Toth v. Mansell

• Decision Date: 14 December 1990
• Docket Number: No. 1-90-0426,1-90-0426
• Court: United States Appellate Court of Illinois
• Parties: , 152 Ill.Dec. 853, 14 UCC Rep.Serv.2d 70 Tom TOTH, Sr., d/b/a Toth Automotive, Plaintiff-Appellant, v. John MANSELL, d/b/a John's Truck Repair, Defendant-Appellee.

Page 730

566 N.E.2d 730

207 Ill.App.3d 665, 152 Ill.Dec. 853,

14 UCC Rep.Serv.2d 70

Tom TOTH, Sr., d/b/a Toth Automotive, Plaintiff-Appellant, v. John MANSELL, d/b/a John's Truck Repair, Defendant-Appellee.

No. 1-90-0426.

Appellate Court of Illinois,

First District, Sixth Division.

Dec. 14, 1990.

As Modified on Denial of Rehearing Feb. 15, 1991.

Jack W. Lund, Gary, Ind., W. Lee Newell, Jr., Calumet City, for plaintiff-appellant.

John P. Brattoli, Chicago Heights, for defendant-appellee.

MODIFIED OPINION UPON DENIAL OF REHEARING

Justice McNAMARA delivered the opinion of the court:

This appeal by plaintiff arises from an action filed to recover amounts allegedly owed plaintiff by defendant for automobile and truck supplies purchased by defendant on open account. The trial court dismissed the action against defendant holding that the statute of limitations barred recovery.

Plaintiff, Tom Toth, doing business as Toth Automotive, sells automobile and truck supplies and equipment. Defendant, John Mansell, doing business as John's Truck Repair, established an open account with plaintiff on March 3, 1977, by making his first charge purchase. From March 3, 1977 until April 17, 1978, defendant charged $9,915 on the account. By April 17, 1978, defendant paid off the entire balance due. From April 7, 1978 until January 7, 1980, defendant purchased $17,700 in supplies from plaintiff. During this period, defendant paid $10,900 on the account. Defendant last purchased goods from plaintiff on January 7, 1980. Defendant last made a payment on August 1, 1980.

From November 17, 1979, when the net balance was $6,816.05, until May 20, 1988, the date this suit was filed, plaintiff added a service charge at the rate of one and one-half percent per month pursuant to the terms set forth on the monthly account statements. As of September 30, 1987, defendant allegedly owed plaintiff $32,434.43. Plaintiff's first amended complaint prayed for this sum plus service charges at the rate of one and one-half percent per month from September 30, 1987, to date of judgment. Plaintiff attached to the complaint 120 pages, consisting of copies of invoices, statements of account and ledgers. Plaintiff alleged that defendant himself signed for 18 of the 25 attached invoices. Plaintiff also alleged that he sent defendant monthly statements showing the net balance due after adjusting for all new invoices, service charges and payments.

Defendant admitted purchasing goods from plaintiff prior to 1981 on open account pursuant to an oral agreement. Defendant denied agreeing to pay the monthly service charge on the balance due, and neither admitted nor denied receiving monthly statements. Both parties agree that defendant never contacted plaintiff either orally or in writing to contest or object to the bills.

On May 20, 1988, plaintiff brought the action against defendant for amounts allegedly owed on "open account." The trial court granted defendant's motion to dismiss on February 3, 1989, based on the applicable five-year statute of limitations for oral contract actions and granted plaintiff leave to file an amended complaint. In his amended complaint, filed on May 19, 1989, plaintiff alleged that the invoices sent to defendant constituted a writing sufficient to invoke the ten-year statute of limitations under section 13-206 of the Limitations Act. (Ill.Rev.Stat.1989, ch. 110, par. 13-101 et seq.) According to plaintiff, although he relied on an account stated theory to establish the amount of the obligation, his case was based instead upon a written contract theory. The trial court, however, concluded that the invoices did not constitute a writing and the five-year statute of limitations period had run on the action.

On appeal, plaintiff contends that the invoices and monthly statements established either a written contract or "other evidence of indebtedness," to which a ten-year statute of limitations applied under section 13-206. Plaintiff maintains that the monthly statements created an account stated, which served to create successive new promises by defendant and to establish the amount of the obligation. As such, plaintiff maintains that even if a five-year limitations period applied, plaintiff was entitled to recover.

Plaintiff first contends that the invoices and monthly statements constituted either a written contract or "other evidence of indebtedness in writing," to which a ten-year statute of limitations applies. We conclude that the writings in this case do not constitute either a written contract or "other evidence of indebtedness."

Section 13-206 provides a ten-year statute of limitations period for actions on bonds, promissory notes, bills of exchange, written leases, written contracts or other evidence of indebtedness in writing. (Ill.Rev.Stat.1989, ch. 110, par. 13-206.) Any action which is not otherwise provided for in the Code of Civil Procedure is governed by a five-year statute of limitations. Ill.Rev.Stat.1989, ch. 110, par. 13-205.

Illinois courts strictly interpret the meaning of a written contract and "other evidence of indebtedness" within the statute of limitations. A contract is considered written for purposes of the statute of limitations if all essential terms are reduced to writing and can be ascertained from the instrument itself. (Brown v. Goodman (1986), 147 Ill.App.3d 935, 101 Ill.Dec. 530, 498 N.E.2d 854; Clark v. Western Union Telegraph Co. (1986), 141 Ill.App.3d 174, 95 Ill.Dec. 563, 490 N.E.2d 36.) If parol evidence is necessary to make the contract complete, then the contract must be treated as oral for purposes of the statute of limitations. Clark v. Western Union Telegraph Co.; Weaver v. Watson (1984), 130 Ill.App.3d 563, 85 Ill.Dec. 799, 474 N.E.2d 759; Novosk v. Reznick (1944), 323 Ill.App. 544, 56 N.E.2d 318.

Similarly, a written document qualifies as "other evidence of indebtedness" under section 13-206 only when one need not resort to parol evidence to establish the vital elements of the agreement. (Schmidt v. Niedert (1976), 45 Ill.App.3d 9, 3 Ill.Dec. 620, 358 N.E.2d 1305.) The document must be of the same nature as those written instruments specified in 13-206, although it need not follow the exact form and phraseology required in those documents. (In re Estate of Garrett v. Garrett (1975), 24 Ill.App.3d 895, 322 N.E.2d 213.) Further, a writing constitutes "other evidence of indebtedness" when the language of the instrument may fairly be construed to contain a promise to pay money or contains facts from which the law implies a promise to pay, so long as parol evidence is not necessary to establish any essential elements. Schmidt v. Kiely (1977), 51 Ill.App.3d 122, 9 Ill.Dec. 198, 366 N.E.2d 455.

In Schmidt v. Kiely, a doctor sued to collect an amount owed based on a billing statement. The patient's father had written "correct" on the statement next to the amount, had written "this will be paid in 90 days" on the back, and had signed and dated the statement. The court held that the document did not qualify as "other evidence of indebtedness" because it failed to indicate who was to pay the bill and the circumstances under which the debt had arisen. See also Ames v. Crown Life Insurance Co. of Toronto (1980), 85 Ill.App.3d 203, 40 Ill.Dec. 521, 406 N.E.2d 222 (written memoranda from insurance company requesting that certain forms be executed did not prove indebtedness.) Cf. In re Estate of Garrett v. Garrett (decedent's signed statement on promissory note that his son loaned him money to pay off the note and that son was to be repaid out of estate qualified as "other evidence of indebtedness.")

In the present case, plaintiff claims that the written documents evidenced the parties' agreement. However, plaintiff cannot establish defendant's alleged promise to pay from the invoices, monthly statements or ledgers, taken either separately or as a whole. We can infer from the invoices that the parties entered various agreements for the purchase of automobile parts and supplies. Yet, none of the writings, not even the signed invoices, demonstrate any promise by defendant to pay. In fact, invoices or sales slips are routinely used for several purposes: to identify the sale and the articles sold, to identify the person making the sale, and to identify the person to whom the goods were delivered. The documents here merely acknowledge that defendant purchased supplies from plaintiff.

To even attempt to establish defendant's alleged promise to pay, plaintiff must introduce some parol evidence, whether it be plaintiff's rendering of statements to defendant, defendant's lack of objection or the prior dealings between the parties. As such, defendant's contractual obligation arises not from the written invoices, but rather from previously executed oral contracts. Since the documents failed to demonstrate a promise to pay, an essential element, the parties' agreement must be viewed as an oral contract. (Wielander v. Henich (1965), 64 Ill.App.2d 228, 211 N.E.2d 775.) The Wielander court wrote, citing Plumb v. Campbell (1888), 129 Ill. 101, 18 N.E. 790:

" 'A written contract is one, which, in all its terms, is in writing. A contract partly in writing and partly oral is, in legal effect, an oral contract.' (citation omitted.) 'If it be true that the agreement as set forth in writing, is so indefinite as to necessitate resort to parol testimony to make it complete, the law is that in applying the statute of limitations it must be treated as an oral contract. Both reasoning and authority support this view.' " Wielander, 64 Ill.App.2d at 231, 211 N.E.2d at 776.

Basic contract theory also support this result. Elementary rules of contract construction require us to find the parties' intentions from the written instrument itself. (Continental Assurance Co. v. Commonwealth Edison Co. (1990), 194 Ill.App.3d 1085, 141 Ill.Dec. 711, 551 N.E.2d 1054.) Under this rule, we find nothing within the "four...