Mid-Pacific Liquor Distributing Corp v Edmond [1999] FMSC 4; 9 FSM Intrm. 75 (Kos. 1999) (12 March 1999)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Mid-Pacific Liquor Disrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75 (Kosrae 1999)

[1999] FMSC 4; [9 FSM Intrm. 75]

MID-PACIFIC LIQUOR DISTRIBUTING CORP.,
Plaintiff,

vs.

RINSON H. EDMOND d/b/a RINSON STORE,
Defendant.

CIVIL ACTION NO. 1997-2001

ORDER AND MEMORANDUM

Martin Yinug
Associate Justice

Decided: March 12, 1999

APPEARANCES:

For the Plaintiff:
Douglas Parkinson, Esq.
P.O. Box 2069
Kolonia, Pohnpei FM 96941

For the Defendant:
Harry Seymour, Esq.
Micronesian Legal Services Corporation
P.O. Box 38
Lelu, Kosrae FM 96944

[9 FSM Intrm. 76]

* * * *

HEADNOTES

Civil Procedure - Summary Judgment
As to a motion and a cross-motion for summary judgment, the familiar standard for granting a summary judgment motion is that judgment should be granted in favor of the moving party only if the pleadings, depositions, answers to interrogatories, and admissions on file, taken together with any affidavits, demonstrate that there is no genuine issues as to any material fact, and that the movant is entitled to judgment as a matter of law. The court must view the facts and inferences in a light most favorable to the party against whom judgment is sought. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 77 (Kos. 1999).

Contracts
An open account is an account based upon running or concurrent dealing between the parties which has not been closed, settled, or stated, and which is kept unclosed with the expectation of further transactions. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 78 (Kos. 1999).

Contracts; Statutes of Limitation
In an action brought to recover the balance due upon a mutual and open account, or upon a cause of action on which partial payments have been made, the cause of action shall be considered to have accrued at the time of the last item proved in the account. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 78 (Kos. 1999).

Contracts; Statutes of Limitation
The statute of limitations for an action to collect the balance due on an open account is six years from the accrual date of the cause of action. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 78 (Kos. 1999).

Statutes of Limitation
A suit filed on March 18, 1997 for a cause of action with a six-year statute of limitation that accrued on March 18, 1991 was filed on the very last day for doing so because in computing any time period the day of the act, event, or default from which the designated time period begins to run is not included. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 78 (Kos. 1999).

Equity - Laches, Estoppel and Waiver
Laches involves two factors, 1) inexcusable delay or lack of diligence by the plaintiff in bringing suit, and 2) injury or prejudice to the defendant from plaintiff's delay. A predicate to reliance on the doctrine of laches is that he who would invoke it must have clean hands, and must have acted properly concerning the subject matter of the litigation. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 78 (Kos. 1999).

Equity - Laches, Estoppel and Waiver
A defendant who has had the benefit of the goods which he received without paying for them is precluded from relying on the doctrine of laches as a defense to a suit for payment. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 78 (Kos. 1999).

Civil Procedure - Summary Judgment
On a motion for summary judgment, a court must consider the facts and inferences therefrom in a light as favorable to the non-moving party as is reasonable. Therefore summary judgment for payment of an invoice is precluded when there is a C.O.D. notation on the invoice, creating an issue

[9 FSM Intrm. 77]

of fact whether the goods were paid for before the defendant received them. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 79 (Kos. 1999).

Attorney, Trial Counselor and Client - Fees; Civil Procedure - Summary Judgment; Contracts
When a plaintiff's interest and attorney's fee claim rests on a paragraph on the bottom left portion of each invoice and none of the invoices bears the defendant's signature, an issue of fact exists as to whether this pre-judgment interest and fee clause ever formed a material part of the open account agreement between the parties. Summary judgment is therefore denied on the issue. Mid-Pacific Liquor Distrib. Corp. v. Edmond, [1999] FMSC 4; 9 FSM Intrm. 75, 79 (Kos. 1999).

* * * *

COURT'S OPINION

MARTIN YINUG, Associate Justice:

A review of this file discloses that plaintiff filed its Motion for Summary Judgment on July 8, 1997. On July 10, 1997, defendant filed his Motion in Opposition to Plaintiff's Motion for Summary Judgment; and Defendant's Cross Motion for Summary Judgment. On that same date, defendant filed Defendant's Motion for Leave to Amend Answer. On August 1, 1997, plaintiff filed Plaintiff's Opposition to Defendant's Cross Motion for Summary Judgment and Nonopposition to Defendant's Motion for Leave to Amend Answer.

There being no opposition to the defendant's motion for leave to amend the answer, the motion is granted.

As to the motion and cross-motion for summary judgment, the familiar standard for granting a motion for summary judgment under Rule 56 of the FSM Rules of Civil Procedure is that judgment should be granted in favor of the moving party only if the pleadings, depositions, answers to interrogatories, and admissions on file, taken together with any affidavits, demonstrate that there is no genuine issues as to any material fact, and that the movant is entitled to judgment as a matter of law. FSM v. Ponape Builders Constr. Inc., 2 FSM Intrm. 48, 52 (Pon. 1985). The court must view the facts and inferences in a light most favorable to the party against whom judgment is sought. Id.

The material facts as set out in plaintiff's motion and supported by the affidavit of plaintiff's credit manager are that beginning on September 4, 1990, and continuing through March 18, 1991, defendant placed seven orders for goods from defendant. The orders were placed on an open account basis. The amount of goods ordered totalled $15,661.99. Plaintiff credited defendant with payments totalling $962.76 on the first shipment. Plaintiff claims that $14,699.13 remains due and owing.

In response, defendant admits that he purchased goods on credit from plaintiff, and does not deny that goods were purchased on an open account basis. Defendant does deny that he owes the total amount claimed of $14,699.13. Specifically, defendant takes issue with one of the invoices, invoice number 11049 dated September 4, 1990. Defendant also contends that he is not chargeable with pre-judgment interest on his account, nor with attorney's fees. Defendant further urges two points of law. He asserts that as to the shipments represented by six of the seven invoices, plaintiff's claim is foreclosed by the six year statute of limitations found in 6 F.S.M.C. 805. Defendant also alleges that the equitable doctrine of laches prevents this action.

[9 FSM Intrm. 78]

Legal Issues

The statute of limitations and laches defenses, if they are legally sufficient, necessarily dispose of this action, and the court addresses them first.

A. Statute of Limitations

Based on the affidavit of plaintiff's credit manager, customer ledger, and invoices attached to plaintiff's motion for summary judgment, plaintiff and defendant had a standard commercial arrangement with defendant constituting an open account, and defendant offers nothing to suggest that seven orders placed between September 4, 1990, and March 13, 1991 were on any basis other than an open account. An open account is "an account based upon running or concurrent dealing between the parties which has not been closed, settled, or stated, and which is kept unclosed with the expectation of further transactions." 1 Am. Jur. 2d Accounts and Accounting § 4 (1962). The FSM Congressshas specifically addressed the accrual date for a cause of action based on an open account when it enacted 6 F.S.M.C. 807, which provides that "[i]n an action brought to recover the balance due upon a mutual and open account, or upon a cause of action on which partial payments have been made, the cause of action shall be considered to have accrued at the time of the last item proved in the account." Hence, the accrual date for the instant cause of action is the date of the last invoice, invoice number 11649, which is dated March 18, 1991.

The statute of limitations for an action to collect the balance due on an open account is six years from the accrual date of the cause of action. This follows from 6 F.S.M.C. 805 by a process of exclusion. That statutory section provides that "[a]ll actions other than those covered in the preceding sections of this Chapter shall be commenced within 6 years after the cause of action accrues." A cause of action for debt collection is not listed in those causes of action set out in 6 F.S.M.C. §§ 802, 803, or 804. Hence stae statute of limitations for the instant suit is six years.

As noted, plaintiff's cause of action accrued for purposes of the statute of limita on March 18, 1991. This suit was filed on March 18, 1997. 997. By virtue of the fact that Rule 6(a) of the FSM Rules of Civil Procedure provides that "[i]n computing any period of time prescribed . . . by any applicabltusta the, the day of the act, event, or default from which the designated period of time begins to run shall not be included," plaintiff filed its suit on the last or doing so. As a consequence, the statute of limf limitatiitations does not preclude the instant suit.

B. Laches

Defendant also contends that the equitable doctrine of laches prevents plaintiff from pursuing its claim. Laches involves two factors, "1) inexcusable delay or lack of diligence by the plaintiff in bringing suit, and 2) injury or prejudice to the defendant from plaintiff's delay." Nahnken of Nett v. United States (III), [1994] FMSC 3; 6 FSM Intrm. 508, 522 (Pon 1994). A predicate to reliance on the doctrine of laches is that he who would invoke it must have clean hands, and "must have acted properly concerning the subject matter of the litigation." Ponape Transfer & Storage v. Federated Shipping Co., [1987] FMSC 14; 3 FSM Intrm. 174, 178 (Pon. 1987).

In this case defendant does not deny that he received the goods for which plaintiff seeks payment. Nor, with one exception, invoice number 1049, does he claim to have paid the invoices. Under these facts, the defendant cannot be said to have clean hands. He has had the benefit of the goods which he received without paying for them. He is precluded from relying on the doctrine of laches as a defense to plaintiff's suit.

[9 FSM Intrm. 79]

For these reasons, the equitable doctrine of laches does not bar plaintiff's claim.

Fact Issues

As to invoices 11318 ($1,315.51), 11409 ($2,658.84), 11551 ($1,444.80), 11579 ($3,525.46), 11640 ($225.63), and 11649 ($5,288.19), which constitute the bulk of the balance of the open account, defendant does not deny that he received these goods, and that he has not paid for them. Therefore, as to this portion of plaintiff's claim, plaintiff is entitled to judgment. However, as to invoice 11049, in the amount of $1,203.46, an issue of fact exists. An issue of fact also exists as to whether the defendant is entitled to pre-judgment interest and attorney's fees.

Invoice 11049 bears the notation "C.O.D." in the upper right hand corner. Defendant offers the affidavit of a Kosrae postal worker, Schaller George, to make the point that "C.O.D." means "collect on delivery." Defendant concludes that he must have paid for this shipment, or else he would not have been permitted to take delivery of it. Plaintiff rightly points out that the affidavit lacks sufficient evidentiary foundation, since Mr. George was not employed as a postal clerk at the post office in Kosrae until sometime after the date of the invoice. However, "C.O.D." has a meaning sufficiently established apart from any evidentiary issues raised by the affidavit of Mr. George. Webster's Third New International Dictionary 437 defines "C.O.D." as "cash on delivery, collect on delivery." The appearance of this notation on the invoice creates an issue of fact whether this invoice was paid, since the accepted meaning of "C.O.D." is receipt of goods is conditioned on payment.

Plaintiff is quick to point out that defendant made three payments of $481.38, $240.69, and $240.691 between September 4, 1990, the date of invoice 11049, and December 6, 1990, the date of the next invoice. Plaintiff maintains that it would be unlikely that defendant would have made these payments if he had already paid invoice 11049, which was the only outstanding invoice at the time these payments were made. However, such a conclusion flows from weighing evidence, and making a determination in favor of plaintiff. On a motion for summary judgment, the court must consider the facts and inferences therefrom in a light as favorable to the non-moving party as is reasonable. FSM Social Sec. Admin. v. Kingtex (FSM), Inc. (I), [1995] FMSC 39; 7 FSM Intrm. 280, 283 (Yap 1995). Viewed in this way, the C.O.D. notation creates an issue of fact that at least precludes summary judgment on this point.

An issue of fact also exists with respect to whether plaintiff is entitled to pre-judgment interest and attorney's fees. Plaintiff seeks these in its motion, although indicating that as to precise amount, it intends to leave this to the court's discretion as part of a motion for entry of judgment should the court grant its motion. However, the court concludes that an issue of fact exists as to whether plaintiff is entitled to pre-judgment interest and attorney fees in the first instance.

Plaintiff's interest and fee claim rests on a paragraph appearing in the bottom left portion of each invoice which provides as follows:

Purchaser understands and agrees that interest of 1½% per month shall accrue on all accounts remaining unpaid after thirty (30) days from date of original purchase. If placed in the hands of an attorney for collection or if suit is sought on same, the purchaser shall also pay the cost of collection including reasonable attorney fees and court costs.

However, based on the photocopies of the invoices attached to the plaintiff's motion for summary judgment, none of these invoices appear to bear the signature of the defendant. Hence, an issue of fact exists as to whether or not this pre-judgment interest and attorney's fee clause ever formed a material part of the open account agreement between the parties. Summary judgment is therefore denied on the issue of pre-judgment interest and attorney's fees.

[1999] FMCSC 9; [9 FSM Intrm. 80]

Conclusion

Based on the foregoing, plaintiff's motion is granted to the extent of $13,495.67 on the principal portion of its claim. The remainder of plaintiff's motion for summary judgment is denied. Defendant's cross-motion for summary judgment is denied.