Mayberry v. Cook

California Supreme Court Aug 2, 1898 No. L. A. No. 402Published

Before: Haynes

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Holding. The court held that an account stated between a consignor and a factor does not strip the underlying debt of its fiduciary character, meaning the debt remains non-dischargeable under the Insolvent Act of 1880. Furthermore, an agreement to an account stated may be implied from the parties' conduct, such as the failure to object to an account within a reasonable time.

Issues

Whether an account stated requires an express agreement or may be implied from the parties' conduct.
Whether a claim based on an account stated is barred by the statute of limitations.
Whether a debt arising from a factor's sale of consigned goods constitutes a debt created in a fiduciary capacity under the Insolvent Act of 1880.
Whether the transformation of an original debt into an account stated eliminates its fiduciary character for insolvency purposes.

Disposition. affirmed

Quotations verified verbatim against the opinion

“But this agreement may be implied from circumstances, as where merchants reside in different places, and one sends an account to the other, who makes no objection to it within a reasonable time.”

“one who receives goods consigned to him on commission to be sold, and the proceeds, less commission, to be transmitted to the consignor, if he sells the goods and fails to transmit the money, creates a debt in a fiduciary capacity.”

Synopsis

Account Stated—Implied Agreement.—The agreement between the parties to an account stated, that all the items therein are true, need not be express, but may be implied from circumstances, such as the sending of the account from one to the other, who makes no objection thereto within a reasonable time.

Id.—Account between Commission Merchants and Consignors—Statute of Limitations.—Where the date of an account rendered between commission merchants and a consignor of merchandise to them, and of the last item on either side in the open account between them, was less than two years before the commencement of the action, no part of the account is barred by the statute of limitations, whether the account be deemed stated or open.

Id.—Discharge . in Insolvency—Fiduciary Capacity.—Commission merchants who receive goods consigned to them on commission to be sold, and the proceeds, less commission, to be transmitted to the consignor, and who sell the goods and fail to transmit the money, create a debt in a fiduciary capacity, which is not barred by their discharge in insolvency; and the statement of the account between the parties does not so change the fiduciary quality or character of the indebtedness as to take it out of the exception declared in the Insolvent Act.

HAYNES, C. The defendants appeal from the judgment and from an order denying their motion for a new trial. The action was tried by the court without a jury.

The complaint alleged that the defendants were copartners •doing business as factors and commission merchants at the city of Los Angeles; that plaintiff from time to time consigned to defendants oranges belonging to him, to he sold by defend[589]ants as factors and commission merchants, on account of the plaintiff, and that on September 7, 1893, an account was stated between plaintiff and defendants, upon which there was found to be due to the plaintiff from the defendants a balance of thirteen hundred dollars and eighteen cents on account of said sales of plaintiff’s oranges so consigned by plaintiff to defendants and by them sold as plaintiff’s factors and commission merchants; that defendants agreed to pay said balance, but have not paid the same or any part thereof.

The defendants answered separately and specifically denied each of the allegations of the complaint, and pleaded that the action was barred by each of the sections 339 and 344 of the Code of Civil Procedure. Defendant Langley also pleaded that defendants had been adjudged insolvent debtors after plaintiff’s cause of action arose, and that his claim was provable in said proceedings, and was included in the schedule of their liabilities; and defendant Cook pleaded his final discharge in said insolvency proceedings, in which discharge was excepted such debts, if any, as are by said insolvent laws excepted from the operation of a discharge in insolvency.

The court found that all the allegations of the complaint are true, that his cause of action was not barred by either of said ■sections, that said defendants had been adjudged insolvent debtors in a proceeding commenced since plaintiff’s cause of action accrued, that Cook had been duly discharged, and the' proceedings therein were still pending as to Langley; that plaintiff’s claim was included in the schedule of liabilities and was provable against defendants in insolvency.

As conclusions of law, the court found that the debt or liability set out in the complaint arose while defendants were acting in a fiduciary capacity, and was not affected by said proceedings in insolvency, nor barred by the discharge granted to Cook) and that plaintiff is entitled to judgment.

1. Appellants’ first point is that “the account sued on is not a stated account.” A copy of the account is set out in the statement, giving the items of debits and credits, the first item being May 11, 1893, and the last September 7, 1893, and showing a balance due plaintiff of thirteen hundred dollars and eighteen cents. lío express acknowledgment of the correctness'

Mayberry v. Cook

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