An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA04-1427


Filed: 6 September 2005



wife, DIANNE R. STURDIVANT,                Durham County
    Defendants and Third-                No. 03-CVS-00402
    Party Plaintiffs


    Third-Party Defendant

    Appeal by defendants/third-party plaintiffs from orders entered 23 July 2004 by Judge Orlando F. Hudson, Jr. in Durham County Superior Court. Heard in the Court of Appeals 11 May 2005.

    Pendergrass Law Firm, PLLC, by James K. Pendergrass, Jr. and Bernard Richards, Jr., for plaintiff-appellee.

    Roberti, Wittenberg, Lauffer & Wicker, P.A., by Samuel Roberti, for defendants/third-party plaintiff-appellants.

    Gary K. Berman, third-party defendant-appellee, pro se.

    HUNTER, Judge.

    Ronnie L. Sturdivant and Dianne R. Sturdivant (“defendants”) appeal from a grant of summary judgment entered on 23 July 2004 in favor of Investors Title Insurance Company (“plaintiff”) and Gary K. Berman (“third-party defendant”). The issues before the Court are whether the trial court's entry of summary judgment was proper on the issues of: (I) Whether the statute of limitations on thecause had run, (II) whether the debt on the promissory note had been forgiven and an accord and satisfaction made, and (III) whether the promissory note was a purchase money note secured by a purchase money deed of trust. We find the trial court properly granted summary judgment on all issues.
    On 31 December 1986, defendants purchased a parcel of property located on High Meadow Road in Durham from third-party defendant. As part of the transaction, defendants signed a promissory note (“Note 1”) in the amount of $27,607.77 payable to third-party defendant in monthly installments, with a final balloon payment on 31 December 1996. The deed of trust securing Note 1 was cancelled on 13 October 1988. Subsequently, another promissory note (“Note 2”) was signed which included the identical terms, conditions, and payment schedule as Note 1. Note 2 bore the same date as Note 1, but was secured by a deed of trust for property located on Holloway Street in Durham. Third-party defendant had never owned the property which secured Note 2.
    In March 1991, defendants accused third-party defendant of legal malpractice regarding third-party defendant's representation of defendants in an unrelated matter. In a supporting affidavit, defendant Ronnie Sturdivant alleged he told third-party defendant he would no longer pay on the note at issue in this action, in exchange for not pursuing a legal malpractice claim against third- party defendant. Defendants believed third-party defendant accepted this resolution and ceased making payments on the note. Third-party defendant made no efforts to collect delinquentpayments and had no further communications with defendants about the note.
    In January 2001, third-party defendant negotiated a sale of the note to plaintiff. Plaintiff purchased the note and attempted to collect from defendants, who contended the debt had been cancelled. Plaintiff filed suit against defendants to collect on the note on 24 January 2003. Defendants moved to add third-party defendant to the action on 10 February 2004. Plaintiff and third- party defendant moved for summary judgment at the close of discovery, and the trial court granted the motions on 23 July 2004. Defendants appeal.


    In their first and second related assignments of error, defendants contend the trial court erred in granting summary judgment for plaintiff and denying summary judgment to defendants, when the evidence showed the statute of limitations on the cause of action had run. We disagree.
    The standard of review on appeal from summary judgment is “whether there is any genuine issue of material fact and whether the moving party is entitled to a judgment as a matter of law. Further, the evidence presented by the parties must be viewed in the light most favorable to the non-movant.” Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998) (citations omitted). Summary judgment is properly granted when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show thatthere is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c) (2003).
    The statute of frauds for sealed instruments is ten years. N.C. Gen. Stat. § 1-47(2) (2003). Defendants do not challenge that the document was under seal. Rather, they contend that the cause of action accrued in March 1991, when they ceased making payments to third-party defendant, and not on 31 December 1996, when the final payment on the installment note was due.
    In Vreede v. Koch, 94 N.C. App. 524, 380 S.E.2d 615 (1989), this Court noted that the “general rule regarding the running of the statute of limitations for installment contracts is that the limitations period begins running from the time each individual installment becomes due.” Id. at 527, 380 S.E.2d at 617. However, an exception has been recognized to this general rule. Vreede held when an installment contract provided that “'any unpaid balance, including any unpaid interest, shall be due and payable on the [final date of the installment contract,]'” the “limitations period should not begin to run until the time that final performance was due[.]” Id. at 529, 380 S.E.2d at 618. Vreede specifically distinguished the case of U.S. Leasing Corp. v. Everett, Creech, Hancock and Herzig, 88 N.C. App. 418, 363 S.E.2d 665 (1988), which held “the statute of limitations runs against each installment individually from the time it becomes due, unless the creditor exercises a contractual option to accelerate the debt, in which case the statute begins to run from the date the accelerationclause is invoked.” Id. at 426, 363 S.E.2d at 669. “'The exercise of the option to accelerate maturity of a note should be in a manner so clear and unequivocal as to leave no doubt as to the holder's intention.'” Vreede, 94 N.C. App. at 527, 380 S.E.2d at 617 (citation omitted). Vreede noted that in Everett, the injured party had signaled his intention to treat the contract as repudiated and had made future performance impossible. Id. at 528- 29, 380 S.E.2d at 617-18.
    Here, similar to Vreede, the installment note provided:
        Beginning January 31, 1988, consecutive monthly payments shall be due on the final day of each month; each such payment shall be in the amount of $244.77. A balloon payment of all remaining principal and interest shall be due on December 31, 1996, and shall be payable on that date. . . .
            In the event of default in payment of any installment of principal or interest hereof or default under the terms of any instrument securing this note, and if the default is not made good within fifteen (15) days, the holder may, without notice, declare the remainder of the debt at once due and payable. Failure to exercise this option shall not constitute a waiver of the right to exercise the same at any other time. The principal of this note and any part thereof, and accrued interest, if any, shall bear interest at the rate of twelve per cent per annum after default until paid.

    Aside from the contractually required increase in interest upon default, defendants presented no evidence as to an issue of material fact regarding third-party defendant's election to accelerate the debt, or of efforts by the third-party defendant to treat the contract as repudiated. Therefore, as a matter of law, the statute of limitations on the installment note did not begin torun until the date of the final installment, 31 December 1996. Plaintiff filed its action for recovery on 20 January 2003, within the required statutory period of ten years. As no material issues of fact exist with regards to the statutory period, the trial court properly decided as a matter of law that plaintiff had brought its action in a timely manner.

    Defendants next contend the trial court erred in granting summary judgment for plaintiff, as there were material issues of fact as to whether the debt had been forgiven, an accord and satisfaction made, or payment made. We disagree.
    The installment note that is the subject of this litigation is a negotiable instrument governed by N.C. Gen. Stat. Ch. 25, Art. 3 (2003), the Uniform Commercial Code (“U.C.C.”). “The Uniform Commercial Code does not provide for oral cancellation of negotiable instruments.” Wolfe v. Eaker, 50 N.C. App. 144, 149, 272 S.E.2d 781, 784 (1980), disc. review denied, 302 N.C. 222, 277 S.E.2d 69 (1981); see also N.C. Gen. Stat. § 25-3-604 (2003) (setting forth requirements for discharge by cancellation or renunciation). Under the provisions of Article 3 of the U.C.C., in order to show that an accord and satisfaction for a negotiable instrument has been made, defendants must show “that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.” N.C. Gen. Stat. § 25-3-311(b) (2003).    Here, defendants argue that an accord and satisfaction cancelling the note was made between the parties in March 1991, in consideration for defendants' agreement to not pursue a legal malpractice claim in an unrelated matter against third-party defendant. Defendants assert only that an oral agreement was made to cancel the note, and that the parties' subsequent course of conduct demonstrates that such an accord and satisfaction occurred. However, defendants do not assert that a writing showing that full satisfaction was made exists, as required by N.C. Gen. Stat. § 25-3-311(b). As defendants do not assert a material issue of fact exists regarding a writing, they may not, as a matter of law, show the defense of accord and satisfaction. See N.C. Gen. Stat. . 25- 3-311(b). Therefore, the trial court properly granted summary judgment as to this issue.

    Defendants finally contend the trial court erred in granting summary judgment for third-party defendant against defendants/third-party plaintiffs when there were genuine issues of material fact as to whether the subject matter was a purchase money note. We disagree.
    A deed of trust qualifies as a purchase money deed of trust which receives the protections of our anti-deficiency statute, N.C. Gen. Stat. § 45-21.38 (2003), “only if it is made as a part of the same transaction in which the debtor purchases land, embraces the land so purchased, and secures all or part of its purchase price.” Dobias v. White, 239 N.C. 409, 412, 80 S.E.2d 23, 26 (1954). OurSupreme Court has held that when “the record affirmatively discloses that the property embraced in the deed of trust was not the same property purchased by the defendant from plaintiff . . . the transaction between plaintiff and defendant with respect to the promissory note was not a purchase money transaction within the meaning of the statute[.]” Management Corp. v. Stanhagen, 35 N.C. App. 571, 573, 241 S.E.2d 713, 715 (1978).
    Here, defendants contend that a material issue of fact exists as to whether a new promissory note was signed when the deed of trust for the High Meadow Road property was cancelled and a new deed of trust for the property on Holloway Street was executed. Defendants do not contest that the deed of trust securing the note that is the subject of this action is for the Holloway Street property. Further, defendants do not contest that third-party defendant has never owned the Holloway Street property, or that this was not the property that was the subject of the original transaction. See Management Corp., 35 N.C. App. at 573, 241 S.E.2d at 714-15. Therefore, as there is no issue of material fact, the trial court properly granted summary judgment.
    As no issues of material fact exist, the trial court's entry of summary judgment was proper as a matter of law on the issues of: (I) Whether the statute of limitations on the cause had run, (II) whether the debt on the promissory note had been forgiven and an accord and satisfaction made, and (III) whether the promissory note was a purchase money note. Therefore, we affirm the trial court's grant of summary judgment.    Affirmed.
    Judges HUDSON and GEER concur.
    Report per Rule 30(e).

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