F. Bernard HELMS
v.
Barbara A. PRIKOPA.
No. 8026SC501.
Court of Appeals of North Carolina.
March 3, 1981.*517 William H. Helms, Perry & Helms, Monroe, for plaintiff-appellee.
James L. Roberts, Charlotte, for defendant-appellant.
VAUGHN, Judge.
Defendant admitted that she owed plaintiff a balance of $12,000.00 on a loan he had advanced to her. Although the parties disputed the terms of the verbal loan agreement, the existence of the debt itself and plaintiff's right to repayment were never in issue, and the court, through summary judgment, simply ordered defendant to pay the sum due. Significantly, the court did not require defendant to pay the loan back with interest, a matter of much disagreement between the parties. Viewed in this *518 light, the question raised by defendant's assignment of error to the entry of summary judgment is whether the court erred, as a matter of law, in its order requiring her to make full payment presently to plaintiff. Our inquiry must necessarily focus on the crucial disclosure in plaintiff's affidavit that the loan was made before the parties reached "a firm agreement as to the time and manner in which [it] should be repaid."
For the sake of clarity, however, we shall first distinguish three other types of cases that arise in the context of money lending. This is not a situation where a contract to lend money is too indefinite to be enforced because it does not specify the time for repayment or the security to be given. See Elks v. Insurance Co., 159 N.C. 619, 75 S.E. 808 (1912). Obviously, since the loan has already been made, the lender cannot be left without a remedy. This is also not a case where money is payable on demand or request, with no particular time stated for payment. In that circumstance, the sum would be due immediately. See Caldwell v. Rodman, 50 N.C. 139 (1857). The rule is inapposite here because plaintiff did not allege that he lent the money to defendant upon the condition that she repay it on request. The third, and most common, situation involves a negotiable instrument in which no time is given for its payment. The law is well established that such an instrument would be payable on demand. G.S. 25-3-108. See Little v. Dunlap, 44 N.C. 40 (1852) and Shields v. Prendergast, 36 N.C.App. 633, 244 S.E.2d 475 (1978) (promissory notes); Ervin v. Brooks, 111 N.C. 358, 16 S.E. 240 (1892), and Freeland v. Edwards, 3 N.C. 49 (1798) (bonds). This principle is also inapplicable for the simple reason that defendant did not execute a note for this loan, even though plaintiff said defendant had agreed to do so.
In the instant case, the substantive issue to be resolved is whether a loan made on oral terms, before the parties agree as to its time and manner of repayment, is payable on demand or within a reasonable time. Plaintiff contends that the judge correctly concluded that the balance of the loan was due on demand. He relies on the general rule that when the contract fixes no time for payment, it is due on demand. 60 Am. Jur.2d Payment § 6, at 615 (1972). His position is also supported by other authority which provides that a loan or a contract for the payment of money, which is silent concerning the time of payment, is payable immediately. See generally 54 C.J.S. Loans, at 658; 58 C.J.S. Money Lent § 3, at 878. We, however, are not persuaded by plaintiff's arguments and believe that the better view, and one which appears to be more consistent with the tenor of our own law, is that money lent pursuant to a verbal agreement, which fails to specify a time for repayment, is payable within a reasonable time. See 1 Williston, Contracts § 38, at 115 (3d ed. 1957) ("Money loaned under a contract must be repaid in a reasonable time if no time is fixed."). Accord, First Nat. Bank v. Eichmeier, 153 Iowa 154, 133 N.W. 454 (1911); C.J. Hogan, Inc. v. Atlantic Corp., 332 Mass. 322, 124 N.E.2d 905 (1955) and McDonald v. Hanahan, 328 Mass. 539, 105 N.E.2d 240 (1952) [citing Page v. Cook, 164 Mass. 116, 41 N.E. 115 (1895)]; Hook v. Crary, 142 N.W.2d 140 (N.D.1966); Foelkner v. Perkins, 197 Wash. 462, 85 P.2d 1095 (1938); Miller v. Nudd, 149 Wash. 419, 271 P. 80 (1928) and Merchants Bank of Canada v. Sims, 122 Wash. 106, 209 P. 1113 (1922).
One case in our jurisdiction which raised, although peripherally, a comparable issue is Wade v. Lutterloh, 196 N.C. 116, 121, 144 S.E. 694, 696 (1928). In Wade, the Court apparently assumed that a $27,500.00 note, to be executed pursuant to a contract (for the purchase of capital stock) which failed to specify a time for payment of the note, would be payable within a reasonable time. The Court cited the case of Colt v. Kimball, 190 N.C. 169, 129 S.E. 406 (1925), which held that a reasonable time for the delivery of goods would be implied as a matter of law since the contract did not provide a definite time for it.
In this regard, the analogous case of Commercial Security Bank v. Hodson, 15 Utah 2d 388, 393 P.2d 482 (1964), is also *519 instructive. In Hodson, the bank sued the borrowers to collect $32,000.00 on a promissory note, and the borrowers brought a counterclaim against the bank for breach of a contract to lend $300,000.00. To prevail on their claim for damages, the borrowers had to show the existence of a binding enforceable contract, i. e., one which was complete in its essential terms. Their evidence tended to show that the bank had informed them their loan had been approved and that they then signed a blank note and were permitted to draw amounts up to $32,000.00 against the loan before the bank later cancelled. The lower court entered a directed verdict in the bank's favor since there was no dispute as to the amount of money the borrowers owed. The Utah Supreme Court, however, reversed and held that the evidence was sufficient to go to the jury on the breach of a contract to lend because "[t]he fact that no exact time was fixed for the termination of this loan ... does not render the contract void for uncertainty, but under such conditions reasonable provisions are inferable." 15 Utah 2d at 391-92, 393 P.2d at 485 [citing Merchants Bank of Canada v. Sims, 122 Wash. 106, 209 P. 1113 (1922)].
We note that the inference of reasonable provisions to supply a missing term in the parties' agreement is endorsed by the Restatement (Second) of Contracts which provides:
§ 230. Supplying an Omitted Essential Term
When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court.
It would hardly seem reasonable, in the context of a verbal loan, where the parties have not reached an agreement as to the length of the credit period, to infer a term whereby large sums of cash are repayable upon demand as a matter of law.
We believe that Wade v. Lutterloh and Colt v. Kimball, supra, reflect a general tendency to infer the standard of a reasonable time for the evaluation of contractual compliance whenever the parties leave the time of payment or performance in doubt. See also 1 Corbin, Contracts § 96 (1963).[1] It is manifest that this standard should also apply to the loan in question when the case is analyzed according to its bare essentials.
Plaintiff performed his promise to lend money to defendant by giving her the agreed sum. Defendant accepted the money which imposed upon her a duty to repay it. The parties, however, failed to designate a time frame for defendant's performance of her obligation to pay the money back. In such circumstances, the principle has long been established in North Carolina that "when no time is specified in a contract for the performance of an act or the doing of a thing, the law implies that it may be done or performed within a reasonable time." Winders v. Hill, 141 N.C. 694, 704, 54 S.E. 440, 444 (1906). See Metals Corp. v. Weinstein, 236 N.C. 558, 561, 73 S.E.2d 472, 474 (1952); Graves v. O'Connor, 199 N.C. 231, 235, 154 S.E. 37, 39 (1930); Michael v. Foil, 100 N.C. 178, 191, 6 S.E. 264, 270 (1888). Accord, 17 Am.Jur.2d Contracts § 329 (1964).
Our Court recently affirmed the rule, that contractual performance must be within a reasonable time when none is stated, in Rodin v. Merritt, 48 N.C.App. 64, 268 S.E.2d 539 (1980). In Rodin, the Court further held that the determination of what constitutes a reasonable time for performance required "taking into account the purposes the parties intended to accomplish." Id. at 72, 268 S.E.2d at 544. Such a determination involves a mixed question of law and fact, "[a]nd, in this State, authority is to the effect that, where this question of reasonable time is a debatable one, it must be *520 referred to the jury for decision." Holden v. Royall, 169 N.C. 676, 678, 86 S.E. 583, 584 (1915); Claus v. Lee, 140 N.C. 552, 53 S.E. 433 (1906); Blalock v. Clark, 137 N.C. 140, 49 S.E. 88 (1904).
Here, plaintiff made a loan to defendant to enable her to purchase a home. Real estate loans often involve substantial sums of money which are normally paid off in monthly installments over a period of years. Plaintiff accepted two "installments" of $500.00 each from defendant. This at least suggests that repayment of the loan was being rendered in a manner consistent with the parties' contractual intent. Thirteen months after the advancement, however, plaintiff formally demanded full payment at once. We hold that, at this point in the proceedings, the question of what was a reasonable time and manner for repayment was sufficiently "debatable" to survive plaintiff's motion for summary judgment. See Holden v. Royall, supra.
In conclusion, we summarize our reasons for reversing the entry of summary judgment: (1) a loan is repayable within a reasonable time if no time is fixed by the parties; (2) plaintiff had the burden of showing the maturity of the loan (58 C.J.S. Money Lent § 7, at 881), i. e., that a reasonable time for repayment had expired; and (3) what constitutes a "reasonable time" is a material issue of fact to be answered by the jury after due consideration of all the attendant facts and circumstances of the transaction. The judge's order entering summary judgment in plaintiff's favor is, therefore, reversed.
Reversed and Remanded.
MORRIS, C. J., and BECTON, J., concur.
NOTES
[1] The case of Biddle v. Girard, 11 Ariz.App. 143, 462 P.2d 836 (1969), includes a citation to Corbin, supra, for the proposition that in straight loan situations, where no time is given, the money should be repaid within a reasonable time. We would comment that the noted author seems to favor the implication of the reasonable time standard in most situations.