Court Opinion

ID: 9514733
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:51:25.001144+00
Date Added: 2024-06-11T09:06:20.435944
License: Public Domain

SABERS, Justice
(dissenting).
[¶ 19.] The majority opinion claims this action is governed by Article 2 of the UCC, which imposes a four-year statute of limitation in this case. It concludes that the statute of limitation began to accrue in August of 1993 and expired in August of 1997. For the following reasons, I disagree.
[¶ 20.] Geralyn and Gary Sherman purchased the Sherman Feed Store in 1980. Gary’s parents bought feed for the store, but Geralyn and Gary were responsible for repaying them. When the parties divorced in 1993, the property distribution divided the debt owed to Gary’s parents between Geralyn and Gary. More specifically, Geralyn agreed to pay $42,306.67 of the debt to Gary’s parents. This property distribution is evidenced by two stipulations, dated October 18, 1993 and December 16, 1993, thereby creating a separate promise from the underlying transaction. Therefore, while the underlying transaction may have been a sale of goods, it was merged into a property distribution and, pursuant to SDCL 15-2-13, Gary’s parents, in the worst case scenario, had until October 18, 1999 to commence this action. Because they sued on November 11, 1998, their action was timely and the trial court erred in granting summary judgment to Geralyn.
[¶ 21.] This court has previously been presented with this issue. In O’Neill v. Steppat, 270 N.W.2d 375, 375-76 (S.D.1978), the parties entered into a purchase agreement for the sale of a business on August 31, 1970. The buyers executed and delivered a promissory note to the sellers on October 15, 1970. On December 29, 1975, the sellers sued to recover the amount of the note, which was due on September 1, 1971. The buyers argued that because the underlying contract was one for a sale of goods, the four-year statute of limitation barred the action. The trial court agreed. In reversing, this court stated:
Sellers have sought to recover on the note, not on the contract. That the note might have been given in payment for a contract for sale is not relevant in this *397action_ Buyers, by signing a negotiable note, made a separate promise.... This separate promise gives rise to a separate remedy on the note[.]
Id. at 376 (internal citations omitted). We determined that a six-year statute of limitation applied per SDCL 57-8-1:
Remedies for breach of any obligation or promise collateral or ancillary to a contract for sale are not impaired by the provisions of chapters 57-2 to 57-8, [UCC Article 2] inclusive.
Id. at 377. Because the note was an “obligation or promise collateral or ancillary to” the contract for sale, we held that Article 2 did not apply.
[¶ 22.] Here, Gary’s parents are seeking to enforce the promises Geralyn made in the stipulations as part of her divorce. They are not suing on the underlying transaction. SDCL 57A-2-701 provides: “Remedies for breach of any obligation or promise collateral or ancillary to a contract for sale are not impaired by the provisions of this chapter.” Obviously, the stipulations here were collateral and/or ancillary to the underlying transactions. Therefore, the action is not barred by Article 2 of the UCC.
[¶ 23.] Additionally, this court has held:
[I]n South Dakota, when one of two statutes of limitations may be applicable, such application should always be tested by the nature of the allegations in the complaint, and if there is any doubt as to which statute applies, such doubt should be resolved in favor of the longer limitation period.
Morgan v. Baldwin, 450 N.W.2d 783, 786 (S.D.1990). Here, the complaint alleges that Geralyn is indebted to Gary’s parents for $42,306.67 based on the stipulations. The complaint does not allege that the debt arises out of a sale of goods, instead, it specifically alleges that the debt arises from the stipulations. In following what we stated in O’Neill and Morgan, the longer statute of limitation of six years applies.
[¶ 24.] Therefore, I vote to reverse and remand the trial court’s grant of summary judgment to Geralyn.
[¶ 25.] GILBERTSON, Justice, joins this dissent.