Stockton Theatres, Inc. v. Palermo

In Stockton Theatres, Inc. v. Palermo (1961) 55 Cal.2d 439, the trial court had allowed certain costs on appeal sought by the plaintiff but disallowed one item, the cost of a surety bond. The plaintiff successfully appealed. The reviewing court held the bond premium could be included in costs if it was reasonably necessary to preserve appellate rights. The trial court's order was reversed and the court directed to determine whether the bond was necessary and, if so, to include the premium as an item of costs. (Stockton, supra, 55 Cal.2d at pp. 440-441.) After a hearing at which both parties offered evidence, the trial court concluded the bond was not necessary and again denied the item of costs. A second appeal was again successful, the appellate court ruling that the evidence demonstrated as a matter of law that the bond was necessary. (Id. at p. 441.) The trial court's order was reversed and the trial court directed to allow the bond premium as a cost on appeal. (Ibid.) The trial court did so, providing for interest from the date of its order. On yet another appeal, it was held that interest should have been awarded from the earlier date of the trial court order finding the bond unnecessary and denying it as an item of costs. (Id. at p. 442.) Stockton explained that interest would not run from the original costs order because that order was not modified but rather was reversed with directions for the trial court to hold a hearing on the necessity for the bond. (Stockton, supra, 55 Cal.2d at p. 443.) As the court stated, "up until this point no award of costs for this item could have been made because there had been no hearing or finding on the issue of necessity for the bond." (Ibid.) After the trial court held the required hearing and found the bond unnecessary, the effect of the next reversal was different. "The legal effect of this 'reversal' was to make the order of April 12, 1957, state what it should have stated on that date. In a very real sense, in legal effect, it increased the original amount awarded as costs, and determined that, after showing necessity, plaintiff was entitled to this award as of April 12, 1957. Instead of reversing with directions, by allowing the item and then affirming the order as modified, this court 'reversed.' This 'reversal' obviously was, in law and in fact, a modification." (Id. at pp. 443-444.)