Opinion
[Copyrighted Material Omitted]
Farris, Thomass&sFarris by Robert A. Farris, Jr., Wilson, for plaintiff-appellee.
Vernon F. Daughtridge, Wilson, for defendant-appellant.
CLARK, Judge.
The issue raised by this appeal is whether the facts are sufficient to support the conclusion of the trial court that none of the account was barred by the statute of limitations.
The sole basis that would support this conclusion from the facts found, and the one urged by plaintiff on appeal, is that the transactions between the parties constituted a 'mutual, open, and current account' and that the present cause of action accrued, under G.S. 1--31, 'from the time the latest item proved in the account on either side'. The court found as a fact that defendant made his last payment to plaintiff on 14 May 1971 in the sum of $525.00. There is no evidence in the record of any writing made by the defendant at the time of this payment which could be construed as an acknowledgment within the requirements of G.S. 1--26. Nor is there evidence of circumstances surrounding this payment which would warrant a clear inference that defendant's payment was a part payment made in recognition of the entire indebtedness and of his obligation to pay it. Bryant v. Kellum, 209 N.C. 112, 182 S.E. 708 (1935).
If G.S. 1--31 were applicable plaintiff's action accrued on 14 May 1971, and since it was commenced on 23 October 1973, none of the account would be barred by the statute of limitations as the trial judge ruled. However, the judge did not conclude, nor on the facts found could he have concluded, that there was a mutual, open, and current account, and so the findings are insufficient to support the judgment of the trial court.
A mutual account is a course of dealing where each party furnishes credit to the other on the reliance that, upon settlement, the amounts will be allowed so that one will reduce the [32 N.C.App. 342] balance due the other. Hollingsworth v. Allen, 176 N.C. 629, 97 S.E. 625 (1918); Annot., 45 A.L.R.3d 446 (1972). An open account results where the parties intend that the individual items of the account shall not be considered independently, but as a connected series of transactions. 1 Am.Jur.2d, Accounts and Accounting § 4 (1962). A current account is one with no time limitation fixed by agreement, express or implied. McKinnie v. Wester, 188 N.C. 514, 125 S.E. 1 (1924).
An ordinary store account or any other account (though open and continued) where the credit is all on one side and the payments on account are on the other is not a mutual, open and current account under G.S. 1--31. Brock v. Franck, 194 N.C. 346, 139 S.E. 696 (1927); Hollingsworth v. Allen, supra; Robertson v. Pickrell, 77 N.C. 302 (1877); Green v. Caldcleugh, 18 N.C. 320 (1835).
Because of the absence of reciprocal demands and other characteristics of mutuality, the account in the case before us does not qualify as 'mutual, open and current' under G.S. 1--31. Nor does the lump sum payment of about $14,000.00 in October, 1967, by means of a bank loan evidenced by promissory note made by plaintiff and endorsed by defendant, add anything to the mutuality of the account thereafter, which is the subject of this action. There was some evidence that the account was open and that it continued for several years after the 1967 payment, but the credit was all by plaintiff and the payments on account by the defendant.
Though G.S. 1--31 is not applicable to the account which is the subject of this action, the statute of limitations does not bar all items thereof which were incurred before 23 October 1970, three years before the action was commenced, if the account qualifies as an 'account current', which has been long recognized in this State. See Newsome v. Person, 3 N.C. 242 (1803) and Kimboll v. Person, 3 N.C. 394 (1806). In Phillips v. Penland, 196 N.C. 425, 147 S.E. 731 (1928), an 'account current' is referred to as a 'running account', and so designated because the parties 'contemplated indefinite and continuous services with no fixed time for payment and with no agreement as to what services should be performed or the value thereof.' 196 N.C. at 427, 147 S.E. at 732.
Where a payment is made on an account current (or running account), the effect of the payment is to stop the running [32 N.C.App. 343] of the statute of limitations against all items not then barred and to fix a new starting point from which the statute would run. Supply Co. v. Banks, 205 N.C. 343, 171 S.E. 358 (1933); Steel Corp. v. Lassiter, 28 N.C.App. 406, 221 S.E.2d 92 (1976); 5 Strong, N.C. Index, Limitation of Actions § 6 (2d Ed. 1968).
Since the conclusion that none of the account is barred by the statute of limitations is not supported by the findings of fact we must vacate the judgment and remand for a new trial. The finding that defendant made a payment of $525.00 on 14 May 1971 would have supported a judgment for recovery by plaintiff of so much of the account beginning three years prior to the payment, if the court had concluded that the transactions constituted an account current. Such finding would not support the judgment rendered because some of the items in the account for which recovery was allowed apparently arose prior to 14 May 1968. However, the evidence tends to show that there were other payments made within three years before the action was commenced and before the 14 May 1971 payment, which would start the statute of limitations running anew as to all items not barred at the time of those payments. On new trial such findings of fact and conclusions of law are for the trial court.
Reversed and remanded.
HEDRICK, J., concurs.
VAUGHN, J., dissents.
VAUGHN, Judge, dissenting:
Defendant did not bring forward any exceptions to the facts as found by the court or to the failure of the court to find other facts. The court found, in part, as follows:
'First, that Plaintiff, Whiteley's Electric Service, Inc. furnished goods and services to Defendant, Henry C. Sherrod or to his benefit through September 10, 1971, of a total value of Eighteen Thousand Two Hundred Thirteen Dollars and Eighty Cents ($18,213.80);
Second, that Defendant, Henry C. Sherrod received and accepted goods and services from Plaintiff, Whitley's Electric Service, Inc. through September 10, 1971 of the total value of Seventeen Thousand Four Hundred Fifty [32 N.C.App. 344] Dollars and Eighty-three cents ($17,450.83) and has failed and refused to pay Plaintiff said amount after demand by Plaintiff;
Third, that Defendant, Henry C. Sherrod paid Plaintiff, Whitley's Electric Service, Inc. the sum of Five Hundred Twenty Five Dollars ($525.00), ratified and acknowledged his indebtedness to Plaintiff, Whitley's Electric Service, Inc. on May 14, 1971; and that
Fourth, Plaintiff, Whitley's Electric Service, Inc. commenced this action on October 23, 1973 against Defendant, Henry C. Sherrod . . ..'
In my opinion, those facts support the court's conclusion that plaintiff's right to bring this action is not barred by a statute of limitation. The court found as a fact that defendant made a payment on the account of 14 May 1971 and 'ratified and acknowledged' his indebtedness to plaintiff. The question of whether there was evidence to support the finding is not presented on this record.
A statute of limitation bars the remedy and not the debt. Part payment on the account whereby, as here, the debtor has 'ratified and acknowledged his indebtedness' fixes a new date from which a statute of limitation will run in order to bar the remedy of an action to collect the sums due on the account. It is equivalent to a new promise to pay. That rule is not limited to 'mutual, open and current accounts.' I vote to affirm the judgment.