Opinion ID: 2635352
Heading Depth: 1
Heading Rank: 5

Heading: the ambiguous meaning of account receivable

Text: ¶ 29 Account receivable is not defined in chapter 4.16 RCW or any other statute. Petitioner David Tingey argues that the word receivable is clear and means a thing that can be received. Pet. for Review at 5. Further, he argues that account is defined as a `right to payment of a monetary obligation, whether or not earned by performance . . . for service rendered or to be rendered.' Pet. for Review at 5 n. 1 (quoting RCW 62A.9A102(a)(2)(A)(ii)). Thus, Tingey concludes that account receivable means `any right to payment for . . . services rendered which is not evidenced by an instrument or chattel paper . . . 'that can be received. Pet. for Review at 6 (quoting RCW 62A.9A-102(c)(2)(A)). The majority has adopted Tingey's definition with the addition that the transaction must be in connection with a business. Majority at 1024. ¶ 30 According to the majority, [t]he plain meaning of `account receivable' in RCW 4.16.040(2) is an amount due a business on account from a customer who has bought merchandise or received services. Majority at 1026. I believe that under the majority's holding, likely all of our dairy farmer's spring day transactions, including the sale of the milk and the lawn mower, the tractor repair, and the leased utility trailer resulted in accounts receivable and are subject to a six-year statute of limitations. Their status is, at least, very debatable. This court can, over the next several decades and at the cost of numerous appellate cases, define account receivable in the ordinary course of business by case law or, much more preferably in my view, the legislature could define account receivable or account receivable in the ordinary course of business for us. ¶ 31 Webster's Third New International Dictionary defines an account receivable as a balance due from a debtor on a current account. Webster's Third New International Dictionary 13 (2002). A current account is defined as an account between two parties having a series of transactions not covered by evidences of indebtedness (as notes or certificates) and usu. subject to settlements at stated intervals (as monthly or quarterly). Id. at 557 (emphasis added). ¶ 32 This definition is inconsistent with the definition derived from the accounting dictionary. At the very least, the difference suggests the term is ambiguous. Account receivable means different things based on the context. The Court of Appeals explored some of the different uses: [T]he term account receivable as it appears in legal proceedings, or as it is defined in dictionaries, has different meanings depending upon the context. In litigation, the term is used in the context of: (1) the sale and valuation of businesses, (2) adversary proceedings during bankruptcy proceedings, and (3) priority disputes between secured parties. In a legal dictionary, any balance owed by a debtor is considered an account receivable. Other times, an account receivable is the balance owed on (1) an unsettled account or (2) an open account. Finally, whether or not a particular debt constitutes an account receivable may be a factual question. Tingey v. Haisch, 129 Wash.App. 109, 114, 117 P.3d 1189 (2005) (footnotes and citations omitted). The meaning of the term account receivable, let alone the phrase account receivable in the ordinary course of business, is not apparent from its face. A statute is unambiguous only when the statutory language admits of only one meaning. State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003). The variety of distinct definitions of account receivable demonstrates that the statutory language is susceptible to more than one interpretation. Faced with different reasonable definitions, we must examine the legislative history to determine which reasonable definition the legislature intended. Dep't of Ecology v. Campbell & Gwinn, L.L.C., 146 Wash.2d 1, 12, 43 P.3d 4 (2002); see also majority at 1023. The result of such an inquiry supports interpreting the statute as referring to open accounts. This interpretation, in addition to reflecting the legislature's intent, is in accord with the principles supporting shorter statutory periods limiting claims based on oral rather than written contracts. ¶ 33 If the legislature meant that all business contracts for goods and services should have a six-year statute of limitation, it would surely have said so. It did not. Instead, it added limiting language the majority would define to make meaningless. The legislature intended that an account receivable, not just any business contract, should be entitled to the same statute of limitations as written contracts. ¶ 34 Our goal is to determine the legislature's intent, and we will avoid absurd results. J.P., 149 Wash.2d at 450, 69 P.3d 318 (citing Nat'l Elec. Contractors Ass'n v. Riveland, 138 Wash.2d 9, 19, 978 P.2d 481 (1999)). I admire the majority's ability to see clearly through cloudy water, but sometimes the water itself distorts the object of scrutiny. The most basic problem with the majority's definition is that it is so broad that the exception swallows the general rule. It means that all oral contracts for goods and services in the ordinary course of business have a six-year statute of limitation. Again, the legislature could have but did not say that all oral contracts for goods and services would enjoy a long statute of limitations usually reserved for written agreements. The result of the majority's interpretation is that the term account receivable has no meaning, and an interpretation making a statute's term superfluous must be rejected. We have held, time and again, that [s]tatutes must be interpreted and construed so that all the language used is given effect, with no portion rendered meaningless or superfluous. Whatcom County v. City of Bellingham, 128 Wash.2d 537, 546, 909 P.2d 1303 (1996) (citing Stone v. Chelan County Sheriffs Dep't, 110 Wash.2d 806, 810, 756 P.2d 736 (1988); Tommy P. v. Bd. of County Comm'rs, 97 Wash.2d 385, 391, 645 P.2d 697 (1982)).