name and style, or name or style, of McPhee Company, otherwise or at all except under the name of McPhee Company, a corporation"; denied that defendant Anna was the owner of any greater number of shares of the capital stock of said corporation than ten shares; denied the indebtedness sued for; denied that they entered into written agreements with plaintiff by which it was agreed that plaintiff should act as superintendent of the construction of the buildings referred to and should receive 40 per cent. of the net profits thereof; denied performance by plaintiff of the conditions of the contracts alleged; denied making an account stated and that any amount of indebtedness was fixed. averments of the second cause of action were specifically denied. The 022, was filed June 6, 1908. It is therein alleged that defendant McPhee Company was a corporation organized and existing under and by virtue of the laws of California, with its office and principal place of business in the city and county of San Francisco; that defendants Daniel McPhee and Anna McPhee were at all times husband and wife; that defendant Daniel, during all the times mentioned, was doing business under the name and style of McPhee Company; that defendants sued fictitiously as First Doe, Second Doe, and Third Doe were the owners of one share each, and defendants Daniel and Anna McPhee were the owners of 2481⁄2 shares each of the capital stock of said corporation, the entire issued capital stock being 500 shares; "that said defendants other than the defendants sued herein as stock- The trial commenced on November 17, 1909, holders of the defendant McPhee Company and, before its conclusion and on December are indebted to this plaintiff in the sum of 1, 1909, an amended complaint was filed, con$13,649.27 upon and as for and upon an ac-taining two counts. The allegations were the count stated made by and between said de- same as in the original complaint, with these fendants except said defendants sued herein exceptions: W. M. Willett, J. F. Campbell, as stockholders and this plaintiff." It is and W. E. Lowe were substituted as dethen alleged that "said defendants other than fendants for First Doe, Second Doe, and those who are sued as stockholders of said Third Doe; it was alleged that defendant defendant corporation within two years last Daniel McPhee was the owner of 483 shares, past entered into a written agree- and defendant Anna McPhee of 10 shares of ments with this plaintiff from time to time, the capital stock of said corporation; that by which it was agreed that in the course of the account stated was for $13,749.27, and the erection and construction of certain that $100 had been paid thereon; the amount buildings, this plaintiff should act as the alleged in the second cause of action to be superintendent thereof and receive 40 per due was $15,649.27, and judgment was prayed cent. of the net profits of the erection and for that amount. construction of said buildings"; that plaintiff performed his part of said contracts and from time to time received various sums of money on account thereof; that, on May 28, 1908, plaintiff and defendants "other than said defendants sued as stockholders" enter-swer was filed, setting up two additional ed into an account stated and the amount of the indebtedness to plaintiff was fixed at the 'sum of $13,649.27, which said defendants promised to pay; that no part thereof has been paid and that said stockholders are liable for their proportionate amount of said indebtedness. ** ** * In a second count of the complaint it was stated "that this plaintiff performed certain work and rendered certain services to defendants other than said defendants sued herein as stockholders of the defendant corporation," and that plaintiff was to receive 40 per cent. of the net profits received for the construction of said buildings; that the said profits thereof were $65,229.56; that 40 per cent. thereof is $25,991.82; that plaintiff has been paid $12,342.45, leaving due him the sum of $13,649.27. The prayer is for the lastmentioned sum; judgment being asked against the five stockholders named for their proportionate amounts. A demurrer to the complaint was overruled, and defendants, other than those fictitiously named, answered: Denied that Dan A demurrer to the amended complaint was overruled, and an answer was filed, with similar denials as those contained in the answer to the original complaint. On April 6, 1910, an amendment to the an further and separate defenses, in the first of which it was alleged that in any account stated between the parties, mistakes, errors, and omissions were made therein by the bookkeeper who prepared "such alleged account stated," and that it showed only "gross profits and losses," the items being enumerated and aggregating $14,544.59 "as appearing in favor of the plaintiff herein." It was also alleged, as a further and separate defense, that both counts of the complaint were barred by the provisions of subdivision 1, section 339, of the Code of Civil Procedure. On April 1, 1912, plaintiff filed an "amendment to amended complaint" to be added to the first count, setting up a mistake by the bookkeeper by which $5,000 of the net profits made by the defendant corporation were omitted from the account upon which plaintiff was to receive 40 per cent., "and if said account stated had expressed said real intention of plaintiff and the defendant corporation, said account would have shown an additional $5,000 of net profits, and said account should and would have been stated A denial of these to assume 40 per cent. of such loss, the same to be deducted from his share of the profits." the sum of $15,749.27." Exhibit No. 5, dated April 18, 1907, covered 4 separate contracts and contained a clause in the same words and figures as last above quoted. The complaint in action No. 18,032, filed July 31, 1908, contained similar averments to those set up in the original complaint in action No. 17,022, alleging an indebtedness of $1,123.78, for which amount judgment was Exhibit No. 6, dated September 28, 1907, asked. An amended complaint was filed covered two contracts and provided that in December 1, 1909, containing the same chang-case of loss on said contracts, "Grant Fee is es as made in the amended complaint filed in the other action on the same date. Answers were filed to both pleadings, denying the material allegations thereof. Very full findings were filed in each action. A nonsuit was granted as to the defendant Daniel McPhee, doing business under the name of McPhee Company. The judgment in action No. 17,022 was in favor of plaintiff against the corporation for the sum of $14,491.33, with interest from the date of the commencement of the action, the aggregate being $18,529.15; judgment was also entered against defendant Daniel McPhee for $17,899.17, and against defendant Anna McPhee for $370.56. In action No. 18,032, the judgment against the corporation, including interest from the commencement of the action, was $1,427.78, against defendant Daniel for $1,379.20, and against defendant Anna for $28.54. to stand 40 per cent. of said loss same to be deducted from his share of profits on other work." Appellants, in their opening brief, urge the following general points as demanding reversal of the judgments: (1) There was no account stated. (2) Interest was allowable only from the date of judgment. (3) The judgment rendered was for 40 per cent. of gross profits and not for 40 per cent. of net profits. (4) The contracts created the relation of a partnership or joint undertaking between plaintiff and defendant corporation. (5) The court erred in its rulings during the trial. (6) The court erred in other particulars in its findings. The court found that the defendant corporation entered into written agreements with plaintiff by which it was agreed that in the course of the construction of certain buildings, plaintiff should act as superintendAs is apparent from the pleadings, the corent thereof and receive therefor 40 per cent. poration defendant McPhee Company was enof the net profits arising from the construcgaged in the general contracting business in tion of said buildings, and that plaintiff perSan Francisco and plaintiff was its super-formed all the terms and conditions of said intendent of construction. Six written agree- agreement on his part to be performed, and ments were entered into by the plaintiff and there became due plaintiff various sums as defendant corporation, which were received his proportion of said net profits; that said in evidence and marked, respectively, Exhib-proportion at the commencement of the action its 1 to 6. Exhibit 1 was as follows: amounted to the sum of $67,334.46, and that said 40 per cent. of said net profits amounted "San Francisco Cal., April 1/05. "This is to certify that Grant Fee is entitled to the sum of $26,933.78, of which plaintiff to 40 per cent. of the net profits on our con- has been paid $12,442.45, leaving due and owtract, Fairmont Hotel dated, Jan. 13/05, sal-ing to plaintiff from defendant corporation aries and office expenses to be charged to the the sum of $14,491.33, no part of which has contract. "All money allowed Grant Fee during construction to be charged against his 40 per cent., on settlement at completion of the contract. "McPhee Company, "D. McPhee, Pres't." Exhibit No. 2 was as follows: "San Francisco, Cal., Nov. 3/05. "This is to certify that Grant Fee is entitled to 40 per cent. of the net profits of our contract, Deming Building located on the southeast corner of Post and Stockton St., S. F. "Should there be a loss on the building it is agreed that 40 per cent. of the net loss on the Deming Building is to be deducted from Grant Fee's share of the profits on our contract, Fairmont Hotel dated Jan. 13/05." (Same signatures as to Exhibit No. 1.) Exhibit No. 3, dated June 25, 1900, certified that plaintiff was entitled to 40 per cent. of the net profits on 17 specified contracts. Exhibit No. 4 was dated December 1, 1906, covered three separate contracts, and contained the following clause: "Should there be a loss on any of the abovenamed contracts it is agreed that Grant Fee is been paid; that on May 30, 1908, plaintiff and defendant made and agreed to an account stated of said indebtedness due to plaintiff, and as a result of said accounting the amount of the net profits of defendant on said buildings and the construction thereof was shown to be $65,288.43, and defendants' indebtedness to plaintiff, after charging all debits against him, was fixed and stated to be the sum of $13,749.27, and it was then and there so agreed between plaintiff and defendant, and defendant thereupon promised and agreed to pay plaintiff the said sum of $13,749.27; "that in said account stated and in the making thereof, mistakes, errors, and omissions were made by which mistakes, errors, and omissions net profits amounting to $2,046.03 made by the defendant corporation McPhee Company in the erection and construction on said buildings upon which plaintiff was to receive 40 per cent. of the net profits, was omitted from said account," and said account, through said errors, did not evidence. The account was introduced as M San Francisco, May 28/08, 190 Contractors Mill and Yard: 1908 represent the real intention of plaintiff and Borel Bank Pacific Union Club.... 40% Nov. 17/09 First page E PMJ 1906 Feb. 22/08 & Grant Fee. To Fairmont Hotel... Newhall, Folsom St...... Pope Estate, Front St.... Forward Bush St. Aronson Bldg. scaffolding. The court found adversely to all the errors, omissions, and mistakes alleged in the answer to have occurred in stating the account, to wit, items in respect of salaries, office expenses, interest, insurance, use of donkey engine, and as to these the court found that none of said items was "omitted from said account stated in making up said account stated through mistake, error, or omission of said plaintiff and defendant corporation McPhee Company, or through the mistake, error, or omission of the bookkeeper of said defendant corporation," except "the court has allowed $809 for insurance and given the defendant corporation credit therefor in ascertaining the net profits as hereinbefore found, and in finding the additional net profits which should have been allowed to the plaintiff in making said stated account." The court also found that defendant's book-Cunningham keeper did in fact figure the office expenses Office work to be $1,800, which sum is the correct sum and was charged for office expenses in making said account stated. The court also found that neither cause of action was barred by the statute of limitations. Brick work, Call. 44 J. D. Spreckels.... 8367 11 $58103 86 $23241 54 As conclusions of law, the court found the Cash rec'd to & including 2/21/08 10710 00 plaintiff was entitled to judgment as we have hereinabove stated. Nov. 17-09 May 23/08 We shall address ourselves to the principal action (No. 17,022 in the superior court), in which judgment for the larger amount, $18,529.15, was rendered. No question arises as to the ownership of the shares of defendant corporation, 97 per cent. of which belonged to defendant D. McPhee he and his wife owning over 98 per cent. of the 500 shares; nor is there any question as to his authority as president and manager of the O.K. corporation, to represent and act for it dur- A.M.G. ing all the time plaintiff was connected with Loss it. There had been no meeting of the stock-40% holders or directors for years, its business being carried on by McPhee. Balance, Feb. 21/08.. .......... .............. The corpora- Cash rec'd to & including 5/23/08....... tion, in fact, represented his business incorporated. Our reference, when made to the defendant, will mean the corporation. [1] 1. One of the principal questions in the case is whether or not the finding that there Mr. McPhee took the paper and he looked it over for a little while and O. K.'d the paper and signed his name to it and handed it to Mrs. Goodspeed, and told her that was all right, to place it in the books." The notation: "O. K. A. M. G." on second the statement. page was placed there by defendant's bookkeeper, Mrs. Goodspeed. Otherwise than the notation made by Judge Mogan, the account is as it was handed to plaintiff by the bookkeeper. It will be observed that there are two pages comprising this account, each initialed by the trial judge. The one spoken of in the testimony as the "second page" is signed: "O. K. McPhee." This account covers transactions concerning the contract made April 1, 1905, in relation to the Fairmont Hotel, and ending February, 1908, the account having been first stated February 22, 1908. The "first page," so-called, brings the account down to May 28, 1908. This page was not signed by McPhee. The facts as to the preparation of the account and its signing by McPhee were given in the testimony of plaintiff and of Mrs. Goodspeed, who was the defendants' bookkeeper. Plaintiff testified that he asked the bookkeeper to make a statement of the profits and losses on the different jobs in which he was associated or superintended and the moneys drawn by him and the moneys due him; that she made the statement in writing and gave it to plaintiff showing the account down to February 21, 1908; that he gave the paper to McPhee between the 1st and 10th of March. He testified: Mrs. Goodspeed testified: * "I saw Mr. Fee on that occasion hand this paper to Mr. McPhee; that paper, plaintiff's Exhibit 7, as near as I can remember, was, at that time, in its present condition and I think both pinned together. As near as I can remember, Mr. Fee said: 'Mr. McPhee,' he says, 'here is a statement of the profits and losses and the balance due me as far as I know.' The A. Yes, sir. Mr. Aitken: Q. Then what? A. Court: Q. Did Mr. McPhee look at the paper? He looked at it quite a few minutes, and then he said, "That is all right, Grant.' Q. Did he sign it? A. I saw him sign it. * Q. Did he say to you, asking about putting it in the books to Mr. Grant Fee's credit? A. I turned around to Mr. McPhee, and I said, 'Mr. McPhee, will I put this in the books?' and he said, 'Yes.'" She testified that McPhee handed the paper to her with this instruction, and that later she gave it to plaintiff. Both before and after this account was stated as plaintiff testified, he had been demanding from McPhee money on account for the purpose of building a house and also to make a contemplated trip east, and these demands amounted to $9,000; that McPhee made frequent promises to meet his demands, but put him off to await a payment due or soon to become due on the Call building. "The Court: Q. At that time he had in his possession, and there was due you, you claim, eleven odd thousand dollars? A. Yes, sir. The Court: Q. But you were only asking a certain sum on account? A. Yes, sir." After plaintiff commenced the action, plaintiff met McPhee at the latter's request. Plaintiff testified: "I told him this was the statement made up by the bookkeeper, showing the profits and losses on the different jobs, the amount of money drawn by me, and the amount of money due me at this date. * * *He took the paper and said that he would look it over"; that McPhee retained it in his possession until the other account ("first page") was handed him more than two months later; that at plaintiff's request, the bookkeeper "Mr. McPhee wanted to know why I had continued the account down to May 23, 1908, brought suit. I told him I was unable to get the showing the profits and losses and moneys drawn money that was due me; he had promised reto that date; that this continuation was a car-peatedly and I could not succeed in getting any bon copy of the prior statement which had been of it, and I brought suit to protect myself; that handed to McPhee; that on May 28, 1908, the I needed the money and wanted it. bookkeeper prepared a further statement as to He said he owed me the money, but he did not two buildings-the Borel Bank and Pacific Un- have the money just then. * There was ion Club-just completed; that this statement no question about his owing me the money. was pinned to the prior statement, the two con- * * * He and I conceded that there was this stituting what is referred to as Plaintiff's Exhib- amount due me of $13,000 and some odd dolit 7. The carbon copy of the February account with its continuations, being the portion referred to as "second page," and the subsequent account constituting what is referred to as the "first page." lars." * Later they met in the office of John R. Aitken, one of plaintiff's attorneys, to talk over the matter. Mr. Aitken testified quite fully He testified that on May 30, 1908, he gave to what was said in his office by the parties. McPhee "the carbon copy of that same paper and the extension brought down and the other business pinned onto it." "Q. Were they attached together with a pin? A. At that time; yes, sir. Q. And the papers were in the same condition then as they are now, as to figures, totals, etc.? A. Yes, sir. Q. Was that written in lead pencil on that second page ‘O. K. McPhee'? A. He placed that on there that day." As to what occurred at that time, he tes tified: "I handed the paper to Mr. McPhee, and told him that was a statement of the profits and losses on the jobs, and the moneys that I had drawn, and what was due me to date, and that Mrs. Goodspeed did not want to put this amount to my credit on the books without he first O. K.'d 160 P.-26 Among other things, he testified: * * I used the words, stating the amount, * * or was the claim mentioned? A. The amount was mentioned in the conversation, I know." It is not necessary to state more of the testimony to show that McPhee knew the contents of the Exhibit 7 and the amount therein stated as the balance due plaintiff and the amount plaintiff claimed to be due him. [2] We think also that this Exhibit 7 was what the law regards as an account stated. In Mercantile Trust Co. v. Doe, 26 Cal. App. 246, 256, 146 Pac. 692, 695, we had occasion to say: "To turn an account into an account stated, it must have been rendered with a view of ascertaining the balance and making a final adjudication of the matter involved in the account; or, in other words, to bring about a meeting of the minds of the parties." That this is precisely what was effected in the case here seems to us plain enough. In Gardner v. Watson, 170 Cal. 570, 574, 150 Pac. 994, 995, the Supreme Court very recently said: “Over what in law constitutes an account there was never any question in this state, and very little uncertainty exists in other states." Quoting from Baird v. Crank, 98 Cal. 297, 33 Pac. 65, the court said: "In the absence of allegation and proof of fraud or mistake which taints the entire account, the court will not open and unravel it as if no accounting had been made, but the settlement will be binding except for the errors shown." 1 Corpus Juris, p. 721. We held in Adams v. Gerig, 25 Cal. App. 638, 640, 145 Pac. 106, that it was proper for the court, in an action for an account stated, to allow evidence of omissions and errors therein and find in favor of plaintiff in accordance with the facts. Johnson v. Gallatin Valley Milling Co., 38 Mont. 83, 98 Pac. 883, was a case where an account was stated in relation to an invoice of wheat sold by plaintiff to defendant. A balance was struck and plaintiff signed at the bottom a receipt in full payment. He afterwards discovered that there was ຄ shortage in the number of bushels and in the true balance due, to his disadvantage, and he demanded of defendant to make the the action to surcharge the account stated. correction, which being refused, he brought Said the court: the present, wherein one of the parties seeks to "The rules of law applicable to such cases as avoid the settlement and reopen the account, are simple and of easy application. The balance ascertained from a statement of accounts was for "It must appear that at the time of the ac-merly held to be the result of so deliberate an act counting certain claims existed, of and concerning which an account was stated, that a balance was then struck and agreed upon, and that defendant expressly admitted that a certain sum was then due from him as a 'debt.' And as was said in Coffee v. Williams, 103 Cal. 556, 37 Pac. 506: "An account stated is a document-a writing which exhibits the state of account between parties and the balance owing from one to the other; and when assented to, either expressly or impliedly, it becomes a new contract." See 1 Ruling Case Law, p. 207, title Accounts & Accounting. We need to go no further into the books to warrant the finding of the court that the document here in question was an account stated. [3] 2. Appellants contend that the account was opened up by proof of mistakes, errors, and omissions, and hence it ceased to be an account stated. Defendants' bookkeeper testified that the account was stated from entries in what were called "Cost Books," in which were entered all the items of receipts and disbursements relating to the contracts with plaintiff, as had been done in agreements not now involved, but similar previous transactions which had been carried on by the same parties and had been closed up in the same manner. She testified that after this account had been stated she discovered that in adding the column showing expenditures on the Fairmont Hotel, she had made a mistake of $5,000 which affected the profits to that extent on that contract, and made a difference in plaintiff's balance of $2,000. She also discovered some other minor mistakes, both debits and credits, resulting in by the parties as to preclude an examination into the items for the purpose of correcting errors or mistakes; but this rule has been so far relaxed that, while the promise to pay the ascertained balance is in effect a new promise, the settlement being regarded as the consideration for it, the settlement does not create an estoppel, but furnishes a strong prima facie presumption that the result is correct." (Citing cases.) [4] It was held that the burden of proof is cast upon the party seeking to avoid this new promise and open up to investigation the antecedent dealings between the parties, and he must allege the error, mistake, or fraud on which he relies and establish it by clear and satisfactory evidence. See, also, note to Jasper Trust Company v. Lampkin, 136 Am. St. Rep. 48. It was in obedience to this rule that defendant sought to surcharge the account and introduced evidence of what it regarded as errors, omissions, and mistakes. [5] 3. At this point we may dispose of defendants' contention that it was error to find against it in these particulars. The precise point urged is that the judgment rendered was for 40 per cent. of gross, and not 40 per cent. of net, profits, and this because it failed to take into account certain items which defendant contends should have been considered. Defendant devotes much attention to the cases and text-writers on the question of what constitute net profits as contradistinguished from gross profits, and the rule by which they are to be ascertained, but he deduces the conclusion that the term "net profits" used in the contracts necessarily implies that the items claimed by defendant should have been included as expenditures, |