United Counties Trust Co. v. Lawler

A-626-97T5 (N.J. Super. App. Div. 1998) (Unpublished)
  • Opinion Date: September 3, 1998

LOANS; STATUTE OF LIMITATIONS—If any co-borrower makes overdue payments on a note, the statute of limitations runs from the last payment as to all co-borrowers.

On January 25, 1985, a co-signer signed a promissory note. The note went into default one month later. The borrower, however, made eight sporadic payments on the note between 1985 and 1992. The lender commenced its collection on September 1, 1992, more than seven years after the initial default, but only months after the most recent payment. Because of the difficulty of locating the co-signer, the summons and complaint was not served on him until March 1994. The issue was whether the statute of limitations barred recovery against the co-signer. Neither the lower court nor the Appellate Division thought that it did.

Case law holds “[a] payment made by any co-debtor on account of a claim before the statute of limitations has run, tolls the statute as to all co-debtors.” The Court found that the borrower had made a number of payments after the loan came due in 1985 as a result of the failure to make payments in accordance with its terms. Those payments were made before the statute of limitations had run and tolled the statute until a time well after the filing of the complaint.