Gillingham v. Brown
178 Mass. 417 (1901)
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Rule of Law:
A partial payment on a debt barred by the statute of limitations, when accompanied by a new conditional promise to pay, revives the debtor's liability only to the extent of the new promise, not for the entire original debt.
Facts:
- A defendant owed a plaintiff money on a demand note dated October 22, 1872.
- By 1898, the statute of limitations had expired, barring the plaintiff from legally enforcing the note.
- The plaintiff's evidence suggested that in February 1898, the defendant orally agreed to pay off the note in monthly installments of $10.
- The defendant allegedly failed to make the first promised installment payment.
- In April 1898, after the plaintiff's agent demanded payment, the defendant gave the agent $5.
- The plaintiff's agent recorded the $5 as a payment on the note.
- The defendant testified that the $5 was not a payment on the note but an act of charity to get the agent to leave.
Procedural Posture:
- The plaintiff filed an action in a trial court to recover payment on a demand note.
- The defendant asserted the statute of limitations as an affirmative defense.
- At trial, the defendant requested a jury instruction stating that if the payment was made pursuant to an installment agreement, the plaintiff could only recover installments due.
- The trial court refused the defendant's requested instruction and instead instructed the jury that if they found the payment was made on account of the note, their verdict should be for the full remaining amount.
- The jury returned a verdict for the plaintiff for the full amount of the note plus interest.
- The defendant excepted to the court's refusal to rule as requested and to the ruling given, and the case was heard on appeal.
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Issue:
Does a partial payment on a debt, otherwise barred by the statute of limitations, revive the entire debt as immediately due if the payment was made pursuant to an oral agreement to pay the debt in installments?
Opinions:
Majority - Hammond, J.
No. A partial payment on a time-barred debt revives the debt only according to the terms of the new promise made by the debtor. The court reasoned that while a partial payment can serve as an acknowledgment of a debt and imply a new promise to pay, that new promise determines the extent of the debtor's liability. If a debtor makes a payment explicitly conditioned on new terms, such as an installment plan, the law cannot imply an unconditional promise to pay the entire original debt at once. The court cited Phillips v. Phillips, stating, 'The new promise, and not the old debt, is the measure of the creditor’s right.' The waiver of the statute of limitations defense is only as extensive as the debtor's new promise; a conditional promise results in a conditional waiver. Therefore, the trial court erred by failing to instruct the jury to determine if the payment was made pursuant to the alleged installment agreement, as this would limit the plaintiff's recovery to only the installments that were due.
Analysis:
This decision clarifies that a debtor maintains control over the terms of reviving a time-barred debt. It establishes that a creditor cannot accept a partial payment made under a conditional promise, such as an installment plan, and then use that payment to sue for the entire original debt immediately. The ruling aligns the doctrine of revival with general contract principles, where the offeror dictates the terms of the agreement. It protects debtors by ensuring that their specific, limited promises to pay old debts are not construed as an unconditional revival of the entire, original obligation.
