Opinion ID: 2051169
Heading Depth: 1
Heading Rank: 6

Heading: pmrp agreement

Text: The statute of limitations for an action on a written contract is 5 years. Neb.Rev.Stat. § 25-205 (Reissue 1995). We first address the July 5, 1989, PMRP agreement. In the absence of a contractual provision allowing acceleration, where an obligation is payable by installments, the statute of limitations runs against each installment individually from the time it becomes due. See, Bauers v. City of Lincoln, 245 Neb. 632, 514 N.W.2d 625 (1994); Becker v. Lammers, 193 Neb. 839, 229 N.W.2d 557 (1975). Where a contract contains an option to accelerate, 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 he has elected to exercise the option. See, State Security Savings Co. v. Pelster, 207 Neb. 158, 296 N.W.2d 702 (1980); Hatch v. Ely, 131 Neb. 882, 270 N.W. 480 (1936); Santini v. Fritkin, 240 Md. 542, 214 A.2d 578 (1965). National's PMRP agreement with Richard provided that if any payment was not made when due, all sums due and owing to National shall immediately become due and payable, without demand or notice. Under such a self-operative acceleration clause, authorities are split as to whether the statute of limitations begins to run automatically upon default or whether it begins to run upon affirmative election by the creditor to accelerate. See 51 Am.Jur.2d Limitation of Actions § 133 (1970). Here, if the statute of limitations began to run automatically upon default, then the statute began to run in January 1990, when Richard first missed a monthly payment. If this is the case, then National failed to bring its action within 5 years. On the other hand, if affirmative action is necessary to accelerate the whole indebtedness due, then the statute of limitations did not begin to run until August, when National prepared and delivered a written demand informing Richard it was exercising its right to demand immediate payment of the whole indebtedness due. If the latter is true, National's action was brought within the 5-year limitations period. In Moorehead v. Hungerford, 110 Neb. 315, 193 N.W. 706 (1923), we stated that a provision in a mortgage given to secure a promissory note stating that the whole debt would immediately become due if any interest payment was not made was permissive only and not self-operative. See, also, McCarthy v. Benedict, 89 Neb. 293, 131 N.W. 598 (1911); Lowenstein v. Phelan, 17 Neb. 429, 22 N.W. 561 (1885). Courts in other jurisdictions have opined that the better-reasoned authorities hold that an acceleration provision, although absolute in its terms, is not self-operative. See, e.g., Fogle v. King, 132 W.Va. 224, 51 S.E.2d 776 (1948). The rationale is that the debtor, by defaulting, should not be permitted to force the maturation of an indebtedness which was intended as an investment for a given period. In Grozier v. Post Publishing Co., 342 Mass. 97, 172 N.E.2d 266 (1961), the court stated that to hold such an acceleration provision to be self-operative would prohibit the creditor from exercising leniency toward the debtor. We therefore conclude that National's cause of action for the unpaid balance of the PMRP agreement accrued when National gave written notice of its election to accelerate the unpaid balance due. Thus, National's action on the PMRP agreement was brought within the 5-year statute of limitations, and we affirm the district court's order granting summary judgment as to the PMRP agreement.