Brief Fact Summary. A country entered into a loan agreement with a bank to borrow a certain sum of money. The country refused to pay the bank back and after several years the bank sued and the country asserted a statute of limitations defense.
Synopsis of Rule of Law. A letter sent by the Defendant concerning a loan agreement after the Statute of Limitations has run "constitutes an acknowledgement or promise within the meaning of General Obligations Law §17-101" and as such is "sufficient to revive plaintiffs' time-barred claims."
In its entirety, the letter referred to the parties loan agreement, and confirmed four balances, including the original loan amount, accrued interest, past-due interest, and, adding up the first three balances, the total amount.View Full Point of Law
Issue. Does a letter sent by the Defendant concerning a loan agreement after the Statute of Limitations has run "constitute an acknowledgement or promise within the meaning of General Obligations Law §17-101" and as such is "sufficient to revive plaintiffs' time-barred claims."
Held. Yes. The court first observed that the General Obligations Law §17-101 states in pertinent part: "An acknowledgment or promise contained in a writing signed by the party to be charged thereby is the only competent evidence of a new or continuing contract whereby to take an action out of the operation of the provisions of limitations of time for commencing actions under the civil practice law and rules." The court then quoted [Lew Morris Demolition Co. v. Board of Education of the City of New York] which while construing General Obligation Law§17-101 observed "[t]his section restates the rule that a written acknowledgment or promise will toll the Statute of Limitations … The writing, in order to constitute an acknowledgment, must recognize an existing debt and must contain nothing inconsistent with an intention on the part of the debtor to pay it." The court concluded that the 1997 letter was "an acknowledgement or promise", which revived plaintiff's otherwise time-barred claims despite the fact it is arguably was "something less than a new promise to pay a past-due debt." "In its entirety, such letter refers to the parties' 1981 loan agreement and then 'confirms' four 'balances,' namely, the original loan amount, accrued interest, past-due interest, and, adding up the first three balances, the 'total amount.' "
Discussion. This case offers an interesting discussion of General Obligations Law §17-101.