Title: Associates Commercial Corp. v. Parker Used Trucks, Inc.

State: mississippi

Issuer: Mississippi Supreme Court

Document:

601 So. 2d 398 (1992) ASSOCIATES COMMERCIAL CORPORATION v. PARKER USED TRUCKS, INC. and J.R. Parker. No. 89-CA-0882. Supreme Court of Mississippi. June 3, 1992. *399 John S. Hill, Mitchell McNutt LaGrone & Sams, Tupelo, for appellant. Gary L. Carnathan, Carnathan & Malski, Tupelo, for appellees. Before HAWKINS, P.J., and PRATHER and McRAE, JJ. PRATHER, Justice, for the Court: This action arose from a dispute concerning two documents: (1) a conditional or retail sales installment contract with full recourse assigned by Parker Used Trucks, Inc. to Associates Commercial Corporation, and (2) a guaranty executed by J.R. Parker personally guaranteeing any existing or future indebtedness of Parker Used Trucks. The primary issue addressed on appeal is whether the assignee made a sufficient or timely demand on the assignor for the repurchase of the installment contract. This Court concludes that a four-year delay in making the requisite demand was untimely and prejudicial to the assignor's interests in receiving a timely demand. This Court therefore affirms the judgment of the circuit court judge. In September 1980, Herschel Wilson purchased a truck from Parker Used Trucks ("Parker Trucks") in Tupelo for $45,421.08. Wilson paid $6,000 down and financed the balance via a conditional or retail sales installment contract. On the same day, Parker Trucks assigned the contract together with a "recourse agreement" to Associates Commercial Corporation ("ACC"), a foreign corporation doing business in Mississippi. Pursuant to this "recourse agreement": In other words, in the event of a default by Wilson, Parker Trucks would on demand *400 repurchase the contract and pay the balance due plus expenses. In September 1981, Wilson defaulted. ACC repossessed the truck and sold it at auction for $16,000. Approximately four years after Wilson defaulted, ACC decided to make a "demand" on Parker Trucks for the "repurchase" of the installment contract and payment "in cash [of] the balance remaining unpaid thereunder plus ... expenses."[1] Specifically, ACC demanded: (1) $16,515.15 for the repurchase of the contract and the unpaid balance, and (2) $21,661.40 for attorney's fees. When Parker failed or refused to satisfy ACC's demand, ACC filed a complaint in November 1986 in the Lee County Circuit Court. ACC sought to recover the $38,176.55 (i.e., $16,515.15 + $21,661.40) under the recourse agreement or under a separate "continuing guaranty." Through this guaranty which was executed in August 1979 J.R. Parker, president of Parker Trucks, personally guaranteed the existing or future indebtedness of Parker Trucks.[2] Basically, Parker Trucks answered ACC's complaint with general denials of the allegations. In August 1988, Judge Thomas J. Gardner held a nonjury trial at which time Parker Trucks articulated its theory of defense: (1) The recourse agreement provides that, if Wilson defaults, Parker Trucks would on demand repurchase the installment contract and pay the balance and expenses; (2) Wilson defaulted, however, ACC did not make a demand on Parker Trucks until four years later after ACC had repossessed the truck and sold it at auction; (3) ACC obviously did not make the demand in a timely manner; and (4) ACC's untimely demand violated the recourse agreement's inherent requirement of timeliness and, thus, prejudiced Parker Trucks' interests. Parker Trucks explained the interests which ACC prejudiced when it failed to make a timely demand: Pursuant to § 75-9-506: Parker Trucks concluded that ACC's violation of the recourse agreement relieved it of any liability under the recourse agreement. J.R. Parker also concluded that *401 ACC's violation relieved it of any liability under the guaranty: Upon completion of the trial, Judge Gardner issued his "Findings of Fact and Conclusions of Law": Rec. Vol. I, at 41-43. ACC appealed and presented three issues for analysis: The gist of ACC's contention under Issue # 1 is that its demand on Parker Trucks four years after Wilson defaulted should be deemed sufficient under the terms of the recourse agreement. ACC explains that its belated demand should be deemed sufficient simply because the agreement neither requires nor specifies a "time" when the demand should be made. Parker Trucks' contention is essentially identical to both: (1) the theory of defense which it articulated at trial, and (2) the *402 judge's "Findings of Fact and Conclusions of Law." In short, Parker Trucks contends that ACC's four-year delay in making a demand should be deemed unreasonable and therefore untimely as a matter of law and equity. ACC's contention is unpersuasive. The recourse agreement provides that Parker Trucks will repurchase the contract and pay the remaining balance and expenses "on demand" albeit the agreement fails to specify a time limit for making a demand. This Court long ago instructed that, in cases in which the contract fails to specify a time for performance or for asserting one's contractual right, the performance or assertion generally must occur within a "reasonable time": Magee v. Catching, 33 Miss. 672, 694 (1857). This prudent rule of "reasonableness of time" has, not surprisingly, endured to date. See, e.g., Deer Creek Constr. Co. v. Peterson, 412 So. 2d 1169, 1172 (Miss. 1982). In sum, the unique facts and circumstances of this case lead to the unequivocal conclusion that, as a matter of law and equity, four years is simply too dilatory to be deemed a reasonable time within which to demand satisfaction of a contractual right of recourse. This Court therefore affirms on this issue. Through this issue, ACC contends that, "[e]ven if demand for repurchase of the contract was not [timely] made on [Parker Trucks], this does not relieve [J.R.] Parker of individual liability pursuant to express terms and conditions of the ... guaranty." Appellant's Brief at 6. J.R. Parker and Parker Trucks' contention is essentially identical to both: (1) the theory of defense which it articulated at trial, and (2) the judge's "Findings of Fact and Conclusions of Law." In short, J.R. Parker contends that, because he is not indebted to ACC under the recourse agreement, liability under the guaranty never accrued. This Court's decision in Brent v. National Bank of Commerce of Columbus, 258 So. 2d 430, 434 (Miss. 1972), is instructive: Applying the law of Brent to the case sub judice, J.R. Parker's liability under the guaranty was "fixed only by the happening of the prescribed conditions." The phrase "prescribed conditions" refers in this case to Parker Trucks' indebtedness to ACC. Parker Trucks is not indebted to ACC under the recourse agreement because *403 ACC failed to assert its contractual rights by making a timely demand; therefore, the "prescribed conditions" (indebtedness to ACC under the agreement) never "happened" leaving ACC without any right to seek relief under the guaranty. In sum, this Court affirms on Issue # 2. Finally, ACC contends through this last issue that Parker Trucks' failure to articulate its theory of defense in its answer to the complaint constituted a waiver. Restated, Parker Trucks failed to plead the timeliness issue as an affirmative defense; "affirmative defenses not pled are deemed waived." Appellant's Brief at 6. Parker Trucks counters that its answer to ACC's complaint was sufficient as a matter of law. Parker Trucks explains that it expressly "denied" ACC's allegation that it (ACC) had made a "demand" for the repurchase of the contract and payment of the balance and expenses. Judge Gardner found in favor of Parker Trucks after concluding that "a defense based on the nonperformance of a condition precedent does not qualify as an affirmative defense and therefore need not be pled by the Defendant." This Court has perused the relevant portions of the record and concludes that Parker Trucks' answer to ACC's complaint was quite sufficient. See Miller Oil Purchasing Co. v. City of Vicksburg, 305 So. 2d 362, 364 (Miss. 1974) ("The defendant is not required to plead affirmatively that he will introduce evidence which shows the falsity of the plaintiff's allegations."). In sum, this Court affirms on this issue. For the foregoing reasons, this Court affirms. AFFIRMED. ROY NOBLE LEE, C.J., HAWKINS and DAN M. LEE, P.JJ., and ROBERTSON, SULLIVAN, PITTMAN, BANKS and McRAE, JJ., concur. [1] ACC supposedly made this "demand" via letter dated March 19, 1985. J.R. Parker and Parker Trucks both deny receiving this letter. [2] Unless otherwise noted, J.R. Parker and Parker Trucks will be referred to collectively as Parker Trucks.