Greer Limestone Co. v. Nestor

• Decision Date: 27 June 1985
• Docket Number: No. 16197,16197
• Parties: , 41 UCC Rep.Serv. 1730 GREER LIMESTONE CO. v. Billy G. NESTOR, etc.
• Court: West Virginia Supreme Court

Page 589

332 S.E.2d 589

175 W.Va. 289, 41 UCC Rep.Serv. 1730

GREER LIMESTONE CO. v. Billy G. NESTOR, etc.

No. 16197.

Supreme Court of Appeals of

West Virginia.

June 27, 1985.

Syllabus by the Court

1. We have defined the term "account" to be a claim or demand by one person against another creating a debtor-creditor relation.

2. An account kept in a ledger book where debit and credit entries are recorded is denominated as a "book account." An "open account" is one that has not been settled by payment or has not become an account stated.

3. "Generally, where persons who have had previous transactions of a monetary character agree that the account representing the transactions and the balance shown are correct, and the debtor expressly or impliedly promises to pay such balance, the account thereby becomes an account stated." Syllabus Point 2, Hoover-Dimeling Lumber Co. v. Neill, 77 W.Va. 470, 87 S.E. 855 (1916).

4. A running account is one in which there has been a series of credit charges made or contemplated without any particular time limitation.

5. A mutual running account is one where the parties deal with each other in the sense that each extends credit to the other. In this situation, each party occupies both a debtor and creditor relationship with regard to the other party. Most familiarly, a mutual account may exist between merchants who trade with each other.

6. With regard to an account, whether an open, book, or running account, the general rule is that the statute of limitations ordinarily begins to run on the date that each credit charge is made in the absence of some express agreement between the parties.

7. Where, however, the account is a mutual account, that is, each party has had credit transactions with the other, the statute of limitations does not begin to run until the date of the last transaction between the parties. In the case of an account stated, the statute of limitations runs from the date it was stated.

8. It is generally held that the statute of limitations contained in the Uniform Commercial Code, which is in W.Va.Code, 46-2-725, supercedes any general statute of limitations with regard to transactions involving the sale of goods.

9. "A notation on a debtor's check acknowledging the existence of the debt can constitute a sufficient writing to extend the statute of limitations under W.Va.Code, 55-2-8." Syllabus Point 4, Weirton Ice & Coal Co. v. Weirton Shopping Plaza, Inc., 175 W.Va .473, 334 S.E.2d 611 (1985).

10. The rule in most jurisdictions is that partial payment on a debt may start the statute of limitations running anew where the payment is made voluntarily by a debtor under circumstances that warrant a clear inference that the debtor recognizes the whole debt to be subsisting and demonstrates his willingness or obligation to pay the balance of the debt. As a corollary, if a debtor restricts or qualifies his partial payment in some manner which indicates an intention not to pay the balance of the debt, then the statute of limitations will not be tolled. Finally, the burden of proof rests on the creditor to demonstrate that the statute of limitations has been renewed by partial payment.

11. The doctrine of partial payment is supported by the overwhelming weight of authority in this country and more accurately reflects commercial realities and, therefore, to the extent that In Re Estate of Kneeream, 120 W. Va. 147, 196 S.E. 362 (1938), expresses a different principle, it is overruled.

Samuel Spencer Stone, Morgantown, for appellant.

Alfred J. Lemley, Furbee, Amos, Webb & Critchfield, Fairmont, for appellee.

MILLER, Justice:

This case presents the question of whether an action filed on August 13, 1981, to recover the remaining balance on an account is barred by the statute of limitations where the last credit charge on the account occurred on September 15, 1974, and where the debtor periodically made payments on the account, with the last payment being made in May of 1980.

The Circuit Court of Marion County concluded that the statute of limitations did not bar the action filed by the Greer Limestone Company against Billy Nestor, the appellant-debtor. Judgment in the amount of $5,888.39 was entered against Mr. Nestor. Implicit in the court's holding was that the debtor had made partial payments on the account, thereby tolling the statute of limitations.

Before addressing the statute of limitations issue, we will first determine what type of account existed between Greer Limestone and Mr. Nestor because the type of account involved affects the application of the statute of limitations. We have defined the term "account" to be "a claim or demand by one person against another creating a debtor-creditor relation." State v. Stout, 142 W.Va. 182, 187, 95 S.E.2d 639, 642, 59 A.L.R.2d 1154, 1158 (1956). See also Coleman v. Kansas City, 353 Mo. 150, 182 S.W.2d 74 (1944) (en banc); Cooley v. Roman, 286 Or. 807, 596 P.2d 565 (1979); Call of Houston, Inc. v. Mulvey, 343 S.W.2d 522 (Tex.Civ.App.1961); 1 Am.Jur.2d Accounts and Accounting § 1 (1962); 1 C.J.S. Account at 571-73 (1936). An account kept in a ledger book where debit and credit entries are recorded is denominated as a "book account." An "open account" is one that has not been settled by payment or has not become a stated account. Plunkett-Jarrell Grocery Co. v. Terry, 222 Ark. 784, 263 S.W.2d 229, 44 A.L.R.2d 917 (1953); Southern Union Exploration Co. v. Wynn Exploration Co., 95 N.M. 594, 624 P.2d 536 (App.), cert. denied, 95 N.M. 593, 624 P.2d 535 (1981), cert. denied, 455 U.S. 920, 102 S.Ct. 1276, 71 L.Ed. 2d 461 (1982); Whitson v. Wetherbee Elec. Co., 416 P.2d 888 (Okla.1966); 1 Am. Jur.2d Accounts and Accounting § 4 (1962); 1 C.J.S. Account at 574-75 (1936). For purposes of the statute of limitations, there is no difference in this jurisdiction between an open and book account because these terms deal only with the formalized nature of the account as kept by the creditor.

An account can become an "account stated," as we defined in Syllabus Point 2 of Hoover-Dimeling Lumber Co. v. Neill, 77 W. Va. 470, 87 S.E. 855 (1916):

"Generally, where persons who have had previous transactions of a monetary character agree that the account representing the transactions and the balance shown are correct, and the debtor expressly or impliedly promises to pay such balance, the account thereby becomes an account stated."

See also Monte Produce, Inc. v. Delgado, 126 Ariz. 320, 614 P.2d 862 (1980); Motive Parts Co. of America, Inc. v. Robinson, 53 Ill.App.3d 935, 11 Ill.Dec. 665, 369 N.E.2d 119 (1977); Glick v. Seufert Constr. & Supply Co., 168 Ind.App. 354, 342 N.E.2d 874 (1976); Cooley v. Roman, supra; Mello v. Coy Real Estate Co., 103 R.I. 74, 234 A.2d 667 (1967); 1 Am.Jur.2d Accounts and Accounting § 21 (1962); 1 C.J.S. Account Stated § 1 (1936).

A more complex area is where there is a "running account" or a "mutual running account." A running account is one in which there has been a series of credit charges made or contemplated without any particular time limitation. Mullan Contracting Co. v. International Business Machines Corp., 220 Md. 248, 151 A.2d 906 (1959); Meyers v. Barrett & Zimmerman, Inc., 196 Minn. 276, 264 N.W. 769 (1936); A.E. Birk & Son Plumbing & Heating, Inc. v. Malan Constr. Co., 548 S.W.2d 611 (Mo.App.1977); Whitley's Elec. Serv., Inc. v. Sherrod, 293 N.C. 498, 238 S.E.2d 607 (1977); 1 Am.Jur.2d Accounts and Accounting § 4 (1962); 1 C.J.S. Account at 575 (1936). A mutual running account is one where the parties deal with each other in the sense that each extends credit to the other. In this situation, each party occupies both a debtor and creditor relationship with regard to the other party. E.P. Hinkel & Co. v. Washington Carpet Corp., 212 A.2d 328 (D.C.App.1965); Vanguard Ins. Agency & Real Estate Co. v. Walker, 157 Ga.App. 838, 278 S.E.2d 723 (1981); Whitley's Elec. Serv., Inc. v. Sherrod, supra; Van de Wiele v. Koch, 256 Or. 349, 472 P.2d 803 (1970); In Re Estate of Vicen, 1 Wis.2d 193, 83 N.W.2d 664 (1957); 1 Am.Jur.2d Accounts and Accounting § 5 (1962). Most familiarly, a mutual account may exist between merchants who trade with each other. ¹

With regard to an account, whether an open, book, or running account, the general rule is that the statute of limitations ordinarily begins to run on the date that each credit charge is made in the absence of some express agreement between the parties. ² See Weadon v. First National Bank & Trust Co., 129 Conn. 541, 29 A.2d 779 (1943); Erenfeld v. Erenfeld, 196 N.W.2d 406 (N.D.1972); Pitts v. Walker, 188 Okla. 17, 105 P.2d 760 (1940); 1 Am.Jur.2d Accounts and Accounting § 15 (1962). This rule is predicated on the general principle that the statute of limitations begins to run when a cause of action accrues. Syllabus Point 3, Steeley v. Funkhouser, 153 W. Va. 423, 169 S.E.2d 701 (1969); Syllabus, Sansom v. Sansom, 148 W. Va. 603, 137 S.E.2d 1 (1964).

Where, however, the account is a mutual account, that is, each party has had credit transactions with the other, the statute of limitations does not begin to run until the date of the last transaction between the parties. See Teter v. Moore, supra; Sheldon Grain & Feed Co. v. Schuetz, 207 Kan. 108, 483 P.2d 1033 (1971); Poeske v. Estreen, 55 Wis. 2d 238, 198 N.W.2d 625 (1972); 1 Am.Jur.2d Accounts and Accounting § 16 (1962). In the case of an account stated, the statute of limitations runs from the date it was stated. Boatner v. Gates Brothers Lumber Co., 224 Ark. 494, 275 S.W.2d 627, 51 A.L.R.2d 326 (1955); Pepper v. Hyman, 117 Colo. 365, 189 P.2d 155 (1948); Frucht v. Garcia, 44 Misc.2d 52, 252 N.Y.S.2d 825 (1964); Hansen v. Fettig, 179 N.W.2d 739, 45 A.L.R.3d 435 (N.D.1970); 1 Am.Jur.2d Accounts and Accounting § 38 (1962); 1 C.J.S. Accounts Stated § 61 (1936).

It should be stressed that these general principles may be subject to specific statutes in other jurisdictions such as we have for...