First Timer

Contract Law and Case Law to help defeat Account Stated

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I'm going to court next week and have been very worried about defeating the "Account Stated" portion of the complaint.

I've been researching like a demon and found the following Contract Law that may help you defeat this. Many cases are lost on Account Stated because if not overcome, it allows the Plaintiff the assumption that their claim on the account balance, interest and fees are correct and indisputable, without having to provide proof the debt is valid. By law it creates a "new contract".

First I found these two items of Contract Law. These references are old and settled, so I think you can use them with some degree of confidence.

“The existence of a valid obligation is necessary as the basis of an account stated.” Law of Contracts, Vol. 4, section 2523, William Herbert Page

“In order that an account may be stated, it is necessary in the first instance that there should be a presentation of what the law recognizes as an account.” Law of Contracts, Vol. 4, section 2518, William Herbert Page

Now, the next items are Colorado Case law, but it can be used for persuasion and you may be able to find similar case law in your own state.

To constitute “an account stated," there must have been (a) an accounting between the parties, (B) a balance struck, and © a promise, express or implied, to pay such balance to the plaintiff. Teller v Ferguson , 24 Colo. 432, 437, 51 Pac. 429.

Mace v. Spaulding, 110 Colo. 58, 130 P.2d 89 (1942), defines the elements necessary to establish a claim for account stated, namely: a statement for sums due presented by plaintiff to defendant and an agreement between plaintiff and defendant that the account is correct and that the agreed amount is due from defendant to plaintiff.

The plaintiff has to meet all the elements of Account Stated in order to use it, so let's take the three elements one at a time.

1. An accounting between between the parties. This means that (prior to any suit) the creditor has to present the debtor with a statement of the amount owed. The debtor then has a "reasonable amount of time to object".

2. Balance Struck/Agreement. This means both parties have to agree to the amount owed. Not responding, by law, means you agree.

3. A promise to pay. This would be a repayment plan, settlement, etc.

If a JDB uses Account Stated (They will), then you need to attack each element of Account stated, using the above referenced Contract law and then supported by case law.

If they cannot prove Account Stated, then they are left with generic cardmember agreements and Bills of Sale that do not have detailed account information and copies of statements that are not the final statement of the account.

In my brief I'm preparing for next week, here is how I'm presenting my attack on their Account Stated claim. Bear in mind that my JDB has produced no statements, no credit application, no notice of default - nothing. They need Account stated because they don't have those other documents or they would have filed them with the court.

Plaintiff claims relief under “Account Stated”.

To constitute “an account stated," there must have been (a) an accounting between the parties, (B) a balance struck, and © a promise, express or implied, to pay such balance to the plaintiff. Teller v Ferguson , 24 Colo. 432, 437, 51 Pac. 429.

Mace v. Spaulding, 110 Colo. 58, 130 P.2d 89 (1942), defines the elements necessary to establish a claim for account stated, namely: a statement for sums due presented by plaintiff to defendant and an agreement between plaintiff and defendant that the account is correct and that the agreed amount is due from defendant to plaintiff. The Plaintiff has failed to produce any evidence, whether in the form of a final statement or notice of an accounting between creditor and debtor sent to and received by the debtor. Without evidence or testimony validating (1) the existence an accounting or (2) service of said accounting and (3) that the accounting was held by the debtor for a reasonable period of time without objection, then there is (a) no accounting between the parties, (B) no balance struck, and © no promise to pay such balance as referenced in Teller v. Ferguson and Mace v. Spaulding and does not constitute an “Account Stated.”

According to settled contract law:

“The existence of a valid obligation is necessary as the basis of an account stated.” Law of Contracts, Vol. 4, section 2523, William Herbert Page

“In order that an account may be stated, it is necessary in the first instance that there should be a presentation of what the law recognizes as an account.” Law of Contracts, Vol. 4, section 2518, William Herbert Page

Plaintiff has failed to provide to the Court, or the Defendant any evidence of the existence of a valid account, thus does not constitute an “Account Stated”. Pudas v. Mattola, 173 Mich. 189, 45 L. R. A. (N.S.) 634, 138 N. W. 1052; Johnson v. Stilwell, - Or. - , 176 Pac. 123

I hope this helps!

Edited by First Timer

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Account Stated

An account stated is an agreed balance between the parties.34 It may be “defined,

broadly, as an agreement, express or implied, between the parties to an account based upon prior

transactions between them, with respect to the correctness of the separate items composing the

account, and the balance, if any, in favor of the one or the other.” 53

As a general rule where an account is made up and rendered, he who receives it is

bound to examine the same or to procure someone to examine it for him. If he

admits it to be correct it becomes a stated account and is binding on both parties.

If instead of an express admission of the correctness of the account, the party

receiving it keeps the same by him and makes no objection within a reasonable

time, his silence will be construed into an acquiescence in its justness, and he will

be bound by it as if it were a stated account. An account stated is conclusive upon

the parties unless fraud, mistake, or other equitable considerations are shown

31

Minskoff v. American Express Travel Related Servs. Co., 98 F.3d 703 (2d Cir. 1996); see also Transamerica Ins. Co. v.

Standard Oil Co. (Indiana), 325 N.W.2d 210, 215 (N.D. 1982).

3215 U.S.C. § 1692g.

3315 U.S.C. § 1692g (B). The validation notice will be discussed in detail in another White Paper in the NARCA White Paper

Series on Consumer Debt.

34Holt v. Western Farm Services, Inc., 19 Ariz.App. 355, 507 P.2d 674, 677 (Ariz.App. 1973).

35 nd

R.A. Associates v Lerner, 265 A.D.2d 541, 697 N.Y.S.2d 161

which make it improper to be enforced.36

A mere statement of a balance due including a monthly credit card account statement, if

accepted, is enough to constitute an account stated.37 An account stated arose “between the

issuer of a credit card and cardholders when the issuer sent monthly statements of account

transactions to cardholders and no objections were made.”38 Once accepted, the statement

becomes a new contract.

It is well settled that a claim for an account stated is independent of the original

obligation. By its submission of unrefuted evidence of having mailed statements

of account to defendant, which statements were retained without objection for a

reasonable period of time, plaintiff established its entitlement to summary

judgment on its claim for an account stated.

Causes of action based upon accounts stated may be entered as default judgments in the

Civil Court of the City of New York so long as they satisfy the following:40

A summons and complaint which qualifies for entry following CPLR § 3215,

where the cause of action is for an account stated, may be entered by the clerk

under the following conditions:

1. The affidavit of facts or verified complaint includes a statement indicating

that an accounting was delivered or mailed to the creditor and the date of

the delivery or mailing.

2. The affidavit of facts or verified complaint also includes a statement that

the accounting has been retained and that no objection to it has been made.

In cases in which the defendant opposed a motion for summary judgment by alleging in a

conclusory fashion that payments were not properly credited or that he questioned certain

36Rodkinson v. Haecker, 248 N.Y. 480, 485 (1928). See also, Philips v. Belden, 2 Edw.Ch.Rep. 1, 13-14 (1833).

37Citibank (South Dakota), N.A. v. Runfola, 283 A.D.2d 1016, 725 N.Y.S.2d 246 (4 Dep’t, 2001), See also Citibank (South

Dakota), N.A. v, Currea, 2006 WL 1229919 (Conn. Super 2006).

38Citibank (South Dakota) N.A. v. Poynton, 187 Misc. 2d 397, 723 N.Y.S.2d 327 (App. Term 2000).

39

Discover Bank v. Anderson, No. 2007-178 QC (NY App. Term 2008). [internal citations omitted]

40See Directive and Procedures 158, Entry of Judgment - Account Stated, Hon. Fern Fisher-Brandveen, Administrative Judge of

the Civil Court of the City of New York, July 27, 2001.

charges, plaintiffs’ applications were granted.

The evidence, fairly interpreted, supports plaintiff's recovery of the credit card

debt under the theory of account stated, since defendant did not object within a

reasonable time to the itemized credit card statements. (internal citations

omitted) Defendant's argument that plaintiff was required to submit a signed

credit card application in order to establish its claim based on an account stated is

without merit. 41

"Defendant's opposition merely asserts he questioned several charges without giving

details. His silence is an admission."42 If the consumer fails to object within a reasonable time

do so, an account stated may be found.43

7. Real Party in Interest

A creditor which sues a consumer to collect a debt must be the real party in interest. This

means that the creditor is the party to whom the consumer owes the debt. The proof of the real

party in interest is straightforward if that party is the original creditor. It is sometimes disputed

in cases in which a third party purchased the consumer’s account and then seeks to collect it.

The Federal Rules of Civil Procedure (“Fed.R.Evid.”) Rule 17(a) states that “every action

shall be prosecuted in the name of the real party in interest.” The effect of this passage is that

the action must be brought by the person who, according to the governing substantive law, is

entitled to enforce the right.44 One for whose benefit a contract between other parties has been made is a real party in interest and may sue the obligated contracting party.

41 st Citibank (S.D.), N.A. v Leon , 2009 NY Slip Op 52642(U) (App.Term. 1 Dept. December 29, 2009).

42National Westminster Bank USA v. Seidler, 1984-6547 (Dist. Ct. Nassau Cnty. 1984).

43

Interman Indus. Products, Ltd. v. R.S.M. Electron Power, Inc., 371 N.Y.S.2d 675, 332 N.E.2d 859 (1975).

44See Richards v. Reed, 611 F.2d 545 (5th Cir. 1980); Simpson v. Providence Washington Ins. Group, 608 F.2d 1171, 1173 n.2

(9th Cir. 1979).

45State Secs. Co. v. Federated Mut. Implement & Hardware Ins. Co., 204 F.Supp. 207 (D.C.Neb.1960), affirmed per curiam, 308

F.2d 452 (8th Cir. 1962).

This post is for my information

Edited by racecar

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who is going to authenticate the billing statements? Is the plaintiff an OC?

Have they submitted a declaration or affidavit and what does it say?

The weak points are billing statements foundation and admissibility, the affiants personal knowledge, the other causes of action, and how the court has ruled in similar cases.

focus on evidentiary codes and business records exception to the hearsay rule.

with a short time span you also have to worry about the other causes of action.

so reviewing

get the affidavit struck or excluded you kick the legs out of the whole case.

failing that you attack the assumsit, they will try the old bill was sent he didnot object therefore implied assumsit. Counter with I did not recieve any billing statements for the alleged account.

It may be too late to subpoena the witness but make one up anyway and send it.

the other legs of account stated is prior course of dealings, meeting of the minds, acknowlegment of the bill. kick those out also.

In my case the court ruled that no account stated existed.

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