                                                       In the
                                 Missouri Court of Appeals
                                             Western District

                                                            
MARY M. HARMS,                                              
                                                                WD78643
                     Respondent,                                OPINION FILED:
v.                                                          
                                                                MAY 24, 2016
GREGORY R. HARMS,                                           
                                                            
                       Appellant.                           
                                                            
                                                            


                       Appeal from the Circuit Court of Benton County, Missouri
                         The Honorable Michael O'Brien Hendrickson, Judge

     Before Division Three: Gary D. Witt, P.J., James E. Welsh, Anthony Rex Gabbert, JJ.

        Gregory R. Harms appeals the circuit court’s judgment in favor of Mary M. Harms on her

petition to recover debts owed to her by Gregory.1 Gregory asserts three points on appeal. First,

he contends that the circuit court erred in rejecting his statute of limitations defense regarding the

$45,000 promissory note because Section 516.1102 requires a civil action to be commenced

within ten years upon any writing and the cause of action accrued upon Gregory’s default on the

promissory note on or about June 21, 2002, and suit was not instituted within ten years of that

date. Second, Gregory contends that the circuit court erred in rejecting his statute of limitations


        1
            Because the parties share the same last name, we refer to them by their first names. No disrespect is
intended.
        2
            All statutory citations are to the Revised Statutes of Missouri 2000, unless otherwise noted.
defense regarding his promise to pay $15,000 in Count II of Mary’s petition because Section

516.120 requires a civil action to be commenced within five years on any contract, except those

mentioned in Section 516.110, and the cause of action here accrued on or before November 30,

2001, and suit was not instituted within five years of that date. Third, Gregory contends that the

circuit court erred in finding that the debt owed to Mary had been reaffirmed in 2011, 2012, and

2013, because Section 516.320 requires that no acknowledgment or promise can take a contract

out of the operation of the provisions of sections 516.100 to 516.370 unless the same is in a

writing subscribed to by a party chargeable thereby, and no writing was subscribed to by Gregory

to extend the statute of limitations on the debts and any promise, acknowledgement, or

reaffirmation thereof is void. We affirm.

       The evidence is uncontested. In 1999 or 2000, Mary loaned her son, Gregory, $5,000. In

2001, Mary loaned Gregory another $8,000 and $2,000 respectively. Gregory acknowledged

these loans at trial and that they had never been repaid. On January 15, 2002, Mary sold Gregory

a house for $45,000. At that time, Mary obtained a promissory note from Gregory wherein he

agreed to pay the $45,000 back in monthly installments over a span of ten years at a 5% annual

interest rate. The promissory note also provided that Gregory would be obligated to Mary for

attorney fees and expenses related to collecting on the note. Also at that time, Gregory prepared

an amortization schedule that consolidated the $45,000 loan with the $15,000 in prior loans.

Gregory testified at trial that all of the debt was to be “rolled under one deal” and that the total

obligation for that one deal would be $60,000. Mary testified that she agreed to this arrangement

and although the amortization schedule called for a 5.25% interest rate, she told Gregory that 5%

was sufficient.



                                                   2
         After entering the January 15, 2002 agreements, Gregory made only two payments to

Mary. These payments totaled approximately $1,000. His last payment was on June 21, 2002.

Gregory testified that, although he took a mortgage out on the home he purchased from Mary

approximately seven months after acquiring it, he gave her none of the proceeds.3 Over the years

Mary and Gregory discussed repayment of the loans. Gregory testified at trial that, in 2011, he

promised to pay Mary upon the sale of a farm that he had inherited from his father. He testified

that, after the farm sold, however, he did not repay Mary.

         On April 23, 2013, Mary filed a petition alleging that Gregory had defaulted on the

$45,000 promissory note and that Gregory had defaulted on the $15,000 personal loans under the

terms of the amortization schedule agreement. She filed a four-count First Amended Petition on

November 6, 2013. The First Amended Petition alleged in Count I that Gregory had defaulted on

the $45,000 promissory note, in Count II that he had defaulted on the $15,000 personal loans

under the amortization schedule agreement, in Count III that Gregory promised to pay Mary all

of the debt due when his father’s farm sold and in reliance on those representations Mary did not

pursue enforcement of the note, and in Count IV that Gregory had defaulted on the terms of the

written amortization schedule to pay Mary a total of $60,000 for all of the debt. Gregory’s

answer to this First Amended Petition, among other things, asserted that Mary’s claims were

barred by all applicable statutes of limitations.

         After hearing evidence, the circuit court ruled in favor of Mary and found Gregory

indebted to Mary in the sum of $75,831.90 on the $45,000 promissory note, including interest,


         3
           Mary testified that, in June of 2002, she released a deed of trust that she had filed in connection with the
promissory note because she was about to undergo heart surgery and did not want Gregory to have to worry about
having a lien on the property if she did not survive the surgery. All parties acknowledged that, in spite of this
release, the loan was never forgiven.

                                                            3
and $24,891.78 on the $15,000 in personal loans, including interest. The court ordered Gregory

to pay $10,000 for attorney fees and costs of collection on the promissory note. Gregory

appeals.

       Our standard of review is set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc

1976). Schollmeyer v. Schollmeyer, 393 S.W.3d 120, 122 (Mo. App. 2013). We will affirm the

circuit court’s judgment unless it is unsupported by substantial evidence, it is against the weight

of the evidence, or it erroneously declares or applies the law. Id. at 122-123. We view the

evidence and all reasonable inferences in the light most favorable to the court’s judgment. Id. at

123. We will affirm the judgment if it is correct under any reasonable theory supported by the

evidence. Williams v. State, Dept. of Social Services, Children’s Div., 440 S.W.3d 425, 427 (Mo.

banc 2014). “Whether a statute of limitations applies to a given cause of action is [] reviewed de

novo.” Davison v. Dairy Farmers of America, Inc., 449 S.W. 3d 81, 83 (Mo. App. 2014).

       In his first point on appeal, Gregory contends that the circuit court erred in rejecting his

statute of limitations defense regarding the $45,000 promissory note because Section 516.110

requires a civil action to be commenced within ten years upon any writing and the cause of

action accrued upon Gregory’s default on the promissory note on or about June 21, 2002, and

suit was not instituted within ten years of that date. We disagree as we find that the cause of




                                                 4
action accrued January 1, 2012, and, therefore, Mary’s claim was timely filed.4

         Gregory argues that Hemar Ins. Corp. of America v. Ryerson, 108 S.W.3d 90 (Mo. App.

2003), is dispositive of this case because it holds that a cause of action on a promissory note

accrues when the borrower first defaults on the note thereby giving the lender the right to

accelerate the payments and bring a successful suit on the note. Gregory contends that, because

his last payment was made on June 21, 2002, the cause of action accrued at that time and,

because Mary did not file suit until April 23, 2013, ten years had passed and the statute of

limitations barred her claim.

         We disagree that Hemar Ins. Corp. of America v. Ryerson (Hemar I) stands for this

proposition as this interpretation was refuted in Ryerson v. Hemar Ins. Corp. of America, 200

S.W.3d 170 (Mo. App. 2006) (Hemar II). In Hemar II, our Eastern District explained that in

Hemar I it had found that the case involved a promissory note, not a demand note, and the trial

court had incorrectly ruled that the cause of action accrued either on the date the first payment of

the promissory note was due or the date the note was signed. Ryerson, 200 S.W.3d at 171. Upon

remand, the trial court granted the creditor’s (an assignee in that case) motion for summary

judgment and assessed damages against the debtor for the principal amount of the loan, pre-

judgment interest, and attorney fees. Id. at 172. The debtor appealed arguing that the trial court


         4
           As a preliminary matter, Mary argues that Gregory waived his statute of limitation defenses by failing to
plead the specific statutes upon which he relied, failing to plead sufficient facts to support his defenses, and by
failing to plead that the statute of limitations operated to extinguish the cause of action itself and not merely bar the
remedy. We find it is unnecessary to examine the sufficiency of Gregory’s pleadings as the record reflects that,
even if deficiently pled, the statute of limitations defenses were tried by consent. Prior to trial, Gregory filed a
Motion for Summary Judgment alleging no genuine issue of material fact in dispute and entitlement to judgment as
a matter of law for the reason that, prior to Mary filing her petition, ten years had passed since Gregory last made a
payment to Mary on the loans. In “Plaintiff’s Legal Memorandum in Opposition to Defendant’s Motion for
Summary Judgment” Mary directly addressed Gregory’s specific statute of limitation defenses and did not assert
that Gregory had failed to properly plead those defenses. Mary first contended that Gregory failed to adequately
plead the statute of limitations after Gregory moved for a directed verdict at trial. Rule 55.33(b).

                                                            5
erred in granting summary judgment because a genuine issue of material fact remained with

regard to when the statute of limitations began to run. Id. The Eastern District disagreed

explaining that our Supreme Court’s interpretation of Section 516.100 in relation to an

installment note was

        ‘that in suits upon contracts where there is more than one item of damage
        (installment) the cause of action shall not be deemed to accrue until the last item
        of damage is sustained (last installment becomes due) so that all damages
        (installments) may be recovered, and full and complete relief obtained in one
        action....’

Id. at 173 (quoting Sabine v. O.W. Leonard, 322 S.W.2d 831, 838 (Mo. 1959)). It noted that “[i]n

Hemar I, this Court rejected the assertion that the date of Borrower’s first installment payment

delinquency was the date that the statute of limitations commenced.” Id. at 172. Hemar II

concluded: “We find the date that the statute of limitations commences to run on an installment

note is the date the last installment of the note is due.” Id.

        Here, the promissory note Gregory signed was an installment note providing that he

would make monthly payments on the first day of each month beginning February 1, 2002 until

the note was paid in full. The note further provides that “[i]f, on January 1, 2012 I still owe

amounts under this Note, I will pay those amounts in full on that date, which is called the

‘maturity date.’” Although the parties disagree as to whether the note gave Mary the right to

accelerate the entire note upon default of monthly payments, it is clear that Mary never exercised

any rights she may have had to accelerate. She did not file suit until after the note’s maturity




                                                   6
date of January 1, 2012.5 Therefore, pursuant to Section 516.110, Mary had ten years from

January 1, 2012 to pursue collection on the note. Consequently, Mary’s claim associated with

the $45,000 promissory note, filed April 23, 2013, was timely and the circuit court did not err in

rejecting Gregory’s statute of limitations defense regarding that note. Point one is denied.

         In his second point on appeal, Gregory contends that the circuit court erred in rejecting

his statute of limitations defense regarding his promise to pay $15,000 in Count II of Mary’s

petition because Section 516.120 requires a civil action to be commenced within five years on

any contract, except those mentioned in Section 516.110, and the cause of action here accrued on

or before November 30, 2001, and suit was not instituted within five years of that date. We find

that Mary’s claim was timely filed.

         It is undisputed that Mary gave Gregory three loans between 1999 and November 30,

2001, and that the total amount of those loans was $15,000. At time the loans were given, there

were no set terms with regard to repayment. Mary testified at trial that there was no interest

attached to the loans and that Gregory was to pay her back as soon as he could. On January 15,

2002, approximately a month and a half after the last of the three loans, an agreement was

reached with regard to exact terms for repayment of all three loans. Mary and Gregory agreed to

consolidate the three loans pursuant to an amortization schedule created by Gregory. The

amortization schedule provided that repayment of the loans would be spread over fourteen years


         5
           If Mary had the option and had chosen to accelerate the note and demand payment of the entire note in full
prior to the maturity date, the cause of action would have accrued at the time she accelerated the note because
acceleration causes the last installment payment to be due and owing. Ryerson, 200 S.W.3d at 173. Gregory
contended in oral argument that, where an acceleration provision exists, the cause of action must accrue upon
default. We disagree as this is only true where the acceleration provision is mandatory. See Casper v. Bell’s Estate,
218 S.W.2d 606, 607 (Mo. 1949). Here, the acceleration provision is clearly not mandatory as it states that, upon
default “the Note Holder may require me to pay immediately the full amount of principal which has not been paid
and all the interest that I owe on the account.” (Emphasis added).


                                                         7
and Mary was to receive interest on the unpaid principal balance throughout that period.6

Although neither party signed the printed amortization schedule, both Gregory and Mary agreed

at trial that, starting January 15, 2002, the amortization schedule was to govern repayment of the

$15,000 in loans.7 Gregory made no payments on any of the loans until after the amortization

schedule agreement became effective.8

         On appeal, Gregory ignores the amortization schedule agreement and argues that the

original three loans totaling $15,000 were “demand notes” that render Mary’s claims for

repayment barred by Section 516.120, or any other applicable statute of limitations, because the

cause of action accrued when the money was loaned. Gregory asserts that, because the final loan

was made November 30, 2001, the cause of action for each loan accrued on or prior to that date

and, because Mary did not file her claims until April 23, 2013, her claims were filed well beyond

Section 516.120’s five-year statute of limitations. We disagree and find that, even if the original

discussions regarding the $15,000 in loans resulted in three payable on demand obligations, any

agreements accompanying those obligations were extinguished by the January 15, 2002,




         6
         Although the amortization schedule states that interest was to be at 5.25%, Mary testified at trial that she
told Gregory that 5% interest was sufficient. The trial court calculated interest on all claims at 5%.
         7
        The parties testified that the amortization schedule agreement also included the $45,000 Gregory agreed to
pay Mary for purchase of the home.
         8
          We note that the trial court calculated the interest for the unpaid balance of the $15,000 in loans based on
the January 15, 2001 amortization agreement and not the original date of each loan.


                                                           8
amortization schedule agreement.9 “Upon the execution of a valid and legal substituted

agreement, the original agreement merges into it and is extinguished, and failure to perform the

substituted agreement will not revive the old agreement.” Boyd v. Lane, 869 S.W.2d 305, 309

(Mo. App. 1994) (internal quotation marks and citation omitted). “A party who repudiates the

contract cannot at the same time set it up as a defense to a liability which he otherwise would




         9
          Gregory argues in his reply brief that the amortization schedule did not constitute a new promise to pay as
there was no new consideration given but, if it did, then the $45,000 promissory note would then be extinguished,
along with his obligation to pay attorney fees under that promissory note, because the $45,000 was included in the
amortization schedule. We disagree. Here, the trial court found the $45,000 due under the promissory note and the
$15,000 due under the amortization schedule agreement. These distinctions are supported by the record as the
promissory note and the amortization schedule agreement were ratified nearly simultaneously and, therefore, it
cannot be said that the oral amortization agreement modified or discharged the written promissory note. The
amortization agreement was orally discussed and agreed upon but not signed by any party. The promissory note was
an unambiguous contract signed by all parties and any oral modification of that contract would be barred by the
parole evidence rule. Waymire Co. v. Antares Corp., 975 S.W.2d 243, 247 (Mo. App. 1998).

         The parole evidence rule prohibits use of oral evidence to contradict or change the terms of a
         written, unambiguous and complete contract absent fraud, common mistake, accident or erroneous
         omission. The rule prohibits evidence of contrary agreements made prior to or contemporaneously
         with the writing but does not prohibit evidence of agreements entered subsequent to the contract.
         It is presumed that a written contract embodies the entire agreement of the parties, and this is
         particularly so where it is a promissory note which is in dispute.

Pacific Carlton Development Corp. v. Barber, 95 S.W.3d 159, 165 (Mo. App. 2003) (internal quotation marks and
citations omitted). The parole evidence rule does not apply, however, to the $15,000 in loans as the amortization
schedule agreement represented a new or modified oral contract regarding those loans. (Mary testified at trial that
Gregory presented the amortization schedule to her in January. Gregory argued orally that the amortization schedule
was agreed upon in December because the schedule contains “12/19/01 4:36 AM” in the lower, right hand corner.
Mary pointed out at trial that the upper, right hand corner contains the date “2002” and the start date listed on the
schedule is “Jan 2002.” Because Gregory has never argued that the amortization schedule was agreed upon after he
signed the promissory note, these variances are insignificant to this analysis.)


                                                         9
incur.” Id.10 Our Supreme Court stated in Berry v. Crouse, 376 S.W. 2d 107 (Mo. 1964):

         It is now perfectly clear that informal contracts, whether written or oral, can be
         modified and discharged by a subsequent agreement, whether written or oral.…
         [A]fter these issues have been determined and the court finds, as a fact, the
         making and the terms of the modifying or discharging agreement, we are no
         longer interested in the terms of the antecedent contract for purposes of
         enforcement of them, in so far as those terms have been nullified by the new
         agreement.

Id. at 112 (internal quotation marks and citation omitted). “When the parties modify an existing

contract they are making a new contract; it is only enforceable if there is mutual assent and

consideration.” Best Buy Builders, Inc. v. Siegel, 409 S.W.3d 562, 565 (Mo. App. 2013) (internal

quotation marks and citation omitted).

         The trial court found that Gregory himself created the amortization schedule and the

record supports this conclusion. All parties agree that the $15,000 in loans were to be repaid

according to the terms of that amortization schedule. Assuming, arguendo, that the original

loans were payable on demand and this amortization schedule was a “new” agreement,

consideration for this “new” agreement can be found in its terms; full payment was deferred over

a period of fourteen years in exchange for 5% yearly interest on the principal balance. This

agreement was an installment contract and, like the promissory note discussed above in Point

one, the statute of limitations did not begin to run until the last installment was due under the

contract. According to the amortization schedule, the last installment was due December, 2015.


         10
            Section 516.320 states that, in actions founded on any contract, no oral acknowledgement or promise
thereafter made shall be evidence of a new or continuing contract that might remove any case from the statutes of
limitations set forth in Section 516.100 to 516.370. Here, the amortization schedule agreement was not a mere
acknowledgment of an existing contract and promise to repay; if not the initial contract, it was an entirely new
contract, complete with new consideration, which nullified any prior agreements. This new agreement was made
prior to the expiration of any potentially applicable statute of limitations set forth in Section 516.100 to 516.370.
Although Gregory raises a statute of frauds defense in Point three with regard to the trial court’s finding that
reaffirmations and new promises were made in 2011, 2012, and 2013 regarding the debt, Gregory has never
contended that the statute of frauds barred enforcement of the amortization schedule agreement.

                                                          10
Mary filed her claim on April 23, 2013, prior to the due date of the final installment. As her

claim was filed prior to the expiration of any possible applicable statute of limitations, the circuit

court did not err in rejecting Gregory’s statute of limitations defense regarding his promise to pay

$15,000 in Count II of Mary’s petition. 11 Point two is denied.

        In his third point on appeal, Gregory contends that the circuit court erred in finding that

the debt owed to Mary was reaffirmed in 2011, 2012, and 2013, because Section 516.320

requires that no acknowledgment or promise can take a contract out of the operation of the

provisions of sections 516.100 to 516.370 unless same is in a writing subscribed to by a party

chargeable thereby, and no writing was subscribed to by Gregory to extend the statute of

limitations on the debts and any promise, acknowledgement, or reaffirmation thereof is void.

        Given our dispositions in Points one and two above, we need not decide this issue

because, even if the court found that the debt was reaffirmed and erred in doing so, this would

not change the fact that Mary’s claims were otherwise timely filed.

        We conclude that the circuit court did not err in rejecting Gregory’s statute of limitations

defense regarding the $45,000 promissory note as the statute of limitations began running on

January 1, 2012, the maturity date of the installment note, and Mary filed her claim within ten

years after that date. Further, we find that the circuit court did not err in rejecting Gregory’s

statute of limitations defense regarding his promise to pay $15,000 in Count II of Mary’s petition

because Mary’s claim was filed prior to the expiration of the statute of limitations set forth in




        11
          Although there is no evidence in the record that the amortization schedule or agreement based on that
schedule included an acceleration provision, Gregory did not object to Mary’s petition for payment of the $15,000
on the grounds that her claim was prematurely filed. Any such claim now would be moot as the final installment
date of December, 2015 has now passed. Had there been an acceleration clause, Mary’s filing would have triggered
the running of the statute of limitations. See Ryerson, 200 S.W.3d at 173.

                                                       11
Section 516.120. We affirm the circuit court’s judgment.




                                                   Anthony Rex Gabbert, Judge


All concur.




                                              12
