Baker v. Broughton , 193 Okla. 656 ( 1944 )

The majority opinion, in so far as it holds that the allegation of the existence of an indorsement of interest payment on a promissory of note, without an allegation of payment of such interest, is sufficient to raise the inference that such payment was actually made, so as to toll the statute of limitations, is in conflict with the prior decisions of this court as well as the general rule in the vast majority of jurisdictions.

In Texas Title Guaranty Co. v. Shepherd, 184 Okla. 599,89 P.2d 337, it is held that where the indorsement of partial payment on a promissory note is relied upon to save the note from the bar of the statute of limitations, and issue is properly joined thereon, the burden is upon the plaintiff to show that such payment was actually made at the time stated, and that it was made by and with the consent of the payor. Therein it is said:

"But the mere production of the note in such case bearing thereon an indorsement of partial payment is insufficient to establish payment as a toll of the statute of limitations. As stated in 37 C. J. 1151, sec. 630, 'It is the payment and not the indorsement on the evidence of debt that operates to toll the statute.' . . . Therefore, the mere indorsement produces no presumption that payment was actually made where such payment is relied upon to save the action from the bar of the statute. Though an indorsement of payment has been held to raise a presumption of payment in favor of the debtor claiming the credit (8 C. J. 1015, § 1321), the rule is otherwise where the indorsement is relied upon to toll the statute. The correct rule in such case as gathered from the decisions in the vast majority of jurisdictions is that where an indorsement on a promissory note, made before the bar of the statute of limitations attaches, is relied on to save the cause of action upon the note from the operation of such statute, the burden of proof is upon the plaintiff to show that the payment was actually made at the time alleged, or that it was made by or with the consent of the payor."

In Flanagan v. Oxley, Ex'r, 190 Okla. 564, 126 P.2d 707, it is said:

"It is the payment and not the indorsement, as the evidence of payment, that tolls the statute where the issue is joined by answer."

That general rule is stated in 37 C. J. 1151. In support of the text cases are cited from Arkansas, Kansas, Maine, Michigan, Missouri, North Carolina, Pennsylvania, South Carolina, and Washington. No cases holding to the contrary are cited.

In J. M. Arthur Co. v. Burke, 83 Wash. 690, 145 P. 974, it is held:

"The fact of part payment within the statutory period, not the formal entry crediting the amount to the debtor on the creditor's books, tolls the statute of limitations."

In Liphart v. Myers, 97 Kan. 686, 156 P. 693, it is held:

"A receipt of money, indorsed on the back of a promissory note after the statute of limitations has barred action, does not indicate part payment by the maker, which would revive liability."

— and:

"In an action on a note bearing such an indorsement, the petition must allege payment by the debtor in order to remove the apparent bar of the statute."

Bernard v. Davidson, 112 Kan. 31, 209 P. 668, cited in the majority opinion, seems to support the contrary rule, but does not overrule Liphart v. Myers, supra.

My view is that Bernard v. Davidson, supra, is not only contrary to the prior decision of the Kansas Supreme Court, but is contrary to the general, and almost universal, rule. It is likewise contrary to the well-known rule that it takes two parties to make a contract and it takes two parties to make a payment on a promissory note — the payor who makes the payment and the payee who receives it. It is a dangerous rule to permit the holder of a note to create evidence in his own behalf which would extend the time within which suit might be maintained on the note, without the knowledge or consent of the payor.

Pitts v. Walker, 188 Okla. 17, 105 P.2d 760, cited in the majority opinion, is not controlling. That was an action on an open account and not upon a note which, upon its face, showed that the statute of limitations had run.

I cannot concur in the majority opinion, and respectfully dissent.

ARNOLD, J., concurs in this dissent.