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Citizen's Nat'l Bk. of Decatur v. Farmer

OPINION FILED OCTOBER 5, 1979.

CITIZEN'S NATIONAL BANK OF DECATUR, PLAINTIFF-APPELLEE,

v.

LINDA FARMER, A/K/A LINDA SMITH, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Macon County; the Hon. LESTER BRINKOETTER, Judge, presiding.

MR. JUSTICE MILLS DELIVERED THE OPINION OF THE COURT:

Automobile purchase — retail installment contract — assigned to bank — suit for balance due.

Which statute of limitations applies? Four years or ten?

Four. The Uniform Commercial Code controls.

• 1 Citizen's National Bank of Decatur brought this small-claims action to recover the balance due on two retail installment sales contracts. Judgment was entered for defendant on one of the contracts and for plaintiff on the other. Only defendant appeals. The sole issue raised is whether the 4-year statute of limitations governing actions for breach of a contract for the sale of goods is a defense to the bank-assignee's action. The trial court ruled that it was not. We view that ruling as erroneous.

We reverse.

On July 7, 1972, the defendant purchased an automobile from Weidenbacher Toyota, Inc. At the time of purchase she made a cash down payment and signed a retail installment contract which obligated her to pay the remaining purchase price in 18 monthly installments. This contract was subsequently assigned to Citizen's, the bank with which the defendant told the dealer she did business. She had never contacted anyone at the bank in regard to a loan but she did make payments to Citizen's on this contract. The testimony at trial was contradictory concerning the date of defendant's default on the contract. According to a bank employee, the account became delinquent in January 1973, but defendant testified that she made no payments after March 1974.

In either case, it is undisputed that plaintiff did not bring this action until more than 4 years after defendant's breach. The defendant unsuccessfully raised the statute of limitations issue three times: by motion to dismiss prior to trial, by motion for judgment, and by motion to vacate judgment. This appeal followed.

It is the bank's position that its action as assignee of a retail installment sales contract is governed by the 10-year statute of limitations for actions on a written contract. The section relied on by plaintiff provides:

"Except as provided in Section 2-725 of the `Uniform Commercial Code,' enacted by the Seventy-second General Assembly, actions on bonds, promissory notes, bills of exchange, written leases, written contracts, or other evidences of indebtedness in writing, shall be commenced within 10 years next after the cause of action accrued; * * *." (Ill. Rev. Stat. 1977, ch. 83, par. 17.)

The explicit exception to this 10-year limitations period — section 2-725 of the Uniform Commercial Code — requires an action for breach of any contract for sale to be commenced within four years after the cause of action has accrued. Ill. Rev. Stat. 1977, ch. 26, par. 2-725.

The bank's argument for application of the 10-year statute, although novel, is unacceptable. It argues that defendant's breach was of her obligations to make payment, not of a contract for the sale of goods. In the contract, defendant agreed to make 18 monthly payments commencing on August 25, 1972, and plaintiff argues that the contract is really a hybrid instrument containing provisions for the sale of goods and provisions for the obligation to pay. The bank would have us hold that the sale of goods occurred on the date the contract was signed. It argues that this action is one for breach of defendant's promise to pay which is an action based on the debtor-creditor rather than the buyer-seller relationship.

We find no basis for making such a distinction.

The principal case relied on by plaintiff-bank is readily distinguishable from the case at bench. In Harris Trust & Savings Bank v. McCray (1974), 21 Ill. App.3d 605, 316 N.E.2d 209, a bank, the issuer of a credit card, brought action against the cardholder to recover the balance due on the credit card account. It was held that the 10-year statute of limitations applicable to written contracts governed the bank's action because the payments by the bank to certain merchants, pursuant to the cardholder agreement, were loans of money by the issuer ...


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