PARKER v. SHELL OIL CO (1946)

On January 15, 1932, the parties to this action entered into a lease whereby the defendant company leased a gasoline service station from plaintiffs. Under the terms of the instrument defendant promised to pay plaintiffs as rental a sum equal to one cent per gallon of gasoline delivered to and sold from the premises. As part of the same transaction a lease and consignment contract was executed whereby defendant sublet the leased premises to plaintiffs and appointed them its agent to sell gasoline. Plaintiffs did not keep regular books but retained certain receipts, invoices and statements as a record of their transactions with the oil company. In March, 1933, plaintiffs acquired another parcel of property nearby, a gasoline pump was installed and by oral agreement the terms of the original lease were made to apply to this service station.

On June 7, 1940, plaintiffs commenced this action to recover certain sums of money. The second amended complaint alleged in the first cause of action that $3,259.02 was due and owing to plaintiffs as the unpaid balance of the monthly rental from January 15, 1932, to August 1, 1936. In the second cause of action plaintiffs alleged that the defendant was indebted to them on a balance due upon an open, mutual and current account in the amount of $3,259.02. The trial resulted in a stipulated judgment in favor of plaintiffs for $168.35 when the trial judge held himself bound by the prior order of a motion judge and refused to admit evidence of the alleged open, mutual and current account in support of the second cause of action. On appeal, Parker v. Shell Oil Company, 55 Cal.App.2d 48, 130 P.2d 158, the judgment was reversed on the ground that the trial judge erred in holding himself bound by the void order of the motion judge.

On retrial plaintiffs filed their third amended complaint, again setting forth two causes of action. The first count was for the recovery of $3,259.02 rent alleged to be due on the service station lease as modified by the oral agreement of March, 1933. The second count was for the recovery of $3,259.02 alleged to be due as a balance on an open, mutual and current account. A trial was had on the issue of the statute of limitations at which time plaintiffs offered a valise containing the receipts, invoices and statements upon which they based their claim of an open, mutual and current account. The court directed a verdict for the defendant on the first cause of action as to all rent accruing prior to the last three months of the lease. On the second count the court submitted to the jury the question as to whether this cause of action was based solely upon the rent due under the lease pleaded in the first cause of action. The jury answered the interrogatory in the negative. The court then entered a judgment notwithstanding the verdict for defendant on the first cause of action, upholding defendant's contention that the cause of action was barred in its entirety by the two year statute of limitations applicable to oral contracts.

Thereafter a trial was had on the issues raised by the second count of the third amended complaint and the answer. Both parties were allowed to make plaintiffs' valise of receipts available to their accountants who prepared statements for the court. The summary of plaintiffs' accountant took into consideration the lease which called for one cent per gallon rental and this item of rent was included in the statement. The defendant's accountant did not consider the item of rent and showed a balance in favor of the oil company. The court refused to accept the procedure adopted by plaintiffs' accountant on the theory that the contents of the valise, considered as an open, mutual and current account, did not contain the items of rent. Judgment was entered in favor of defendant.

Plaintiffs' appeal is devoted solely to the portion of the judgment relative to the second cause of action. They argue that the court erred in its refusal to consider the item of rent as a part of the open, current and mutual account and that the lease may be used for the purpose of explaining the items of the account.

The second cause of action stated in the third amended complaint alleged that $3,259.02 was due as the balance of an open, mutual and current account. Appellants contend that they are not suing merely for the rent due under the service station lease in this cause of action but that the item of rental is only one of several items which is included in the account. It is true, as stated in the former appeal in this action, that the identity of amounts sued for in the two counts does not in itself establish that the two causes of action are identical. It is also true that in an early stage of the trial the jury, in answer to a special interrogatory, found that the second cause of action was not based solely upon the rent due under the lease. Although appellants argue this matter in general terms they have failed to sustain their burden of pointing out specifically what other items are included. The evidence presented at the trial on the general issues raised by the second count and the answer thereto is wholly to the contrary. Plaintiff, Della Parker, the sole witness produced by the plaintiffs at this trial, testified without contradiction that the only item which remained unpaid and for which she was suing was the item of rent, all other items having been settled between the parties. This evidence, standing unimpeached, establishes as a fact that the claim under the second cause of action, although couched in terms of an open, mutual and current account, is for the rent allegedly due under the lease pleaded in the first count.

In view of this evidence and the change of the record the statement of the court on the former appeal, Parker v. Shell Oil Company, supra, 55 Cal.App.2d at page 55, 130 P.2d at page 162 becomes of prime import. The court said:

‘The major contention of respondent is, that, even if the order of the motion judge was void, no prejudice to appellants occurred because the offered documents, as a matter of law, would not constitute an open, mutual, and current account. This contention is predicated on the argument that the account pleaded in the second count is based on the lease pleaded in the first, and that the law will not permit a person, where his claim on express contract is barred by the statute of limitations, to evade the statute by the device of pleading that claim as an open account. That is undoubtedly the law. Tillson v. Peters, 41 Cal.App.2d 671, 107 P.2d 434; Cleaveland v. Inter-City Parcel Service, 22 Cal.App.2d 574, 72 P.2d 179; Lee v. De Forest, 22 Cal.App.2d 351, 71 P.2d 285; Stewart v. Claudius, 19 Cal.App.2d 349, 65 P.2d 933; People v. California S. Deposit, etc., Co., 41 Cal.App. 727, 183 P. 289. If the proffered evidence should show that appellants' second cause of action is for the rent due under the lease pleaded in the first, these cases would be authority for the proposition that no open account, as required by section 337, subdivision 2, of the Code of Civil Procedure, existed.’

This statement of the court in the former appeal is binding upon us in this subsequent appeal and is the law of the case. Dewey v. Gray, 2 Cal. 374; Pillsbury v. Superior Court, 8 Cal.2d 469, 472, 66 P.2d 149; Gore v. Bingaman, 20 Cal.2d 118, 121, 124 P.2d 17; De Hart v. Allen, Cal., 161 P.2d 453. It cannot be said that this statement in the opinion is obiter dictum. 2 Cal.Jur. 959. The reviewing court refers to the issue as ‘the major contention of respondent.’ The effect of the ruling is a direction to the trial court on the new trial to admit the proffered evidence and, if it found that the second cause of action was for the rent due under the lease pleaded in the first cause, the rule of the decision cited should be applied.

Appellants' contention that they are entitled to refer to the written lease in order to explain the items of their alleged open, mutual and current account is without foundation. It is apparent that such procedure would constitute more than an explanation but would actually led to the addition by parol evidence of an item not appearing in the records upon which they base their claim of an open account. It is settled law that a recovery will not be permitted where an open account is alleged if the right of action is based upon an express contract which does not constitute an item of the account. Hopkins v. Orcutt, 51 Cal. 537, 538; Lee v. De Forest, 22 Cal.App.2d 351, 359, 71 P.2d 285. The statement of the law in Cleaveland v. Inter-City Parcel Service, 22 Cal.App.2d 574, 72 P.2d 179, is pertinent to the situation presented by the instant appeal. The court said in 22 Cal.App.2d at page 580, 72 P.2d at page 182:

‘Plaintiff cannot thus extend the period of limitation by purporting to rely upon a book account, and then, by a process of calculation based thereon, seek to establish an amount due under the terms of an oral agreement that bears no relation to the books, and when the enforcement of said oral agreement under the law is barred by the statute of limitations. As has been hitherto declared, ‘The distinction, as a matter of pleading, between a book account and an ordinary contract debt not founded on a writing, is only important when * * * the statute of limitations is involved and where the question arises whether suit may be commenced within four years, or must be begun within two years after the cause of action has accrued.’ Hansen v. Burford, 212 Cal. 100, at page 107, 297 P. 908, 911, citing Wright v. Loaiza, 177 Cal. 605, 171 P. 311, 312. It has been held that recovery cannot be had for items not contained in a book account. Egan v. Bishop, 8 Cal.App.2d 119, at page 126, 47 P.2d 500.'

The trial court's exclusion of the item of rent from the alleged open, mutual and current account was in accord with this recognized principle of law.

The judgment is affirmed.

NOURSE, Presiding Justice.

GOODELL and DOOLING, JJ., concur.