Six-Year Statute of Limitations Under Vermont UCC, Instead of Fourteen-Year Statute of Limitations for a witnessed promissory note Under Vermont Statutes, Applied To Claim To Recover On Promissory Note. Clark v. DiStefano, 2018 WL 3799978 (VT, August 10, 2018).
In December 2006, Richard DiStefano (“Debtor”) executed a witnessed promissory note in the aggregate principal amount of $16,500 (the “Promissory Note”) in favor of Wayne Clark (the “Creditor”), payable upon sixty days’ written notice of demand. Late April or early May 2007, the Creditor delivered written notice of demand to pay but the Debtor did not comply. The Creditor filed suit to collect on the Promissory Note in April 2017, approximately ten years after the written notice of demand.
The Creditor argued that § 508 of the Vermont Statutes governed, providing that, “An action brought on a promissory note signed in the presence of an attesting witness shall be commenced within 14 years after the cause of action accrues, and not after.” The Debtor countered by arguing that the UCC governed instead, and § 3-118(b) of the Vermont UCC requires that “if demand for payment is made to the maker of a note payable on demand, an action to enforce the obligation of a party to pay the note must be commenced within six years after the demand.” The Debtor also noted that § 464 of the Vermont Statutes states that “[t]he provisions of this chapter shall not affect an action otherwise specially limited by law.”
The court sided with the Debtor. The court first looked to the plain language of the Vermont Statutes and noted that § 508 is in the same chapter as § 464, and so § 508 is among the provisions that “shall not affect an action otherwise specially limited by law.” Conversely, § 3-118(b) of the UCC is outside of the chapter in question (Chapter 23), and unquestionably applies to negotiable demand notes (whether witnessed or not). Thus, § 464 allows applicable statutes of limitations outside of Chapter 23 to take precedence over applicable limitations within that chapter.
The court identified numerous cases supporting its conclusion, for example: “[I]n Pike v. Chuck's Willoughby Pub, Inc . . . We stated . . . Because the [Dram Shop Act] contains its own limitations provision and is not codified in chapter 23, an action under the statute is otherwise specially limited and removed from the operation of the minority tolling provision by § 464.” Although precedent case law was distinguishable as to the facts and statutes involved, “The bottom line is that § 464 does not draw a distinction between statutes outside of Chapter 23 of Title 12 that codify new causes of action not previously recognized at common law, and those, like the UCC, that codify preexisting common law principles. In both circumstances, § 464 provides that the statute of limitations outside of Chapter 23 of Title 12 prevails.” Therefore, the court held that the six-year statute of limitations period per the Vermont UCC prevailed and granted summary judgment in favor of the Debtor.