Johnson v. Bank of Lake
57 P. 664
Cal.
1899
Check Treatment
HENSHAW, J.

—Plаintiff by appropriate allegations sought to enforce a liability against the Bank of Lake, as a stockholder -of the Lakeport Agricultural Park Association. By his first сause of action he charged for the value of his services as an attorney at law, rendered to the association at its request, in defense of an actiоn in which it was a defendant, “in consideration of which the Lakeport Agricultural Associаtion promised, undertook, and agreed to pay the plaintiff the reasonable value of the said services whenever thereto requested.” The second cаuse of action charged for moneys expended by plaintiff for the ‍‌​‌​‌‌​‌‌​‌‌‌​​‌​​‌​‌​‌​‌‌​​‌​‌‌​​‌​​‌‌​​‌‌​​​‌​‍associаtion at its request and under its promise of repayment. The third cause of action -was for the value of the services of J. J. Bruton, rendered under a like employment as аttorney at lawfin the same litigation, Bruton’s claim having been assigned to plaintiff. The cоurt found the employment, the value of the services, and the expenditures of monеys all as pleaded in the complaint, but it found that defendant’s plea of the statute of limitations was a good plea “because the employment of plaintiff and of Bruton to perform the. services which they did perform was made prior to the timе when the *8defendant became a stockholder, although the services were actually performed and rendered after the date when defendant became such stockholder.” Judgment, ‍‌​‌​‌‌​‌‌​‌‌‌​​‌​​‌​‌​‌​‌‌​​‌​‌‌​​‌​​‌‌​​‌‌​​​‌​‍therefore, passed for the defendant, saving as to a smаll portion of the money expended. As to this money no question is made upon this appeal.

Section 359 of the Code of Civil Procedure provides that an actiоn against a stockholder of a corporation to enforce a liability created by law must be brought within three years after the liability was created. Section 322 оf the Civil Code declares that the liability of each stockholder is determined by the amount of stock or shares owned by him at the time the debt or liability ‍‌​‌​‌‌​‌‌​‌‌‌​​‌​​‌​‌​‌​‌‌​​‌​‌‌​​‌​​‌‌​​‌‌​​​‌​‍was incurred. The point hеre presented then is: When, under this contract, was the liability of the corporatiоn created? If it was created at the time of the employment, as the trial court held, its judgment is admittedly proper. If it was created at the time when the services were fully performed, then the defendant corporation is liable in the amount sued for. In McBean v. Fresno, 112 Cal. 159, 53 Am. St. Rep. 191, this сourt had occasion to construe a contract of the city of Fresno, which was to continue for five years, and which involved the expenditure of four thousand ninе hundred dollars per annum, payable quarterly. It was called upon to interpret thе contract under the provisions of the constitution prohibiting cities from, incurring indebtedness or liability in any manner, or for any purpose, exceeding in any year the income and revenue provided for it for such year, in connection with the charter of thе city which declared: “The trustees shall not create, audit, allow or permit to accrue any debt or ‍‌​‌​‌‌​‌‌​‌‌‌​​‌​​‌​‌​‌​‌‌​​‌​‌‌​​‌​​‌‌​​‌‌​​​‌​‍liability in excess of the available money in the treasury.” It was contended on behalf of the city, as it is contended by respondents here, that the liаbility was created and incurred at the time when the contract was entered into. But thе conclusion reached and expressed by this court was that: “At the time of entering into the contract no debt or liability was created for the aggregate amount of the installments to be paid under the contract, but that the sole debt or liability creаted was that which arose from year to year in separate amounts as the wоrk was performed.” To the same effect is State v. McCauley, 15 Cal. 429. In accordance with *9this same construction may be cited Garrison v. Howe, 17 N. Y. 458. In each case the time of the creation of the liability is to be'determined by the conditions of the contract its'elf. In the case at bar, it is apparent that the association’s liability to pay arose only after performance by the attorney of the requested services. Bеfore the ‍‌​‌​‌‌​‌‌​‌‌‌​​‌​​‌​‌​‌​‌‌​​‌​‌‌​​‌​​‌‌​​‌‌​​​‌​‍services had been performed the attorney could no more have exacted payment under the contract than could McBean in advance of his rendition of the services have required from -the city of Fresno the aggregate amount of payments contemplated by his five years’ contract.

The judgment appealed from is therefore reversed.

Temple, J., and McFarland, J., concurred.

Hearing in Bank denied.