First Hawaiian Bank v. Zukerkorn

Supreme Court of Hawaii · Contracts

Contractsstatute of limitationsrevival of debtsummary judgmentstale debtnew promiseacknowledgmentpart payment

Facts

Zukerkorn executed a demand note in 1965 and a two-year note in 1966, and he made no payments on either note. In 1975, when he applied for a master charge credit card, the Bank told him he owed a small amount on an old account and conditioned issuance of the card on his agreement to pay $100 per month on that old account; Zukerkorn admitted agreeing to that condition but denied that the 1965 and 1966 notes were specifically identified or that his agreement related to them. He also denied the Bank's assertion that he made a $200 cash payment when the agreement was made, though both parties agreed that in 1976 he made several payments pursuant to the disputed agreement. In 1978, the Bank sued on the two notes and on the balance due on the master charge account.

Issue

Whether summary judgment was proper on the two stale notes on the theory that, as a matter of law, Zukerkorn revived those debts within six years before suit by promising to pay them, acknowledging them, or making part payment on them. A related issue was whether the undisputed record supported summary judgment on the master charge account.

Rule

A new promise by a debtor to pay a debt, whether or not already barred by the statute of limitations, binds the debtor for a new limitations period. The promise may be express or implied; if express, it may be unconditional or conditional, but a conditional promise is ineffective until the condition is performed. A promise may be implied from an express acknowledgment of the debt or from part payment, but acknowledgment or part payment is only prima facie evidence of a new promise and may be rebutted by other evidence and the surrounding circumstances; thus a court may not treat acknowledgment or part payment as creating a promise as an inference of law when factual disputes remain.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Portland, Oregon, Meadow Crest Finance sued Lena Ortiz in 2024 on a promissory note that became time-barred in 2016. In 2021, Lena signed a letter stating, "I will pay the old note when my condominium in Salem closes," and the sale closed two months later.

Assuming the letter refers to the specific old note, what is the strongest argument that the claim is timely?

Explanation. A debtor's new promise to pay a debt starts a new limitations period even if the debt was already barred. The promise may be express and conditional, but a conditional promise is not effective until the condition is performed. Here, if the letter referred to the specific debt, the sale's closing performed the condition and triggered a new limitations period. (Derived from First Hawaiian Bank v. Zukerkorn (n.d.).)