Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

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Gowin v. Granite Depot, LLC a
a. An LLC is a limited liability company, which is a form of business organization discussed in detail in Chapter 37.
Supreme Court of Virginia, 2006. 272 Va. 246, 634 S.E.2d 714.
Opinion by Justice ELIZABETH B. LACY.
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FACTS
In November 1998, John Stathis began operating a granite countertop business. He filed Articles of Organization (Articles) in 1999 and was issued a certificate of organization for Granite Depot, LLC. * * * Stathis acted as the manager. Shortly thereafter, Stathis offered [Patrick] Gowin employment and promised that after two years, Gowin would receive either 20% of the company or $250,000. Gowin accepted the employment offer and began working at Granite Depot in June 1999.
On November 9, 2000, Gowin became a member of Granite Depot * * *. b Stathis' percentage of membership interest in the LLC [was] 80% and his capital contribution [was] $50,000, while Gowin's percentage of membership interest was 20% and his capital contribution was $12,500. In conjunction with * * * [Granite Depot's Operating Agreement, which allowed Gowin to satisfy the capital contribution requirement with a promissory note], Gowin signed a promissory note (the Note) payable to Granite Depot, LLC, in the amount of $12,500. However, at the time Gowin executed the Note, Stathis told him that the Note was "something the company's lawyer said had to be done" and that he was "not to worry about it, the company would take care of it." Gowin made no payments on the Note, and Granite Depot made no demands for payment.
b. A member in an LLC has many of the same rights as a partner in a partnership but is not personally liable for the obligations of the firm. See Chapters 36 and 37.
In 2001, the relationship between Stathis and Gowin began to deteriorate. Gowin left his employment position on May 31, 2002, but he did not resign his membership in the company.
* * * Stathis as the majority member, executed a written consent of members eliminating Gowin as a member of the LLC for failing "to make his required contribution to the Company by defaulting on the promissory note he executed."
After receiving notice that his membership in the LLC had been eliminated, Gowin filed this action [in a Virginia state court against Granite Depot and Stathis] * * *.
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* * * [T]he trial court dismissed Gowin's * * * action. [The Virginia Supreme Court] awarded Gowin an appeal.
DISCUSSION
Gowin * * * [argues in part that] Stathis acted unlawfully in eliminating Gowin's membership interest based on Gowin's failure to pay the Note * * *.
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* * * Gowin asserts that the Note was a demand note and, because no demand for payment had been made, he had not failed to make a contribution he was obligated to make and therefore, under the terms of the termination amendment, his membership could not be terminated.
[Virginia] Code [Section] 8.3A-108(a) [Virginia's version of UCC 3-108(a)] defines a demand note as a note that "(i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or (ii) does not state any time of payment." A note payable at a definite time, in contrast, "is payable on elapse of a definite period of time * * * or at a fixed date or dates"[under Code Section 8.3A-108(b), Virginia's version of UCC 3-108(b)].
The Note in this case is dated January 15, 2000, in the amount of $12,500 at 9% annual interest "payable in twenty-four (24) monthly installments * * * commencing on February 1,2000, with each successive payment due on the first (1st) day of each and every month thereafter until fully paid." It purports to be a note payable at a definite time because it states the first payment is due February 1,2000, while remaining payments are due "on the first (1st) day of each and every month thereafter until fully paid." Nevertheless, the stated execution and initial payment dates precede the actual execution date of the Note, November 9, 2000, making compliance with the stated dates impossible.
The parties in this case agree that the dates appearing on the face of the Note are incorrect, but neither asserts that such mistakes invalidate the Note. Although we have held that a note with no stated time for payment is a demand note, we have not previously considered whether a note with incorrect or impossible dates of issue or payment is a demand or an installment note. Because of the error in the payment dates in this Note, the Note is effectively a note that states no date of payment and is, therefore, a demand note under the provisions of Code [Section] 8.3A-108(a)(ii). [Emphasis added.]
As relevant here, a demand note does not become overdue until the day after demand is made or the instrument has remained outstanding for an "unreasonably long [time] under the circumstances," whichever occurs first [under Code Sections 8.3A-304(a)(1) and (3), Virginia's version of UCC 3-304(1) and (3)]. This demand note never became overdue because neither Stathis nor Granite Depot ever demanded payment, and the record does not contain evidence of an unreasonable delay in nonpayment under the circumstances. Thus, though the Note matured and became payable at once, it never became overdue and Gowin never failed to make a payment he was obligated to make. As a result, Stathis' termination of Gowin's membership based on nonpayment of the Note representing Gowin's capital contribution was improper and Gowin remains a member of Granite Depot, LLC. [Emphasis added.]
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CONCLUSION
In summary,* * * because we conclude that the Note was a demand note and no demand was made for payment, Gowin's membership in Granite Depot could not be terminated based on a failure to make a capital contribution * * * and, therefore, Gowin remains a member of Granite Depot, LLC. Accordingly, we will remand the case for further proceedings consistent with this opinion.
1. Did Gowin's delivery of the note to Granite Depot meet his capital contribution requirement without further payment Why or why not
2. Why is a note with no stated time for payment considered a demand note rather than an unenforceable note