## Facts

- Taylor supplied carbon dioxide and its own cylinders to Coca Cola’s Bakersfield plant for use as fire extinguishers under an oral agreement beginning in 1957.
- Coca Cola paid a per-pound price for CO₂ plus a per-fill service charge “in lieu of demurrage,” and Taylor never charged demurrage while the relationship continued.
- The trial court found Taylor’s services terminated on September 23, 1971.
- Within about 90 days after termination, Taylor demanded return of several hundred cylinders in Coca Cola’s possession; Coca Cola returned many, but 246 cylinders remained missing at trial.
- Taylor’s ledger reflected a zero balance on Coca Cola’s account as of January 31, 1972.
- From June 1972 to July 1974, Taylor sent statements seeking “demurrage” totaling $8,494.08; Coca Cola did not respond, and Taylor’s internal records later reflected additional “late charges.”
- Taylor originally pursued a tort conversion theory but, by stipulation, waived conversion and proceeded on contract-type theories, including indebitatus assumpsit (quasi-contract).

## Issues

1. Whether the four-year limitations period for “contracts for sale” under California Uniform Commercial Code § 2725 applies to a quasi-contract claim arising from failure to return goods, or whether the three-year limitations period under Code of Civil Procedure § 338(3) for taking or detaining personal property controls.
2. Whether Taylor established liability under account stated or open book account theories based on the post-termination “demurrage” statements.
3. How the applicable limitations period and theory of recovery affect the proper scope and amount of any judgment.

## Decision

- The Court of Appeal held UCC § 2725’s four-year statute of limitations does not govern obligations implied in law arising from detention of personal property.
- The court applied Code of Civil Procedure § 338(3)’s three-year limitations period because the gravamen of the claim was the taking and detaining of Taylor’s cylinders.
- The court rejected attempts to avoid § 338(3) by recharacterizing the dispute as a sale under quasi-contract or as an account stated/open book account based on unilateral demurrage billings.
- The judgment was reversed in part and remanded (and otherwise modified) to conform to the three-year limitations analysis and related conclusions regarding the account theories.

## Legal Principles

- The limitations period is determined by the nature of the right sued upon, not by pleading labels or election to sue in contract rather than tort.
- California Uniform Commercial Code § 2725 applies to breaches of “contracts for sale,” including contracts implied in fact, but not to obligations implied in law (quasi-contract) imposed to prevent unjust enrichment.
- A claim based on failure to return personal property is treated, for limitations purposes, as an action for taking or detaining goods within Code of Civil Procedure § 338(3), even if pleaded as assumpsit.
- An account stated requires mutual assent to a final balance; unilateral post-termination invoices, especially when inconsistent with the parties’ prior pricing arrangement and a zero account balance, do not establish assent.
- An open book account theory cannot be used to convert a time-barred property-detention dispute into a longer-lived account balance without a supporting underlying agreement.

## Conclusion

The court held that a quasi-contract claim stemming from a customer’s failure to return the supplier’s cylinders is governed by the three-year statute for taking or detaining personal property, not the UCC’s four-year period for sales contracts, and that unilateral post-termination “demurrage” billings did not create an account stated or open book account that would avoid the shorter limitations period.


H. Russell Taylor’s Fire Prevention Serv., Inc. v. Coca Cola Bottling Corp., 99 Cal. App. 3d 711 (Cal. Ct. App. 1979)