John H. Kolb & Sons, Inc. v. G and L Excavating, Inc.

The defendant, G and L Excavating,
Inc., appeals from the judgment of the trial court, rendered
after a trial to the court, in favor of the plaintiff,
John H. Kolb & Sons, Inc. On appeal, the defendant claims that the court improperly (1) denied its motion
for a judgment of dismissal at the conclusion of the
plaintiff's case, (2) determined that the six year statute
of limitations set forth in General Statutes § 52-5761
was applicable as opposed to the three year statute of
limitations set forth in General Statutes § 52-581,2 (3)
found that the statute of limitations was tolled, and (4)
found that the plaintiff did not act with inexcusable
delay in bringing the action and that the defendant was
not prejudiced by that delay. We affirm the judgment
of the trial court.

The court found the following facts. The parties had
a long-standing business relationship based on an oral
contract. The plaintiff obtained various types of insurance3
on behalf of the defendant and paid the premiums.
The payments, made by the plaintiff, were recorded in
the defendant's account with the plaintiff. The defendant
made periodic payments on the account. The court
concluded that this arrangement was an open, running
account.

The parties operated under that arrangement from
1986 until February, 1991. In February, 1991, despite
the periodic payments made by the defendant, the balance
of the account exceeded $62,000 (first account).
In April, 1991, the plaintiff started a new account, with
a zero balance, on behalf of the defendant (second
account). After the second account was started, there
were no charges made to the first account, although a
balance remained. The defendant made regular payments
on the second account, and the last entry on that
account revealed a payment resulting in a zero balance.

The court found that the parties had entered into an
agreement that all payments made after February, 1991,
would first be applied to the balance of the second
account and any excess payment would be then applied
to the first account. A letter from the plaintiff's bookkeeper,
dated September 26, 1991, informed the defendant
that a recent payment of $20,000 resulted in the
second account having a zero balance. The letter further
stated that the overpayment of $8367 would be applied
to the balance of the first account.

On March 26, 1993, the defendant made a payment
of $4000. That payment resulted in the second account's
balance being reduced to zero, and the overpayment
of $825 was applied to the first account balance. The
relationship between the parties ended at that point,
and the plaintiff no longer obtained insurance on behalf
of the defendant. The only remaining issue between the
parties was the payment of the first account, which still
carried a balance.

In February, 1994, an insurance company issued a
dividend check to the defendant in the amount of $800.
The check was sent to the plaintiff, who forwarded
it to the defendant and requested that the defendant endorse the check over to the plaintiff. The defendant
complied with the plaintiff's request, and the $800 was
applied to the first account. The insurance company
subsequently placed a stop payment on the check; nevertheless,
the court found that this transaction demonstrated
the intent of the defendant to acknowledge
the debt.

The plaintiff initiated an action to recover the balance
of the first account on February 9, 1999. The defendant
filed an answer and several special defenses. The first
special defense alleged that the action was commenced
more than three years after the oral contract allegedly
was breached and, therefore, was barred by § 52-581.
The second special defense averred that enforcement
of the contract was prevented by the six year statute
of limitations as set forth by § 52-576. In its sixth special
defense, the defendant claimed that the plaintiff had
initiated the action after ‘‘an inexcusable delay and
[that] the defendant has been prejudiced by this delay.''4

Following the trial, the court requested and received
briefs from the parties regarding the issue of the applicable
statute of limitations. The court held that the contract
between the parties was executed because the
plaintiff had completed all of its contractual obligations;
therefore, § 52-576 and its six year statute of limitations
applied.

The next issue the court addressed was whether the
defendant had tolled the statute of limitations by
acknowledging the debt. The court found that although
the defendant never expressly directed payment to a
particular account, the overpayments of the second
account were intended to be applied to the first account
As a result, the court stated that the six year statute of
limitations was tolled by the overpayments that
acknowledged the debt and that the six year statute
started to run on March 26, 1993, the date of the overpayment
of $825 that was applied to the first account. The
plaintiff served the defendant with process on February
4, 1999, and, therefore, the court concluded that the
action was timely.5 In a footnote to its written memorandum
of decision, the court rejected the defendant's special
defense of inexcusable delay.6 The court rendered
judgment in favor of the plaintiff, and this appeal followed.
Additional facts will be set forth as necessary.

I

The defendant first claims that the court improperly
denied its motion for a judgment of dismissal at the
conclusion of the plaintiff's case. Specifically, the defendant
argues that the court found, at the conclusion of
the plaintiff's case, that the plaintiff's claim had been
initiated outside of both the three year and six year
statutes of limitation, and, therefore, denial of the
motion was improper. We disagree.

As an initial matter, we set forth the applicable legal principles and standard of review. Practice Book § 15-
8 provides in relevant part: ‘‘If, on the trial of any issue
of fact in a civil action tried to the court, the plaintiff
has produced evidence and rested his or her cause, the
defendant may move for judgment of dismissal, and the
judicial authority may grant such motion, if in its opinion
the plaintiff has failed to make out a prima facie
case. . . .''

Our Supreme Court has stated that ‘‘[a] prima facie
case, in the sense in which that term is relevant to this
case, is one sufficient to raise an issue to go to the trier
of fact. . . . In order to establish a prima facie case,
the proponent must submit evidence which, if credited,
is sufficient to establish the fact or facts which it is
adduced to prove.'' (Citation omitted; internal quotation
marks omitted.) Thomas v. West Haven, 249 Conn. 385,
392, 734 A.2d 535 (1999), cert. denied, 528 U.S. 1187,
120 S. Ct. 1239, 146 L. Ed. 2d 99 (2000). Moreover,
‘‘[w]hether the plaintiff has established a prima facie
case is a question of law, over which our review is
plenary.'' Cadle Co. v. Errato, 71 Conn. App. 447, 456,
802 A.2d 887, cert. denied, 262 Conn. 918, 812 A.2d 861
(2002). ‘‘[W]here the legal conclusions of the court are
challenged, we must determine whether they are legally
and logically correct and whether they find support in
the facts set out in the memorandum of decision . . . .''
(Internal quotation marks omitted.) Fontaine v. Colt's
Mfg. Co., 74 Conn. App. 730, 732, 814 A.2d 433 (2003).

The defendant claims that at the time of its oral
motion for dismissal, it argued that the plaintiff's action
was untimely under both the three year and six year
statutes of limitation, and that the court replied, ‘‘That's
true.'' According to the defendant, it was, therefore,
improper for the court to proceed any further and the
motion should have been granted.

The defendant's argument fails to account for the
statement that the court made immediately after the
plaintiff requested a judgment of dismissal: ‘‘I'm not
going to grant a directed verdict because I'm going to
require briefs on this issue of the statute of limitations,
and I want the law briefed as to those issues that might
or might not toll the statute . . . .'' The court had heard
evidence, through the testimony of John Kolb, Jr., the
president of the plaintiff, that a balance remained on
the first account and that the parties had agreed, via
the oral contract, that the plaintiff would apply any
overpayments on the second account to the first
account. From the evidence, the court could conclude
that the payments on the account had tolled the six year
statute of limitations, and therefore, the court properly
denied the defendant's motion for dismissal.

Furthermore, the basis of the defendant's motion to
dismiss was its special defense that the plaintiff's action
was barred by the applicable statute of limitations. In
Resnik v. Morganstern, 100 Conn. 38, 122 A. 910 (1923), our Supreme Court held that a plaintiff is not required
to meet a defendant's special defense at the time of a
motion for nonsuit.7 The Resnik court determined that
the trial court improperly had granted a motion for
nonsuiton the basis of rescission, a special defense.
‘‘The nonsuit was wrongly granted. The plaintiff had
proven the essential allegations of his complaint, and
under such circumstances a nonsuit could not be
granted. If it were true that the evidence also established
that the contract sued on had been rescinded,
the court could not grant the nonsuit. Rescission is an
affirmative defense and the plaintiff is not bound to
meet it in establishing his case. If this were not so, a
plaintiff would be compelled to assume the burden of
proving not only his own case but meeting the special
defenses of the defendant.'' (Emphasis added.) Id., 42;
but see Carnese v. Middleton, 27 Conn. App. 530, 537–
38, 608 A.2d 700 (1992) (special defense of collateral
estoppel can be entertained on motion pursuant to predecessor
of Practice Book § 15-8, although a procedural
irregularity). The defendant's argument that the court
improperly denied the motion for dismissal, based on
the special defense of the statute of limitations, is misplaced.
A motion for dismissal is not generally granted
when based on a special defense, such as the statute of limitations, and, in this case, the court properly
denied the defendant's motion for dismissal.

II

The defendant next claims that the court improperly
determined that the six year statute of limitations set
forth in § 52-576 was applicable, rather than the three
year statute of limitations set forth in § 52-581. Specifically,
the defendant argues that the contract between
the parties was oral and, therefore, § 52-581 was the
applicable statute of limitations. Additionally, the defendant
argues that the court improperly ignored a previous
order, issued by a different judge of the Superior
Court, that found that an oral contract existed between
the parties.8 We disagree.

A

The court concluded that the six year statute of limitations
applied in the present case because the contract
contained an open, running account and that the contract
had been executed. Before we address the issue
of the proper statute of limitations, we must first determine
whether the court properly concluded that an
open, running account existed between the parties and
that the contract had been executed. ‘‘When . . . the
trial court draws conclusions of law, our review is plenary
and we must decide whether its conclusions are
legally and logically correct and find support in the
facts that appear in the record.'' (Internal quotation
marks omitted.) Lenares v. Miano, 74 Conn. App. 324,
328, 811 A.2d 738 (2002); see also Novak v. Omega
Plastics Corp., 60 Conn. App. 424, 427, 760 A.2d 137, cert. denied, 255 Conn. 910, 763 A.2d 1035 (2000).

An open account is defined as ‘‘[a]n unpaid or unsettled
account; an account with a balance which has not
been ascertained, which is kept open in anticipation of
future transactions.'' Black's Law Dictionary (6th Ed.
1990). In the present case, the plaintiff charged the
defendant's first account after obtaining insurance. The
defendant made periodic payments to the account, and
that business relationship continued from 1986 until
1991. During that time, the defendant was never
required to pay the total amount of the account. The
court, therefore, correctly concluded that an open, running
account existed between the parties.

The defendant argues that the court failed to apply
the general rule that payments to an open, running
account are applied to the oldest debt first and that
under that rule, no account existed between the parties.
In the present case, the defendant's payments were
applied first to the more recent second account rather
than to the older first account. We disagree with the
defendant's argument.

In American Woolen Co. v. Maaget, 86 Conn. 234, 85
A. 583 (1912), our Supreme Court stated: ‘‘In the
absence of evidence of a contrary intention and of any
other controlling circumstances, the law presumes that
the entry of payments generally as credits upon an open,
running merchant's account, indicates the intention of
the creditor to apply the payments to the earliest items
of the account. The rule, although general, is, by no
means, universal. It is not an artificial or arbitrary
principle, but one founded merely on the presumed
intention of the parties; and is applicable only where
there is no evidence sufficient to show a contrary
intention.'' (Emphasis added; internal quotation marks
omitted.) Id., 247–48.

In the present case, the plaintiff's bookkeeper sent
a letter to the defendant stating that all payments made
after February, 1991, would be applied to the second
account with any excess to be applied to the first
account. Moreover, the overpayments made by the
defendant in September, 1991, and March, 1993, were
credited to the first account without objection by the
defendant. Furthermore, the defendant endorsed the
insurance company dividend check to the plaintiff,
which applied the funds to the first account, an action
that the court found demonstrated the defendant's
intent to acknowledge the debt.We conclude, therefore,
that the court properly determined that an open, running
account existed between the parties.

B

We next consider whether the court applied the
proper statute of limitations. The defendant argues that
the contract between the parties was oral and therefore
that the three year statute of limitations applied. We disagree.

As an initial matter, we set forth the applicable standard
of review. ‘‘The question of whether a party's claim
is barred by the statute of limitations is a question of
law, which this court reviews de novo.'' Giulietti v.
Giulietti, 65 Conn. App. 813, 833, 784 A.2d 905, cert.
denied, 258 Conn. 946, 947, 788 A.2d 95, 96, 97 (2001);
see also Lenares v. Miano, supra, 74 Conn. App. 328.

The Supreme Court has explained the difference
between §§ 52-576 and 52-581. ‘‘If [General Statutes]
§§ 6005 [now § 52-576] and 6010 [now § 52-581] are to
be construed to make a harmonious body of law, it is
necessary to restrict the latter . . . to executory contracts.
Section [52-576] limits to six years actions on
simple, that is parol, contracts; § [52-581] limits to three
years actions on contracts not reduced to or evidenced
by a writing, that is, contracts resting in parol; and
unless the latter is intended to apply only to executory
contracts there would be different limitations established
for actions of the same type, that is, those on
parol contracts, a result which the legislature could
not have intended.'' (Citation omitted; emphasis added;
internal quotation marks omitted.) Tierney v. American
Urban Corp., 170 Conn. 243, 248, 365 A.2d 1153 (1976);
Hitchcock v. Union & New Haven Trust Co., 134 Conn.
246, 259, 56 A.2d 655 (1947); Novak v. Omega Plastics
Corp., supra, 60 Conn. App. 428.

In Cupina v. Bernklau, 17 Conn. App. 159, 551 A.2d
37 (1988), we explained the distinction between §§ 52-
576 and 52-581. ‘‘These two statutes, each establishing
a different period of limitation, can both be interpreted
to apply to actions on oral contracts. Our Supreme
Court has distinguished the statutes, however, by construing
§ 52-581, the three year statute of limitations,
as applying only to executory contracts.'' (Emphasis
added.) Id., 163. A contract is executory when neither
party has fully performed its contractual obligations
and is executed when one party has fully performed its
contractual obligations. Id.; see Tierney v. American
Urban Corp., supra, 170 Conn. 249 (oral contract was
executed when plaintiff had done everything he had
contracted to do); Campbell v. Rockefeller, 134 Conn.
585, 587–88, 59 A.2d 524 (1948); Hitchcock v. Union &
New Haven Trust Co., supra, 134 Conn. 259. It is well
established, therefore, that the issue of whether a contract
is oral is not dispositive of which statute applies.
Thus, the defendant's argument that § 52-581 automatically
applies to the oral contract between the parties
is incorrect. The determinative question is whether the
contract was executed.

In the present case, the plaintiff had performed all
of its contractual obligations fully by obtaining the
insurance on behalf of the defendant. All that remained
was for the defendant to provide payment for the plaintiff's
services. As a result, the contract was not executory in nature, and the six year statute of limitations in
§ 52-576 applied. Accordingly, the trial court properly
determined that issue.

III

The defendant next claims that the court improperly
found that the statute of limitations was tolled. Specifically,
the defendant argues that it was improper for the
court to find that the statute of limitations was tolled
because (1) the parties did not have an agreement as
to how the first account was to be paid, (2) the plaintiff's
unilateral action was insufficient to toll the statute and
(3) the defendant did not make an unequivocal acknowledgment
of the debt. We disagree.

In Cadle Co. v. Errato, supra, 71 Conn. App. 461,
this court stated: ‘‘The Statute of Limitations creates a
defense to an action. It does not erase the debt. Hence,
the defense can be lost by an unequivocal acknowledgment
of the debt, such as a new promise, an unqualified
recognition of the debt, or a payment on account. . . .
Whether partial payment constitutes unequivocal
acknowledgment of the whole debt from which an
unconditional promise to pay can be implied thereby
tolling the statute of limitations is a question for the
trier of fact. . . . As with other questions of fact, unless
the determination by the trial court is clearly erroneous,
it must stand. . . .

‘‘A general acknowledgment of an indebtedness may
be sufficient to remove the bar of the statute. The governing
principle is this: The determination of whether
a sufficient acknowledgment has been made depends
upon proof that the defendant has by an express or
implied recognition of the debt voluntarily renounced
the protection of the statute. . . . But an implication
of a promise to pay cannot arise if it appears that
although the debt was directly acknowledged, this
acknowledgment was accompanied by expressions
which showed that the defendant did not intend to pay
it, and did not intend to deprive himself of the right
to rely on the Statute of Limitations. . . . [A] general
acknowledgment may be inferred from acquiescence
as well as from silence, as where the existence of the
debt has been asserted in the debtor's presence and he
did not contradict the assertion.'' (Citations omitted;
internal quotation marks omitted.) Id., 461–62.

In the present case, the court heard evidence that
the plaintiff had sent the defendant a letter indicating
that any excess payment to the second account would
be applied to the first account. In September, 1991, the
plaintiff applied $8367 to the first account. In March,
1993, the plaintiff applied $825 to the first account's
balance. Finally, in February, 1994, the defendant signed
an insurance check over to the plaintiff. The court found
that all of those transactions indicated the intent of the
defendant to acknowledge and to pay the first account's balance. We cannot say that this finding was clearly
erroneous. We conclude, therefore, that the court properly
found that the defendant had acknowledged the
entire debt and that the statute of limitations was tolled.9

IV

The defendant's final claim is that the court improperly
refused to find that the plaintiff had acted with
an inexcusable delay in filing its action and that the
defendant was prejudiced by that delay.10 Specifically,
the defendant argues that as a result of the plaintiff's
delay, all of the defendant's records regarding the dispute
were lost and that the defendant was unable to
recall the circumstances of the dispute. We are not persuaded.

We first set forth the applicable standard of review.
‘‘The defense of laches, if proven, bars a plaintiff from
seeking equitable relief in a case in which there has been
an inexcusable delay that has prejudiced the defendant.
First, there must have been a delay that was inexcusable,
and, second, that delay must have prejudiced the
defendant. . . . A conclusion that a plaintiff has been
guilty of laches is one of fact for the trier and not one
that can be made by this court, unless the subordinate
facts found make such a conclusion inevitable as a
matter of law. . . . We must defer to the court's findings
of fact unless they are clearly erroneous.'' (Internal
quotation marks omitted.) Tinaco Plaza, LLC v. Freebob's,
Inc., 74 Conn. App. 760, 776, 814 A.2d 403, cert.
granted on other grounds, 263 Conn. 904, A.2d
(2003).

Our Supreme Court has stated that ‘‘[t]he defense of
laches does not apply unless there is an unreasonable,
inexcusable, and prejudicial delay in bringing suit. . . .
Delay alone is not sufficient to bar a right . . . .'' (Citations
omitted; internal quotation marks omitted.) Cummings
v. Tripp, 204 Conn. 67, 88, 527 A.2d 230 (1987).

In Giordano v. Giordano, 39 Conn. App. 183, 664
A.2d 1136 (1995), this court stated: ‘‘The defendant misunderstands
the nature of a laches defense. A laches
defense is not, as he asserts, a substantive right that
can be asserted in both legal and equitable proceedings.
Laches is purely an equitable doctrine, is largely governed
by the circumstances, and is not to be imputed
to one who has brought an action at law within the
statutory period. . . . It is an equitable defense
allowed at the discretion of the trial court in cases
brought in equity.'' (Citation omitted; emphasis in original;
internal quotation marks omitted.) Id., 214.

In the present case, it is clear that the defense of
laches was not available to the defendant. The plaintiff's
action, an action at law, was filed within the applicable
statute of limitations. We conclude, therefore, that the
court properly refused to find that the defense of laches
was applicable.

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