Fisher Sand & Gravel Co. v. Neal A. Sweebe, Inc.
| Decision Date | 30 July 2013 |
| Docket Number | Calendar No. 1.,Docket No. 143374. |
| Parties | FISHER SAND AND GRAVEL COMPANY v. NEAL A. SWEEBE, INC. |
| Court | Michigan Supreme Court |
494 Mich. 543
837 N.W.2d 244
81 UCC Rep.Serv. 239
FISHER SAND AND GRAVEL COMPANY
v.
NEAL A. SWEEBE, INC.
Docket No. 143374.
Calendar No. 1.
Supreme Court of Michigan.
Argued Jan. 9, 2013.
Decided July 30, 2013.
[837 N.W.2d 247]
Allan Falk, P.C., Okemos (by Allan Falk), and McClintic & McClintic, P.C., Mount Pleasant (by William M. McClintic and Gavin W. McClintic), for plaintiff.
W. Jay Brown PLC, Midland (by W. Jay Brown), for defendant.
Roger L. Premo, Farmington Hills for Amicus Curiae the Michigan Creditors Bar Association.
ZAHRA, J.
[494 Mich. 547]At issue in this case is whether the four-year period of limitations in § 2725 of article 2 of [494 Mich. 548]Michigan's Uniform Commercial Code (UCC),1MCL 440.2725, is applicable to actions on either an open account or an account stated when the underlying debt stemmed from the sale of goods. Because actions on an account stated and actions on an open account are distinct and independent from the underlying transactions giving rise to the antecedent debt, neither action is governed by the four-year limitations period provided in § 2725 of the UCC. Rather, both actions are governed by the six-year period of limitations provided in MCL 600.5807(8). Accordingly, we reverse the contrary judgment of the Court of Appeals, which barred plaintiff's open account and account stated actions as untimely, and remand the case to the trial court for further proceedings consistent with this opinion.
Plaintiff provided concrete supplies to defendant commencing in October 1991.
[837 N.W.2d 248]
Plaintiff timely and regularly invoiced defendant for these supplies. Defendant made sporadic payments to plaintiff in random amounts. Plaintiff maintained an account that recorded the supplies sold to defendant and the payments defendant submitted to plaintiff on that account. Through the course of the litigants' business relationship, defendant never paid its account in full.2 Commencing in 2003, defendant acquired from plaintiff less product [494 Mich. 549]than it had acquired in prior years. Specifically, defendant made only 4 purchases from plaintiff in 2003 and 10 purchases from plaintiff in 2004. On May 9, 2005, defendant made what turned out to be its final purchase from plaintiff. On that date, plaintiff delivered a small amount of supplies to defendant, for which defendant was invoiced $152.98. Defendant paid the invoiced amount on May 13, 2005, by check. Defendant did not designate on its check that the tendered amount was to satisfy the invoice of May 9, 2005. Plaintiff claims it credited the payment against the open account balance. That was the last payment defendant made to plaintiff.
More than four years later plaintiff sued defendant, claiming that defendant owed plaintiff $92,968.57, including $3,718.32 in finance charges.3 Plaintiff's claims included breach of contract, unjust enrichment, and account stated.4 Plaintiff filed an amended complaint on October 29, 2009, adding a claim for amount owed on an open account. Defendant moved for summary disposition pursuant to MCR 2.116(C)(7), arguing that plaintiff's claims were barred by the four-year period of limitations provided in § 2725 of the UCC. Plaintiff countered that defendant's obligation to pay on the open account was independent of any sale of goods and that its claim was therefore governed by the six-year [494 Mich. 550]period of limitations provided in MCL 600.5807(8). Whether defendant's May 13, 2005, payment was a payment on the open account or a payment for a distinct transaction was also disputed because defendant's $152.98 payment matched an invoice for the same amount dated May 9, 2005. The trial court held that plaintiff's action was governed by the four-year period of limitations provided in § 2725 because the parties' open account related to the sale of goods. Therefore, the trial court concluded, plaintiff's claims based on open account and account stated were not timely because the action was commenced more than four years after the claims accrued.5 A divided panel of the Court of
[837 N.W.2d 249]
Appeals affirmed in a published opinion, holding that the UCC's four-year limitations period was applicable to actions on both an open account and an account stated.6
[494 Mich. 551]The Court of Appeals noted that it was unable to find anything in Michigan's jurisprudence directly addressing whether the four-year period of limitations in the UCC is applicable to an open account relating to the sale of goods.7 Plaintiff argued that the UCC did not apply to its claim because “payment on an open account triggers a new obligation, separate and distinct from an underlying agreement.” 8 The Court of Appeals dismissed plaintiff's contentions because the cases supporting plaintiff's argument did not involve the sale of goods subject to the UCC.9 The Court of Appeals consulted the official comments to the UCC,10 which provide that the purpose of article 2 is to take “ ‘sales contracts out of the general laws limiting the time for commencing contractual actions....' ” 11 Though it acknowledged that the official comments do not have the force of law, the Court of Appeals noted that applying the UCC's four-year period of limitations to actions on open account would accomplish the goal identified in [494 Mich. 552]the comments of promoting “uniformity and consistency” among the jurisdictions.12 The Court of Appeals also noted that “[o]ther jurisdictions that have addressed this question have favored applying the UCC limitations period to an action based on an open account related to
[837 N.W.2d 250]
the sale of goods.” 13
Judge O'Connell dissented, asserting that “[p]ayment on an open account triggers a new obligation, separate and distinct from an underlying agreement,” and therefore, the new obligation is governed by the six-year period of limitations in MCL 600.5807(8).14 Thus, Judge O'Connell would have reversed the judgment of the trial court.15
This Court granted leave to appeal to determine whether an action on an open account relating to the sale of goods is subject to the four-year period of limitations in § 2725 of the UCC or the general six-year period of limitations applicable to contract actions in MCL 600.5807(8).16
MCR 2.116(C)(7) allows a party to file a motion for summary disposition on the ground that a claim is barred because of the expiration of the applicable period of limitations. A movant under MCR 2.116(C)(7) is not required to file supportive material, and the opposing party need not reply with supportive material. Moreover, the contents of the complaint are accepted as true unless contradicted by documentation submitted by the movant.17 Appellate review of a trial court's summary disposition ruling pursuant to MCR 2.116(C)(7) is de novo.18 Questions of statutory interpretation are also reviewed de novo.19
Michigan has recognized a number of collection actions. These actions include open account claims, mutual and open account current claims, and account stated claims. The purpose of these causes of action is to recover sums due that arose out of a course of dealing between the parties.
Historically the common law has distinguished an open account from a mutual and open account current. An “open account” is traditionally defined as “ ‘1. [a]n unpaid or unsettled account. 2. [a]n account that is left open for ongoing debit and credit entries and that has a fluctuating balance until either party finds it convenient to settle and close, at which time there is a single [494 Mich. 554]liability.’ ” 20 This Court
[837 N.W.2d 251]
has characterized an open account as “ ‘one which consists of a series of transactions and is continuous or current, and not closed or stated.’ ” 21 By comparison, a “mutual account” is traditionally defined as “[a]n account showing mutual transactions between parties, as by showing debits and credits on both sides of the account.” 22 Consistent with this traditional definition, this Court has characterized a mutual and open account current as an account that is both mutual and open, resulting from “a course of dealing where each party furnishes credit to the other on the reliance that upon settlement the accounts will be allowed, so that one will reduce the balance due on the other.” 23
An account stated action is based on “ ‘an agreement, between parties who have had previous transactions of a monetary character, that all the items of the accounts representing such transactions are true and that the balance struck is correct, together with a promise, express or implied, for the payment of such balance.’ ” 24 Importantly, an open account may be converted into an account stated: 25
The conversion of an open account into an account stated, is an operation by which the parties assent to a sum [494 Mich. 555]as the correct balance due from one to the other; and whether this operation has been performed or not, in any instance, must depend upon the facts. That it has taken place, may appear by evidence of an express understanding, or of words and acts, and the necessary and proper inferences from them. When accomplished, it does not necessarily exclude all inquiry into the rectitude of the account. The parties may still impeach it for fraud or mistake.26
In the past these claims have been conflated or treated inconsistently by the Legislature and Michigan courts.27 For example, the burden-shifting statute (now MCL 600.2145) has expressly included open account claims and claims on an account stated since as far back as the 1870s, but has never expressly included claims on mutual and open accounts.28 Furthermore, the accrual of mutual and open account claims is governed by MCL 600.5831, while no specific statutory provision exists for the accrual of either open account claims or claims on an account stated.29
At times, this Court has not been a model of clarity when addressing...
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