Case Name: Robert T. MOSHER, Petitioner, v. Stephen J. ANDERSON, Respondent
Court: Florida Supreme Court
Jurisdiction: Florida
Decision Date: 2002-04-25
Citations: 817 So. 2d 812
Docket Number: No. SC00-1263
Parties: Robert T. MOSHER, Petitioner, v. Stephen J. ANDERSON, Respondent.
Judges: WELLS, C.J., and SHAW, HARDING, ANSTEAD, and QUINCE, JJ„ concur.
Reporter: Southern Reporter, Second Series
Volume: 817
Pages: 812–819

Head Matter:
Robert T. MOSHER, Petitioner, v. Stephen J. ANDERSON, Respondent.
No. SC00-1263.
Supreme Court of Florida.
April 25, 2002.
Rehearing Denied May 22, 2002.
John T. Mulhall III and Michael E. Wargo of Rutherford, Mulhall & Wargo, P.A., Boca Raton, FL, for Petitioner.
William J. McPharlin, Fort Lauderdale, FL, for Respondent.

Opinion:
PER CURIAM.
We have for review a decision from the Fourth District Court of Appeal, Anderson v. Mosher, 758 So.2d 1177, 1178 (Fla. 4th DCA 2000), which certified conflict with the decision from the Second District Court of Appeal in Mason v. Yarmus, 483 So.2d 832 (Fla. 2d DCA 1986). We have jurisdiction. See art. V, § 3(b)(4), Fla. Const. For the reasons that follow, we approve the Second District's decision in Mason, and hold that a cause of action on an oral loan payable upon demand accrues, and the statute of limitations begins to run, at the time when demand for payment is made.
BACKGROUND
Stephen J. Anderson and his brother, Michael, were the only shareholders of the Anderson Development Corporation, a Florida corporation. Robert T. Mosher secured a judgment against the corporation and sought to garnish Anderson's pri- or loan obligation to the corporation to satisfy his judgment. The Fourth District set out the additional relevant facts:
Appellee creditor [Robert T. Mosher] has a judgment against Anderson Development Corporation in the amount of $77,732. When he was unable to collect the judgment, the creditor filed a motion for writ of garnishment asserting that [Stephen J.] Anderson (debtor) possessed assets of the corporation. Ensuing discovery revealed that in 1988, debtor received $67,500 as a loan from the corporation. The loan was not in writing and contained no terms regarding interest or time for repayment. The corporation never made a demand for repayment of the loan prior to the garnishment proceedings, brought in November, 1995.
The debtor in the garnishment proceedings asserted that the statute of limitations had run; however, the trial court granted the creditor's motion for summary judgment, and the debtor appeals.
The parties agree that the oral loan contained no terms governing repayment and that the creditor stands in the shoes of the corporation for purposes of collecting the debt owed by debtor to the corporation. They agree that the dispositive issue is when the cause of action accrued so as to start the statute of limitations running on this loan.
Anderson, 758 So.2d at 1177. After the trial court's grant of summary judgment to the corporation's creditor, Anderson appealed and the Fourth District reversed, absolving him of liability for repayment of the loan, and holding that the statute of limitations applicable to the oral loan began to run on the date the loan was made. See id. at 1177. In so holding, the district court relied upon what it perceived to be the majority rule in other jurisdictions, and rejected Mosher's contention that the statute of limitations does not begin to run on an obligation that does not contain repayment terms until a demand for payment has been made. See id. The district court certified its decision as being in direct conflict with the decision of the Second District in Mason, 483 So.2d at 832, which held that the limitations period applicable to oral loans payable on demand does not begin to run until a demand for payment is made. See Anderson, 758 So.2d at 1178.
DISCUSSION
At issue is when the limitations period begins to run on an oral loan that either does not contain repayment terms or is payable on demand. Section 95.11(3)(k), Florida Statutes (2001), mandates that "[a] legal or equitable action on a contract, obligation, or liability not founded on a written instrument" shall be brought within four years. Thus, all agree that an action on the oral loan in this case is subject to a four-year statute of limitation. However, at issue is when the four-year limitations period begins to run.
Section 95.031, Florida Statutes (2001), provides that "the time within which an action shall be begun under any statute of limitations runs from the time the cause of action accrues." Section 95.031(1), provides that "[a] cause of action accrues when the last element constituting the cause of action occurs." Therefore, the dispositive issue is when the cause of action accrues, where, as here, the oral loan does not contain explicit terms for repayment.
In Mason, the Second District analogized to Florida's version of the Uniform Commercial Code in holding that the statute of limitations on an oral debt payable on demand did not accrue until the creditor demanded payment and the debtor failed to pay:
We affirm the final judgment against defendant for breach of an oral obligation to pay a debt on demand.
We agree with the trial court that the cause of action in this case did not accrue, and the statute of limitations on the obligation did not begin, until there had been a demand for payment and a failure by the debtor to pay. Although it appears that there is no Florida case law in point, we see no difference in principle or policy between this situation and the provisions of the Uniform Commercial Code, section 673.122, Florida Statutes (1983), which was enacted in 1977 as an amendment to prior law, that a cause of action on a note accrues as provided in section 95.031(1), which provides that the cause of action accrues upon written demand. See Ruhl v. Perry, 390 So.2d 353 (Fla.1980); Jones v. Rainey, 386 So.2d 1319 (Fla. 2d DCA 1980). Indeed, the 1977 amendment appears to have made the statute consistent with the principle that a cause of action on a contract accrues upon breach of the contract. See Fradley v. Dade County, 187 So.2d 48 (Fla. 3d DCA 1966). There was no breach in this case of the oral contract to pay the debt until the creditor had made demand for payment and the debtor did not pay.
We acknowledge that there is apparently case law in other jurisdictions to the contrary. See Annot., 14 A.L.R.4th 1385 (1982). But we decline to accept appellant's well-presented argument that the cause of action accrued, and the statute of limitations began to run, on the date the obligation arose. At that time there was no obligation by the debtor to pay and, therefore, no breach by the debtor of the obligation and, therefore, no accrual of a cause of action against the debtor.
483 So.2d at 833. While we, like the Second District, acknowledge authority to the contrary, we approve Mason and hold that in Florida, the limitations period for bringing an action on an oral loan payable upon demand begins to run only after there has been a breach by the debtor, i.e., the debt- or has refused to repay the loan at the time the creditor demands repayment.
As noted by the Second District, this is the rule that obtains when there is a written loan agreement providing that the loan is payable upon demand, and we see no valid basis for distinguishing between the two situations. The critical feature of both forms of loans, whether oral or written, is the provision for repayment upon demand. When that provision is the same in both instances, we see no reason to have one rule that says a demand must first be made and rejected in the one instance, but not in the other. Cf. Schreiber v. Hackett, 173 Ill.App.3d 129, 122 Ill.Dec. 914, 527 N.E.2d 412 (1988) (holding that where parties to an oral loan agreed that the loan would be repaid on demand, the statute of limitations did not begin to run until the date plaintiff demanded repayment of the loan). The cases which adhere to a contrary rule fail to indicate good policy reasons why the commencement date for the statute of limitations for written and oral "on demand" loans should be different.
We also agree with the Second District's reasoning applying ordinary contract principles to the loan transaction. To hold to the contrary would be tantamount to holding that a loan recipient is in immediate breach of the loan agreement at the time the loan is made. We cannot agree that such a construction of the loan would be in the ordinary contemplation of the parties. On the other hand, it is reasonable for all to assume that there has been a breach of a simple oral loan agreement where repayment is requested and refused. A contrary rule would also punish a lender who may wish to allow a creditor substantial time to repay an oral loan, only to find out down the road that his kindness has been repaid by a legal "gotcha" tactic not based on the merits of the dispute but rather on the silent starting and running of a statutory limitations period.
We are also concerned that the outcome in the case below may be illustrative of the mischief that may obtain under a contrary ruling. In this case we have an oral loan that is made by a company to one of its two family shareholders. No demand is made for repayment of this "friendly" loan. Then, when a legitimate third party creditor seeks to collect a valid judgment against the company by garnishment of the shareholder's debt to the company, the shareholder says, "Sorry, but my debt to the company has expired as a matter of law because my company did not sue me for repayment within four years." We doubt very seriously that other institutions, like the IRS or other government institutions, would honor such a "gotcha" tactic. While we recognize that different rules control different proceedings and institutions, we still find a lack of logic in the elimination of the demand requirement for oral loans payable "upon demand," and in the outcome of these proceedings below.
Accordingly, we quash Anderson, approve Mason, and remand this cause for further proceedings consistent herewith.
It is so ordered.
WELLS, C.J., and SHAW, HARDING, ANSTEAD, and QUINCE, JJ" concur.
PARIENTE, J., dissents with an opinion, in which LEWIS, J., concurs.
. We recognize that some other jurisdictions have adopted a contrary rule. See Jay M. Zitter, Annotation, When Statute of Limitations Begins To Run Against Action Based On Unwritten Promise To Pay Money Where There Is No Condition Or Definite Time for Repayment, 14 A.L.R.4th 1385 (1982 & Supp.2001). Those jurisdictions holding that the limitations period begins to run when the loan is made have expressed concern with the delay that might occur if the creditor does not promptly make a demand for repayment. However, that same delay is obviously a consideration in written demand loans.