Court Opinion

ID: 9445574
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:33:26.659549+00
Date Added: 2024-06-11T17:30:20.037452
License: Public Domain

PRETTYMAN, Circuit Judge
(dissenting).
I disagree with my brethren on two grounds: (1) The issue of usury was fairly raised by defendant’s Fourth Defense, and (2) the account sued on was not an account stated.
Schumer Company, Inc., entered into an agreement with Reed Research, Inc., in November of 1949, undertaking to lend, or to guarantee the loan of, $30,-000 to Reed. The agreement provided that during the period of the loan Reed would hire a designee of Schumer whose services would “encompass supervision of” Reed’s accounting department “at a salary commensurate with the services rendered.” This salary was later set at $200 a month. Pursuant to the agreement Schumer pledged securities with a Washington bank to guarantee a loan to Reed. Schumer frequently rendered statements showing the state of the account. When the bank’s loan was paid, Reed refused to pay the amount Schumer claimed, denying that it owed the money; Reed contended that Schumer’s designee had not in fact performed the services for which $200 a month had been charged.
On September 30, 1955, Schumer filed a civil action “On an Account”, attaching to the complaint a statement showing a balance due August 31,1952, and twenty-nine entries of charges and credits dated over the period to January 30, 1954. That statement was prepared solely for use in the lawsuit. Reed answered with four defenses and a counterclaim. The District Court gave summary judgment for Schumer, holding that there was an account stated and that the affirmative defenses were insufficient in law.
One of the defenses raised by Reed was that the agreement was in reality a loan contract calling for excessive interest. *606Illegality of consideration is a good defense to an account stated,1 and usurious interest is an illegal consideration.2 A loan or sale of credit will be examined closely, and, if it appears from all the circumstances that the parties intended a usurious loan, the contract is unlawful. The question of the parties’ intent is for the jury.3 It seems to me that Reed’s Fourth Defense raised genuine issues of material fact which precluded summary judgment.
Moreover it seems clear to me that the purported statement of account attached to the complaint was not an account stated. As I have pointed out, Schumer filed suit on September 30, 1955. The account annexed to the complaint began with a balance of $4,500.87 as of August 31, 1952, contained twenty-nine entries of charges and credits, and ended with a balance of $4,600.87 on January 30, 1954. This account was never seen by Reed before trial, was prepared solely for trial, and contained no entry or balance after January 30, 1954. The last statement rendered by Schumer before the impasse was on December 31, 1953, and was for a lesser amount. On January 13, 1954, after Reed had repaid the Washington bank, Schumer’s vice-presi■dent suggested that representatives of the two firms should meet in order to ■“wind up final details concerning the loan •contract.” On April 16, 1954, Reed went to New York to meet with Schumer’s attorney, but the latter was out of town. Before the parties met, Schumer rendered the account of May 31, 1954. On July 22, 1954, Reed wrote a letter to Schumer denying liability.4
The majority of the court treats the account of May 31, 1954, as an account stated. But Schumer did not sue on the account of May 31,1954; it was not even referred to in the complaint. It is true that an account rendered may ripen into an account stated under certain circumstances, if the recipient voices no objection to it for a sufficiently long time.5 But the period of silent acceptance in the case at bar is at most one month and three weeks, from May 31 to July 22, 1954. On the latter date Reed made a flat denial of liability. Furthermore the non-cooperation and deadlock6 during the period after January 13, 1954, when the bank loan was repaid, lend no support to the proposition that Reed impliedly agreed it was liable and impliedly promised to pay the account of May 31, 1954.7 The parties may have come close to an agreement upon a balance due in August, 1953, but that “corrected statement” was not the account sued upon and is not even shown in the account attached to the complaint.
If the statement sued upon was not an “account stated” Reed was entitled to dispute the entire liability or the amount of the balance, or both; and it did dispute the liability. If the account of May 31, 1954, can be held to be a part of the statement sued upon, and can be held further to constitute an account stated, nevertheless, as pointed out above, Reed *607successfully raised the issue of the legality of the consideration.8
For these reasons I think the summary judgment should be reversed and the case remanded to the District Court for further proceedings.

. De Pasquale v. Williams-Bauer Corporation, 151 F.2d 578 (2d Cir.1945), cer-tiorari denied 328 U.S. 836, 66 S.Ct. 1007, 90 L.Ed. 1612 (1946).

. Peebles v. Yates, 88 Miss. 289, 40 So. 996 (1908); Jorgensen v. Kingsley, 60 Neb. 44, 82 N.W. 104 (1900).

. Annotation, 104 A.L.R. 245, 251 (1936).

. This letter apparently followed a meeting of the parties; the record is ambiguous on this point.

. As in the ease of Riley y. Mattingly, 42 App.D.C. 290 (D.C.Cir.1914), where Riley held an account received for eight months without objection. However we stated in that case that the facts must be clear in order to warrant such a holding.

. For example, Schumer’s remonstrative letter of May 25th, six days before the supposed account stated, which referred to Reed’s failure to cooperate.

. Chinn v. Lewin, 57 App.D.C. 16, 19, 16 F.2d 512, 515, 49 A.L.R. 1480 (D.C.Cir. 1926).

. The majority cites Standard Oil Co. v. Van Etten, 107 U.S. 325, 1 S.Ct. 378, 27 L.Ed. 319 (1882), for the proposition that silent acceptance of three and a half months, or twice the period involved here, can cause an account rendered to ripen into an account stated. In that case the Oil Company had agreed to purchase from Van Etten and his assignors a certain number of oil-barrel headings. The pieces of lumber were delivered to the Oil Company at a point in Michigan and then shipped to Cleveland, where an inspector of the Company counted and inspected them. Three and a half months before Van Etten sued the Company, he had been rendered an account by the Company, to which lie never objected.
The trial court, after determining that as a matter of law the account was an account stated, sent to the jury the issue whether the Oil Company had been mistaken in its count of the lumber. It was upon the strength of its count of the lumber that the Oil Company had rendered the account. The jury found there had been a mistake in the count, and judgment was rendered for Van Etten despite the existence of the account stated. The Supreme Court affirmed. It follows from that case, therefore, that,, even if the account in the case at bar was an account stated, Reed’s claim of illegality, like a claim of mistake, should have-been tried.