White v. Moriarty, No. A055618

• Decision Date: 14 May 1993
• Docket Number: No. A055618
• Citation: 19 Cal.Rptr.2d 200,15 Cal.App.4th 1290
• Parties: Peter K. WHITE, as Trustee, etc., Plaintiff and Appellant, v. Michael James MORIARTY, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

Page 200

19 Cal.Rptr.2d 200

15 Cal.App.4th 1290

Peter K. WHITE, as Trustee, etc., Plaintiff and Appellant, v. Michael James MORIARTY, Defendant and Appellant.

No. A055618.

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

May 14, 1993.

Rehearing Denied June 8, 1993.

Review Denied Aug. 12, 1993.

Daniel M. Cahill, Mill Valley, John G. Fall, San Francisco, for plaintiff and respondent, cross-appellant.

John Daniel and Michael James Moriarty, Law Offices, San Francisco, for defendant and appellant.

DOSSEE, Associate Justice.

Michael James Moriarty appeals from a judgment against him on a promissory note, arguing that the judgment is not supported by substantial evidence. Plaintiff Peter K. White, as trustee for his wife and Mr. and Mrs. John Fall, cross-appeals, arguing statute of limitations issues. We determine that the trial court applied the wrong statute of limitations and remand for recalculation of the amount due. In all other respects, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In 1983 Moriarty, a California attorney, purchased $10,000 worth of stock in Nisus Video, Inc. Charles Anderson, Moriarty's brother-in-law, was Secretary of Nisus. Anderson explained to Moriarty that Nisus had a patent on a commercial video lens that would revolutionize the video market.

In 1985 Anderson asked Moriarty to sign a power of attorney to facilitate Anderson's financing and purchase of a video camera for the corporation. The power of attorney was drafted by Anderson, a New Mexico attorney, and was signed by Moriarty. The document gave Anderson the power to "execute all documents, do all acts, receive or pay all sums of money, and negotiate all matters in conjunction with the purchase of an Ikegami HL-79E broadcast camera, and its leaseback to Nisus Video, Inc., including all financing, and necessary related activities which are necessary, related activities which are necessary [sic ] or convenient for the accomplishment thereof." The last paragraph of the power of attorney stated: "I hereby ratify and confirm that CHARLES E. ANDERSON, said attorney in fact, shall lawfully do or cause to be done by virtue of these presence [sic ]."

On January 9, 1985, Anderson had signed a note for $40,550 payable to Moncor Bank and secured by the Ikegami video camera. Anderson signed his own name and signed "Michael James Moriarty by Charles E. Anderson, Attny in fact" as borrowers. On January 11, 1985, Moriarty signed the power of attorney. On January 16, 1985, the bank advanced the full principal amount of the note. On January 21, 1985, the power of attorney was filed with the county recorder in New Mexico. A total of 11 installment payments were due quarterly, beginning on March 17, 1985. According to White's calculations, only two payments, one due on March 17, 1985 and one due on June 17, 1985, were made.

In February of 1986, after two payments had been missed, Moriarty learned of the loan from the bank. Moriarty did not recall ever contacting the bank. In April of 1987, Moriarty received a letter from the Federal Deposit Insurance Corporation (FDIC) stating that the bank holding the note was having financial problems and inquiring about payment. Moriarty questioned his brother-in-law, who advised Moriarty that everything was under control and that Nisus was negotiating with the FDIC. Moriarty informed an FDIC official that he had not signed the note.

On February 9, 1990, the FDIC assigned the note to General Financial Services, Inc. (GFS). In March of 1990, GFS sold the note to White. On June 8, 1990, White filed a complaint on the note in the superior court naming Moriarty and Anderson as defendants. Prior to trial, White's motion to dismiss Anderson without prejudice was granted.

On May 29, 1991, the court issued a statement of decision finding, inter alia, that Moriarty's signature on the power of attorney ratified Anderson's signing of the promissory note. The court rejected White's argument that the federal statute of limitations applied and found that two installments were barred by the California statute of limitations. Judgment for White was in the principal amount of $27,033.32 plus interest to be calculated between June 15, 1986 and May 24, 1991. White was awarded attorney fees and costs.

Moriarty filed a motion to vacate the judgment, and White filed a motion for new trial on the statute of limitations issue. Both motions were denied, and judgment was entered for $27,033.32 plus interest of $13,004.51 and attorney fees of $8,436.81 and costs. Moriarty appealed, and White filed a cross-appeal.

DISCUSSION

Moriarty raises three points on appeal. He argues first that the judgment is not supported by substantial evidence. His second point is that the court erred in its calculation of interest. His final point is that the award of attorney fees was erroneous. The main issue in White's cross-appeal is whether the federal statute of limitations applies to claims brought by assignees of the FDIC. We are convinced by White's argument and will remand for recalculation of the amount of the judgment. We discuss Moriarty's contentions first.

Substantial Evidence Supporting the Judgment

Moriarty argues that powers of attorney are strictly construed and that the instant power only authorized future acts. Because the promissory note was dated January 9 and the power of attorney was dated January 11, Moriarty argues that the signature on the note was unauthorized.

This argument ignores the language of ratification contained in the power of attorney. Although it was inartfully drafted, the document specifically referenced the camera transaction. It spelled out Anderson's powers in connection with the purchase and financing of the camera. It also purported to "ratify and confirm" things that Anderson "shall ... cause to be done...."

The word "ratify" is defined as follows: "To approve and sanction; to make valid; to confirm; to give sanction to. To authorize or otherwise approve, retroactively, an agreement or conduct either expressly or by implication." (Black's Law Dict. (6th ed. 1990) p. 1262, col. 1.) "Generally, the effect of a ratification is that the authority which is given to the purported agent relates back to the time when he performed the act. [Citations.]" (Rakestraw v. Rodrigues (1972) 8 Cal.3d 67, 73, 104 Cal.Rptr. 57, 500 P.2d 1401.) "Ratification is approval of a transaction that has already taken place." (City of Fresno v. Baboian (1975) 52 Cal.App.3d 753, 759, 125 Cal.Rptr. 332.) Contrary to Moriarty's argument, the word "ratify" pertains to past events. Moriarty and Anderson were both attorneys. The trial court was not required to believe that Moriarty did not know the meaning of the word "ratify" when it is contained in a power of attorney.

Moriarty admitted that he read the power of attorney and knew that it related to the purchase of a video camera in connection with a commercial enterprise. The terms of the power of attorney included allowing Anderson to sign Moriarty's name to documents in connection with the financing of the purchase. Signing a purchase money note for the camera was clearly within the scope of the power given. Although Moriarty testified that he had no knowledge of the loan transaction, the court was not required to disregard the express reference to financing in the power of attorney. Moriarty admitted that he knew the camera had been purchased and that he had accepted a payment of about $1,000 on account of the camera lease arrangement. By agreeing to ratify acts of Anderson, Moriarty expressly adopted prior acts taken within the scope of the power granted. The power of attorney Because there was substantial evidence that Moriarty expressly ratified prior acts in connection with the purchase and financing of the camera, there is no need to discuss White's argument regarding the alternative theory of ratification by acceptance of benefits. Regarding Moriarty's contention that he never assumed personal liability for the corporate debt, we observe that the note was signed only in the individual capacities of Anderson and Moriarty. The only mention of the corporation was that the debt was secured by the camera and the equipment lease from Nisus Video. There is no issue of alter ego liability. ²

document itself constitutes substantial evidence of ratification. ¹

Miscalculation of Interest

Moriarty argues that interest was miscalculated, based on application of the four-year California statute of limitations. We need not discuss this issue because we conclude that the six-year federal statute applies.

Errors in Award of Attorney Fees

Moriarty argues, without citation of authority, that the court erred in failing to strike portions of White's attorney's billing for telephone conversations with Mr. Fall, Mr. Hale and Mr. Colvin. We can see from the record on appeal that Mr. Fall appears to be the beneficiary of the trust represented by White. We are not told who Hale and Colvin are, or why telephone calls to them are not properly charged. We note that the trial court heard Moriarty's arguments and did make deductions for time billed for the attorney fee motion itself and time billed opposing a motion for a continuance. Moriarty has not shown an abuse of discretion.

CROSS-APPEAL

White also appeals arguing that the federal statute of limitations applies, that the action was brought within the period of the California statute of limitations, and that the court erred in calculating interest.

Federal Statute of Limitations

"The relevant federal statute confers upon the FDIC a six-year limitations period which begins to run, ... on the date the FDIC became the receiver of the failed bank. [Citations.]" (Mountain States Financial Resources v. Agrawal (W.D.Okla.1991) 777 F.Supp. 1550, 1552.) The six-year statute of limitations located in 12 United States Code section 1821(d)(14)(A) gives the FDIC the longer of six years or the applicable state statute of limitations in...