Tatsuno v. Pedersen

California Court of Appeal Apr 4, 1913 No. Civ. No. 1160.Published

Before: Lennon

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Holding. The court held that because the defendant's acceptance of the plaintiff's order was conditional upon a final balance being due to the contractors, and because the contractors' actual damages and offsets exceeded the contract earnings, no funds existed to satisfy the plaintiff's claim.

Issues

Whether a clause providing for stipulated damages in a contract is void under the Civil Code when actual damages are proven to exceed the stipulated amount.
Whether an incomplete statement of account presented by the defendant constitutes an 'account stated' acknowledging an indebtedness.
Whether payments and damages incurred by the defendant after the acceptance of an order can be offset against the order when the order is payable only from the final balance due under the contract.

Disposition. affirmed

Quotations verified verbatim against the opinion

“the question of the validity of the contract, in so far as it relates to liquidated damages, is not of any importance.”

“such statement possessed none of the essentials of an “account stated.””

“the order was but an assignment to plaintiff of the sum of seven hundred and fifty dollars out of any moneys finally found to be due to plaintiff’s assignors”

Synopsis

Damages—Validity of Agreement to Liquidate.—The validity of a provision in a contract for stipulated damages is not of importance, if the evidence shows that the actual damages suffered from the breach of the contract are far in excess of the sum stipulated.

Account Stated—What Does not Constitute.—Where one who has employed labor contractors exhibits to them a statement of account which he advises them is not complete and which they dispute the correctness of, such statement possesses none of the essentials of an account stated, and does not constitute a written acknowledgment of an indebtedness due the contractors sufficient to sustain a judgment.

Setoff and Counterclaim—Assignment by Contractor of Sum to be Due on Settlement.—An assignment by a contractor of such sum as may be found due him on the final settlement of his contract is not within the rule that an unconditional assignment of a contract for the payment of money cannot be subjected to offsets subsequently created in favor of the debtor.

LENNON, P. J.

This is an appeal from a judgment in favor of the defendant entered upon the verdict of a jury, and also from an order denying the plaintiff a new trial.

The action was founded upon a written order drawn upon the defendant in favor of the plaintiff by W. Mori, Tanaka Bros., and W. Wantanabe, Japanese labor contractors, who had previously entered into a contract with the defendant to furnish laborers for the. work of canning salmon during the fishing season of 1909 at defendant’s cannery at Bristol Bay on the coast of Alaska. The order in question requested the defendant to pay to the plaintiff the sum of seven hundred

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and fifty dollars “from the balance that may become due to us in the final payment of our salmon contract with you for this season.” This order was accepted in writing by the defendant “subject to the amount becoming due contractors signing same.-”

Plaintiff’s complaint alleged, among other things, that at the time of the commencement of the action there was a balance of several thousand dollars due to the Japanese contractors. The defendant answered denying that such balance or any amount whatever was due from him under the contract. Further answering the plaintiff’s complaint the defendant admitted an indebtedness to the Japanese contractors for work done under the contract in the sum of $20,753.75, but by way of counterclaim averred that defendant at various times from and after the execution of the contract and under the terms thereof advanced to said contractors various sums of money and furnished them with supplies aggregating the sum of $16,447.50; that said contractors became further indebted to the defendant in various sums of money aggregating the sum of $22,598 because of damages resulting to defendant from distinct and specific alleged breaches of several conditions of the contract.

The defendant’s answer proceeded further and alleged that in view of the nature of the contract and the circumstances under which it was entered into it was impractical or extremely difficult to ascertain the amount of damages which the defendant might sustain in the event of a breach of the contract, and for that reason the parties thereto stipulated the damages which would accrue to the defendant because of such breach.

Tatsuno v. Pedersen

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Synopsis

LENNON, P. J.

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