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MOSS v. UNDERWRITERS' REPORT, Inc.†
The plaintiff sued upon three separate causes of action for compensation for extra services. The first count, or cause of action, was on an open book account for money claimed to be due up to December 31, 1934; the second was upon an account stated; the third was on an open book account for money claimed to have been earned after December 31, 1934. Prayer was made for $13,543.51. The action was tried without a jury, and plaintiff had judgment on the first and third causes of action in the sum of $12,422.07. The appeal from this judgment is presented on a typewritten transcript to which has been added, after a motion for diminution of the record, a number of the exhibits.
Plaintiff rested his claim upon a contract with the defendant employing him to act as editor of three publications which the defendant was engaged in printing and circulating. The contract of employment began in 1922 and terminated on July 15, 1935. The original agreement called for a weekly salary of $75 and 3 per cent. on the annual gross income from these publications, such percentage to be determined annually after an accounting extending over each calendar year. The parties agree that a 3 per cent. bonus was to be paid, but disagree as to whether it should be based on the income of all three publications, or upon that derived from two only. Books of account were kept by the defendant from which the plaintiff claimed that he was entitled to recover the sum prayed for. At the trial the court found certain errors in these accounts which caused a reduction in the amount allowed in the judgment. As this situation gives rise to the principal attack upon the judgment, it is well to add these details: in his first count the plaintiff relied upon the balance shown to be due on these books of account up to December 31, 1934, which was $14,068.51, and, allowing a credit of $525, asked judgment for $13,543.51. The third count, though pleaded on an open book account, did not fix the amount, because the income for that period was unknown to plaintiff, but asked the court to take an accounting to ascertain the amount due. Defendant's bookkeeper estimated plaintiff's bonus by taking 3 per cent. of the gross income derived from three of defendant's publications, whereas the defendant claims that plaintiff was not entitled to any bonus upon the income from one of them. Other errors were made by the bookkeeper, some favorable and others unfavorable to the plaintiff. From the balance shown on the books as of December 31, 1934, the trial court allowed deductions claimed as errors by the defendant amounting to $2,449.75, and a credit of $700 paid to plaintiff subsequent to December 31, 1934. The sum of $1,503.31 was found due plaintiff upon his third count for services rendered after that date. When this was added to the balance of the principal claim, following the deductions noted, the full sum found to be due was $12,422.07, which is the amount of the judgment.
Growing out of the situation just mentioned, appellant's first question stated on this appeal is: “Is not an essentially erroneous book account insufficient to evade the bar of the statute of limitations?” There is sufficient evidentiary support for the trial court's finding that a contract of employment was executed, as alleged in the complaint, calling for payment of a salary to plaintiff and, in addition thereto, a sum equal to 3 per cent. of the annual gross income from two of the publications printed by the defendant; that the “defendant caused the same (the money due plaintiff for such extra compensation) to be regularly computed by its bookkeeper and accountant,” and that such account was “duly entered upon a record kept by said defendant corporation for that purpose”; that, in computing said sum of $14,068.51, “there were by inadvertence and mutual mistake included therein certain sums of money equal to three per cent (3%) of the gross income of defendant corporation from sources other” than the two publications mentioned; and that these sums, amounting to $2,449.75, should be deducted from said account. Upon these facts the appellant contends that the book account must be rejected as a whole, and that the first cause of action is therefore barred because it rests on an oral contract and was not brought within two years. Respondent replies that the book account was kept by appellant in the regular and usual course of its business, that it was proved by uncontradicted evidence that the only errors in the account were made by appellant, and that the respondent was not responsible for them. It cannot be denied that the entries were made in the regular and usual manner, that the account meets all the requirements for an “open book account,” and that appellant alone is accountable for the errors. None of the cases cited by the appellant gives any support for the position here taken. They hold generally that a book account must be proved before it will support a judgment. As to this there is no controversy. The point here is, Must it be wholly free from error before it will support a judgment for the amount found due? The cause of action is upon the account, not upon the separate items which enter into it. It is like an action on a written contract, or on a promissory note, neither of which is defeated by the appearance of errors which may be readily corrected. Here the appellant was responsible for the errors upon which it relies to defeat its own account. On principle it should be estopped to take advantage of its own errors when, throughout the period of employment, the respondent was led to believe that appellant was keeping a correct book account, and may have, for that reason, delayed bringing his action within the time limited for an action upon an oral contract.
The failure of the trial court to specifically find that the action was not barred by the two–year statute of limitations was not prejudicial to the appellant. If a finding had been made, it must have been adverse to appellant. Egan v. Bishop, 8 Cal.App.2d 119, 123, 47 P.2d 500; Anderson v. Calaveras Central Mining Corporation, 13 Cal.App.2d 338, 349, 57 P.2d 560. When it thus appears from the facts found that the statute has not run, there is no prejudicial error in a failure to find separately on the alleged bar of the statute. Woodham v. Cline, 130 Cal. 497, 498, 62 P. 822; Scott v. Symons, 191 Cal. 441, 456, 216 P. 604; Webster v. Mountain Monarch G. M. Co., 6 Cal.App.2d 450, 454, 44 P.2d 646; 24 Cal.Jur. p. 944.
It is urged that the original contract was abrogated, or so materially modified, as to defeat all rights of respondent founded upon it. It is appellant's contention that the contract of employment made in 1922 called for a base salary of $75 a week and that the bonus claimed by respondent was to be allowed on that base; that subsequently the base salary was increased, and hence the trial court should have found that the agreement to pay a bonus fell with this change. This all rests upon the conflicting testimony of the respective parties as to what was said, and what arrangements were made, as to compensation at different stages of the period of employment. There is sufficient evidentiary support for the trial court's finding that the appellant agreed to pay the respondent a bonus of 3 per cent. of the gross annual income in addition to all fixed salaries throughout the period of employment, and the conduct of the parties during that period lends additional support to the finding.
The appellant argues that the respondent is estopped from claiming any balance due because of these facts: at various times during the period of employment the respondent was paid by check drawn on the corporation which contained in a space provided thereon a notation of a certain amount for salary and a certain amount for bonus. Each check had printed thereon the words “Endorsement of this check evidences payment in full of items set forth in voucher.” Respondent answers that no plea of estoppel was made in the trial court, that the point was first raised on this appeal, and that there is no evidence of estoppel as the appellant did not alter its course of conduct in any respect, but that it continued to enter upon its books of account the balance remaining due. If the question had been raised in the trial court, that court would have necessarily found that there was no estoppel on this evidence. The checks were plainly payments on account of the bonus awards carried on the books which were not definitely ascertained at the time. Throughout the period the endorsements on the checks were treated as receipts for payment “on account” of the bonus awards and in the amounts, or items, stated on the face of the check; the appellant continued to carry entries on its books of the amounts remaining due, notwithstanding these endorsements, and had better means of knowledge than the respondent of the condition of its own books, and of the manner in which these endorsements on the checks were treated. The evidence fails to show the essential elements of an estoppel. One relying on a plea of estoppel must have been ignorant of the true state of facts and must have been intentionally misled by the act of the other to his injury. 10 Cal.Jur. pp. 636, 637; 10 R.C.L. pp. 696, 697; Maggini v. West Coast Life Ins. Co., 136 Cal.App. 472, 29 P.2d 263.
Finally the appellant argues that the trial court went beyond the issues raised in the complaint and reached into equity when it reduced the award from the amount shown to be due on the books of account. The point rests on the finding that by “inadvertence and mutual mistake” the sum of over $2,400 was included in the account as due the respondent. The judgment in favor of respondent was reduced to that extent. This, the appellant argues, was a reformation of the contract of employment which the court could order only through its equity jurisdiction. Then, it is argued, that, since the action is one strictly at law, equitable remedies could not be granted. For the purpose of determining the running of the statute of limitations, the cause of action is deemed to be one on the account, and the statute is said to run from the last entry in the account. But the basis of the right of recovery is the contract of employment, and for this purpose the book account is deemed evidence of the contract, but not the contract upon which the right is based. When errors are found in the account, they are errors in the evidence, and not errors in the basic contract. Hence, a reduction in the amount allowed from that shown due in the account is not a reformation of the contract of employment, and it does not bring into play the exercise of any equity jurisdiction. But, if we should accept appellant's theory, we would have to restore to the judgment the amount deducted. Respondent argues that the trial court erred in making the reduction, but concedes that he cannot raise the point because he did not take an appeal. But he is not averse to accepting the advantages of appellant's position. Since the error complained of was favorable, rather than prejudicial, to the appellant, he is in no position to urge a reversal on that ground.
In a separate appeal three classes of items allowed in the cost bill are attacked: premiums paid on bonds on attachments; cost of a copy of a deposition of plaintiff taken by defendant; and cost of depositions of others taken by plaintiff but not used at the trial.
Section 1033 of the Code of Civil Procedure, as amended by St.1933, p. 1902, authorizes the prevailing party to recover “his costs and necessary disbursements in the action.” Nowhere in the Code can be found any definition of “costs” or “necessary disbursements” which could form a guide as to what expenditures should be allowed. Numerous cases have been written holding that it is within the discretion of the trial court to determine what is “necessary” and whether the expenditure was made in good faith. It is also settled that an appellate court will not substitute its discretion for that of the trial court, except upon a showing of a gross abuse of that discretion.
In Williams v. Atchison, Topeka, etc., Ry. Co., 156 Cal. 140, 103 P. 885, 134 Am.St.Rep. 117, 19 Ann.Cas. 1260, the Supreme Court affirmed an order of the trial court striking from a cost bill an item covering a premium paid for a surety bond in an action of claim and delivery. In support of the judgment, the court said that, in giving a bond of a surety company, the plaintiff was exercising a privilege and convenience, not a necessity. That case was followed in Christenson v. Cudahy Packing Co., 84 Cal.App. 237, 257 P. 906, where a similar order was affirmed. In the first case it was suggested that, if the Legislature did not agree with the decision, it would be an easy matter to provide for the allowance of such items. No change has been made in the statute since that decision, and we are constrained to hold on the authority of the Williams Case alone that the item should not be allowed.
The two remaining classes present a different situation. The respondent made a full showing as to the necessity for these expenditures and the aid which the depositions afforded in clarifying the issues and in saving the time of the trial court in the presentation of the evidence. The trial court had all the facts of the conduct of the trial and was in a far better position to determine the necessity of these expenditures. The appellant has not made any showing of an abuse of discretion as to this part of the order, and the implied finding of the trial court that these expenditures were necessary should not be disturbed.
The order is modified by striking therefrom the sum of $40 expended for premiums on surety bonds, and in other respects the order is affirmed. Neither party will have costs on the appeal from the order. The judgment is affirmed, the respondent to have his costs on that appeal.
NOURSE, Presiding Justice.
We concur: STURTEVANT, J.; SPENCE, J.
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Docket No: Civ. 10533.
Decided: March 29, 1938
Court: District Court of Appeal, First District, Division 2, California.
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