West v. Holstrom

Plaintiff, Larry West, is a former partner in a partnerership known as the W & K Trucking Company. The partnership was dissolved, and upon dissolution plaintiff acquired the partnership’s cause of action against defendant. In 1966 plaintiff acquired a $25,000 judgment against defendant Robert C. Holstrom in the Superior Court of Placer County. The judgment is for undercharges resulting from lumber hauling services performed for defendant by the W & K Trucking Company during the 19-month period eommene

Defendant is an experienced lumberman who has operated a sawmill for more than 20 years. In May 1962 he engaged plaintiff to haul green lumber from his sawmill. At the time plaintiff had obtained a license to operate as a radial highway common carrier. He had also obtained a schedule of the minimum tariff rates for the hauling of lumber as fixed by the Public Utilities Commission. However, during the entire period that plaintiff hauled defendant’s lumber he was paid by the volume of the lumber hauled instead of the weight of the lumber as required by the minimum rates. Subsequently the Public Utilities Commission discovered that plaintiff had undercharged the defendant for hauling defendant’s lumber. The commission fined plaintiff $1,000 and directed him to collect the undercharges. After defendant refused to pay the undercharges, plaintiff instituted this action in the superior court.

Defendant neither denies the undercharges during the period in question nor challenges the sufficiency of the evidence to support the $25,000 awarded by the court. However, while conceding that the decisional law is against him, he nevertheless requests us to reverse the judgment by declaring “a rule which will permit consideration of equitable principles so as to afford appellant (defendant) and other innocent shippers protection against a subsequent suit for undercharges by a carrier who has knowingly violated P.U.C. tariff schedules. ’ ’

A law established for a public reason cannot be contravened by private agreement (Civ. Code, § 3513). Thus, it is firmly settled that a carrier has both the right and the duty to recover undercharges; recovery is essential to preserve the minimum rate structure for a vital quasi-public industry and to maintain the integrity of the orders of the Public Utilities Commission (Hischemoeller v. National Ice etc. Storage Co., 46 Cal.2d 318 [ 294 P.2d 433 ]; Gardner v. Rich Mfg. Co., 68 Cal.App.2d 725 [ 158 P.2d 23 ]; Gardner v. Basich Bros. Constr. Co., 44 Cal.2d 191 [ 281 P.2d 521 ]). In fact, it has been repeatedly stated that the collection of undercharges is one of the most effective means of preserving the minimum rate schedule and of eliminating collusion between carriers and shippers (People ex rel. Public Utilities Com. v. Ryerson, 241 Cal.App.2d 115 [ 50 Cal.Rptr. 246 ]).

Moreover, defendant’s argument subtly suggests that he was an innocent shipper. However, defendant’s good faith was not placed in issue by the pleadings or the pretrial conference order. And, significantly, the trial court made no findings on this issue. The court merely found that plaintiff was not estopped by his own conduct from recovering the undercharges.

In any event, this is not a compelling ease to apply equitable principles to protect the defendant. The defendant was an experienced businessman who had been in the sawmill business for more than 20 years and hired transportation services since 1950. He was acquainted with the existence of the Public Utilities Commission and knew that the commission controlled lumber hauling. He testified that he always paid lumber truckers by the quantity of board-feet hauled rather than by the weight of the lumber because it was not practical to weigh the lumber. Significantly, he experienced similar troubles with the Interstate Commerce Commission before he engaged the plaintiff.

We shall now direct our attention to plaintiff’s cross-appeal. He contends that the evidence does not support the damages awarded and that the trial court should have allowed prejudgment interest.

Plaintiff presented into evidence a detailed statement of the hauling services he performed for the defendant during the 19-month period that he was engaged by defendant. This statement contains 692 entries and inter alia shows the board-feet of lumber hauled, the rate charged per thousand board-feet, the amount billed, the weight of the board-feet and the total amount that should have been charged under the minimum rates. Defendant only disputed one figure; he asserted the weight of the lumber was 3.4 pounds per board-foot

Plaintiff’s contention is without substantial merit. ■ The court applied the two-year statute of limitations (Code Civ. Proc., § 339) and restricted plaintiff’s recovery of undercharges to lumber hauled on and after June 10, 1962; plaintiff’s complaint was filed on June 10, 1964. According to the evidence, if the court found that the lumber weighed 3.4 pounds per board-foot (instead of 4.0 pounds per board-foot) the sum of $26,695.66 was the most that plaintiff was entitled to recover. And if a leeway of about 5 percent is allowed to take care of miscalculations and other factors (as the court was also free to do under the evidence), it is evident the court’s $25,000 judgment conforms to the evidence.

Plaintiff concedes that the two-year statute of limitations is applicable. Plaintiff apparently hauled defendant’s lumber under an oral agreement and the statute of limitations relating to oral agreements applies (Pellandini v. Pacific Limestone Products, Inc., 245 Cal.App.2d 774 [ 54 Cal.Rptr. 290 ]). Plaintiff asserts, however, that the parties “permitted a bi-monthly lag between the completion of the haul and the payment therefor” and concludes that the statute of limitations did not run on any haul performed during the 15-day period prior to June 10, 1962. According to plaintiff’s testimony defendant made out hauling tickets for each hauling service performed and furnished copies of these tickets to plaintiff’s drivers. Then twice each month (on the 5th and 25th) defendant furnished plaintiff with a statement summarizing all services performed by plaintiff for the preceding 15-day period. The statement was accompanied by defendant's check in payment for the services.

This contention is also without substantial merit. If plaintiff’s argument is carried to its logical conclusion it would mean that plaintiff can recover undercharges under an open account which was terminated, contrary to the rule articulated in Groom v. Holm, 176 Cal.App.2d 310 [ 1 Cal.Rptr. 410 ], In Holm the parties had adopted a billing procedure remarkably similar to the one employed in the instant case. The carrier attempted to invoke the four-year statute of limitations by asserting that the undercharges were due under an open account. The trial court, however, applied the two-year statute of limitations and the carrier appealed. The appellate court affirmed the trial court and held that the open

Civil Code section 3287 provides: 1 ‘ Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor, from paying the debt.” And in comparable situations (the collection of undercharges under the Interstate Commerce Act and Interstate Commerce Commission regulations) the federal courts have held that interest must be allowed (Fawley Motor Lines, Inc. v. Cavalier Poultry Corp., 235 F.2d 416 ; Louisiana & Arkansas Ry. Co. v. Export Drum, Co., 359 F.2d 311 ).

Defendant argues, however, that the court correctly disallowed prejudgment interest since no liquidated claim existed prior to judgment. He relies on excerpts from Chase v. National Indem. Co., 129 Cal.App.2d 853 , 865 [ 278 P.2d 68 ], and Conderback, Inc. v. Standard Oil Co., 239 Cal.App.2d 664 , 689-690 [ 48 Cal.Rptr. 901 ], In Chase the court stated: “The reason for denying interest on claims is that where the person liable does not know what sum he owes, he cannot be in default for not paying.” In Conderback the court said: “Civil Code section 3287 provides in relevant part: ‘Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, . . .’ Under this section interest cannot be awarded prior to judgment when the amount of damages cannot be ascertained except on conflicting evidence. [Citations.] The rationale of such rule is that where a defendant does not know what amount he owes and cannot ascertain it except by accord or judicial process, he cannot be in default for not paying it. [Citations].” (Italics added.)

In the instant case defendant kept complete records on the lumber hauled by the plaintiff. He knew exactly the date and destination of each haul, the number of board-feet hauled and the amount that he had paid. Yet defendant argues that there was a conflict in the evidence on the weight of the green lumber that plaintiff hauled for defendant. Plaintiff’s expert testified that the weight of the lumber was 4.0 pounds per board-foot, and defendant’s expert testified to 3.4 pounds per board-foot. Defendant therefore asserts that the exact sum of his indebtedness was not readily ascertainable.

Defendant’s arguments are not persuasive. The weight of green lumber per board-foot is at least as measurable as established market values. And it has been stated on numerous occasions that interest will be allowed as damages where the demand, although unliquidated, is of such a nature that the amount can be established with reasonable certainty or by reference to well-established market values (Crabbe v. Mires, 112 Cal.App.2d 456 [ 246 P.2d 991 ]; Katz v. Enos, 68 Cal.App.2d 266 [ 156 P.2d 461 ]; Shell Chemical Corp. v. Owl Transfer Co., 173 Cal.App.2d Supp. 796 [ 344 P.2d 108 ]).

In any event, the duty of a carrier to collect undercharges, when ordered to do so by the Public Utilities Commission, is based on salutary public policy and is one of the most effective ways of preserving the minimum rate schedule. Thus, the shipper must not be allowed to gain any advantage, including the advantage that he would gain from the free use of the carrier’s money, as the result of rate cutting. And this is particularly true where, as here, the shipper is an experienced businessman who was or should have been familiar with the Public Utilities Commission rates and regulations. As the court aptly stated in Louisiana & Arkansas Ry. Co. v. Export

The judgment is affirmed and the trial court is directed to determine the prejudgment interest and add it to the principal amount of the judgment.

Conley, P. J., and Stone, J., concurred.