Fleet National Bank v. Liberty

2004 ME 36, 845 A.2d 1183, 53 U.C.C. Rep. Serv. 2d (West) 9, 2004 Me. LEXIS 36

• Court: Supreme Judicial Court of Maine
• Decided: March 18, 2004
• Status: Published

Opinions

DANA, J.

[¶ 1] Michael A. Liberty, individually and as general partner and guarantor of several partnerships, and the partnerships themselves (hereinafter referred to as “Liberty”) appeal from a judgment of the Superior Court (Cumberland County, Cole> J.) granting Fleet’s motion for attachment and trustee process. Liberty asserts that the court erred in not applying a six-year statute of limitations enacted in 1993, 11 M.R.S.A. § 3-1118(1) (1995), to bar Fleet’s suit on notes entered into before 1993. Fleet contends that the Superior Court properly applied the twenty-year statute of limitations, 14 M.R.S.A. § 751 (2003), for promissory notes signed before a witness. We agree and affirm the judgment.

I. BACKGROUND

[¶2] In 1991 and 1992, Liberty issued three promissory notes to Fleet in the total amount of $1,004,000. The notes were negotiable instruments made payable on definite future dates, and the parties signed each note in the presence of an attesting witness. In 1992, as had been true for over a hundred years, the relevant statute of limitations provided that suits brought on “promissory notes signed in the presence of an attesting witness ... shall be commenced within 20 years after the cause of action accrues.” 14 M.R.S.A. § 751 (2003).¹

[¶ 3] By July of 1996 all of the notes were in default, and as of the motion hearing, Liberty had failed to make any payments. In 2002, Fleet filed suit to collect principal, interest, and penalties totaling $2,333,772.37, and filed a motion for attachment and trustee process. At a hearing on the attachment motion, Liberty asserted that the applicable statute of limitations had run on' all three notes.² Liberty argued .that 11 M.R.S.A. § 3-1118(1) (1995),³ enacted in 1993, established a six-year statute of limitations for suit on all negotiable instruments, including promissory notes executed before an attesting witness. The Superior Court disagreed.

[¶ 4] The court concluded that, even if section 3-1118(1) might apply to such instruments issued today, in the absence of clear legislative intent it is inappropriate to apply the six-year statute of limitations to notes issued prior' to its enactment. Instead the court applied the twenty-year statute of limitations in existence when Liberty signed the notes and granted Fleet’s motion for attachment and trustee process for their face value. This appeal followed.

[¶ 5] This Court reviews an order granting attachment and trustee process for an abuse of discretion or clear error. Liberty v. Liberty, 2001 ME 19, ¶ 11, 769 A.2d 845, 847. To the extent we address issues of statutory interpretation ora¹ review is de novo. State v. McLaughlin, 2002 ME 55, ¶ 5, 794 A.2d 69, 72.

II. DISCUSSION

[¶ 6] To vacate the court’s order, we must conclude that section 3-1118(1) repealed section 751 either specifically or by implication, and did so even with respect to notes entered into before section 3-1118(1) was enacted. Because we conclude there was no repeal, we need not address the constitutional implications of any retroactive effect.

[¶ 7] Liberty argues that the Legislature intended section 3-1118(1) to repeal or amend section 751 so that the latter statute no longer governs any negotiable promissory notes. This intention is not evident on the face of section 3-1118(1), which reads:

Except as provided in subsection (5), an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within 6 years after the due date or dates stated in the note or, if a due date is accelerated, within 6 years after the accelerated due date.

11 M.R.S.A. § 3-1118(1) (1995). The statutory comments and legislative history are also devoid of any reference to section 751 or its possible repeal.

[¶ 8] The legislative silence on this issue is telling, particularly in light of the commentary that accompanies other enactments of the Uniform Commercial Code (UCC). When the Legislature intends that the UCC will repeal an existing statute of limitations it has made that intention very clear. For example, the comment to 11 M.R.S.A. § 2-725 (which adopts a four-year statute of limitations for sales contracts) explicitly states, “[t]he four-year period under the Code would change present law. There is now a limitation of 6 years on personal actions.” 11 M.R.S.A. § 2-725 comment (1995). That legislators chose not to make any mention of section 751 when adopting section 3-1118 is strong evidence that the Legislature did not intend to repeal the existing statute.

[¶ 9] Liberty nonetheless asks us to find that section 3-1118(1) repealed section 751 by implication, despite the well-established principle of statutory construction disfavoring this result. See 2A SUTHERLAND STATUTORY CONSTRUCTION § 51.02 (6th ed.2000). Traditionally, we have been reluctant to find that the enactment of one statute acts to repeal an earlier statute without an express legislative statement to that effect. See Heber v. Lucerne-in-Maine Vill. Corp., 2000 ME 137, ¶ 14 n. 6, 755 A.2d 1064, 1068. In fact, we have only recognized a repeal by implication in circumstances “ ‘when a later enactment encompasses the entire subject matter of an earlier act, or when a later statute is inconsistent with or repugnant to an earlier statute.’ ” Id. (quoting Blair v. State Tax Assessor, 485 A.2d 957, 959 (Me.1984)). Because it is possible to read these statutes in harmony, a finding of repeal by implication is inappropriate.

[¶ 10] It is evident that section 3-1118(1) establishes a six-year statutory period for general, unattested negotiable instruments, while section 751 continues to provide a twenty-year statutory period for attested promissory notes, notes under seal, and notes issued by a bank. Not only is this interpretation consistent with the larger purposes of the UCC,⁴ it also comports with the principle of statutory construction favoring specific statutes over general ones. 2A SUTHERLAND STATUTORY CONSTRUCTION § 51.02 (6th ed.2000). The six-year statutory period is a general provision governing negotiable instruments not issued pursuant to the formalities described in section 751. As has been true for over a hundred years, section 751 provides a twenty-year statute of limitations for specific kinds of promissory notes.

[¶ 11] In light of these considerations and the strong presumption against repeal by implication, we cannot conclude that section 3-1118(1) repealed section 751 by implication, and accordingly affirm the grant of the motion for attachment and trustee process.

The entry is:

Judgment affirmed.

1 .The full text of section 751 states:

Except as provided in Title 11, section 2-725, personal actions on contracts or liabilities under seal, promissory notes signed in the presence of an attesting witness or on the bills, notes or other evidences of debt issued by a bank shall be commenced within 20 years after the cause of action accrues.

14 M.R.S.A. § 751 (2003).

2 . Liberty relies on dicta in Premier Capital, Inc. v. Doucette, 2002 ME 83, ¶ 7, 797 A.2d 32, 34 applying section 3-1118(1) to a promissory note signed before an attesting witness.

3 . 11 M.R.S.A. § 3-1118(1) is Maine’s enactment of section 3-118(1) of the Uniform Commercial Code. Compare 11 M.R.S.A. § 3-1118(1) (1995) with U.C.C. § 3-118(a), 2 U.L.A. 378 (1991).

4 . The prefatory comment to Article 3 of the UCC makes it clear that the Code's framers were largely concerned with the need for uniformity in state laws given the tremendous increase in the volume of unattested personal checks crossing state lines. U.C.C. Art. 3-A Prefatory Note, 11 M.R.S.A. at 422 (1995). Moreover, as well as promoting uniformity, the UCC serves the stated purpose of encouraging "the continued expansion of commercial practices through custom, usage and agreement of the parties!.]” U.C.C. § 1-103(a)(2), 1 U.L.A. 5 (Supp.2003). It is evident that state laws providing a shorter statute of limitations might discourage lending and commerce by reducing the time in which a creditor may pursue a default in certain states. It is not clear, however, that the existence of a longer limitations period under state law frustrates the stated goal of expanding commercial practice. Only those planning to default on a note are discouraged from practicing commerce in a state that provides a longer statute of limitations. In fact, in those cases where courts have determined that section 3-118 takes priority over state statutes broadly applicable to 'written contracts, the UCC provides a longer period in which to bring suit. E.g., Motley v. Motley, 60 F.Supp.2d 380, 382 (D.N.J.1999); Fales v. Norme, 263 Neb. 932, 644 N.W.2d 513, 521 (2002); Emerson v. Zagurski, 3 Neb.App. 658, 531 N.W.2d 237, 241 (1995); Lenders Collection Corp. v. Harris, 900 P.2d 1022, 1023-24 (Okla.Ct.App. 1995).