Tsarnas v. Bailey

• Decision Date: 30 March 1960
• Docket Number: No. 18545,18545
• Citation: 3 Cal.Rptr. 629,179 Cal.App.2d 332
• Court: California Court of Appeals
• Parties: J. E. TSARNAS and Henry Tsarnas, Individually and doing business as J. E. Tsarnas & Son, Plaintiffs, Cross-Defendants and Respondents, v. Walter C. BAILEY, individually and dba West Coast Forest Products Company, a sole proprietorship, Defendant, Cross-Complainant and Appellant.

Page 629

3 Cal.Rptr. 629

179 Cal.App.2d 332

J. E. TSARNAS and Henry Tsarnas, Individually and doing business as J. E. Tsarnas & Son, Plaintiffs, Cross-Defendants and Respondents, v. Walter C. BAILEY, individually and dba West Coast Forest Products Company, a sole proprietorship, Defendant, Cross-Complainant and Appellant.

No. 18545.

District Court of Appeal, First District, Division 1, California.

March 30, 1960.

Brobeck, Phleger & Harrison, San Francisco, W. R. Bailey, Orinda, Ray W. Donahue, Visalia, for appellant.

McKenzie, Arata & Murphy, Santa Rosa, for respondents.

DEVINE, Justice pro tem.

Defendant, who is also cross-complainant, appeals from a judgment which was rendered against him in amount $11,553.20. The controversy arose from a contract relating to the manufacture of lumber.

J. E. Tsarnas and Henry Tsarnas, individually and doing business as J. E. Tsarnas & Son, operated a sawmill in Humboldt County. Walter C. Bailey, individually and doing business as West Coast Forest Products Company, operated a lumber business in San Mateo. On May 6, 1955, a contract was signed by the terms of which Bailey was to supply logs to Tsarnas & Son, who were to saw them into merchantable lumber and ship it as directed by Bailey.

Disputes between the parties over claimed breaches by each party ensued. On August 1, 1955, Tsarnas & Son gave notice of rescission of the contract because of one asserted breach, namely, failure of Bailey to supply an adequate number of logs in accordance with Bailey's obligations as they were viewed by Tsarnas & Son.

This action was commenced by Tsarnas & Son to recover a balance alleged to be due for shipments of lumber for Bailey after August 1, 1955, for a balance for lumber stored at South Fork in Humboldt County for Bailey's account, and for a small amount for peeling of logs. A bill of particulars was filed which lists eight unpaid invoices from September 14, 1955 to September 30, 1955. However, the complaint itself is on common count for services rendered at the specific instance and request of the defendant prior to July 1, 1955.

The trial court admitted the special contract in writing as evidence in plaintiffs' case, over objection by defendant that a special contract should not be admitted on a pleading of a common count. A huge volume of evidence was produced on each side relating to claimed breaches of contract by the other. The court found that plaintiffs had not breached the contract, and that defendant owed the sum of $11,553.20. It is conceded by plaintiffs that the amount is slightly in excess of the amount which plaintiffs claim to be supported by the evidence, and plaintiffs admit that the judgment should be reduced to the sum of $11,266.49.

Appellant makes several points, some of which relate to the procedural aspects of the trial, others to the substance of the controversy. They are taken up after a statement of the essential facts. There having been conflicts in evidence spread over more than 700 pages of testimony, and on several score of subjects, major and minor, it is well to give a succinct account of the evidence as it favors the respondent's cause.

The written contract of May 6, 1955 contains these references to the supply of logs to the mill: (1) Bailey agrees to deliver logs 'at rates of sawing within the reasonable sawing capacity of said sawmill and as requested by first party [Bailey],' (2) Tsarnas & Son agree to 'saw no logs except for first party at any time when first party shall have logs available at said mill site for sawing and shall have requested that the same be manufactured into lumber.'

Thus, the written contract does not specify any number of board feet of logs, nor any percentage of the capacity of the mill which must be supplied by Bailey. However, a considerable amount of evidence relating to the log supply was admitted on both sides, all of it without objection. When Henry B. M. Tsarnas first met Bailey, Tsarnas had been considering the moving of his mill. Bailey told him he would bring in about ten million feet a year, about a hundred million feet altogether. Hale, production manager for Bailey, told Tsarnas that Bailey had a contract with a logger named Wirta to take Wirta's entire supply of ten or twelve million feet a year and that he had a ten year supply. Bailey and Hale told Tsarnas they would supply all the logs Tsarnas needed for the future and would supply him with six or seven million feet of logs for the winter supply, called the 'cold deck.' Thereafter, the contract was signed. It was for one year, but would be renewed automatically from year to year unless terminated 'for cause' by ninety days' notice by one party to the other.

Logs were supplied to the mill, commencing in May, by Wirta for Bailey's account, but Wirta demanded more money of Bailey, and the supply was stopped by Bailey. Thereafter, Bailey tried earnestly to contract with loggers, but with little success. The last supplier brought logs of such poor quality that 40 per cent went into the burner as refuse. A meeting was arranged between Tsarnas and Bailey at the office of Tsarnas' lawyer in Eureka, Judge Falk, at which the subject of supply was discussed.

It was necessary, for the operation of the mill in the winter, to have a deck of six or seven million feet. Moreover, it was testified, if it becomes apparent to employees that an adequate deck is not being built up for the winter, they will leave for mills that have a more promising prospect. The average supply of logs Bailey had at the Tsarnas mill in the period from May to August 1955 was estimated variously at two or three hundred thousand feet to four or five hundred thousand, and the deck diminished as the summer went on, when it should have increased.

On August 1, 1955, Tsarnas & Son wrote to Bailey rescinding the contract, stating that Tsarnas & Son had signed the contract 'under the promise of Walter C. Bailey, that first party would provide sufficient logs to keep the sawmill of second party in full operation, or within the reasonable sawing capacity of said sawmill,' and went on to say that whereas the reasonable sawing capacity of the mill is in excess of 1,250,000 feet per month, Bailey had delivered not over 250,000 feet between June 15 and August 1. The letter was admitted without limitation of purpose, no such limitation having been requested. The letter stated that Tsarnas & Son would expect payment for lumber that would be manufactured from logs already delivered and shipped to Bailey.

Bailey contends that the contract was breached by Tsarnas & Son in repudiating the contract by the August 1, 1955 letter, and also claims a number of other breaches which are set forth in a cross-complaint. On appeal, he lists four classes of such breaches as being undisputed: (1) inaccurate tallies and invoices lacking description of grades of lumber, (2) substitution of lots of lumber that were ordered, (3) underloading of cars, resulting in freight penalties against appellant, and (4) refusal to honor an option of Bailey's to purchase lumber from logs obtained from other sources.

However, some of them were disputed. It was testified that the substitutions were of equal grade, and were merely to prevent heavy costs of moving inaccessible piles of lumber. John Tsarnas testified that he could not sell his own logs to Bailey when the latter demanded them, as an exercise of the option, by letter of July 27, 1955, because Tsarnas, having sawn all of the Bailey logs, had to borrow money to keep the mill in operation, and had obligated himself to give the first refusal of his own logs to the lender.

But as to these and to any remaining breaches, which may have been undisputed, the cross-complainant presented no evidence which would show an amount of damage resulting from any breach. There was testimony that appellant had lost money on the contract and that he lost the opportunity of profit and the amounts were given, but this was an overall calculation without specification as to any particular claimed breach or breaches. There was evidence from plaintiffs and cross-defendants that defendant's loss resulted from lack of supply of logs, poor quality of logs, and the lack of a scaler who would be employed by Bailey to check the scaling by the loggers.

We shall consider the points made by appellant, commencing with those which have to do with procedure and rules of evidence, but first we must dispose of a question raised by ourselves. The trial court caused a minute order to be entered ordering judgment for plaintiff on the amended complaint and that cross-complainant take nothing on his cross-complaint. Thereafter, the court signed findings of fact and conclusions of law, in which there were findings against the cross-complainant's contentions as contained in the cross-complaint and a conclusion that defendant and cross-complainant on the cross-complaint or on the counterclaim are not entitled to recover. However, the judgment itself does not mention the cross-complaint. It simply decrees that plaintiffs have judgment against defendant for $11,553.20 plus interests and costs. Apparently no one noticed this in the argument on the motion for new trial or in presentation of the appeal.

Judgment rendered on a complaint alone, unaccompanied by judgment on a pending cross-complaint, is not a final judgment, and appeal from it may be dismissed on motion. Witkin, California Procedure, vol. 3, § 14, p. 2155; Nicholson v. Henderson, 25 Cal.2d 375, 381, 153 P.2d 945; Krug v. Meehan, 106 Cal.App.2d 554, 235 P.2d 410. However, this court on a former occasion has decided that because of the relaxation in the rules on appeal, of the strictures against premature appeals, the court may, in its discretion, where the intention of the trial court was clear, order judgment rather than send the case back for the...