Garcia v. Sibley

MARKS, J. This is an appeal from an order of the Superior Court of Tulare County sitting in probate determin[55]ing that W. S. Sibley is a general creditor of the estate in the sum of $2,373.05.

Appellants attack the order on the following grounds: (1) that it included interest charged in the amount of $2,021.01 on what is termed a “running account” upon which no interest should have been allowed; (2) that it improperly included $391.39 on what is called the “Sanderson account transfer”; (3) that it improperly included $7.50 paid to the Tulare Abstract Company for legal services.

Amado Montijo died on April 23, 1931, the owner of an interest in an orange grove in Tulare County. At that time he was indebted to Sibley in a considerable sum, secured by a continuing mortgage on the crops of oranges. The executors had no money to conduct the farming operations and on three separate occasions secured formal permission of the probate court to continue the operations and for that purpose to borrow money on their unsecured notes bearing interest at not to exceed eight per cent per annum. Notes in a total amount of $8,100, all payable to Sibley, were executed by the executors of the estate. The earlier notes bore interest at the rate of seven per cent per annum and the later at eight per cent per annum.

Sibley was in the business of packing and shipping citrus fruits and handled the crops from the estate property. His bookkeeper did not set up a note account with the estate but carried the charges and credits as an open account. He charged the estate with each advancement made by Sibley and credited it with the returns from the oranges as they came in. While the bookkeeper described a rather complicated method used by him of computing interest, it amounted to a charge of seven per cent interest on the actual net balances owed by the estate.

Appellants argue that as it was an open running account, interest could not be charged on it until demand for payment was made. They have entirely overlooked the fact that the indebtedness was evidenced by promissory notes executed by them under authority of court orders; that all of these notes provided for payment of interest; that the court orders authorized the payment of interest. This is sufficient evidenec of an agreement to pay interest to support this portion of the order. It is evident that the earlier [56]