, Defendants and Appellants. Civ. 30448.
• Decision Date: 16 November 1967

Page 774

63 Cal.Rptr. 774 256 Cal.App.2d 56 Joseph E. MARTINDELL and Mary Martindell, Plaintiffs and Respondents,
v.
Llewellyn G. BODRERO, Darrell D. Pearson, Horace W. Sant, Walter H. Karnes and Boyd G. Jensen, Defendants and Appellants. Civ. 30448. Court of Appeal, Second District, Division 2, California. Nov. 16, 1967.

Page 775

[256 Cal.App.2d 58] Pray, Price, Williams & Deatherage, Long Beach, for appellants.

Kindel & Anderson, by Malcolm G. Smith, Los Angeles, for respondents.

ROTH, Presiding Justice.

Action upon a promissory note.

Appellants, all individuals, together with respondent Martindell, were directors and minority shareholders of a corporation known as El Bodrero Hotel, organized to build and operate a motel.

The corporation encountered financial difficulties in completing construction of the motel.

At a board meeting on February 15, 1958, appellants Bodrero and Sant each agreed to loan $6,000 to the corporation in return for its note. Respondent for himself and wife also agreed to loan $6,000, but unlike Bodrero and Sant, he stated that he would make it only in exchange for a note signed individually by the directors as makers. The loan was made on that basis. In addition, respondents' note was guaranteed by Bodrero, the President of the corporation. Respondents' note was due in May, 1958.

To enable the corporation to qualify for a Small Business Administration loan, the corporation made it appear that the note was its obligation; that there were no guarantors on the note and that interest had been reduced to six per cent. Martindell was in Alaska and had nothing to do with the arrangement for the loan. Martindell, as one of the directors of the corporation, and his wife, were induced, however, to sign a [256 Cal.App.2d 59] stand-by agreement for this loan by assurances, oral and written, concurrently made by the various individual makers and the guarantor of his note that the interest rate would remain ten per cent.

Page 776

In December 1960, respondents attempted to collect on the note. Appellants Bodrero and Pearson assured him it would be paid by the makers at the rate of $200 a month. A board meeting was convened and a resolution was adopted to pay respondents' note at the rate of $200 a month, beginning January 1961. In January 1961, a corporation check for $200 was sent to respondents. In 1962, at a meeting of the board, it was decided that no further payments could be made at that time. Respondents, on May 15, 1963, sued all the individual makers, appellants herein, and also sued appellant Bodrero on his guarantee.

Section 337(1) of the Code of Civil Procedure bars the action since it was not brought within the four year limitations period, unless the part payment made as above indicated, tolls the statute. The trial court found upon ample evidence that the note was the individual obligation of each of the appellants; and that the payment of $200 was made by the corporation with the knowledge, authorization, participation and consent of appellants and therefore tolled the statute of limitations as to all the makers.

Appellants appeal from the judgment ordering them to pay the $6,000 due on the note, together with ten per cent interest from February 15, 1958 and attorneys' fees, and from the minute order of November 8, 1965, modifying a pretrial order.

As a general rule, part payment of a debt or obligation is sufficient to extend the bar of the statute. The theory on which this is based is that the payment is an acknowledgment of the existence of the indebtedness which raises an implied promise to continue the obligation and to pay the balance. (Note, 29 So.Cal.L.Rev. 370, 374 (1956).)

Section 360 of the Code of Civil Procedure provides:

'* * * that any payment on account of principal or interest due on a promissory note made by the party to be charged shall be deemed a sufficient acknowledgment or promise of a continuing contract to stop, from time to time as any such payment is made, the running of the time within which an action may be commenced upon the principal sum or upon any installment of principal or interest due on such note, and to start the running of a new period of time * * *.'

The precise question at bench is whether the $200 payment [256 Cal.App.2d 60] made by the corporation may be considered to have been made by 'the party to be charged.'

Bullock v. Simon, 132 Cal.App.2d Supp. 881, 281 P.2d 916, defines to a limited extent the connection between the payment and the party to be charged therewith. In Bullock, the creditor gave certain 'credits' on the obligation of his debtor. These 'credits' were made without the consent of the debtor and with no notice to the debtor of the fact that such 'credits' were given. The court found that there was no payment on principal or...