NE Code § 25-205 (2021)
2021 Nebraska Revised Statutes|Chapter 25 - Courts; Civil Procedure|25-205 - Actions on written contracts, on foreign judgments, or to recover collateral.

25-205.  Actions on written contracts, on foreign judgments, or to recover collateral.(1) Except as provided in subsection (2) of this section, an action upon a specialty, or any agreement, contract, or promise in writing, or foreign judgment, can only be brought within five years. No action at law or equity may be brought or maintained attacking the validity or enforceability of or to rescind or declare void and uncollectible any written contract entered into pursuant to, in compliance with, or in reliance on, a statute of the State of Nebraska which has been or hereafter is held to be unconstitutional by the Supreme Court of Nebraska where such holding is the basis for such action, unless such action be brought or maintained within one year from the effective date of such decision. The provisions hereof shall not operate to extend the time in which to bring any action or to revive any action now barred by reason of the operation of any previously existing limitation provision.(2) An action to recover collateral (a) the possession and ownership of which a debtor has in any manner transferred to another person and (b) which was used as security for payment pursuant to an agreement, contract, or promise in writing which covers farm products as described in section 9-102, Uniform Commercial Code, or farm products which become inventory of a person engaged in farming, shall be brought within eighteen months from the date possession and ownership of such collateral was transferred.Source   R.S.1867, Code § 10, p. 395;   R.S.1913, § 7567;   C.S.1922, § 8510;   C.S.1929, § 20-205;   R.S.1943, § 25-205;   Laws 1963, Spec. Sess., c. 2, § 1, p. 61;   Laws 1983, LB 343, § 9;  Laws 1999, LB 550, § 3. Annotations  1. Acts that toll the statute 2. Acts that do not toll the statute 3. Specific actions covered by statute 4. Miscellaneous 1. Acts that toll the statute A cause of action on an insurer's duty to defend does not run until the underlying action is resolved against the insured. Dutton-Lainson Co. v. Continental Ins. Co., 271 Neb. 810, 716 N.W.2d 87 (2006). Voluntary payment of any part of principal or interest tolls statute of limitations and new right of action accrues after each payment, not tolled as to joint maker unless payment made with his authority or consent. Pick v. Pick, 184 Neb. 716, 171 N.W.2d 766 (1969). Where a new independent cause of action is filed by way of amendment, the statute of limitations runs until the filing of the amended petition. Horn's Crane Service v. Prior, 182 Neb. 94, 152 N.W.2d 421 (1967). Mortgage subsequently given was an acknowledgment in writing of prior note. Alexanderson v. Wessman, 158 Neb. 614, 64 N.W.2d 306 (1954). Where a bank assumed and agreed to pay the liabilities of another bank, the statute of limitations commenced to run against the assuming bank upon a certificate of deposit that had already matured at the time the assumption agreement was made. Diss v. State Bank of Holdrege, 141 Neb. 146, 3 N.W.2d 89 (1942). Where a municipal warrant has been registered, statute of limitations does not commence to run until treasurer of municipal corporation gives notice to the holder of the warrant that there is sufficient money in the treasury to pay the warrant. Havelock Nat. Bank v. Northport Irr. Dist., 139 Neb. 747, 298 N.W. 695 (1941). In determining whether statute of limitations has run upon a written instrument, part payments made by a debtor without specific direction may be applied by the creditor on any indebtedness owing by the debtor to the creditor. Fox v. Carman, 139 Neb. 34, 296 N.W. 343 (1941). Where judgment is obtained on promissory note through fraud, court of equity will set it aside where it appears the maker had a good defense in that statute of limitations had run. Pavlik v. Burns, 134 Neb. 175, 278 N.W. 149 (1938). Payments by one partner out of partnership funds, where partnership has become inactive but has not been dissolved, toll statute of limitations as to both partners. Jensen v. Romigh, 133 Neb. 71, 274 N.W. 199 (1937). In suit on insurance policy based on presumption of death after seven years' unexplained absence, statute of limitations does not begin to run until expiration of seven-year period. Wells v. Equitable Life Assurance Society, 130 Neb. 722, 266 N.W. 597 (1936). Cashier of bank who endorsed to bank a note of which he was payee, and, instead of collecting the note as was his duty, made payments of principal and interest on note from time to time, and, in three instances marked the note extended for two years each, was estopped, when sued on his endorsement, to plead statute of limitations. Atlas Corporation v. Magdanz, 130 Neb. 519, 265 N.W. 743 (1936). Where a judgment of revivor had been obtained within five years before bringing action in this state, it was not barred by the statute of limitations of this state. Packer v. Thompson, 25 Neb. 688, 41 N.W. 650 (1889). 2. Acts that do not toll the statute Partial payments made without the authority or consent of a surety, unless ratified by the surety, do not toll the statute of limitations as to the surety. Watkins Products, Inc. v. Rains, 175 Neb. 57, 120 N.W.2d 368 (1963). Action against surety on written contract of guaranty was barred although payments were made by principal within five years. W. T. Rawleigh Co. v. Smith, 142 Neb. 529, 9 N.W.2d 286 (1943), affirming 142 Neb. 527, 7 N.W.2d 80 (1942). Surety was not liable when he did nothing to prevent running of statute of limitations. W. T. Rawleigh Co. v. Smith, 142 Neb. 527, 7 N.W.2d 80 (1942). Payments on note by principal without authority or consent of surety does not prevent running of statute of limitations against surety. In re Estate of Soukup, 142 Neb. 456, 6 N.W.2d 615 (1942). The right to retain the debt of an heir upon a promissory note from his distributive share of estate is not precluded even though action to recover upon the note is barred by the statute of limitations. Fischer v. Wilhelm, 139 Neb. 583, 298 N.W. 126 (1941), opinion partially vacated on rehearing, 140 Neb. 448, 300 N.W. 350 (1941). Where will provided that any sum owing to testator by heirs should be deducted from share of such heir, an heir cannot successfully object upon the ground of the statute of limitations to deduction of notes which had not run five years at time of death of testator. In re Estate of Nissen, 134 Neb. 794, 279 N.W. 782 (1938). Payment by one of several joint debtors on note, without authority or consent of other debtors, does not toll statute of limitations as to them. Kuhse v. Luther, 130 Neb. 623, 266 N.W. 66 (1936). Stipulation contained in a note permitting the holder to extend the time of payment without notice, is not an agreement waiving the right to plead the bar of the statute. Allen v. Estate of Allen, 81 Neb. 600, 116 N.W. 509 (1908). 3. Specific actions covered by statute This section governs deficiency actions brought after the judicial foreclosure of a trust deed. First Nat. Bank of Omaha v. Davey, 285 Neb. 835, 830 N.W.2d 63 (2013). In a suit against the guarantors of a promissory note that contains an optional acceleration clause, the statute of limitations for an action on the whole indebtedness due begins to run from the time the creditor takes positive action indicating that the creditor has elected to exercise the option. City of Lincoln v. Hershberger, 272 Neb. 839, 725 N.W.2d 787 (2007). In this case, the general 5-year statute of limitations must yield to the 3-year provision in a health insurance policy because such provision is authorized by the statutes regulating health insurance policies. Brodine v. Blue Cross Blue Shield, 272 Neb. 713, 724 N.W.2d 321 (2006). The statute of limitations provided in this section applies to an action on a contract of guaranty. The statute of limitations begins to run against a contract of guaranty the moment a cause of action first accrues, and a guarantor's liability arises when the principal debtor defaults. In the absence of provisions to the contrary in the controlling documents, a cause of action does not accrue against a guarantor until the guarantor's liability has arisen, and a guarantor's liability does not arise until the debtor defaults. City of Lincoln v. PMI Franchising, 267 Neb. 562, 675 N.W.2d 660 (2004). This section, which provides for a 5-year statute of limitations on written contracts, applies in an insured's suit against its uninsured or underinsured motorist coverage insurer when the insured has timely filed the underlying claim against the uninsured or underinsured motorist. Schrader v. Farmers Mut. Ins. Co., 259 Neb. 87, 608 N.W.2d 194 (2000). Generally, absent a more specific statute, actions on written contracts may be brought within 5 years. Kratochvil v. Motor Club Ins. Assn., 255 Neb. 977, 588 N.W.2d 565 (1999). An action for damages for breach of a covenant of warranty contained in a deed conveying land is an action upon a specialty and must be brought within 5 years after the cause of action accrues; this rule applies in actions for damages for breach of a covenant against encumbrances. Omega Chemical Co. v. Rogers, 246 Neb. 935, 524 N.W.2d 330 (1994). An action based on breach of a written contract must be commenced within five years of accrual of a cause of action. Grand Island School Dist. #2 v. Celotex Corp., 203 Neb. 559, 279 N.W.2d 603 (1979). Five-year statute of limitations applies to a third party beneficiary under a real estate sales contract. Mid-Continent Properties, Inc. v. Pflug, 197 Neb. 429, 249 N.W.2d 476 (1977). Actions to recover annual payments provided by indenture granting perpetual easement for flow of water and to enforce equitable lien growing out of the indenture are controlled by this section. Frye v. Sibbitt, 145 Neb. 600, 17 N.W.2d 617 (1945). Cause of action on indemnity contract accrues when loss thereunder occurs. Lyhane v. Durtschi, 144 Neb. 256, 13 N.W.2d 130 (1944); Bankers Surety Co. v. Willow Springs Beverage Co., 104 Neb. 173, 176 N.W. 82 (1920). A domestic judgment is a specialty and suit thereon is barred after five years from date of judgment. Farmers & Merchants Bank of Axtell v. Merryman, 126 Neb. 684, 254 N.W. 428 (1934); Reed v. Occidental Bldg. & Loan Assn., 122 Neb. 817, 241 N.W. 769 (1932); Armstrong v. Marr, 120 Neb. 182, 231 N.W. 758 (1930); Fisher v. Woodard, 103 Neb. 253, 170 N.W. 907 (1919); Armstrong v. Patterson, 97 Neb. 229, 149 N.W. 408 (1914), reversed on rehearing 97 Neb. 871, 152 N.W. 311 (1915). Action for breach of covenant of warranty in deed is specialty, barred unless commenced within five years from date of breach. Campbell v. Gallentine, 115 Neb. 789, 215 N.W. 111 (1927); Kern v. Kloke, 21 Neb. 529, 32 N.W. 574 (1887). Statute runs against married woman during coverture. Watkins v. Adamson, 113 Neb. 715, 204 N.W. 816 (1925). Time of commencing action on city warrants stated. Trenerry v. City of So. Omaha, 86 Neb. 7, 124 N.W. 920 (1910); Rogers v. City of Omaha, 82 Neb. 118, 117 N.W. 119 (1908). Time of commencing action for money had and received stated. Thiele v. Carey, 85 Neb. 454, 123 N.W. 442 (1909). Time of commencing action on draft stated. Wrigley v. Farmers and Merchants State Bank of Beatrice, 76 Neb. 862, 108 N.W. 132 (1906). Time of commencing action to reform policy of insurance stated. Grand View Building Assn. v. Northern Assur. Co., 73 Neb. 149, 102 N.W. 246 (1905). Time of commencing action on county warrants stated. Bacon v. Dawes County, 66 Neb. 191, 92 N.W. 313 (1902). Time of commencing action on award of damages stated. City of Omaha v. Clarke, 66 Neb. 33, 92 N.W. 146 (1902). Time of commencing action on covenant against encumbrances stated. Johnson v. Hesser, 61 Neb. 631, 85 N.W. 894 (1901); Bellamy v. Chambers, 50 Neb. 146, 69 N.W. 770 (1897). Time of commencing action on guaranty of payment stated. Cummins v. Tibbetts, 58 Neb. 318, 78 N.W. 617 (1899). Time of commencing action on bank check stated. Connor v. Becker, 56 Neb. 343, 76 N.W. 893 (1898). Time of commencing action on foreign judgments stated. Lonergan v. Lonergan, 55 Neb. 641, 76 N.W. 16 (1898); Hepler v. Davis, 32 Neb. 556, 49 N.W. 458 (1891); Marx & Kempner v. Kilpatrick, 25 Neb. 107, 41 N.W. 111 (1888). Time of commencing action on contract for transportation of goods stated. Denman v. Chicago, B. & Q. R. Co., 52 Neb. 140, 71 N.W. 967 (1897). Time of commencing action for foreclosure of tax lien stated. Alexander v. Thacker, 43 Neb. 494, 61 N.W. 738 (1895); Shepherd v. Burr, 27 Neb. 432, 43 N.W. 256 (1889). Time of commencing action on insurance policy stated. Phenix Ins. Co. v. Rad Bila Hora Lodge, 41 Neb. 21, 59 N.W. 752 (1894). An action upon a foreign judgment is barred in five years. Nelson v. Becker, 32 Neb. 99, 48 N.W. 962 (1891). Warrant issued by a village will be barred in five years from time it becomes due. Arapahoe Village v. Albee, 24 Neb. 242, 38 N.W. 737 (1888). Time of commencing action on school district bonds stated. School Dist. No. 42 of Pawnee County v. First Nat. Bank of Xenia, 19 Neb. 89, 26 N.W. 912 (1886). Time of commencing action on promissory notes stated. Hedges v. Roach, 16 Neb. 673, 21 N.W. 404 (1884). A suit to collect on a contract that is from the foreclosed deed of trust is governed by the statute of limitations found in this section, rather than the 3-month statute of limitations found in section 76-1013. Boxum v. Munce, 16 Neb. App. 731, 751 N.W.2d 657 (2008). Suit by employee against employer for breach of written employment contract was governed by Nebraska five-year statute of limitations rather than the four-year statute of limitations relating to actions upon a contract not in writing. Sandobal v. Armour & Co., 429 F.2d 249 (8th Cir. 1979). Cause of action for breach of contract of employment accrued on date of alleged wrongful discharge. Howard v. Chicago, B. & Q. R. R. Co., 146 F.2d 316 (8th Cir. 1945). 4. Miscellaneous Where there is an ongoing contractual obligation, a separate cause of action accrues at the time of each breach. Where an obligation is payable by installments, the statute of limitations runs against each installment individually from the time it becomes due. Andersen v. A.M.W., Inc., 266 Neb. 238, 665 N.W.2d 1 (2003). A cause of action in contract accrues at the time of the breach or failure to do the thing agreed to. An insured's cause of action on an insurance policy to recover underinsured motorist benefits accrues at the time of the insurer's breach or failure to do that which is required under the terms of the policy. Snyder v. Case and EMCASCO Ins. Co., 259 Neb. 621, 611 N.W.2d 409 (2000). The filing of a foreign judgment in a Nebraska court pursuant to section 25-1587.03 is not an action upon a foreign judgment within the meaning of this section. Deuth v. Ratigan, 256 Neb. 419, 590 N.W.2d 366 (1999). Pursuant to subsection (1) of this section, the statute of limitations started running when the city failed to timely post notice of a promotion examination under the terms of a collective bargaining agreement, not when the city actually administered the exam. Cavanaugh v. City of Omaha, 254 Neb. 897, 580 N.W.2d 541 (1998). To toll the statute of limitations and to remove the bar of the statute, a debtor must unqualifiedly acknowledge an existing liability. Kotas v. Sorensen, 216 Neb. 648, 345 N.W.2d 1 (1984). In a suit on a promissory note and security agreement, the statute of limitations begins to run when the creditor exercises his option to accelerate the debt, thereby making the entire amount of the debt due. State Security Savings Co. v. Pelster, 207 Neb. 158, 296 N.W.2d 702 (1980). Where a covenant against encumbrances and covenants of warranty or quiet enjoyment appear in the same instrument, they are separate and independent covenants and one does not embrace the other. Cape Co. v. Wiebe, 196 Neb. 204, 241 N.W.2d 830 (1976). This section bars action on the note, but not on the mortgage given to secure it. J. I. Case Credit Corp. v. Thompson, 187 Neb. 626, 193 N.W.2d 283 (1971). Where insurance policy issued in this state provides twelve months' limitation for filing action, but also contains provision amending terms to conform with conflicting statutes, limitations in state statutes are applicable. Hiram Scott College v. Insurance Co. of North America, 187 Neb. 290, 188 N.W.2d 688 (1971). Where community of interest or privity of estate exists between intervener and plaintiff, the commencement of action by plaintiff inures to benefit of intervener. Baker v. A. C. Nelson Co., 185 Neb. 128, 174 N.W.2d 197 (1970). This section did not govern bringing of action on fire insurance policy. Rhodes v. Continental Ins. Co., 180 Neb. 10, 141 N.W.2d 415 (1966). An action upon a contract in writing must be commenced within five years after cause of action has accrued. Weiss v. Weiss, 179 Neb. 714, 140 N.W.2d 15 (1966). Instrument must in itself contain contract or promise. Grant v. Williams, 158 Neb. 107, 62 N.W.2d 532 (1954). In action upon written instrument, where more than five years have elapsed from date of maturity, claimant must plead and prove facts to avoid bar of statute. In re Estate of Anderson, 148 Neb. 436, 27 N.W.2d 632 (1947). Burden of proof rests upon plaintiff who pleads written extension of time of payment to avoid the bar of statute of limitations upon a promissory note. Prokop v. Mlady, 136 Neb. 644, 287 N.W. 55 (1939). By failing to make demand, payee of a demand note cannot do away with the statute of limitations, which begins to run the day after the note is executed and delivered. Melville Lumber Co. v. Scott, 135 Neb. 379, 281 N.W. 803 (1938). The statute of limitations on a note payable on demand begins to run the day after the note is executed and delivered. Luikart v. Hoganson, 135 Neb. 280, 281 N.W. 27 (1938). Provision in insurance policy issued by fraternal benefit society that suit must be commenced within one year from date of member's death will be enforced in Nebraska if valid in state where contract was made. Avondale v. Sovereign Camp, W.O.W., 134 Neb. 717, 279 N.W. 355 (1938). Defense of statute of limitations was properly pleaded. Nebraska State Bank Liquidation Assn. v. Village of Burton, 134 Neb. 623, 279 N.W. 319 (1938). Defense of recoupment must arise out of same transaction as plaintiff's claim, and survives as long as plaintiff's cause of action exists, even if affirmative action on the subject of the recoupment is barred by statute of limitations. Oft v. Dornacker, 131 Neb. 644, 269 N.W. 418 (1936). When state bank, against which a creditor had taken judgment, reorganized as national bank, and creditor sues the national bank to enforce his judgment formerly obtained against state bank, the statute of limitations begins to run on judgment from date it was obtained. Wilson v. Continental Nat. Bank, 130 Neb. 614, 266 N.W. 68 (1936). A claim for indemnification filed after the applicable statute of limitations for the underlying breach of contract does not preserve a separate cause of action for breach of contract. Keith v. Data Enters., 27 Neb. App. 23, 925 N.W.2d 723 (2019). A claim for indemnification filed after the applicable statute of limitations for the underlying negligence or negligent misrepresentation claims does not preserve separate causes of action for negligence or negligent misrepresentation. Keith v. Data Enters., 27 Neb. App. 23, 925 N.W.2d 723 (2019). Forum state's statute of limitations was procedural rather than substantive and was properly applied in diversity action for breach of contract. Player Pianette, Inc. v. Dale Electronics, Inc., 478 F.2d 336 (8th Cir. 1973). In applying provision of Bankruptcy Act relating to proving of debt founded on contract express or implied, the character of the debt is determined by the law of the state where created. Erickson v. Richardson, 86 F.2d 963 (9th Cir. 1936).