Boatner v. Gates Bros. Lumber

George Rose Smith, J. This action, according to the appellee’s amended complaint, is one to recover $3,014.33 upon an account stated. The appellant denies the existence of an account stated and relies upon the three-year statute of limitations as a defense to two items totaling $2,449.60. The circuit court, upon motions by both sides for a directed verdict, withdrew the case from the jury and held the statute of limitations to be inapplicable for the reason that the proof established an account stated. Judgment was therefore entered for the lumber company in the amount sued for. In this court Boatner contends that his plea of limitations should be upheld as a matter of law. This contention involves three separate questions, one relating to the account stated and the other two to part payments. I. On the issue of account stated the evidence is to this effect: Boatner is a contractor and for several years has purchased building materials from the appellee, on credit. It has been the lumber company’s bookkeeping practice to devote a separate ledger page to each job for which Boatner has bought material. Boatner’s indebtedness for each job becomes due and payable thirty days after the completion of the work. The amount now sued for represents the total due upon some fourteen separate jobs. Two of these job accounts, amounting to $2,449.60, had been due for more than three years when Boatner allegedly agreed to the account stated. At the end of each month the lumber company prepares a consolidated statement on which Boatner’s various jobs are listed, with the amount owed upon each. On July 29, 1953, which was two weeks' before this suit was brought, the appellee’s president presented such a monthly statement to Boatner and went over it with him, item by item. Boatner admitted the correctness of the account and promised payment. This proof discloses a typical example of an account stated and amply supports the trial court’s finding that such an account existed. Ark. Fertilizer Co. v. Banks, 95 Ark. 86, 128 S. W. 566. Nevertheless, the existence of a stated account does not automatically eliminate the issue of limitations. At common law an account stated was held to create an independent cause of action, upon which the statute of limitations ran axiew. But where, as here, the debtor’s manifestation of assent to the account is merely oral, the common law rule has been modified by provisions such as this one in our limitation statutes: “No verbal promise or acknowledgment shall be deemed sufficient evidence in any action founded on a simple contract, whereby to take any case out of the operation of this act, or to deprive the party of the benefits thereof.” Ark. Stats. 1947, § 37-216. Inasmuch as the debtor’s part in the creation of an account stated amounts in legal effect to nothing more than an acknowledgment that the computation is correct, the statute would be pretty well nullified by a holding that an oral statement of the account is effective as to items already barred. It is therefore the uniform rule in jurisdictions having statutes like ours that, although a parol account stated interrupts the running of the statute as to items not yet barred, it is wholly ineffective as to items already barred by limitations. Auzerais v. Naglee, 74 Calif. 68, 15 P. 371; O’Hanlon Co. v. Jess, 58 Mont. 415, 193 P. 65, 14 A.L.R. 237; Delabarre v. McAlpin, 101 App. Div. 468, 92 N.Y.S. 129; Rest., Contracts, § 422; Williston on Contracts, § 1863. Here the two items in controversy were more than three years overdue when Boatner orally agreed to the correctness of the account. It is familiar law that the statute of limitations runs separately from the due date of each item in an open account like this one. McNeil v. Garland, 27 Ark. 343; Parker v. Carter, 91 Ark. 162, 120 S. W. 836, 134 Am. St. Rep. 60. Hence the account stated did not include these items, and the trial court was in error in holding that the mere showing of an account stated deprived Boatner of the defense of limitations. II. The appellee insists that the judgment should nevertheless be affirmed on the ground that part payments by Boatner took the case out of the statute. With respect to one of the payments the evidence is undisputed, presenting only a question of laAV. On August 7, 1953, which was in the interval between the stating of the account and the filing of this action, Boatner went to the appellee’s office and paid in full the balance of $1.53 that was due on one of the jobs, referred to as the Rice job. It was Boatner’s intention to pay this particular item, and the payment was so accepted by the appellee and so. entered upon its books. Upon no theory could this payment revive the íavo items already barred. A general payment upon an open account operates as a part payment upon the entire debt. McConnell v. Ark. Coffin Co., 172 Ark. 87, 287 S. W. 1007. But, conversely, a part payment directed specifically to one item only has no legal effect upon the rest, of the account. Clark v. Diefendorf, 109 Conn. 507, 147 A. 33; Slagle & Co. v. Bushnell, 70 S.D. 250, 16 N.W. 2d 914, 156 A.L.R. 1070. Nor does the existence of an account stated affect the situation. As we have seen, the oral statement of the account could not encompass items already barred by the statute. Hence if the part payment be treated as an implied recognition of the new cause of action created by the account stated, it still does not reach those outlawed claims that were not legally a part of that account. III. The evidence concerning the other part payment raised a question of fact that has not yet been decided by the trial court. It was the lumber company’s practice to allow Boatner a commission upon the sale of materials to new customers whom Boatner induced to trade Avith the company. In March of 1953 the company credited Boatner Avith such a commission, in the amount of $9.82, and on its books entered half this amount as a payment upon each of the tAvo job accounts now in dispute. Whether Boatner knew of and approved these credits, in circumstances amounting to such a recognition of the debts as would interrupt the running of the statute, is an issue of fact upon Avhich the evidence is not undisputed. In this situation it is our practice to remand the ease for a neAv trial. Louisiana Petroleum Corp. v. Oil Well Supply Co., 172 Ark. 386, 289 S. W. 1; Hot Springs Sch. Dist. No. 6 v. Surface Combustion Corp., 222 Ark. 591, 261 S. W. 2d 769. Reversed and remanded. McFaddin and Mildavee, JJ., dissent.