Baxter v. Waite

| Wash. Terr. | Jul 15, 1884

Opinion by

Turner, Associate Justice.

This case comes to this Court on writ of error to the District Court for the Third District, holding terms at Seattle in King County.

Numerous exceptions were taken to the rulings of the Court below, which exceptions were preserved in the record.

We need to examine and discuss in this opinion but two of the questions raised by said exceptions, it being the opinion of the Court, after careful consideration, that no error appears in the record, unless it be in connection with the ruling of the Court upon said questions.

The action in the Court below was commenced by the defendants in error, who are commission merchants doing business in Liverpool, England, to recover the sum of $7480.05 with interest, upon the balance of an account current for goods, wares, and merchandise sold and delivered by them to the plaintiffs in error, who are merchants doing business in Seattle, W. T., and for money advanced by them to and for the use of said plaintiffs in error.

The jury rendered a verdict for the full amount claimed by the defendants in error. This account between the parties had run over a period of several years, and it was not disputed that the defendants in error had, from time to time, rendered statements of account to the plaintiffs in error, to which statements the plaintiffs in error had not objected. Mr. Baxter, one of the plaintiffs in error, in his testimony claimed that objections to the accounts rendered had béen deferred from time to time, in the expectation that he would soon visit England, when he intended to draw the attention of the defendants in error to said objections; but that he was delayed by unexpected occurrences in the years 1878 and ’79, and as the dealings between his firm and the defendants in error ceased in the year 1880, the expected opportunity to make verbal objection did not occur.

On the trial below, the plaintiffs in error attacked the correctness of the statement of account rendered by defendants in error to them, and introduced testimony to prove the nature of the parol contract under which the account was made, for the purpose of showing that certain classes of items in the accounts-were not allowed or provided for by said contract.

Plaintiffs in error also introduced testimony going to show that defendants in error had not dealt fairly with them, in the sale of large consignments of hops which they had shipped to defendants in error for sale in England. This testimony tended to establish the fact that the hops, when shipped from this country, were of prime quality and in good condition ; while the defendants in error, in the letters acknowledging the receipt from time to time of such consignments, reported the hops to be of an inferior quality, and in a damaged condition; and in the accounts of sales furnished by them to the plaintiffs in error, reported such hops as sold at greatly reduced prices.

The plaintiffs in error, upon this branch of the-case, introduced testimony showing that it was the custom of merchants in Liverpool, when consignments of hops were received from abroad, to cause such consignments to be examined by a committee of experts, whose duty it was to report upon the condition of the hops, and to seal up for transmission to the consignors samples taken by them from each bale. This course of action was not pursued by the defendants in error with reference-to the consignments sent to them by the plaintiffs in error, nor did they attempt, so far as the evidence disclosed, to fix responsibility for the damaged condition of the hops upon any of the-common carriers over whose lines the hops were transported while in transit to Liverpool.

The foregoing seems to be a sufficient statement of the facts of the case, to enable one to understand the force and effect of that part of thé charge of the Court below which it -is claimed 3s error. The alleged error is found in instructions numbered XVIII and XIX. In the first of said instructions, the Court ■charged the jury that if they “ believed the plaintiffs from time to time sent to the defendants statements of the accounts between them, which were received by defendants, and- that they ■did not, within a reasonable time, object to said statements, and notify the plaintiffs of said objections, then, as a matter of law, the jury should regard the defendants as admitting that the accounts were correctly stated; and the defendants will be bound by them, unless the defendants have shown by a preponderance •of evidence that there was some error or mistake in the accounts .as rendered to them, of which they were not informed at the time they so consented to them, or unless defendants have •shown by a preponderance of evidence some excuse satisfactory to the jury for'not objecting.

In the nineteen instructions, the Court charged the jury in effect that the plaintiffs in error would not be liable for errors or mistakes, fraudulent or otherwise, in the account against themselves, of which they were not aware at the time of the bringing of the suit.

Does knowledge of fraud or error in an account by the party to whom such account has been presented, -which account has become a stated account by the mere failure of the party receiving it to object within a reasonable time, prevent such party from afterwards setting up the fraud or error as a defense to an action on the account ?

The charge of the Court below answered this question in the affirmative, and we think that in so doing the Court erred. Mr. Abbott, in his work on Trial Evidence, p. 458, Seo. 1, says : “An account stated is not now regarded as a contract upon a new consideration, and does not create an estoppel, but it establishes prima facie the accuracy of the items without further proof. The statement is not the equivalent of an express promise to pay the balance, when the items do not constitute a legal ■debt or duty.”

It is believed that this is a correct statement of the law, applied to an account which has become a stated account by the silence of the party to whom it was rendered, however it may be as to an account which has been balanced with the express assent of both parties. Silence as to an open account rendered does not and ought not to extend liability in such an account beyond what is justly due. To hold otherwise would be to eliminate from the contract sued on, one of the essentials of all contracts, namely, the existence of a good consideration. The law imposes a penalty for the silence, however, which is that the burden of proof is shifted from the party whose interest it is to establish the account, and the account will stand in its entirety, unless the other party, by affirmative proof, can impeach it. The penalty is not the creation by the law of an entirely new contract between the parties, but the shifting from, one party to the other of the burden of proof. To this effect see 2 Estee’s Pleadings, 285, Sec. 7; 1 Wait’s Actions and Defenses, 195; 1 Story’s Equity Jurisprudence, Sec. 528; Bainbridge v. Wilcox, Baldwin’s Reports, 540; Life Ins. Co. v. Carpenter, 49 New York, 668; Guernsey v. Rexford, 63 New York, 631; Perkins v. Hart, 11 Wheaton, 256; Wiggins v. Burkham, 10 Wall. 131; Oil Co. v. Van Etta, 107 W. S. 332; Board of Supervisors v. Jones, 91 Wis. marginal, 54; Lockwood v. Thome, 18 New York, 285; Young v. Hill et al. 67 New York, 162; Freeland v. Hern et al., Cranch, 147.

Counsel for defendants in error cited a large number of authorities in opposition to the view here taken. Such of them as were read upon the argument at bar, or which the Court has had the opportunity to examine since, were cases of settled accounts, or stated accounts express^ assented to and containing mutual concessions, or cases in which the doctrine of estoppel was held to apply. We will now inquire if the doctrine of estoppel can help out the case at bar. To create an estoppel in favor of a stated account, several things must concur besides knowledge at the time the account was rendered on the part- of the person defending, of the truth of the matters which he is trying to set up; the most important being want of knowledge of the truth on the part of the person claiming the estoppel,, and action on his part to his prejudice induced by the silence of the other party. An illustration of the doctrine may be drawn from this case. The defendants in error, in most if not all the accounts current rendered by them, charged the plaintiffs in error with sums'paid to other merchants and brokers in Liverpool for commission, in excess of their own commission, on. sales of merchandise consigned to them by plaintiffs in error. It seems to have been conceded that the original contract between the parties did not provide for or allow the payment of such extra commissions; yet the defendants in error, having pjaid them, doubtless, in the belief that they were justified by the contract, and the plaintiffs in error having failed to object, and thus induced the defendants in error to continue in that course of dealing, and to pay out considerable sums of money, it would be manifestly inequitable now to allow the plaintiffs in error to say, “ These items in the account are not justified by the original contract.”

It will be seen, however, that the doctrine mentioned does not aid the exposition of the law given to the jury by the learned Judge in the Court below.

The effect of the charges complained of was, to say to the jury, “The defendants are estopped by their mere silence from denying the correctness of all items in the account, as to the incorrectness of which they had knowledge, regardless of the effect such silence may have had up>on the plaintiffs. The estoppel, too, was applied to all the items of the account, including those which it was claimed were fraudulent. It is apprehended that as to items of such a character no estoppel would be declared, even if the party rendering the account had been induced by the silence of the other party to continue that or some other course of dealing. It follows from those views that the 18th instruction, which directed the jury to disregard the errors and mistakes in the accounts,’ if any existed, unless the plaintiffs in error should first establish a want of knowledge on their piart as to such errors and mistakes at the time the account was rendered to them, was an erroneous exposition of the law. The 19th instruction was more injurious to the plaintiffs in error, in our view, than the 18th. It extended the time within which knowledge of errors would debar them from defending, from the date of the rendition of the account to the date of the filing of the suit. If the jury accepted it as a rule of action, they could not have given the plaintiffs in error the benefit of mistakes, errors or frauds, of which they were ignorant at the time of the rendition of the account, and for a reasenable time thereafter, but of which they became informed before suit was brought.

Plaintiffs in error were entitled to show fraud, error, or mistake which had come to their knowledge after the account became a stated account, whether the knowledge came to them before or after suit was brought.

It was contended by the counsel for defendants in error, that the error of the Court below, if error it was found to be, did not, in fact, prej udice the plaintiffs in error; because the great preponderance of evidence in the case went to establish, as to all of the account, each and every of the facts necessary to create an estoppel. We would have no difficulty in so finding as to the item of commission paid to other brokers, to which we have before adverted, and, perhaps, as to other items ; but as to the conduct of defendants in error concerning the sales of hops, if the same were fraudulent, the plaintiffs in error cannot be es-topped by mere silence. It is not the purpose of the Court to intimate that the conduct of the defendants in error in the sales ■of hops was other than upright and honorable ; but there is certainly a preponderance of evidence in favor of the claim that the hops, before shipment, were prime hops in good condition, ■and it was not disputed that the defendants in error had failed to follow the custom of merchants in Liverpool in respect to the inspection of said hops, or in respect to the custom -which a conscientious performance of duty would impose on all consignees ■of goods, to attempt to fix liability somewhere for damage done to the goods while in transit. The plaintiffs in error were entitled to have the question of the effect of the evidence submitted to the jury in support of their claim, that defendant in' ■error had not dealt properly by them in the matter of the consignments of hops. (Oil Co. v. Van Etta, 107 U. S. 332.)

We cannot say what view the jury would have taken in that ■case. It is possible that their verdict would not have been at all different, especially -(and we may say this to guard against the implication that we have meant to express any opinion as to the merits of this case), as there were other facts not mentioned herein, because not considered necessary for the purpose of this opinion, which went to show the good faith of the defendants in error. To ask this Court to go further, and laboriously inform itself of all the facts possessed by the jury, and by the same processes that a jury would employ to determine this case according to the right of the matter, is to impose burdens which its limited time forbids it to assume, to say nothing of the imperfectness of such a Coui-t, by its constitution, for such a task.

It was further contended by counsel, that the law in respect to i;he matters of defense mentioned in Instructions XVIII. and XIX. was given to the jury correctly in other portions of the charge of the Court, and that the error was thus obviated. It is true, as stated by counsel,' that the law was correctly given to the jury by the Court in a series of instructions, numbered from VIII. to XIV. inclusive. These instructions were general, however.

It might well be that the jury thought said instructions qualified and limited by charges XVIII. and XIX. Such was the effect of the latter charges, and such was evidently the intention of the Court in giving them. Under these circumstances, we think the following a correct statement of the rule by which this Court should be guided:

• “ The giving of inconsistent instructions is error, for the reason that the jury will be as likely to follow the one as the other. Therefore, an erroneous instruction is not cured by another instruction on the same subject, which is correct, unless the former is by the latter specifically withdrawn.”

And this is especially true of a correct general instruction, coupled with an erroneous specific instruction. The latter is ■obviously not cured by the former. (Thompson’s Charging the Jury, Sec. 69.) The remaining question in this case is raised by the action of the jury in rendering a verdict against plaintiffs in error for the full amount of the balance claimed against them, with interest thereon from November 10,1881, at the rate ■of ten per cent, per annum. The defendants in error were entitled to recover only on the case which they had made. Interest is not recoverable on an open account, unless stipulated for by contract. The contract in this case provides for interest at the ■rate of five per cent, per annum only. It follows that the Court below should have granted the plaintiffs in error a new trial «ipon the motion, unless the defendants in error had remitted the excess of interest above five per cent, recovered by them.

The judgment of the Court below Is reversed, and the case remanded to said Court, with instructions to proceed in conformity with this opinion

¥e concur. John P. Hoyt,

S. C. Wingaru, Associate-Justices.