Yeiter v. Knights of St. Casimir Aid Society, Docket No. 114185.

• Decision Date: 08 March 2000
• Docket Number: Docket No. 114185.
• Citation: 607 N.W.2d 68,461 Mich. 493
• Parties: Gerald Samuel YEITER, Plaintiff-Appellant, v. KNIGHTS OF ST. CASIMIR AID SOCIETY, Defendant-, Third-Party Plaintiff-Appellee, and Stanley Walsh and Gretta Walsh, Third-Party Defendants.
• Court: Michigan Supreme Court

607 N.W.2d 68

461 Mich. 493

Gerald Samuel YEITER, Plaintiff-Appellant, v. KNIGHTS OF ST. CASIMIR AID SOCIETY, Defendant-, Third-Party Plaintiff-Appellee, and Stanley Walsh and Gretta Walsh, Third-Party Defendants.

Docket No. 114185.

Supreme Court of Michigan.

March 8, 2000.

Russell & Batchelor (by James W. Batchelor), Grand Rapids, MI, for the plaintiff-appellant.

Opinion

PER CURIAM.

After making a series of loans to the defendant, the plaintiff was only partially repaid. He filed suit to obtain the remainder, but the circuit court restricted his recovery by applying the statute of limitations to a portion of the obligation. The Court of Appeals affirmed. We reverse the judgment of the Court of Appeals and reverse in part the judgment of the circuit court. The partial payments, some of which were within the limitation period, renewed the defendant's promise to pay the amount owed.

I

The Society of the Knights of St. Casimir is a charitable organization founded in 1895 at Saint Adalbert's Roman Catholic Parish in Grand Rapids. In a 1974 report to the state of Michigan, its purpose was described in this manner:

Fraternal mutual benefit aid society for visitation of sick members, assistance in case of sickness and death, and operation of club room for members.

The Society has a detailed constitution and body of regulations but, as the circuit court later explained, "the business of St. Casimir's had fallen into irregular reporting and lack of regular accountability." When the Society ran low of funds in 1976, then-president Stanley Walsh approached a man named G. Samuel Yeiter for help.¹

Mr. Yeiter initially agreed to make an interest-free loan of $1,450 to the Society. Over the next sixteen years, Mr. Yeiter made additional interest-free loans, and received a number of partial payments. At no point did the Society fully repay Mr. Yeiter.

Date Transaction Amount Balance August 5,1976 Loan $1,450.00 $1,450.00 December 22, 1976 Loan $2,500.00 $3,950.00 July 31,1978 Loan $1,800.00 $5,750.00 January 12, 1979 Loan $2,000.00 $7,750.00 July 1,1980 Payment -$500.00 $7,250.00 October 8, 1980 Payment -$1,000.00 $6,250.00 January 10, 1981 Payment -$1,000.00 $5,250.00 June 15,1981 Payment -$500.00 $4,750.00 August 11,1982 Payment -$750.00 $4,000.00 September 8, 1986 Payment -$800.00 $3,200.00 September 8,1987 Loan $5,200.00 $8,400.00 January 15,1988 Loan $1,200.00 $9,600.00 December 14, 1988 Loan $25,000.00 $34,600.00 January 10,1989 Payment -$9,000.00 $25,600.00 March 3, 1989 Payment -$7,000.00 $18,600.00 August 8,1989 Payment -$3,000.00 $15,600.00 September 20, 1991 Loan $2,800.00 $18,400.00 October 2, 1991 Payment -$2,800.00 $15,600.00 October 30,1991 Loan $1,800.00 $17,400.00 January 3,1992 Loan $1,200.00 $18,600.00 July 28,1992 Loan $15,000.00 $33,600.00

On the basis of memoranda, checks, and other documents, Mr. Yeiter has assembled this summary of the transactions between the Society and him:²

On February 14, 1995, Mr. Yeiter sued the Society to recover the $33,600 balance. The Society defended the action on several grounds. One was that a portion of the obligation was barred by the six-year limitation period for contract actions. MCL 600.5807(8); MSA 27A.5807(8). Another was that Mr. Walsh had been without authority to make these arrangements on behalf of the Society. The latter defense was accompanied by allegations of wrongdoing on the part of Mr. Walsh, and led to the filing by the Society of a third-party complaint against Mr. Walsh and his spouse.

On cross-motions for summary disposition, the circuit court ruled that the Society was not obliged to repay any loans that Mr. Yeiter made before February 14, 1989 (six years before the filing of the complaint). In reaching this conclusion, the court said that "each of these transactions by the plaintiff to the defendant was a separate and separable transaction."

After further proceedings, the circuit court entered judgment in favor of Mr. Yeiter for $18,000, the amount of the three unpaid loans made after February 14, 1989.³ The court later entered a default judgment for $18,000 against the Walshes, the third-party defendants, for failure to appear at a settlement conference.⁴

Mr. Yeiter appealed, asking the Court of Appeals to award the full amount of the arrearage. However, the Court affirmed the circuit court judgment.⁵

Mr. Yeiter has applied to this Court for leave to appeal.

II

Affirming the judgment of the circuit court, the Court of Appeals explained:

Plaintiff does not contest the trial court's finding that each loan was a separate transaction. A partial payment made on a debt after the debt matures serves to revive the statute of limitations. A new cause of action accrues on the date of payment. Bonga v. Bloomer, 14 Mich.App. 315, 165 N.W.2d 487 (1968); Alpena Friend of the Court ex rel Paul v. Durecki, 195 Mich.App. 635, 491 N.W.2d 864 (1992). However, in order for the statute of limitations to be revived in such a way, the partial payment must be accompanied by a recognition of the entire debt and an indication of an intention to pay same. Bonga, 14 Mich.App. at 319,165 N.W.2d 487. The record does not indicate that the society made any such indication when it made the payment on August 8, 1989.

However, it is not accurate to say, as the Court of Appeals did, that a partial payment on a debt begins the limitation period anew only if "accompanied by a recognition of the entire debt and an indication of an intention to pay same." Indeed, the opposite is true—a partial payment restarts the running of the limitation period unless it is accompanied by a declaration or circumstance that rebuts the implication that the debtor by partial payment admits the full obligation.⁶

This rule is at least as old as Miner v. Lorman, 56 Mich. 212, 216, 22 N.W. 265 (1885). Though other aspects of Miner led this Court to conclude that the plaintiff could not prevail in his suit, Justice COOLEY'S opinion for a unanimous Court included this explanation:

The statute does not prescribe what effect part payment of a demand shall have, but it is familiar law that it operates as an acknowledgment of the continued existence of the demand, and as a waiver of any right to take advantage, by plea of the statute of limitations, of any such lapse of time as may have occurred previous to the payment being made. The payment is not a contract; it is not in itself even a promise; but it furnishes ground for implying a promise in renewal from its date, of any right of action which before may have existed.

The Supreme Court frequently has restated this principle. In Hiscock v. Hiscock, 257 Mich. 16, 25, 240 N.W. 50, 78 ALR 953 (1932), a dispute concerning payments on a mortgage, the Court said:

A voluntary and unqualified payment subsequent to the bar [of the statute of limitations] is the best evidence that the debtor does not claim his legal rights, but, on the contrary, intends to waive them and to perform his moral obligation to pay the whole of the just debt.

With little discussion, the principle was applied in Wagner v. Kincaid, 291 Mich. 262, 266, 289 N.W. 154 (1939). To the same end, we explained in Collateral Liquidation, Inc. v. Palm, 296 Mich. 702, 704, 296 N.W. 846 (1941), that "[t]he effect of the payment under the statute is equivalent to a new promise." And in Beaupre v. Holzbaugh, 327 Mich. 101, 107-108, 41 N.W.2d 338, 27 ALR2d 532 (1950), this Court said, "In the absence of any showing that payment was not intended by the parties to imply a new promise to pay, the statute was tolled by the payment and the note was not outlawed when suit was begun."

In recent years, the Court of Appeals has likewise applied this rule. Alpena Friend of the Court ex rel Paul v. Durecki, supra at 638, 491 N.W.2d 864; Federal Deposit Ins. Corp. v. Garbutt, 142 Mich. App. 462, 468, 370 N.W.2d 387 (1985); Bonga, supra at 319, 165 N.W.2d 487.⁷ The present case falls squarely within this principle. Partial payments were made less than six years before the filing of the complaint, and these payments were unaccompanied by any declaration or circumstance that would rebut the presumption that they were an acknowledgment of the full obligation.

III

A potential factual issue is whether Mr. Yeiter's loans were disconnected events, giving rise to a number of separate obligations on the part of the Society. Alternatively, the loans and repayments may have been parts of a whole—a single debtor-creditor relationship in which the balance rose and fell as transfers were...