Weidner disbursed two lump sums of money through his company, Weidner Holdings, LLC, to his daughter and her husband (the Gundersons) for a real estate purchase. The Gundersons executed two promissory notes for these sums: a $739,000 note, secured by a deed of trust, and an unsecured $150,000 note. The notes were explicitly payable on demand and bore a nominal annual interest rate of 0.75%, but they did not require periodic payments of interest or principal. The Gundersons made no payments on the notes.

            Thereafter, the Gundersons asked Weidner to forgive the notes so they could sell the property encumbered by the larger note and purchase property in Montana. Weidner declined but agreed to release the deed of trust and take a subordinated security interest in the Montana property. The Gundersons moved to Montana and soon began dissolution of marriage proceedings.

            After the Gundersons filed for divorce in Montana, Weidner and his company (collectively, defendants) called the two notes due against Mr. Gunderson only. Defendants’ demand was made almost eight years after the notes were executed. In response, Mr. Gunderson filed suit in Colorado district court, seeking a declaratory judgment that the money was a gift. He also argued that the statute of limitations barred enforcement of the notes. Defendants asserted counterclaims, and Mr. Gunderson moved for summary judgment. The district court granted the motion, concluding that defendants’ claims were time barred.

            On appeal, defendants argued that CRS § 4-3-118(b), the Uniform Commercial Code’s (UCC) statute of limitations for payable-on-demand negotiable instruments, applied rather than CRS § 13-80-103.5, the general statute of limitations applicable to liquidated debts. Where there is a conflict over the applicable statute of limitations, courts should apply the specific rather than a general statute of limitations. Here, both promissory notes met the definition of a negotiable instrument under the UCC, and the fact that one was secured by a deed of trust does not defeat its negotiability. Thus, the Court of Appeals concluded that CRS § 4-3-118(b) applies. And because it is undisputed that the promissory notes are demand notes on which no principal or interest has been paid, and suit was filed within 10 years of the notes’ execution and within six years of the demand, the action is not time barred.   

The summary judgment was reversed and the case was remanded for further proceedings.