Fisher Sand & Gravel Co. v. Neal a Sweebe, Inc.
494 Mich. 543
| Mich. | 2013Background
- Plaintiff supplied concrete to defendant from 1991 through 2005 on an ongoing invoiced open account; defendant made sporadic payments and never paid the account in full. The last delivery was May 9, 2005; defendant paid $152.98 on May 13, 2005. Plaintiff sued in 2009 seeking the balance on open account and account stated, among other claims.
- Defendant moved for summary disposition under MCR 2.116(C)(7), arguing the claims are time-barred by the UCC’s 4-year statute of limitations (MCL 440.2725) because the underlying transactions were sales of goods.
- Plaintiff argued that actions on an open account and account stated are independent contract actions governed by the general 6-year limitations period (MCL 600.5807(8)), and that a post-bar partial payment may revive the claim.
- The trial court and a divided Court of Appeals had applied the UCC 4‑year limitation to both account stated and open account causes of action and dismissed plaintiff’s claims as untimely.
- The Michigan Supreme Court granted leave to decide whether the UCC 4‑year limitations period governs suits on an open account or account stated when the underlying debt arises from sales of goods.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an action on an account stated arising from sales of goods is governed by MCL 440.2725 (4‑year) or MCL 600.5807(8) (6‑year) | Account stated is a later, independent promise to pay a stated balance; governed by 6‑year general contract statute | Underlying sales are sales of goods so UCC 4‑year statute should control | Account stated is an independent contract-based cause of action; governed by 6‑year limitations (MCL 600.5807(8)). |
| Whether an action to recover amount owed on an open account (where underlying transactions are sales of goods) is governed by the UCC 4‑year or the general 6‑year limitation | Open account is an independent claim arising from the parties’ course of dealing and is a contract claim governed by 6‑year statute | Open account recovery is effectively a suit to collect for sales of goods and thus falls under UCC 4‑year period | The Court holds open account is a distinct contract claim in many cases and, absent an express payment schedule integral to the transaction, is governed by the 6‑year statute; trial court must decide whether the parties’ relationship here created an express payment term or whether partial payments revived the obligation. |
| Accrual and effect of partial payments | Partial payments can renew the promise to pay and restart the limitations period | If governed by UCC, accrual is on breach and partial payments matter only under that statute | Partial payments may revive the promise and restart the 6‑year period; trial court must determine if May 13, 2005 payment renewed the debt. |
Key Cases Cited
- White v Campbell, 25 Mich 463 (Mich. 1872) (account stated functions as new original demand, akin to a promissory note)
- In re Hiscock Estate, 79 Mich 536 (Mich. 1890) (nature of original transaction is immaterial to account stated)
- Miner v Lorman, 56 Mich 212 (Mich. 1885) (partial payment implies renewal and tolls statute of limitations)
- Seyburn v Bakshi, 483 Mich 345 (Mich. 2009) (accrual in attorney-fee open-account context and role of express payment terms)
- Fisher Sand & Gravel Co v Neal A Sweebe, Inc, 293 Mich App 66 (Mich. Ct. App. 2011) (Court of Appeals decision applying UCC 4‑year limit; reversed by the Supreme Court)