Atkins v. Crosland, A--11733
| Citation | 417 S.W.2d 150,26 A.L.R.3d 1431 |
| Decision Date | 05 July 1967 |
| Docket Number | No. A--11733,A--11733 |
| Parties | Roy D. ATKINS, Petitioner, v. Robert E. CROSLAND, Respondent. |
| Court | Supreme Court of Texas |
Rawlings, Sayers, Scurlock & Eidson, Lloyd Scurlock, Fort Worth, for petitioner.
Cantey, Hanger, Gooch, Cravens & Scarborough, Robert A. Watson, Fort Worth, for respondent.
On September 30, 1963, Petitioner, Roy D. Atkins, brought this suit against Respondent, Robert E. Crosland, to recover damages in the sum of $12,297.32. The parties will be designated as in the trial court. The question for decision is: Did the trial court err in granting defendant's motion for summary judgment based on the ground that plaintiff's cause of action was filed more than two years after December 31, 1960? The Court of Civil Appeals has affirmed the judgment of the trial court so holding. 406 S.W.2d 263. We reverse the judgments of the trial court and the Court of Civil Appeals and remand the cause for a trial on its merits.
In 1958 plaintiff was engaged in the business of owning and operating service stations as a sole proprietor. Near the end of 1958 the defendant, an independant accountant, was employed by the plaintiff for the primary purpose of preparing plaintiff's income tax returns. The defendant relied upon the cash receipts and disbursements method of accounting rather than an accrual method. The method relied upon failed to show plaintiff's inventories. Plaintiff takes the position that this method was improper.
It is undisputed that by the use of the cash method of accounting, the plaintiff's income tax liability for 1960 would have been $20,627.69. Had the accrual method been successfully employed, on the other hand, the tax liability for that same year would have been only $8,340.37. In 1960 the defendant did in fact utilize the accrual method but failed to secure the consent of the Commissioner of Internal Revenue as required by Internal Revenue Code, 1954, § 446(e). The result of the failure to obtain the required consent was that the Commissioner required the plaintiff to retain the cash method for the year of 1960 thereby depriving him of a tax savings of $12,297.32. On October 20, 1961, less than two years from the institution of this suit, the Commissioner assessed the plaintiff with the tax deficiency of $12,297.32.
The plaintiff alleged that the defendant's choice of accounting methods increased plaintiff's liability in the amount sued for; that the defendant in relying upon the cash receipts and disbursements method of accounting rather than the accrual method was negligent in three particulars and that such negligence was a proximate cause of plaintiff's tax loss. The specific allegations of acts of negligence and proximate cause follow:
'In the course of his employment as plaintiff's independent accountant, defendant was guilty of the following acts of negligence which proximately caused plaintiff's tax loss mentioned above:
(a) In originally adopting the cash receipts and disbursements methods of tax accounting for plaintiff's business;
(b) In failing to obtain the Commissioner of Internal Revenue's permission to change from the cash method to an accrual method of accounting for the 1960 tax year; and
(c) In failing to warn plaintiff of his tax problem in time for plaintiff to pay off his accounts payable prior to the end of the 1960 tax year.'
It is undisputed that the acts of the defendant alleged under subparagraphs (a), (b) and (c), supra, occurred prior to and by December 31, 1960. Defendant's motion for summary judgment is supported by an affidavit that all alleged acts of negligence occurred more than two years prior to the commencement of the suit.
Plaintiff's unsworn answer to defendant's motion for summary judgment prays that the motion be overruled for the following reasons:
We must first determine when the plaintiff's cause of action accrued, for it is at that time that the two year statute of limitations began to run. Article 5526, Vernon's Annotated Civil Statutes. The plaintiff argues that the statute did not begin to run until the tax deficiency was assessed by the Internal Revenue Service, i.e., only at that time was the tort complained of completed. We agree with this contention.
The general rule is that a cause of action sounding in tort accrues, in the absence of a statute to the contrary or fraudulent concealment, when the tort is committed. This rule obtains notwithstanding the fact that the damages, or their extent, are not ascertainable until a later date. Quinn v. Press, 135 Tex. 60, 140 S.W.2d 438, 128 A.L.R. 757 (1940); Blondeau v. Sommer, 139 S.W.2d 223 (Tex.Civ.App. 1940, writ ref'd); 54 C.J.S. Limitations of Actions § 168, p. 123; 34 Am.Jur. Limitations of Actions, § 160, pp. 126--127; 37 Limitations of Actions § 62, pp. 184--185. A legal injury must be sustained, of course, before a cause of action arises. It is said in 34 Am.Jur. Limitations of Actions § 160, p. 126:
'As regards the running of the statute of limitations applicable to torts, a cause of action accrues only when the force wrongfully put in motion produces the injury, the invasion of personal or property rights accruing at that time.' (citing the Quinn Case, supra.)
And see Houston-American Finance Corp. v. Travis, 343 S.W.2d 323 (Tex.Civ.App. 1960, writ ref'd n.r.e.). A helpful and often quoted test for determining when the cause of action accrues is found in 54 C.J.S. Limitations of Actions § 168, pp. 122--123:
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