Wahyou v. Kiernan

PEEK, J.

This is an appeal from a judgment in an action upon an open book account for the cost of meat sold by plaintiffs to defendant.

For many years the defendant Kiernan owned and operated a bar in Stockton called the Tavern. It was located in the same building and immediately adjoining a restaurant commonly known during the period here in question as the Tavern Waffle Shop. A doorway at the rear of the building connected the kitchen of the restaurant with the bar, through which food was served to both establishments. Kiernan had never

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personally operated the restaurant, but he did own the furniture and equipment. The state sales tax permit for the restaurant and bar was in his name, and the on-sale liquor license was also in his name. He was billed directly for the utilities for both businesses. In 1951 a Mr. Hemley took over the operation of the restaurant, paying the former operators for the merchandise and stock on hand and agreeing with defendant to pay him 5 per cent of the gross receipts of the restaurant. In addition, Hemley agreed to pay Kiernan the sales tax and utility costs relating to the operation of the restaurant. Thereafter these amounts were computed monthly and paid to Kiernan, who in turn made payment to the state and to the concerns furnishing the utility services. One of plaintiffs’ salesmen solicited and obtained the meat account of the Tavern Waffle Shop from Hemley. The defendant did not participate in this transaction and he was never billed nor did he ever pay for meat supplied to the restaurant. Hemley made all payments on the account from his own funds. In the early part of June, 1952, approximately one year after credit was first extended, the credit manager for plaintiffs investigated and ascertained that the sales tax permit for both the restaurant and bar, as well as the on-sale liquor license, stood in the name of defendant. At that time the balance of the account was in the sum of $2,189.22. Plaintiffs made no attempt to contact defendant in regard to the outstanding balance and continued to extend credit in excess of $10,000. In the latter part of 1954, Hemley vacated the restaurant premises on demand of defendant because of his failure to pay defendant the agreed 5 per cent of the gross receipts of the restaurant. At the suggestion of Kiernan some creditors retook merchandise sold to Hemley and did not look to defendant for payment of the balance owing on the accounts carried in Hemley’s name.