Learn About the Law
Get help with your legal needs
FindLaw’s Learn About the Law features thousands of informational articles to help you understand your options. And if you’re ready to hire an attorney, find one in your area who can help.
UNION SUGAR CO. v. HOLLISTER ESTATE CO.a1
On October 1, 1924, appellant and respondent contemporaneously executed a farming contract and a beet sale contract, the latter being expressly made a part of the former, by the terms of which appellant agreed to farm certain lands of respondent in a good and husbandlike manner and in accordance with the standards and customs in the vicinity, and plant and raise thereon a crop of beets during the 1925 season, at the expense of respondent, and to buy all the beets so raised and delivered at a price to be fixed by averaging prices of sugar over a period of twelve months beginning July 1, 1925, according to a certain table set forth therein. On June 25, 1929, appellant brought suit against respondent to recover the alleged balance of $12,071.83, with interest at 7 per cent. from October 31, 1925, unpaid on the advances and expenses of farming the lands and raising the crop of beets, after crediting the agreed price of beets produced and delivered. On December 2, 1929, respondent filed its answer and counterclaim, joining issue on the allegation of balance unpaid and pleading damages for specified breaches of the farming contract in respect to good husbandry in the sum of $31,067.31, as “a counterclaim and set-off against plaintiff's demand to the extent thereof,” and also praying for judgment for said amount “or so much thereof as it may be entitled to over and above plaintiff's claim.” Trial was had, and in the lower court, prior to submission, appellant's counsel orally urged as a defense against the counterclaim the bar of the statute of limitations under section 337, subdivision 1, of the Code of Civil Procedure. Findings and conclusions were filed and judgment entered thereon in favor of respondent for the sum of $16,162.19, the excess of damages found to be suffered by respondent over the balance of expenses found to be due and unpaid to appellant. In its findings the court expressly found that the counterclaim was not barred by any statute of limitations.
From the judgment this appeal is taken on the so-called alternative method, appellant setting up four main points relating to (1) the bar of the statute of limitations to the counterclaim, (2) the measure of damage adopted by the court, (3) the matter of interest on the unpaid balance found, and (4) errors in ruling on evidence.
Appellant contends that the counterclaim was barred by the provisions of section 337, subdivision 1, of the Code of Civil Procedure. Respondent meets this contention with the claim that appellant waived the bar of the statute by failing to plead the same. Unquestionably there is a general rule, long established in this state, that the statute of limitations is a special defense, personal in its nature, which may be waived or asserted, and that the party relying on it must affirmatively set it up in his pleading either by demurrer or answer, or it will be deemed to have been waived. Grattan v. Wiggins, 23 Cal. 16; California Safe, etc., Co. v. Sierra, etc., Co., 158 Cal. 690, 112 P. 274, Ann. Cas. 1912A, 729; Miller v. Parker, 128 Cal. App. 775, 18 P.(2d) 89. There is, however, another rule which has developed in respect to the plea of the bar to counterclaims because of the provision in section 462 of the Code of Civil Procedure, which may be stated as follows: Where the answer to a complaint sets up new matter constituting an affirmative cause of action or counterclaim, such new matter is deemed controverted under the provisions of section 462 of the Code of Civil Procedure, and the adverse party may, without formal plea, show that the attempted defense is barred by the statute of limitations, that statute being deemed pleaded by operation of law. Curtiss v. Sprague, 49 Cal. 301; Granger's, etc., v. Clark, 84 Cal. 201, 23 P. 1081; In re Garcelon's Estate, 104 Cal. 570, 38 P. 414, 32 L. R. A. 595, 43 Am. St. Rep. 134; Moore v. Copp, 119 Cal. 429, 51 P. 630; Brooks v. Johnson, 122 Cal. 569, 55 P. 423; Peck v. Noee, 154 Cal. 351, 97 P. 865; Hermosa Beach, etc., Co. v. Law Credit Co., 175 Cal. 493, 166 P. 22; Pacific Improvement Co. v. Maxwell, 26 Cal. App. 265, 146 P. 900; Jones v. Peck, 63 Cal. App. 397, 218 P. 1030. However, it has been held that unless the adverse party invokes the plea of the statute at the trial, and brings to the attention of the trial court his purpose to offer evidence in support of such plea, the court cannot assume that he desires to make any such defense, and he cannot invoke the plea for the first time on appeal. In re Garcelon's Estate, supra; Bliss v. Sneath, 119 Cal. 526, 51 P. 848. Herein appellant invoked the plea at the trial and the trial court made a finding on the plea thus presented. We must therefore hold that the statute was sufficiently pleaded and that it was properly entertained by the trial court.
The counterclaim was not barred at the date of commencement of the action on June 25, 1929. The farming contract was an executory contract, continuing over the beet season of 1925, and could not be completed or fully performed by appellant until the end of that season, the date of which is established by evidence as the month of October, 1925. In such a contract, where the parties did not mutually abandon or rescind it upon a breach or successive breaches, the injured party could wait until the time arrived for a complete performance by the other party and then bring an action for damages for such breaches. Ross v. Tabor, 53 Cal. App. 605, 200 P. 971. Respondent was not bound to treat the contract as abandoned on the first breach of it, or on any particular breach, but had his election to still rely on it, and the statute of limitations could not begin to run until he had made his election. Richter v. Union Land, etc., Co., 129 Cal. 367, 62 P. 39; Coulter v. Sausalito Bay Water Co., 122 Cal. App. 480, 10 P.(2d) 780.
The filing of the complaint on June 25, 1929, operated to suspend the running of the statute of limitations as to any counterclaim existing at that date in favor of respondent, and therefore the counterclaim pleaded and filed on December 2, 1929, by respondent, although more than four years after completion of the contract, was not barred. Perkins v. West Coast Lumber Co., 120 Cal. 27, 52 P. 118; McDougald v. Hulet, 132 Cal. 154, 64 P. 278; Whittier v. Visscher, 189 Cal. 450, 209 P. 23; Maryland Casualty Co. v. Shafer, 57 Cal. App. 573, 208 P. 197. Nor did the amendment of section 438 of the Code of Civil Procedure in 1927 (St. 1927, p. 1620) affect or destroy this rule, as is claimed by appellant. This becomes manifest upon examination of the above decisions, which are predicated alike upon counterclaims on contracts and torts without distinction, and all are based on the general proposition that such counterclaims must be existing at the commencement of action. Nor did such amendment, as appellant contends, have the effect of reducing the former statutory counterclaim to the common law idea of counterclaim, that is, one that may be employed to diminish or defeat plaintiff's claim by way of set-off only to the extent of such claim. Section 666 of the Code of Civil Procedure, which must be read with section 438 as amended, provides that any excess of the counterclaim established over plaintiff's demand must be awarded to defendant by judgment. In the case of Terry Trading Corporation v. Barksy, 210 Cal. 428, 292 P. 474, 478, the court in passing upon the effect of this amendment to section 438 said: “It is likewise perfectly proper to seek affirmative relief by way of counterclaim, which may not only defeat plaintiff's recovery but result in an affirmative judgment for defendant on his counterclaim.”
Appellant contends that the evidence does not support the findings or judgment in that the evidence shows that the trial court applied an improper measure of damages. It then attempts to support this contention by quoting the memorandum opinion of the trial judge filed in the court below. This opinion cannot be considered by the appellate court for the purpose of impeaching the findings. Messenkop v. Duffield, 128 Cal. App. 541, 18 P.(2d) 67. The findings of fact and conclusions of law constitute the decision of the court below and are the final expression of the court. Looking to them, we are unable to find anything therein which would support the claim that the court adopted and used an improper measure of damage. Counsel in their briefs agree upon the proper measure of damage applicable herein, but there is nothing in the findings nor in the record of the proceedings to indicate that the court did not adopt and use that measure. We must therefore presume that the court applied the proper measure of damage in arriving at its decision. The argument of counsel for appellant in support of this point is ingenious but highly speculative. For this court to embark on similar speculation would be contrary to the rules established to protect and sustain findings against everything except manifest or demonstrable error.
Appellant claims the court erred in failing to allow interest on the unpaid balance of expenditures from October 31, 1925, asserting interest was chargeable both by the terms of the contract and by operation of law. The court found that at the end of the harvest time in 1925 appellant was entitled to a credit of $11,414.15 against respondent on account of farming operations under said contract, and at the trial found and liquidated the damages on the counterclaim in the sum of $27,756.44, and gave judgment in favor of respondent for the difference between those two sums without allowing any interest during the interim on the amount of expenditures under the contract. The contract provided that: “Any money advanced, work performed, seed furnished, or any other charges to the account of said first party [Hollister Estate Company] will be paid by first party, and the second party may deduct the same, if approved in writing by the first party, before making payments on said beets. When advances are made by second party for the purposes hereof to be charged to first party, first party shall be charged with interest thereon at seven per cent. per annum from monthly statement to payment.” It is also provided that “second party will render monthly statement to first party, covering charges for the preceding month.” These provisions appear to render it doubtful whether interest was to be charged on any item except “money advanced,” as distinguished from the other items in the monthly statement of “charges.” In such case contemporaneous construction by the parties may be resorted to as the best means of solution. Civ. Code, § 3535; 6 Cal. Jur. 304, 305. The audit of the books of account kept by appellant, and the monthly statements rendered, in evidence herein, show that interest was charged only on money advanced as distinguished from other charges. This is sufficient to resolve the doubt and warrant an interpretation of the contract which would limit interest to items of money advanced and exclusive of other charges. Such interest was included in the balance found due.
It is further claimed by appellant that interest thereon at the legal rate should have been added to the amount of expenditures found unpaid in October, 1925, on the ground that such amount of contract expenditures were capable of exact computation and therefore bears interest from the date the amount is due. Civ. Code, §§ 3287 and 3302. The general rule with respect to allowance of interest, when there is no contract to pay interest, is that the law awards interest upon money from the time it becomes due and payable, if such time is certain and the sum is certain or can be made certain by calculation. Cox v. McLaughlin, 76 Cal. 60, 18 P. 100, 9 Am. St. Rep. 164; Gray v. Bekins, 186 Cal. 389, 199 P. 767; Perry v. Magneson, 207 Cal. 617, 279 P. 650. The question whether the claim of appellant, under the tests laid down in the above cases, is, in contemplation of law, a liquidated or unliquidated demand, becomes unnecessary for decision herein, in the light of the law which applies to this case. For we hold that even though, under such tests, appellant's claim was a liquidated demand in October, 1925, it was subject to reduction by virtue of the unliquidated claim of respondent and must therefore be deemed to be an unliquidated sum upon which interest is not recoverable, under the rule that in cases such as here presented, where the deduction is for defective workmanship or defective husbandry under a contract, the court may properly allow interest only on the balance found to be due on the contract after deduction of such damages when liquidated, on the theory that the contractor is entitled to interest only on such amount, of the use of which he has been deprived during the period of default, because it is to that extent only that he has been damaged. Hansen v. Covell, 218 Cal. 622, 24 P. (2d) 772, 89 A. L. R. 670. As the amount of damages in the instant case exceeds appellant's demand, there remains nothing on which to compute or allow interest.
We have examined appellant's assignments of error claimed to have occurred in ruling on the admissibility of evidence, and find no error in any of such rulings.
The judgment is affirmed.
WILLIS, Justice pro tem.
We concur: STEPHENS, P. J.; CRAIL, J.
A free source of state and federal court opinions, state laws, and the United States Code. For more information about the legal concepts addressed by these cases and statutes visit FindLaw's Learn About the Law.
Docket No: Civ. 8963.
Decided: December 06, 1934
Court: District Court of Appeal, Second District, Division 2, California.
Search our directory by legal issue
Enter information in one or both fields (Required)
Harness the power of our directory with your own profile. Select the button below to sign up.
Learn more about FindLaw’s newsletters, including our terms of use and privacy policy.
Get help with your legal needs
FindLaw’s Learn About the Law features thousands of informational articles to help you understand your options. And if you’re ready to hire an attorney, find one in your area who can help.
Search our directory by legal issue
Enter information in one or both fields (Required)