On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. MRS-L-2405-97.
Before Judges Stern, A. A. Rodr¡guez and Fall.
The opinion of the court was delivered by: Stern, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Plaintiff appeals from an order entered on August 20, 1999, granting summary judgment in favor of defendant S. Rotondi and Sons, Inc. (defendant) and dismissing the complaint.
The issues on this appeal relate to the applicable statute of limitations with respect to the timeliness of plaintiff's complaint seeking judgment on defendant's $140,000 demand note executed in favor of Suburban National Bank on March 11, 1991, and whether the assignor Federal Deposit Insurance Corporation's letter of July 28, 1991 to defendant (and deceased co-defendant guarantor Angelo Rotondi (Rotondi)) constituted a "demand" for payment.
Defendant claims that the suit was barred by the applicable six-year statute of limitations under N.J.S.A. 2A:14-1 and 12 U.S.C. § 1821. Plaintiff asserts that it is a holder in due course and that the 1995 amendment to the Uniform Commercial Code (UCC), N.J.S.A. 12A:3-118(b), governs the timeliness of its action. Defendant contends that since N.J.S.A. 12A:3-118(b) was not enacted until 1995 it should not be given retroactive effect.
The motion judge held that the six-year statute of limitations embodied in N.J.S.A. 2A:14-1 "applie[d]" and ran from the date the note was executed; that 12 U.S.C. § 1821 (which incorporated that New Jersey statute of limitations) applied "because the FDIC took over the bank's assets [on July 26, 1991,] subsequent to the making of the note"; and that the action was time barred. The judge further concluded that the 1995 revision to N.J.S.A. 12A:3-118(b) was not to be given "retroactive" effect, but that even if it were, a July 28, 1991 letter from the FDIC to defendant "constituted a demand" for payment and, therefore, the six-year bar of N.J.S.A. 12A:3-118(b) had run.
Before us, plaintiff argues that the Legislature had the authority "to extend the statute of limitations on a demand promissory note"; that N.J.S.A. 12A:3-118 "was part of a curative revision" of the UCC and that the Legislature intended to give it "retroactive effect"; that the July 28, 1991 letter "was not a demand for payment"; and that as a "holder in due course," it is "entitled to payment from defendant corporation as a matter of law."*fn1
We conclude that the 1995 revision of the UCC and the provisions of N.J.S.A. 12A:3-118 do not apply in this case. As that amendment does not apply to demand promissory notes already in existence on its effective date, we affirm the judgment.
On March 11, 1991, Rotondi executed and delivered on defendant's behalf a "PROMISSORY NOTE (Demand)," payable to Suburban National Bank ("Suburban") in the principal sum of $140,000. While the note provided for monthly payments of interest only, beginning on April 11, 1991, it specifically stated "[t]his [o]bligation . . . is payable on demand." The parties agree that this constituted a "demand note."*fn2
On July 26, 1991, Suburban was declared insolvent. The FDIC was appointed its receiver and, as a result, holder of defendant's note and Rotondi's guaranty. On July 28, 1991, FDIC sent a letter to defendant and Rotondi so advising them. The letter stated:
On July 26, 1991, Suburban National Bank, Somerville, New Jersey, was declared insolvent and was closed by the Office of the Comptroller of the Currency. The Federal Deposit Insurance Corporation (FDIC) was appointed Receiver and is now the holder of your obligation(s) owed to the failed bank.
If your payments are current, adhere to the original contractual terms of your indebtedness by making payments as described below:
Pay to: FDIC as Receiver of Suburban National Bank
Care of: Provident Savings Bank 32 New Amwell Road Somerville, New Jersey 08876
If your payments are past due, you should contact this office immediately to arrange for prompt ...