Case Title: Stanbury v. Larsen

Citation: 

Docket Number: 90-48

State: wyoming

Court: Wyoming Supreme Court

Date: 1990-12-10T00:00:00Z

Document:
Stanbury v. Larsen1990 WY 138803 P.2d 349Case Number: 90-48, 90-49Decided: 12/10/1990Supreme Court of Wyoming
S.J. 
STANBURY,

 Appellant 
(Plaintiff),

v.

Raymond B. LARSEN, 

Appellee 
(Defendant).

Raymond B. LARSEN, 

Appellant 
(Defendant),

v.

S.J. STANBURY, 

Appellee 
(Plaintiff).

Appeal from the District 
Court, Albany County, Arthur T. Hanscum, J.

Robert O. 
Anderson of Andrews & Anderson, P.C., Riverton, for appellant S.J. 
Stanbury in case No. 90-48 and appellee in case No. 90-49.

A. Joe Hageman 
and Cherie Shelton Norman of Skiles, Hageman & Butler, Laramie, for 
appellee in case No. 90-48 and appellant in case No. 90-49. 

Before 
URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

URBIGKIT, Chief 
Justice.

[¶1]      Samuel J. 
Stanbury sued Raymond B. Larsen on two unpaid promissory notes. The district 
court ruled for Larsen on one note and entered judgment in Stanbury's favor on 
the other. Stanbury appealed the district court's dismissal of his suit on the 
first note by assertion of district court error in not tolling the Wyoming 
statute of limitations. Larsen filed a cross-appeal, and asserts the district 
court erred in finding that the cause of action on the second note arose in 
Wyoming, precluding application of a shorter California statute of limitations, 
with an additional error in the award of attorney fees.

[¶2]      We 
affirm.

FACTS

[¶3]      For a number of 
years, these two litigants had been friends and business associates in Riverton, 
Wyoming. Stanbury, at one point, even became an investor and stockholder in one 
of Larsen's business ventures, Acme Solar Works, Inc. Stanbury also permitted 
Larsen to open an accounts payable at his business, Riverton Tire and Oil. In 
1977, Larsen left Riverton and moved to California. In February of 1978, Larsen 
signed the first note (a 180-day time instrument dated February 1, 1978 and due 
August 1, 1978) for $6,000. In 1981, Larsen executed the second note in 
California (a demand instrument) for $5,500. After signing the second note, he 
returned (delivered) it by mail to Stanbury in Wyoming. In 1985, Stanbury sent a 
letter to his ex-friend in California "suggesting" that Larsen begin making 
payments on the second note. Neither note was paid and this lawsuit was filed on 
December 27, 1988.

[¶4]      Larsen, in a 
motion to dismiss, claimed the Wyoming statute of limitations barred Stanbury's 
lawsuit on the first note and that the California statute of limitations barred 
suit on the second instrument. He argued the cause of action on the first note 
accrued August 1, 1978 (when the note was due). Under Wyoming's ten-year statute 
of limitations, it was asserted that Stanbury had only until August 1, 1988 to 
file suit.1 Thus, the lawsuit filed on December 
27, 1988 was time barred on that note. As to the second note, Larsen argued the 
cause of action arose in California where the note was executed and, therefore, 
California's statute of limitations governed. (California has an applicable four 
year statute of limitations.) Larsen contended, since the instrument was a 
demand note, that the cause of action accrued upon California execution in 1981 
and the payee only had until 1985 to file suit. Accordingly, the December 1988 
lawsuit on the second promissory note was barred as well. This claim was based 
on Wyoming's "borrowing" statute which states that "[i]f by the laws of the 
state * * * where the cause of action arose the action is barred, it is also 
barred in this state."2 W.S. 1-3-117.

[¶5]      The district 
court dismissed the complaint on the first note, but allowed Stanbury to proceed 
with his suit on the other instrument. As to the first note, the district court 
found Stanbury knew Larsen's residential address in California and knew where to 
find him throughout the ten-year statute of limitations, and ruled that under 
Wyoming law "the statute of limitations is not tolled if the one who seeks 
collection of the note has knowledge of the whereabouts and residence of the 
payor."3 The district court ruled the cause 
of action on the second note arose in Wyoming rather than California, and under 
Wyoming's ten-year statute of limitations, the collection lawsuit was not 
barred. Subsequently, after a one-day bench trial, the district court entered 
judgment in favor of Stanbury on the second note and, in addition, pursuant to 
the note terms, $5,265 in attorney fees.

[¶6]      Stanbury 
challenges the district court's ruling that the first note was barred under the 
Wyoming statute of limitations and Larsen contests the monetary judgment by 
denial that the cause of action on the second note arose in Wyoming or that the 
attorney fees were properly proven.

STANDARDS OF REVIEW AND 
APPLICATION

[T]he applicable standard 
of review depends upon whether the determination called into question in the 
appellate courts falls within one of three categories: [1] "review of the 
sufficiency of the evidence to meet the required burden of persuasion at the 
trial [fact-finding] level; [2] review of the exercise of discretion; and [3] 
plenary review of the choice, interpretation, [construction], and application of 
the controlling legal precepts."

ANR Production 
Co. v. Wyoming Oil and Gas Conservation Com'n, 800 P.2d 492, 495 (Wyo. 1990) 
(quoting Byer, Judge Aldisert's Contribution to Appellate Methodology: 
Emphasizing and Defining Standards of Review, 48 U.Pitt.L.Rev. xvi, xx 
(preceding p. 963) (1987)).

The First 
Note

[¶7]      Stanbury claims 
the district court erred both as to the law and the facts in dismissing his 
claim on the first note. The district court erred as a matter of law, he 
contends, when it ruled that Stanbury's "knowledge" of the non-resident 
defendant's whereabouts prevented the statute of limitations from being tolled. 
The interpretation and construction of our case law on tolling the statutes of 
limitation engages our plenary review of controlling legal precepts.

[¶8]      In Tarter v. 
Insco, 550 P.2d 905, 908-09 (Wyo. 1976) (emphasis in original), this court 
stated the tolling statute applies when the defendant has "departed from the 
state in such manner so that he is beyond the reaches of the law for purposes of 
service." In a later case, we indicated that, if the plaintiff has knowledge 
of the nonresident defendant's location and that defendant is subject to this 
state's jurisdiction through the long arm statute, the statute of limitations is 
not tolled. Greenwood v. Wierdsma, 741 P.2d 1079 (Wyo. 1987).

[¶9]      Given this line 
of cases, the district court could reasonably find the statute of limitations is 
not tolled when the plaintiff has "knowledge" of the defendant's whereabouts. 
Thus, the district court was correct in its construction of controlling legal 
precepts when it ruled the statute of limitations was not tolled and the 
collection action on the first note was barred.

[¶10]   Stanbury also asserts he had no 
"knowledge" of Larsen's whereabouts and, therefore, the district court erred 
factually when it ruled to the contrary. This issue engages our review of the 
sufficiency of the evidence.4 

[¶11]   There was sufficient evidence to 
support the district court's finding that Stanbury knew Larsen's location in 
California; that he visited Larsen in California; that he knew the location of 
Larsen's residence; that he knew Larsen's mailing address; and that Larsen was 
not avoiding service during this period. Notwithstanding his knowledge, Stanbury 
made no attempt to ascertain whether Larsen was susceptible to service under 
Wyoming's long arm statute within the ten-year statute of limitations.5 In fact, he testified it was not 
until 1988 that he decided to make a "serious effort" of locating Larsen. 
Stanbury fails on this sufficiency of the evidence challenge to the district 
court's decision.

The Second 
Note

[¶12]   Larsen then claims that litigable 
action and resulting judgment on the 1981 demand note was barred by the 
California statute of limitations. He bases this claim on our decision in 
Cantonwine v. Fehling, 582 P.2d 592 (Wyo. 1978). This issue also engages our 
plenary review of controlling legal precept.

[¶13]   Cantonwine was a Wyoming suit 
against the makers of several promissory notes. The payee-plaintiff of the notes 
was a resident of Colorado and the makers-defendants were residents of Wyoming. 
The notes, drafted as demand instruments payable in Colorado, were executed by 
the defendants in Wyoming. One of the issues was whether the Wyoming or the 
Colorado statute of limitations applied. If the Colorado statute applied, the 
suit would be barred. (Colorado had a six-year statute of limitations.) On the 
other hand, if the Wyoming statute applied, the suit would be within the 
ten-year limitation period. The defendants argued that under Wyoming's borrowing 
statute, the Colorado statute of limitations applied because the cause of action 
arose in Colorado; where the notes were payable and where the defendants were 
subject to service of process.

[¶14]   In Cantonwine, 582 P.2d  at 596, 
this court began by noting that it was "critical" to maintain the distinction 
between a time instrument and a demand instrument when deciding where the cause 
of action on a promissory note arises. This distinction was based on a reading 
of W.S. 34.1-3-122, which states in part:

     (a) A cause of action 
against a maker or an acceptor accrues:

     (i) In the case of a 
time instrument on the day after maturity;

      (ii) In the case 
of a demand instrument upon its date or, if no date is stated, on the date of 
issue.

Given this 
language, we reasoned that "[g]enerally, in making a determination as to where a 
cause of action on a promissory note arises, the courts consider such factors as 
the place of execution and delivery and the place of payment." Cantonwine, 582 P.2d  at 597.

[¶15]   The decision would have generally 
applied these factors to a cause of action when the promissory notes are time 
instruments, but "[w]hen, however, the promissory notes in question are demand 
instruments, further matters must be considered within the context of 
these general factors." Id. at 597 (emphasis in original). Under W.S. 
34.1-3-122, this court reasoned "[t]he cause of action on a demand note arises 
immediately upon its execution and delivery, which - in turn - determines where 
the cause of action accrues for purposes of applying statute-of-limitation 
provisions." Cantonwine, 582 P.2d  at 597. In that case, where the notes were 
executed in Wyoming, the decision applied the longer Wyoming statute of 
limitations as the law of the forum to permit the collection 
litigation.

[¶16]   Thus Larsen, relying on Cantonwine, 
argues that because the parties' demand note was executed in California, the 
cause of action on the note arose in California, and under Wyoming's borrowing 
statute, the district court should have applied the California statute of 
limitations rather than Wyoming's.

[¶17]   In retrospect, it is discerned that 
W.S. 34.1-3-122 was applied too broadly in Cantonwine. After taking a second 
look at the statute, we believe it has a narrower purpose: it triggers the 
statute of limitations on demand notes. The statute does nothing more. It does 
not direct the court's determination as to where the cause of action arose. 
Under the statute, the cause of action accrues upon the execution (and delivery) 
of the demand note. In other words, the statute of limitations may begin to run 
when the demand note is executed, but the commercial code statute does not 
require the court to apply the statute of limitations of the state where the 
note may have been executed as a unitary test. Thus, the statute does not 
foreclose a Wyoming court from applying its own statute of limitations to a 
demand note executed in another state. Simply put, where the demand note was 
executed is just one of the factors the court weighs in analyzing where the 
cause of action arose. This approach is preferable to one that ties the cause of 
action to one, perhaps fortuitous, event - where the note was executed. 
Similarly to the Wyoming sale found in Cherry Creek Dodge, Inc. v. Carter, 733 P.2d 1024 (Wyo. 1987), this transaction was a Wyoming loan. See also Whitman v. 
Green, 289 F.2d 566 (9th Cir. 1961), where the place of the execution did not 
control over the essential elements of the transaction.

[¶18]   We conclude that the cause of 
action accrued for the "on demand" note upon execution and delivery, Cantonwine, 
582 P.2d  at 597; Golden Rule Oil Co. v. Liebst, 153 Kan. 123, 109 P.2d 95 
(1941); W.S. §§ 34.1-3-109 and 34.1-3-122; and the default occurred in Wyoming 
where the payment was to have been made in accord with its terms, "Payable at 
Riverton, Wyo. on demand by maker S.J. Stanbury." See discussion of demand notes 
which would authenticate creation of the defined obligation upon receipt in 
Riverton of the note, 11 Am.Jur.2d Bills and Notes § 286 (1963). The test is 
where performance is to be made, Bank of Boston Intern. of Miami v. Arguello 
Tefel, 626 F. Supp. 314 (E.D.N.Y. 1986); Aviation Credit Corp. v. Batchelor, 190 So. 2d 8 (1966), cert. denied 198 So. 2d 24 (Fla. 1967); Davidson v. Browning, 73 
W. Va. 276, 80 S.E. 363 (1913), and delivery is significant. See Annotation, 
When Statute of Limitations Begins to Run Against Note Payable on Demand, 71 
A.L.R.2d 284, 290 n. 5 (1960). Cantonwine, 582 P.2d  at 597 (emphasis added) 
states "[t]he cause of action on a demand note arises immediately upon its 
execution and delivery * * *." In this case, delivery occurred by mailing 
to the payee in Riverton, thus creating a documented obligation when the note 
was received in Wyoming which then could trigger existence of the written 
instrument cause of action.

[¶19]   There is a further basis to affirm 
the district court decision in application of the Wyoming statute of 
limitations. After first discerning in this case the existent cause of 
action on the note only accrued upon delivery of the note in Wyoming and not 
upon prior execution in California, the additional distinguishable line of 
authority recognizes that even after delivery in some cases the debt may not 
accrue until demand is made. Contrary to the normal rule of non-requirement of 
demand for demand notes, 11 Am.Jur.2d, supra, at 311, the superseding intent of 
the parties may appear from the instrument or other facts properly proved at 
trial to require demand.

[¶20]   On its face, this note is not a 
typical demand note. The instrument contains a twenty percent interest 
provision, references installment payments, lacks a due date, and then provides 
in the last line, "Payable * * * on demand by maker S.J. Stanbury." Cases 
reflecting this constructional case law examine the terms of the instrument and 
the nature of the transaction to determine, within particularized circumstances, 
whether a demand was required to create default. Consequently, the demand 
incident for effectuating the litigable status occurs not on note execution in 
California, but demand for payment made in Wyoming where the note was payable. 
The requirement for demand which attenuates the usual demand note rule first 
arose in discussions of notes providing "on demand after date" with additional 
provisions reflecting an anticipated post execution event for required payment. 
Shapleigh Hardware Co. v. Spiro, 141 Miss. 38, 106 So. 209 (1925). The intent of 
the parties was established from the entire instrument to be considered in 
creating a demand requirement. See, however, S.S. Finger Mercantile Co. v. 
Adair, 159 Miss. 303, 131 So. 875 (1931), where the "on demand after date" alone 
was not sufficient to require affirmative demand action to mature litigable 
cause of action. The circumstance rule was applied to reject classical demand 
note status in C & T Discount Corp. v. Sawyer, 123 Vt. 238, 185 A.2d 462, 
465 (1962), where that court stated:

     The note was not a 
demand note on its face. Both the wording of the note and the circumstances 
under which it was given made abundantly clear that it was optional with the 
payee when demand might be made for payment of the note. That option was not 
exercised by the payee against the defendant until the bringing of this action 
in June, 1959. This was the first demand made by the plaintiff for payment of 
this note by the defendant, and the statute of limitations did not commence to 
run in favor of the defendant until such demand was made.

[¶21]   The circumstance rule was applied 
by the Rhode Island court in Dibattista v. Butera, 104 R.I. 465, 244 A.2d 857 
(1968), to require actual demand to be made. A similarity of circumstances 
exists between that case and the factual circumstance here where at the date of 
note execution, the parties clearly recognized that the maker had no funds to 
repay and would expect to commence payment at some indefinite future time "upon 
demand."6 The structure of the note 
anticipating "demand" was dispositive in First Nat. Bank v. Bell, 140 Okla. 24, 
282 P. 147 (1929) and Schoonover v. Caudill, 65 N.M. 335, 337 P.2d 402 (1959). 
See also Eggers v. Eggers, 79 S.D. 233, 110 N.W.2d 339, 342 (1961).

[¶22]   We discern that the district court 
would also have been justified in holding for this case that a demand was 
required as was ultimately made. Requirement of payment demand for the note 
payable in Wyoming as submitted from Wyoming makes application of the Wyoming 
statute of limitations appropriate and particularly so when suit is filed in 
Wyoming. Shewbrooks v. A.C. and S., Inc., 529 So. 2d 557 (Miss. 
1988).

[¶23]   After weighing the factors 
discussed in Cantonwine (place of execution and delivery, place of payment, 
etc.), the district court ruled that the cause of action on the promissory note 
arose in Wyoming and, therefore, the borrowing statute had no application. We 
agree. Stanbury, a Wyoming resident and businessman, as evidenced by the 1981 
replacement obligation instrument, loaned Larsen money for his business, Acme 
Solar Works, Inc., started in 1977 while Larsen was a Wyoming resident and 
businessman living in Riverton. Stanbury and Larsen had an "ongoing business 
relationship" in Acme Solar Works, Inc.7 (Stanbury held stock and was an 
initial investor in Acme Solar Works, Inc.) Thus, the 1981 promissory instrument 
- delivered and payable in Wyoming - was part of Stanbury and Larsen's ongoing 
business relationship, vis-a-vis Acme Solar Works, Inc.8 That business relationship had its 
roots in Wyoming when the cause of action on the 1981 demand note arose.9 The place of performance for this 
note is where payment was to be made. Cherry Creek Dodge, Inc., 733 P.2d 1024, 
Aviation Credit Corp., 190 So. 2d 8. The borrowing statute does not apply to a 
cause of action which arose in Wyoming. Hamilton v. General Motors Corp., 490 F.2d 223 (7th Cir. 1973); Restatement (Second) Conflicts of Law § 188 
(1971).

[¶24]   Thus, we hold that, even when the 
note was executed in California in 1981 and then delivered by mailing to 
Wyoming, enforcement was controlled by the Wyoming statute of limitations, and 
Stanbury then had at least ten years to file suit from date of receipt which 
completed delivery. Stanbury's suit filed in December 1988 was within the 
limitation period. Accordingly, the district court's ruling on the second note 
is affirmed.

Award of 
Stanbury's Attorney Fees on the Second Note

[¶25]   The district court ruled Stanbury, 
having prevailed on the second note (1981 demand note), was entitled to an award 
of $5,265 in attorney fees.10

[¶26]   Larsen claims the district court's 
award of attorney fees was neither reasonable nor adequately proved by citation 
of this court's decision in UNC Teton Exploration Drilling, Inc. v. Peyton, 774 P.2d 584 (Wyo. 1989). This is a sufficiency of the evidence issue since 
otherwise with note recovery, plaintiff is entitled to the reasonable attorney 
fees provided by agreement.

[¶27]   In UNC Teton Exploration Drilling, 
Inc., this court ruled that before attorney's fees may be awarded, a party must 
prevail and the fee awarded should be determined by the district court to be 
"reasonable." We then enumerated the requirements required to support an award 
of attorney's fees:

The claiming litigant 
should first present the court with an itemized billing reflecting time and 
rate. Thereafter, the determination of reasonableness is within the exercised 
discretion of the trial court. Evidence by the claimant including an analysis by 
his expert witness in affidavit or testimony becomes a basic requirement since 
the burden of proof rests with the claimant. Chambless v. Masters, Mates & 
Pilots Pension Plan, 815 F.2d 869 (2d Cir. 1987).

* * * With the 
reasonableness of the award to be judged by the abuse of discretion standard of 
review, these additional factors which may be considered by the trial court 
include: (1) the novelty and difficulty of the questions; (2) the skill 
requisite to perform the legal service properly; (3) the preclusion of other 
employment by the attorney due to acceptance of the case; (4) the customary fee; 
(5) whether the fee is fixed or contingent; (6) time limitations imposed by the 
client or the circumstances; (7) the amount involved and the results obtained; 
(8) the experience, reputation, and ability of the attorney; (9) the 
"undesirability" of the case; (10) the nature and length of the professional 
relationship with the client; and (11) awards in similar cases.

Id. at 
595.

[¶28]   Stanbury's attorney presented 
affidavits to the district court detailing the amount of services expended on 
the case. He also presented the expert testimony of an attorney who reviewed his 
records (and reduced some of the hours charged). The expert testified as to the 
reasonableness of the amount charged and was cross-examined by Larsen's 
attorney. Larsen also had the opportunity to oppose the amount awarded, but 
provided no countervailing evidence by documents or witnesses. The district 
court arrived at the amount of the award after a review and application of the 
factors detailed in UNC Teton Exploration Drilling, Inc., 774 P.2d 584 to the 
evidence of services expended on collection of the note.

[¶29]   We affirm the district court on all 
issues of appeal. 

FOOTNOTES

1 The Wyoming statute of 
limitations provides in relevant part:

     (a) Civil actions * * 
* can only be brought within the following periods after the cause of action 
accrues:

     (i) Within ten (10) 
years, an action upon a specialty or any contract, agreement or promise in 
writing[.]

W.S. 1-3-105.

2 The promissory note, 
which is an interesting document, is attached as Appendix A to this opinion. In 
cognizance of the twenty percent per annum provision of the note, a curious 
feature of this litigation is that Larsen, with his California forum statute of 
limitations argument, did not present the companion issue of California usury 
statutes which comparably do not exist in Wyoming. See Cal.Civil Code § 1916-1 
(West 1985 & Cum.Supp. 1990) and Cal.Const. art. XV, § 1 (West 1954 & 
Cum.Supp. 1990).

3 The tolling statute 
supplements the statute of limitations:

     If a cause of action 
accrues against a person when he is out of the state, or has absconded or 
concealed himself, the period limited for commencement of the action does not 
begin to run until he comes into the state or while he is so absconded or 
concealed. If after the cause of action accrues he departs from the state or 
absconds or conceals himself, the time of his absence or concealment is not 
computed as part of the period within which the action shall be 
brought.

W.S. 1-3-116.

4 A parallel issue is also 
discernable which was not considered, although perhaps assumed in context, and 
not briefed by the litigants for our decision. That inquiry addresses whether 
the tolling statute, W.S. 1-3-116, equally involves long arm jurisdictional 
litigation where the defendant was not a resident in the forum state when the 
cause of action accrued compared to the case where a resident defendant leaves 
the jurisdiction subsequent to accrual of the claimed obligation. Following the 
basis of decision of the district court and our resolution of the case, no 
consideration of the parallel inquiry will be given and no intimation of result 
is provided for future litigation.

5 Wyoming's long arm 
statute, W.S. 5-1-107, provides that:

     (a) A Wyoming court 
may exercise jurisdiction on any basis not inconsistent with the Wyoming or 
United States constitution.

     (b) When the exercise 
of personal jurisdiction is authorized by this section, service may be made 
outside this state and proved according to the Wyoming Rules of Civil Procedure 
or any order of the court.

6 Larsen never made any 
payments on the note from date of execution of July 30, 1981 until the lawsuit 
was instituted.

7 Acme Solar Works 
Partnership was the predecessor of Acme Solar Works, Inc. formed in 1977 by 
Larsen. All of the individuals, including Stanbury, who were partners were made 
shareholders in the corporation. These individuals were all from Riverton and 
were involved in "business dealings" with Acme Solar Works, Inc.

8 We believe the following 
colloquy between Larsen and Stanbury's attorney reflect Larsen's substantial 
Wyoming connections:

     Q. Mr. Larsen, you 
have been a businessman of some substantial success since the early to 
mid-1960's in the Riverton, Wyoming area, haven't you?

      A. 
Yes.

     Q. And have you been 
an officer and director and chief executive officer of corporations employing 
many dozens of people during that time, haven't you?

     A. Yes.

9 One of Stanbury's 
exhibits at trial was a 1988 "Wyoming Investment Fund Committee Loan Proposal 
and Analysis" prepared and signed by Larsen. In his loan application, for a 
business he operates in Laramie, Larsen lists his residence as Laramie. It is 
therefore unclear to this court whether Larsen is a California or Wyoming 
resident.

10 The demand note 
provided: "In the event of default in payment of this note and if same is 
collected by an attorney at law, the undersigned agrees to pay all costs of 
collection, including reasonable attorney's fees."