Jones v. Watson

• Decision Date: 07 October 1977
• Docket Number: No. 12176,12176
• Citation: 98 Idaho 606,570 P.2d 284
• Parties: Milford JONES and Hazel Jones, Plaintiffs-Respondents, v. Albert WATSON and Madeline Watson, Defendants-Appellants.
• Court: Idaho Supreme Court

Page 284

570 P.2d 284

98 Idaho 606

Milford JONES and Hazel Jones, Plaintiffs-Respondents, v. Albert WATSON and Madeline Watson, Defendants-Appellants.

No. 12176.

Supreme Court of Idaho.

Oct. 7, 1977.

Lloyd J. Webb, Webb, Burton, Carlson & Pedersen, Twin Falls, for defendants-appellants.

Frank M. Rettig, Rettig, Fredericksen & Williams, Jerome, for plaintiffs-respondents.

McFADDEN, Chief Justice.

Milford and Hazel Jones, plaintiffs-respondents, filed suit against Albert and Madeline Watson, defendants-appellants, alleging that they are holders of a promissory note executed by the Watsons, and that the Watsons failed to make payments on the note when due. The Jones sought judgment for the amount of the note, plus interest and attorney's fees. After trial, the court entered judgment in favor of plaintiffs. Defendants have perfected this appeal, and we affirm.

Plaintiffs are the holders of a $10,000 promissory note executed by defendants on January 26, 1967. The note provides for three equal payments of principal, with interest, on February 1, 1967, September 30, 1967, and September 30, 1968. At various times prior to September 13, 1967, defendants paid amounts totaling $1,900; no further payments were made.

On June 21, 1973, the Jones filed this action, together with an application for a writ of attachment. An order to issue the writ of attachment was signed by the district judge on the same day. An order to show cause why a writ of attachment should not issue was entered June 21, 1973 and the writ was issued on June 22, 1973. A hearing was set for July 3, 1973, but the matter was continued because service of the Order to Show Cause had not been returned.

On June 13, 1974, defendants filed an answer, and motion to vacate the attachment. Nothing further transpired until the day set for trial, September 26, 1975. Defendants then requested leave to amend their answer to include a defense of statute of limitations and a counter-claim for wrongful attachment. The court granted leave to amend the answer to reflect a defense of statute of limitations, but refused permission to include the counter-claim. Following trial, judgment was entered in favor of the plaintiffs.

Defendants first assign as error the trial court's ruling that plaintiff's action is not barred by the statute of limitations. All agree that the applicable statute of limitations is I.C. § 5-216, a five-year limitation on actions brought to enforce a written contract. On June 21, 1973, when the complaint was filed, the five-year period had expired for the first two installments of the promissory note. However, I.C. § 5-229 provides that if after a cause of action accrues, the defendant departs from the state, the time of his absence is not part of the time limited for the commencement of the action. The defendants here left Idaho in 1968, and subsequently resided in Arizona. Defendants contend that when the answer was originally filed, they believed that the statute of limitations had been tolled because of the provisions of I.C. § 5-229 and this court's holding in Staten v. Weiss, 78 Idaho 616, 308 P.2d 1021 (1957). On June 12, 1975, this court released its decision in Lipe v. Javelin Tire Co., Inc., 96 Idaho 723, 536 P.2d 291 (1975) (a personal injury case). In that opinion, this court overruled Staten and held that the statute of limitations is not tolled for an out-of-state defendant who is susceptible to service of process under the provisions of the "long-arm" statute, I.C. § 5-514, if the defendant can be located for service of process with reasonable diligence. Here the trial court found that plaintiffs knew of defendants whereabouts. Defendants assert that they could have been served via the long-arm statute; thus, they contend that the statute of limitations was not tolled and the action is barred. On the day of trial, defendants moved to amend their answer to include the defense of statute of limitations. The court allowed the amendment, but ruled that the holding in Lipe v. Javelin should be applied prospectively only. Thus, the court concluded that the statute of limitations was tolled so long as defendants were out of the state. Defendants argue on appeal that Lipe should be applied retroactively.

The alternative of prospective application of decisions has a sound basis in policy and legal theory. As the Washington Supreme Court noted:

"So it is that the doctrine of prospective overruling has attached in many areas: in constitutional law, contracts, torts, criminal law, taxation, and in the field of procedure, giving the doctrine both sanction and acceptance throughout our jurisprudence. Prospective overruling imparts that final degree of resilience, to the otherwise rigid concepts of stare decisis, so necessary to prevent the system from becoming brittle. It enables the law under stare decisis to grow and change to meet the ever-changing needs of an ever-changing society and yet, at once, to preserve the very society which gives it shape." State v. Martin, 62 Wash.2d 645, 384 P.2d 833, 849 (1963).

The determination of whether an overruling decision shall be applied retroactively or prospectively, is a matter left to state courts for determination on a case-by-case basis. As the Alaska Supreme Court noted:

"A state supreme court has unfettered discretion to apply a particular ruling either purely prospectively, purely retroactively, or partially retroactively, limited only 'by the juristic philosophy of the judges * * * their conceptions of law, its origin and nature.' The decision is not a matter of law but a determination based on weighing the merits and demerits of each case. Consideration is given to applying a ruling prospectively 'whenever injustice or hardship will thereby be averted.' " Warwick v. State ex rel. Chance, 548 P.2d 384, 393 (Alaska 1976).

See, also, Great Northern R. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 365, 53 S.Ct. 145, 77 L.Ed. 360 (1932); Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965); Thompson v. Hagen, 96 Idaho 19, 523 P.2d 1365 (1974); Sims v. State, 94 Idaho 801, 498 P.2d 1274 (1972); Dawson v. Olson, 94 Idaho 636, 496 P.2d 97 (1972); Smith v. State, 93 Idaho 795, 473 P.2d 937 (1970); 10 A.L.R.3d 1371. As this court noted in footnote to Dawson v. Olson, supra, "those issues have subsequently become questions of 'judicial policy rather than of judicial power.' " 94 Idaho 636, 639, 496 P.2d 97, 100; see also, Annotation, Prospective or Retroactive Application of Overruling Decision, 10 A.L.R.3d 1371, 1378.

In exercising the discretion to determine the effect to be given a decision, courts have relied on a widely varying spectrum of factors. See, e. g., Li v. Yellow Cab Co. of California, 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226 (1975) (fairness and public policy); Vaughn v. Murray, 214 Kan. 456, 521 P.2d 262 (1974) (justifiable reliance on the earlier law, nature and purpose of overruling, res judicata, vested right accrued by earlier law, administration of justice); Richey v. Cherokee Lab., Inc., 515 P.2d 1377 (Okl.1973) (substantive rights); Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal.3d 176, 98 Cal.Rptr. 837, 491 P.2d 421 (1971) (extent of public reliance and ability of litigants to foresee the coming change in the law); So. Pacific Co. v. Cochise County, 92 Ariz. 395, 377 P.2d 770 (1963) (hardship and economic hardship). This court has enunciated three criteria to be evaluated in determining the effect of a ruling: 1) the purpose of the decision, 2) reliance on the prior rule of law, and 3) the effect upon administration of justice. Rogers v. Yellowstone Park Co., 97 Idaho 14, 25, 539 P.2d 566 (1974) (McFadden, J. on rehearing); Thompson v. Hagen, 96 Idaho 19, 523 P.2d 1365 (1974). See also, Wood v. Morris, 87 Wash.2d 501, 554 P.2d 1032 (1976); State v. Stenrud, 113 Ariz. 327, 553 P.2d 1201 (1976); In re Bye, 12 Cal.3d 96, 115 Cal.Rptr. 382, 524 P.2d 854 (1974); State Farm Mutual Ins. Co. v. Farmers Insurance Exchange, 27 Utah 2d 166, 493 P.2d 1002 (1972); Russell v. Blackwell, 53 Haw. 274, 492 P.2d 953 (1972). In other words,

"The determination of whether a rule is to be given retroactive application is generally made pursuant to a balancing process, wherein the gain to be achieved in the administration of justice by accomplishment of the purpose of the new rule (the first criterion) is balanced against the adverse effects on the administration of justice resulting from the extent to which the courts have mistakenly but in good faith relied on the prevailing rule (the second criterion) and from an application of the new rule for the purpose of reconsidering determinations already finally made pursuant to the then prevailing rule (the third criterion)." People v. McDaniel, 16 Cal.3d 156, 127 Cal.Rptr. 467, 545 P.2d 843, 848 (1976).

Applying these principles, this court concludes that the trial court ruled correctly in applying the decision in Lipe v. Javelin prospectively. By not tolling the statute of limitations as to an out-of-state defendant subject to the long-arm statute, the Lipe decision works to encourage potential plaintiffs to diligently utilize long-arm provisions, and prevents claims from becoming more stale than necessary by penalizing plaintiffs who do not invoke long-arm procedures. No enhancement of this purpose is served by retroactive application, as the incentive of the Lipe v. Javelin holding cannot work after the fact. We are convinced that minimal number of cases will proceed to trial solely because of a prospective application of the Lipe doctrine, and thus the impact on the administration of justice will be slight. Of critical importance, we believe, is the reliance element. Prior to Lipe, the case of Staten v. Weiss, 78 Idaho 616, 308 P.2d 1021 (1957) strongly intimated, although did not expressly dictate, that the statute of limitations would be tolled as to an out-of-state defendant, even if that defenda...