N.H. Hydraulics, Inc. v. Crean Equip., Inc., No. 669-9-09 Rdcv (Cohen, J., Apr. 26, 2010)

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
                                                 STATE OF VERMONT
                                                  RUTLAND COUNTY

NEW HAMPSHIRE HYDRAULICS, INC. )                                                           Rutland Superior Court
                               )                                                           Docket No. 669-9-09 Rdcv
v.                             )
                               )                                                           on appeal from
CREAN EQUIPMENT, INC.          )                                                           Docket No. 333-4-09 Rdsc


                                 DECISION ON SMALL CLAIMS APPEAL

           Plaintiff filed a small-claims complaint in April 2009 seeking to collect a debt

allegedly owed by defendant. The small claims court held a merits hearing and entered

judgment for plaintiff for the principal amount of the debt, plus interest and court costs.

Defendant now appeals and contends that the entire claim is barred by the six-year statute of

limitations set forth in 12 V.S.A. § 511.

           The findings of fact are not contested on appeal. Defendant entered into an open

account with plaintiff, the terms of which required defendant to pay outstanding balances

within thirty days of the invoice. For the first few months, defendant incurred charges on the

account and paid the balances promptly. Defendant then incurred charges in June 2002 and

August 2002 totaling more than $2,000. Defendant made only one partial payment of $200

towards this balance, in September 2003. The rest remains unpaid.

           The question is whether the claim is barred by the statute of limitations. The rule is

that the action must have been commenced “within six years after the cause of action

accrue[d].” 12 V.S.A. § 511. Since a cause of action for breach of contract accrues when the

breach occurs, Benson v. MVP Health Plan, Inc., 2009 VT 57, ¶ 5 (citing Alexander v.

Gerald E. Morrissey, Inc., 137 Vt. 20, 24 (1979)), it is apparent that the statute of limitations

first began running in this case no later than September 2002, when defendant failed to pay

his outstanding balances within thirty days of the invoices.
         Yet it is widely accepted that partial payment of a debt is an acknowledgment that

“has the effect of starting the statute of limitations running anew.” See Calamari & Perillo,

The Law of Contracts § 5-7, at 255 (3d ed. 1987) (explaining rule). As older Vermont cases

explain, “voluntary part payment of a debt . . . is a recognition of such debt by the debtor,

from which the law not only implies an admission of the existence of the balance as a

subsisting debt, but also a promise to pay it which prevents the operation of the statute [of

limitations].” Putnam v. Swain, 102 Vt. 90, 93 (1929); Goodwin v. Buzzell, 35 Vt. 9, 10

(1861). Hence, in the context of open accounts and credit-card accounts, the general rule is

that the limitations period is measured by the date the charges became due (i.e., the date of

the missed payment) or the date of the last payment, whichever is later in time. Smither v.

Asset Acceptance, LLC, 919 N.E.2d 1153, 1159–60 (Ind. Ct. App. 2010); Portfolio Recovery

Assocs., LLC v. Neska, 2010 WL 696649 (Minn. Ct. App. 2010); J.R. Simplot Co. v. Jelinek,

748 N.W.2d 17, 27 (Neb. 2008); Hawkins v. Barnes, 661 So.2d 1271, 1272–73 (Fla. Ct. App.

1995).

         Here, defendant made a partial payment on the account in September 2003. Since the

partial payment had the effect of “starting the statute of limitations running anew,” the

complaint for breach of contract was timely filed in April 2009. The small claims court

accordingly did not err in entering judgment for plaintiff.


                                           ORDER

         The judgment of the small claims court dated August 12, 2009, is affirmed.

         Dated at Rutland, Vermont this ____ day of April, 2010.


                                                ___________________________________
                                                Hon. William D. Cohen
                                                Superior Court Judge




                                               2
