Wickwire v. Reard

Citations: 226 P.2d 192; 37 Wash. 2d 748; 23 A.L.R. 3d 1323; 1951 Wash. LEXIS 374Docket: 31471

Court: Washington Supreme Court; January 4, 1951; Washington; State Supreme Court

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James F. Wickwire, as trustee of the estate of L.H. Pruitt, filed a lawsuit to enforce a $2,000 promissory note and foreclose on a mortgage, both dated February 1, 1923, with the note due by February 1, 1926. Wickwire claimed several interest payments were made, the last on December 21, 1942. The complaint was filed on December 20, 1948, just under six years after the last payment. The primary defense was the statute of limitations, disputing whether an interest payment on December 21, 1942, occurred. Mildred Reard was dismissed from the case before trial, leaving Emma G. Reard and John A. Reard as defendants. The trial court ruled in favor of the defendants on January 31, 1950, and denied Wickwire's motion for a new trial on February 6, 1950. Wickwire's appeal was hindered by a statement of facts filed late, prompting the court to strike it. Without the statement, the appellate court focused solely on whether the trial court's findings supported its judgment, which was based on the statute of limitations being applicable. The trial court found that an interest payment was made on December 28, 1937, but concluded that the notation related to the December 21, 1942 payment did not establish a prima facie interest payment, determining that the statute of limitations barred the action. The burden of proof for a voluntary payment lies with the party asserting it, and such proof is scrutinized more strictly after the statute has run. The note was considered in good standing on December 21, 1942.

Plaintiffs in this litigation often aim to prove their case by demonstrating that a credit has been recorded in the debtor's favor on the creditor's accounts or endorsed on a promissory note. It is crucial to recognize that it is the act of partial payment, rather than merely the recording of credit, that tolls the statute of limitations. Many courts have examined the admissibility of such endorsements as evidence of partial payments that can toll this statute. While the specific facts of the case are not presented, it is assumed that the findings are based on competent evidence, focusing on whether a payment was made on December 21, 1942, which would toll the statute until December 21, 1948.

The courts have generally found that endorsements, when accompanied by evidence proving they were made before the expiration of the statute, are admissible and carry sufficient probative value. In this case, the endorsement on the note was made prior to the statutory deadline, as a payment had been made earlier on December 28, 1937, keeping the note valid until December 28, 1943. The endorsement's date indicates it was made more than a year before the statute ran, establishing its validity. There is some disagreement among courts regarding whether such endorsements adequately prove voluntary payments were made on the specified dates. However, the general consensus is that if extrinsic proof confirms the endorsement was made before the statute's bar, it is competent evidence. The discussion references a Washington case, Schlotfeldt v. Bull, which highlights the importance of payments made within the statutory window to avoid the statute's expiration.

Plaintiff attempted to establish payment through endorsements dated 1884 and 1893 but provided no additional evidence to verify that these endorsements were made or payments received on those specific dates. The court ruled the endorsements inadmissible due to a lack of supporting evidence confirming their timing. Citing Haver v. Schwyhart, the court emphasized that endorsements alone do not prove payments were made at the stated times; there must be extrinsic evidence showing the endorsements were recorded before the statute of limitations expired. The ruling indicates that if a holder makes a credit endorsement before the statute bars action, it serves as evidence of payment, as it would be against their interest to falsify a credit while the note remains valid. The Schlotfeldt case also supported this principle, stating that endorsements are admissible if there is external proof they were made before the statute ran. The discussion referenced Mills v. Davis, which shared a similar outcome regarding the necessity of extrinsic evidence. Following these precedents, the Arthur Co. v. Burke case illustrated the principle further, where endorsements for credits from resale of goods were deemed inadmissible because evidence suggested the goods had likely been sold before the claimed payment dates and the maker did not intend for these credits as payments.

The court stated that an endorsement by the holder of a note indicating payment does not serve as competent evidence to establish the true payment date, thus not affecting the statute of limitations. This principle was upheld in the Arthur case, where there was no supporting evidence for the claimed voluntary payment apart from the endorsement, which was also contradicted by substantial evidence. No extrinsic evidence was presented to support the timing of the endorsement relative to the statute's running. Consequently, the court did not need to address the admissibility of endorsements corroborated by such evidence. The court referenced the Schlotfeldt case, which supports a broader interpretation of this rule, while noting that the Smith v. Wells case indicated the endorsement alone is insufficient to prove the payment date. In the Floe v. Anderson case, however, sufficient evidence, including testimony from a disinterested witness and additional context of a second note being issued, established the payment was made on the date indicated by the endorsement. In contrast, in Catlin v. Mills, it was determined that without proof of who made the payments, endorsements are merely self-serving declarations. Stewart v. Kelliher concluded that conflicting evidence supported the endorsement as indicative of a voluntary payment made on or before the date noted. Cannavina v. Poston reiterated the principle from the Arthur case but found that evidence favored the argument that the payment occurred in time to toll the statute.

The holder testified that the endorsement was added to the note shortly after a payment was made, which included fifty dollars in cash and one hundred dollars for real property transferred, well before the statute of limitations expired. The court acknowledged that this payment was made in a timely fashion and was not merely a last-minute credit to evade the statute. In reviewing a related case, Walker v. Sieg, the court noted that certain endorsements were made as credits for produce rather than cash payments, leading to the conclusion that those endorsements did not toll the statute. 

However, in the current case, the findings of fact supported the existence of a voluntary payment: a fifty-dollar check was received by Cook, who made the endorsement prior to the statute's expiration. This timing and the nature of the endorsement suggested that Cook had no incentive to misrepresent the payment. The court emphasized that the statute of limitations should not be unduly favored in legal proceedings. Ultimately, the findings established that a voluntary payment occurred on December 21, 1942, tolling the statute until December 21, 1948. Consequently, the judgment was reversed, and the case was remanded for judgment in favor of the appellant as requested.