Court Opinion

ID: 9473865
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:41:44.181999+00
Date Added: 2024-06-11T17:43:46.529327
License: Public Domain

BREITENSTEIN, Circuit Judge.
This is an action by plaintiff-appellant, Federal Deposit Insurance Corporation (FDIC), against defendants-appellees Petersen, Heidtbrink, and Dunn to enforce guaranty contracts entered into by defendants. We have jurisdiction under 28 U.S.C. § 1345 and 12 U.S.C. § 1819, Fourth. The district court, 565 F.Supp. 1007, held that the FDIC’s claims were barred by the federal statute of limitations, 28 U.S.C. § 2415(a). FDIC appeals. We affirm.
The case was submitted on a stipulation of facts. R. 60-65. On February 1, 1975, Meridian Properties, Inc. (Meridian) signed a note to Drovers National Bank of Chicago for $66,335.47, payable in installments with the balance of all unpaid principal and interest due June 1, 1976. R. 60. On the same day, Petersen, Heidtbrink, and Dunn, defendants-appellees, each signed a guaranty of Meridian’s payment to the bank up to a maximum of $66,335.47 plus interest and expenses of enforcement. Id. The last payment on the note was on November 18, 1975, at which time the balance of principal due was $57,708.33. Id. On August 25, 1976, Richard Williams, Meridian’s accountant, sent the bank a letter enclosing Meridian’s financial statement listing Meridian’s debt to the bank as a liability. Id. at 61. Neither the board of directors of the bank, nor the appellees, expressly authorized Williams to extend or acknowledge the debt. Meridian suspended active operations in 1977. R. 62. On January 19, 1978, FDIC was appointed receiver of the bank, purchased the note, and is now the holder in due course. R. 61. FDIC filed this suit on September 1, 1982, six years and three months after the note matured, to enforce the guaranties of Petersen, Heidtbrink, and Dunn. The district court held that, based on the stipulation of facts, the FDIC claims against the guarantors were barred by the six-year federal statute of limitations found in 28 U.S.C. § 2415(a). The FDIC appeals.
FDIC argues that the ten-year Illinois statute of limitations, 111. Code Civ. Proc. § 13-206, applies because the guaranty contracts specifically provide that Illinois law is to govern them. The guaranties state that they “shall be governed by the law of the State of Illinois.” R. 69-71. Statutes of limitation are generally considered to be procedural rather than substantive law. Kalmich v. Bruno, 7 Cir., 553 F.2d 549, 553, cert. denied 434 U.S. 940, 98 S.Ct. 432, 54 L.Ed.2d 300; Bournias v. Atlantic Maritime Co., 2 Cir., 220 F.2d 152, 154-155. See Stokke v. Southern Pacific Co., 10 Cir., 169 F.2d 42, 43. Choice of law provisions in contracts are generally understood to incorporate only substantive law, not procedural law such as statutes of limitation. Des Brisay v. Goldfield Cory., 9 Cir., 637 F.2d 680, 682. See also Alaska Airlines, Inc. v. Lockheed Aircraft Cory., D.Alaska, 430 F.Supp. 134, 139. The parties did not expressly state an intention to include the Illinois statute of limitations into the guaranties choice of law provisions. Absent an express statement of intent, a standard choice of law provision *143such as this one will not be interpreted as covering a statute of limitations. Des Brisay, supra, 637 F.2d at 682.
FDIC brought this suit in its corporate capacity under 12 U.S.C. § 1819, Fourth, which provides that “[a]ll suits of a civil nature at common law or in equity to which the Corporation [FDIC] shall be a party shall be deemed to arise under the laws of the United States.” Federal law applies to the case at bar. D’oench, Duhme & Co. v. Federal Deposit Insurance Corporation, 315 U.S. 447, 455-456, 62 S.Ct. 676, 678-679, 86 L.Ed. 956; Santoni v. Federal Deposit Insurance Corporation, 1 Cir., 677 F.2d 174, 177-178.
Section 2415(a), 28 U.S.C., provides for a six year statute of limitations for “every action for money damages brought by the United States or an officer or agency thereof which is founded upon any contract____” FDIC is an agency of the United States when acting in its corporate capacity and § 2415(a) governs an action brought by FDIC to enforce an assigned claim for money. Federal Deposit Insurance Corporation v. Bird, D.P.R., 516 F.Supp. 647, 649-650. The Supreme Court has said with regard to a claim assigned to the Federal Housing Authority and brought by it on behalf of the United States, that “[i]t is well settled that the United States is not bound by state statutes of limitation____” United States v. Summerlin, 310 U.S. 414, 416, 60 S.Ct. 1019, 1020, 84 L.Ed. 1283.
FDIC does not dispute the trial court’s finding that the cause of action accrued on June 2, 1976, approximately six years and three months before the time when FDIC filed suit on September 1,1982. Appellant’s Brief, p. 11. FDIC argues that the August 25, 1976, letter of Williams, Meridian’s accountant and a member of its board of directors, to the bank recreated or started anew the obligation of the bank. R. 61, 90. Section 2415(a), 28 U.S.C., provides “that in the event of ... written acknowledgement of debt, the right of action shall be deemed to accrue again at the time of each ... acknowledgement.” The district court held that the acknowledgment of Williams did not bind the defendants who were guarantors. The question of whether an acknowledgment of a debt by a principal debtor will bind its guarantors appears to be an issue of first impression in federal courts. It is the general rule that an acknowledgment by a principal debtor will not affect the running of the statute of limitations as to a guarantor. 54 C.J.S., Limitation of Actions, § 318(b). We believe that the federal courts will follow this rule.
FDIC argues that the guaranties permitted the extension or renewal of the note and Meridian’s acknowledgment of the debt constituted such a renewal to which the guarantors gave prior consent by signing the guaranties. The district court characterized the argument as “sophistry.” R. 109. We agree. Extension or renewal of a note refers to a binding agreement supported by consideration to postpone the maturity date of a note or to replace it with a new contract. Elk Horn Bank & Trust Co. v. Spraggins, 182 Ark. 27, 30 S.W.2d 858, 859; Wellington National Bank v. Thomson, 9 Kan.App. 667, 59 P. 178. Acknowledgement or part payment of the debt does not constitute a new agreement. It only suspends the running of the statute of limitations against the party making such acknowledgment or partial payment. Wellington, supra, 59 P. at 178.
The parties stipulated that the defendants Dunn in 1979 and Heidtbrink in 1978 were out of the country for periods of ten and five days respectively. Peterson was outside the United States for five to seven days in each of the years 1980, 1981, and 1982. None of these trips were made with the intention of changing their domicile, citizenship, or residence but the trips were for vacations. R. 62. The cause of action accrued June 2, 1976, and the case was filed September 1, 1982. The action was then barred.
FDIC requests that if this court affirms the district court, the affirmance be without prejudice. We held in Stokke v. Southern Pacific Co., 10 Cir., 169 F.2d 42, 43, *144that a judgment dismissing an action on statute of limitations grounds is ordinarily not “res judicata which forecloses the maintaining of a subsequent action in another state where the right is not barred by local law.” Stokke does not apply here. We have found that the action is barred by federal law, 28 U.S.C. § 2415(a). This determination is res judicata as to any subsequent suit FDIC might bring.
Affirmed.