Stockton Theatres, Inc. v. Palermo

• Decision Date: 02 March 1961
• Citation: 11 Cal.Rptr. 580,55 Cal.2d 439,360 P.2d 76
• Court: California Supreme Court
• Parties: , 360 P.2d 76 STOCKTON THEATRES, INC. (a Corporation), Appellant, v. Emil PALERMO et al., Respondents. Sac. 7100.

Page 580

11 Cal.Rptr. 580

55 Cal.2d 439, 360 P.2d 76

STOCKTON THEATRES, INC. (a Corporation), Appellant, v. Emil PALERMO et al., Respondents.

Sac. 7100.

Supreme Court of California, In Bank.

March 2, 1961.

Freed & Freed, Eli Freed and Kurt W. Melchior, San Francisco, for appellant.

Forrest E. Macomber, in pro. per., Gordon J. Aulik and Smith & Zeller, Stockton, for respondents.

PETERS, Justice.

Stockton Theatres, Inc., appeals from two orders made after judgment, one entered on January 20, 1959, taxing an item of costs as effective on that date, and the other entered on April 30, 1959, which, in legal effect, overruled plaintiff's motion that such item of costs be allowed as of December 17, 1954, with interest from that date.

This litigation has been before the appellate courts on at least seven prior occasions. ¹ The basic action was brought by plaintiff to secure a restitution of profits. The plaintiff obtained a judgment in 1949. Both sides appealed. The appellate court materially increased the amount of the judgment and expressly ordered that 'the appellant theatre company to recover costs on appeal.' Stockton Theatres, Inc. v. Palermo, 121 Cal.App.2d 616, 632, 264 P.2d 74, 85. The plaintiff, after the issuance of the remittitur, filed in the trial court its memorandum of costs on appeal. Several of the items totaled $1,097.37. In addition, an item of $6,980.49 was listed, it being the admitted cost to the plaintiff of a surety bond given to preserve a certain attachment on appeal. The defendants challenged this last item. The trial court, on December 17, 1954, disallowed it, but allowed as costs the items totaling $1,097.37. The trial court disallowed the amount of the bond premium as costs because it ruled that section 1035 of the Code of Civil Procedure ² was not applicable to costs on appeal.

The defendants did not appeal from the allowance of $1,097.37, and that portion of the award has long since become final. The plaintiff appealed from the order disallowing the $6,980.49. The plaintiff was successful on that appeal. This court held that section 1035, supra, did provide for bond premiums on appeal to be included in the costs when such premiums were reasonably 'necessary' to preserve rights on appeal. The actual order of this court was that the order was 'reversed and the trial court directed to determine the necessity for the bond required to preserve the attachment pending appeal, and, if it is determined that such bond was necessary, allow the amount of the premium paid therefor as an item of the costs on appeal to which plaintiff is entitled.' 47 Cal.2d 469, at page 478, 304 P.2d 7, at page 12, supra.

This, it will be noted, was a reversal in the legal sense. Up to this point it had been determined that such bond premiums were recoverable as a cost on appeal, but only when such expenditure was 'necessary.' There had as yet been no hearing on the necessity for such bond. Neither party had presented any evidence on that issue.

After the reversal, the trial court, as directed, held a hearing to determine whether the expenditure for the bond was 'necessary.' Both parties offered evidence on the issue. The trial court found that the expenditure was 'unnecessary,' and on April 12, 1957, entered its order denying the allowance of this item as a cost on appeal. Plaintiff again appealed, and again was successful. The majority of this court held that the evidence produced at the hearing demonstrated 'as a matter of law' that the challenged expenditure was 'necessary.' The last paragraph of the majority opinion reads as follows:

'Having concluded as a matter of law that the record shows that a bond was necessary to preserve the attachment within the meaning of section 1035 of the Code of Civil Procedure, the order is reversed with directions to the trial court to allow the premiums on said bond as a cost on appeal.' 51 Cal.2d 346, at page 352, 333 P.2d 10, at page 13, supra.

Thereafter, the trial court ordered the cost of the premium on the bond taxed as an item of costs on appeal, but made its order effective only from the date of its entry, January 20, 1959. This meant, of course, that the award was to bear interest only from that date. The plaintiff moved to vacate the order and for the allowance of the bond item as a part of the costs on appeal as of the date when costs were originally taxed, December 17, 1954. Such an allowance would authorized the running of interest on the amount of the bond premium from that date. In re Kennedy's Estate, 94 Cal. 22, 29 P. 412; Dalzell v. Kelly, 115 Cal.App.2d 60, 251 P.2d 343. Upon the denial of the motions plaintiff appeals.

The sole question presented is, on what date did interest start to run on the award? The defendants contend that interest on a judgment for costs on appeal begins to run from the date of entry of the judgment, and that in the present case there was no judgment taxing the bond premium as a cost on appeal until January 20, 1959. The plaintiff contends that the original order taxing costs was made on December 17, 1954; that the trial court first erred on that date in failing to tax the bond premium as a cost on appeal; that after several appeals the error was corrected; and that the effect of these reversals was to modify the original order of December 17, 1954. Based on these premises, plaintiff urges that interest should have been allowed as of December 17, 1954.

We have concluded that neither contention is sound, and that the proper date from which the interest should run is April 12, 1957. That is the date the trial court entered its order denying the bond premium as an item of costs based on its finding that such expenditure was unnecessary. On the resulting appeal this court in 51 Cal.2d 346, 333 P.2d 10, supra, determined that on that date, as a matter of law, the trial court should have allowed the item involved.

There is no controlling authority to which we have been referred, or found, that deals with this particular subject. But the law applicable to the effect of reversals or modifications on interest on judgments generally would seem, by analogy, to be applicable. Dalzell v. Kelly, supra, 115 Cal.App.2d 60, 62, 251 P.2d 343.

A judgment bears legal interest from the date of its entry in the trial court even though it is still subject to direct attack. Bellflower City School Dist. of Los Angeles v. Skaggs, 52 Cal.2d 278, 280, 339 P.2d 848. When a judgment is modified upon appeal, whether upward or downward, the new sum draws interest from the date of entry of the original order, not from the date of the new judgment. Beeler v. American Trust Co., 28 Cal.2d 435, 438, 170 P.2d 439; Barnhart v. Edwards, 128 Cal. 572, 575, 61 P. 176; 1 A.L.R.2d 479, 510-512, 520-521. On the other hand, when a judgment is reversed on appeal the new award subsequently entered by the trial court can bear interest only from the date of entry of such new judgment. Cowdery v. London, etc., Bank, 139 Cal. 298, 303, 73 P. 196.

A judgment for costs should be governed by the law applicable to judgments generally. Such awards are, in fact, separate and complete judgments in themselves. Supera v. Moreland Sales Corp., 28 Cal.App.2d 517, 521, 82 P.2d 963. Costs on appeal are provided for in section 1034 of the Code of Civil Procedure, and are therein made enforceable by execution in the same manner as a final judgment.

How do these rules apply to the present case? First, there was the order of December 17, 1954. The trial court disallowed on that date, the item of costs here involved. On appeal that order was reversed with instructions to the trial court to pass on the question of the necessity for the bond (47 Cal.2d 469, 304 P.2d 7, supra). That, as already pointed out, was a legal reversal. It did not modify the order the December 17, 1954. Quite to the contrary it directed the trial court to hold a hearing on the necessity for the expenditure, and to make its award of costs depend upon the outcome of that hearing. Up until this point no award of costs for this item could have been made because there had been no hearing or finding on the issue of necessity for the bond. If the court found the expenditure to be 'necessary,' then it was directed to award the amount of the bond premium as costs. Under the general rule applicable to judgments, such an award would bear interest not from December 17, 1954, but from the date that this last order was made.

The trial court held such a hearing, and found the expenditure unnecessary, and on April 12, 1957, entered its order disallowing the challenged item. On appeal (51 Cal.2d 346, 333 P.2d 10, supra) this court held that, as a matter of law, the evidence demonstrated that the expenditure was necessary, and that on April 12, 1957, the court should have allowed this item of costs. The legal effect of this 'reversal' was to make the order of April 12, 1957, state what it should have stated on that date. In a very real sense, in legal effect, it increased the original amount awarded as costs, and determined that, after showing necessity, plaintiff was entitled to this award as of April 12, 1957. Instead of reversing with directions, by allowing the item and then affirming the order as modified, this court 'reversed.' This 'reversal' obviously was, in law and in fact, a modification. When the facts are considered in their entire context this conclusion is inescapable. On December 17, 1954, the court allowed as costs on appeal the sum of $1,097.37, but denied the cost of the bond premium totaling $6,980.49. At that time it held no hearing on the necessity of such expenditure. A finding on that issue is a condition precedent to the allowance of such expenditure. The December 17, 1954, ruling was reversed and the trial court ordered to hold the requisite hearing. On April 12, 1957, after the hearing, the trial court found the expenditure to have been unnecessary. But on appeal, in 51 Cal.2d 346, 333...