After an ingredient supplier of Italian food products sued a pizza restaurant company for amounts due on unpaid invoices, the Missouri Supreme Court recently reversed the trial court's judgment for the supplier, finding that Missouri's 5-year statute of limitations barred the legal claims.
The Court held that signed invoices did not contain a written promise to pay money, as that term is used in the statute which grants a 10-year limitation period to such actions.
The menu of facts
The course of business was that a manager from one of the pizza restaurants would call the supplier and place an order. A warehouse employee would gather the requested goods and prepare them for delivery on the following day. The delivery driver would receive an invoice for the order, load the delivery truck, and transport the goods. Upon arrival at the restaurant, a manager would sign the invoice and return it to the driver.
According to the case opinion, the restaurant paid on “seven-day terms,” meaning it would pay for the requested goods at the end of the week and a new delivery would be made the following week. While this arrangement worked for some time, the restaurants failed to make payments altogether on multiple invoices.
5 years or 10 years to file suit?
Missouri has two statutes of limitation relating generally to contract actions. One section requires that "all actions upon contracts, obligations or liabilities, express or implied, except those mentioned in section 516.110, and except upon judgments or decrees of a court of record, and except where a different time is herein limited” to be brought within five years.
The other section requires “an action upon any writing, whether sealed or unsealed, for the payment of money or property” to brought within 10 years.
And so the Missouri Supreme Court had to decide this issue: whether the signed invoices actually contain a written promise to pay money? The Court reviewed prior cases which established that the essence of a promise to pay money is that it is (1) an acknowledgment of an indebtedness and (2) an admission of a debt due and unpaid. Moreover, the promise to pay money must arise from the writing's explicit language.
Basis for the court's decision
The Court actually included a copy of an invoice with its decision. It noted that the invoice contained terms such as the date the shipment was ordered, the pizzeria delivered to, the date the order was shipped, the shipping method, the payment terms, the quantity of each item shipped, units of measurement, item number, description of the goods delivered, unit and extended prices of the goods delivered, and the total cost of the shipment.
Yet, the Court ruled that none of these terms can be said to be the restaurant's acknowledgement of a debt or its admission a debt is due and unpaid. Instead, the only term on the invoice possibly attributable to the restaurant is the manager's signature.
However, since the invoices are silent as to the significance of the signature, the Court held that the invoice does not contain any language suggesting or implying the signature is the restaurant' acknowledgement of indebtedness or his admission of a debt due and unpaid. Therefore, the Court concluded that the 5-year statute of limitations applied and the supplier's lawsuit was deemed to have been filed beyond that time period.
The attorneys at Summers Compton Wells LLC are well-versed in commercial litigation involving payment obligations between companies.