Barlow v. Collins

Plaintiff-respondent brought this action against defendant-appellant, in three separate causes of action alleging in general, breach of contract, breach of trust and for an accounting, and injunction. Therein, he alleged that beginning in the year 1948, up to 1956, excepting certain periods, plaintiff and defendant lived together as husband and wife, without the benefit of a marriage license or ceremony ; that during these years they agreed to pool their earnings; that during that period they were both employed by third parties as a cook and waitress or were self-employed in the restaurant business as joint venturers or copartners; that they placed their joint earnings in a bank account in defendant’s name for the benefit of both parties; that unhappy differences occurred between them about December 3,1956, and defendant left with the proceeds; that plaintiff made demand upon her for his share of the proceeds or an accounting which was refused. An attachment was levied upon defendant’s bank account. Judgment by default for $11,095 was given plaintiff. It was subsequently set aside and a temporary restraining order was dissolved. By stipulation the money attached was held by plaintiff’s counsel in his trust fund account pending the outcome of the action. An execution levied on defendant’s bank account in the total sum of the judgment was also set aside.

Defendant answered, admitted they lived together as such, between said dates, with the exception of certain intervals; denied any agreement to share any money; alleged she contributed more money to plaintiff’s support than he contributed to hers; claimed plaintiff never gave her any money to deposit in the banks except the sum of $14,000 realized from the sale of a restaurant they jointly owned; and claimed that plaintiff retained one-half of this amount. She denied the other allegations of the complaint.

A pretrial hearing was had. Later the trial court found generally that the parties lived together as alleged; that they agreed to pool their earnings and share equally in their accumulations ; that defendant agreed to deposit them in banks in her name for their joint benefit; that said agreement was independent of and not in consideration of either of them living with the other but was in the nature of a joint enterprise ; that the sum of $13,753.80 represented such earnings and profits so accumulated in accordance with their agreement ; that unhappy differences arose and defendant refused to account to plaintiff for his share; that certain money had

Defendant appealed and contends: (1) that the complaint does not state facts sufficient to constitute a cause of action for breach of contract; (2) that plaintiff was estopped from claiming equitable relief since he elected to proceed on the theory of breach of contract by reason of obtaining a writ of attachment; (3) that plaintiff is barred, under section 300 of the Labor Code, from asserting any claim to defendant’s wages; (4) that plaintiff was barred by the statute of limitations from asserting any claim to her share in the profits or wages accumulated beyond the period prescribed by the statute of limitations; (5) that the evidence in support of the judgment is inherently improbable; and (6) that the findings do not support the judgment.

The main claim under this heading is that one partner may not maintain an action against his copartner for claims growing out of the partnership until after the partnership has been dissolved and an accounting has been had, citing such authority as Hall v. Hagerman, 107 Cal.App.2d 523 [ 237 P.2d 80 ]; Martyn v. Leslie, 137 Cal.App.2d 41 , 61 [ 290 P.2d 58 ]; Shearer v. Davis, 67 Cal.App.2d 878 , 879 [ 155 P.2d 708 ]; and Martin v. Going, 57 Cal.App. 631 [ 207 P. 935 ].

Under the first claim the complaint in the first cause of action did allege breach of contract and set forth in detail the particulars from which it was claimed such breach arose. It is true an attachment was levied but it was, before trial, dismissed or released. The second cause of action alleges a breach of trust and seeks an accounting. It incorporates the allegations of the first cause of action in support thereof. The court made general findings applicable to both counts. By obtaining the attachment there was no definite election of plaintiff to stand on the first count, as opposed to the election of the second count. Bach stated similar facts and in substance the complaint stated a cause of action for claimed breach of an agreement to pool their earnings and profits. Such agreements have been held enforceable in protecting the interests of each in such property unless the contract is made in contemplation of such relationship. (Bridges v. Bridges, 125 Cal.

Defendant relies on the general rule that a partner may not sue his copartner in an action at law in respect to firm transactions until an accounting has been had. While this general rule is well established, a different rule or at least an exception to the general rule, has been quite generally recognized and has been indicated and applied in several cases in this state. The general rule is peculiarly applicable to claims for damages arising out of the manner in which a partnership business has been conducted and to breaches of said agreements as such. But the reasons for applying the general rule are less forceful where the wrongful acts complained of are not only a breach of contract but constitute a tort, and this is especially true where the tort is of such a nature that it not only terminates the partnership but wrongfully destroys it, and where the erring partner converts to his own use its entire assets. (Laughlin v. Haberfelde, 72 Cal.App.2d 780 [ 165 P.2d 544 ]; Tufts v. Mann, 116 Cal.App. 170 [ 2 P.2d 500 ]; Keyes v. Nims, 43 Cal.App. 1 [ 184 P. 695 ].)

Under the second claim plaintiff was not estopped from claiming equitable relief. (De Hart v. Allen, 49 Cal.App.2d 639 [ 122 P.2d 273 ].) Third, plaintiff was not barred from claiming his purported share of the profits and his earnings which were found in defendant’s bank account under section 300 of the Labor Code. Defendant placed her earnings and profits in said account. She never parted with any of her money pursuant to the pooling agreement. There was no assignment of her wages in violation of that section and defendant could not equitably assert such claim. (Cline v. Festersen, 128 Cal.App.2d 380 [ 275 P.2d 149 ].) Fourth, this same conclusion applies to the claimed bar of the statute of limitations. Such a statute would run from the time of the breach or termination of the agreement or when the cause

Plaintiff testified generally that he commenced living with defendant as man and wife in 1948; that he was separated from his former wife at the time and defendant knew he was not divorced from her; that he was then employed as a cook and bartender and defendant was employed as a waitress; that they agreed to pool their earnings after taking out expenses and he turned the balance over to defendant to handle and to keep for both of them; that she kept it in a bank account and safety deposit box in her name for several reasons, i.e., because of probable demands of his former wife and on account of his drinking problem; that they subsequently went into business together on several occasions under the same arrangements ; that they both drank a little and he knew generally what they had saved and made. He itemized the amounts paid and received from such sales and operations and said that the bank account constituted about the only record of their transactions and earnings; that in 1951 they went to Arizona and defendant took the money and deposited it there in her name,

Savings account bank books of defendant were received in evidence and showed deposits and withdrawals over a two-year period. One showed a balance of $7,505.94 withdrawn on March 7, 1957; another a balance of $3,257.87 withdrawn on December 5, 1956; and a balance in another account of $2,360 on June 26, 1956. One showed a deposit of $10,000 on April 20, 1956, which was not withdrawn.

Defendant testified generally about their meeting and subsequent transactions. She said she left him about 50 times between 1948 and 1954, and she claims she had $7,000 of her own money from her mother’s estate when she first met plaintiff, which she kept in the several banks named and in

Defendant was confronted with her verified affidavit used in support of her motion to set aside the default. Therein she alleged she and plaintiff split $14,000 as a result of joint restaurant operations. She later said this was untrue, that it was only $4,000 that she made out of it. She testified that when they separated she had $10,000 in one bank, $8,500 in another, and $3,000 in another. She said they did not pool their earnings; that plaintiff kept his and she kept hers; that they had no agreement about pooling their earnings; that she helped support plaintiff during his illness in Arizona and at other times. She admitted having saved $22,000 at the time of the separation but claims $7,000 was her own money; that she gave plaintiff $2,000 the first six months she knew him, $2,900 to invest in the several businesses, and extra money to support himself.

Apparently there was some discussion at the pretrial hearing pertaining to a limitation in reference to the accounting, i.e., that the court, under the pleadings, did not desire to go into a complete accounting between the parties since they started living together but would limit it to the allegations of plaintiff’s complaint. The complaint alleges the agreement to be that each party agreed to deposit his earnings and profits in bank accounts and each agreed to share such money as was deposited therein. Then follows the names of the banks and the amounts then on deposit. The prayer was for a division of the money in the bank accounts. From the evidence produced it appears that the court did, to a great extent, trace the money deposited to these accounts back to the time these parties started living together. A sharp conflict in the testimony of the two parties existed. Defendant testified as to a $7,000 inheritance, claimed to have been deposited in certain banks prior to this time. This testimony stands un