Mosher v. Anderson
817 So. 2d 812, 2002 WL 716163 (2002)
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Rule of Law:
A cause of action on an oral loan that is payable on demand or has no specified repayment terms accrues, and the statute of limitations begins to run, only when a demand for payment is made and subsequently refused by the debtor.
Facts:
- Stephen J. Anderson and his brother were the sole shareholders of Anderson Development Corporation.
- In 1988, Anderson Development Corporation made an oral loan of $67,500 to Stephen J. Anderson.
- The loan was not in writing and had no terms specifying a date for repayment or interest.
- Prior to the subsequent legal proceedings, Anderson Development Corporation never made a demand on Anderson for repayment of the loan.
- Robert T. Mosher obtained a monetary judgment against Anderson Development Corporation.
- When Mosher was unable to collect the judgment directly from the corporation, he sought to garnish the debt Anderson owed to the corporation.
Procedural Posture:
- Robert T. Mosher obtained a judgment against Anderson Development Corporation.
- Mosher filed a motion in a Florida trial court for a writ of garnishment against Stephen J. Anderson to collect the debt Anderson owed the corporation.
- The trial court granted summary judgment in favor of Mosher, the creditor.
- Anderson, as appellant, appealed the trial court's decision to the Florida Fourth District Court of Appeal.
- The Fourth District Court of Appeal reversed, holding that the statute of limitations had run because it began on the date the loan was made.
- The Fourth District Court of Appeal then certified that its decision was in direct conflict with a prior decision from the Second District Court of Appeal, sending the case to the Supreme Court of Florida for review.
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Issue:
Does the statute of limitations on an oral loan payable upon demand begin to run from the date the loan is made, rather than from the date a demand for payment is made?
Opinions:
Majority - Per Curiam
No. A cause of action on an oral loan payable upon demand does not accrue, and the statute of limitations does not begin to run, until there has been a demand for payment and a refusal by the debtor to pay. The court reasoned that there is no valid basis for distinguishing between oral and written demand loans, and under ordinary contract principles, a breach only occurs when repayment is demanded and then refused. To hold that the statute begins to run at the time the loan is made would imply the debtor is in immediate breach, a conclusion contrary to the ordinary contemplation of the parties. This rule prevents debtors from using a 'gotcha' tactic to avoid repayment of 'friendly' loans simply because the creditor was lenient and did not demand payment within the statutory period.
Dissenting - Pariente, J.
Yes. The statute of limitations on an oral loan with no repayment terms should begin to run from the date the loan is made. The dissent argued that the legislature, in Florida Statute § 95.031(1), specifically changed the common law to require a written demand for written notes, but by omitting oral loans, it implicitly left the common law rule in place for them. Under common law, a cause of action on a demand obligation accrued on the date of issuance. The majority's holding contravenes the purpose of statutes of limitations—to prevent stale claims—by allowing a creditor to extend the limitations period indefinitely by simply not making a demand.
Analysis:
This decision resolves a conflict in Florida appellate courts by aligning the accrual rule for oral demand loans with the statutory rule for written demand notes. It prioritizes the actual breach of the agreement (refusal to pay upon demand) over the creation of the obligation itself as the trigger for the statute of limitations. This provides greater protection to creditors in informal lending arrangements, particularly within closely-held companies, by preventing debtors from using a passive 'wait-out-the-clock' strategy. However, it also creates the potential for claims to remain viable for decades, undermining the legal system's general preference for finality and repose.
