Brown Shoe Co. v. Unter

• Decision Date: 01 April 1937
• Docket Number: 5428
• Citation: 173 So. 579
• Court: Court of Appeal of Louisiana — District of US
• Parties: BROWN SHOE CO. v. UNTER et al

173 So. 579

BROWN SHOE CO. v. UNTER et al

No. 5428

Court of Appeal of Louisiana, Second Circuit.

April 1, 1937

Arthur C. Watson, of Natchitoches, for appellant.

Rusca &amp Cunningham and W. Peyton Cunningham, all of Natchitoches, for appellees.

OPINION

TALIAFERRO Judge.

Plaintiff seeks to hold responsible, and to procure judgment against defendants, the officers and directors of Chas. Unter & Son, Inc., for the price of merchandise sold and delivered to the corporation upon the faith of allegedly false written statements, knowingly made by said officers and directors to plaintiff, of the financial condition of said company. A plea of prescription of one year was sustained, and this appeal presents the issue tendered by that plea. The original and amended petitions, with attached exhibits, disclose this state of facts:

That in the autumn of 1934 Chas. Unter & Son, Inc., enjoyed credit rating with plaintiff, and was due it in December of that year a balance on account; that on or about December 31st, plaintiff sent to that company a form used by its credit department to secure from its customers, present and prospective, data and information which would reflect their true financial condition, and which form, when truthfully filled out in detail, would enable plaintiff to determine whether or not credit, original or continued, should be extended; that this form, at plaintiff's request, was filled out fully by Joseph L. Unter, in the capacity of president of his company, on January 15, 1935, and mailed to plaintiff, and on the faith of the financial statement therein contained, and relying upon the truthfulness of the statement, plaintiff thereafter extended credit to said company and sold and delivered to it goods and merchandise for several hundred dollars; that said amount was due and owing on or about April 10, 1935, when the debtor company was forced into involuntary bankruptcy; that said financial statement disclosed the value of the debtor company's assets to be $ 25,441.41 with liabilities of only $ 7,772.46; that on May 14, 1935, a meeting of the debtor's creditors was held by the referee in bankruptcy, whereat defendants herein appeared and, together with books and records of their company, were duly examined, and from said examinations it was definitely disclosed that said financial statement was grossly incorrect and untrue; that it was clearly disclosed from said examinations that on the date of said financial statement and thereafter, Chas. Unter & Son, Inc., was insolvent, the value of its assets being very much less than the total of its liabilities. Details of fact touching said assets and liabilities are set out. It is further alleged that after the meeting of creditors, the bankrupt, in composition of its liabilities, offered to creditors 20 per cent. of their claims against it, which offer was finally accepted by vote of a majority of said creditors, and the bankrupt discharged; that plaintiff did not vote to accept said offer, and did not voluntarily accept twenty per cent. of its account, but was forced to do so by action of the majority of creditors.

Plaintiff affirmatively alleges that if said statement had disclosed the true financial condition of Chas. Unter & Son, Inc., as of its date, no credit thereafter would have been extended to it; that the ultimate result of extending credit on the faith of said incorrect and fraudulent statement and the discharge of that company from its liabilities, is that 80 per cent. of plaintiff's account remains unpaid and will be a total loss unless defendants are forced to pay it. This suit, for said balance, was filed March 21, 1936.

There is an admission in the record that the first knowledge plaintiff had that the financial statement of date January 15, 1935, was not true, was derived from the contents of a letter written by the counsel of Chas. Unter & Son, Inc., to plaintiff, of date March 23, 1935. As plaintiff is domiciled in New York City, this letter reached it a few days thereafter.

Defendants contend that the current of prescription began when plaintiff delivered goods on the faith of the financial statement furnished it by defendants, while it is plaintiff's position that the genesis of the prescriptive period was not earlier than the receipt of the above-mentioned letter. In other words, that the current of prescription was suspended so long as plaintiff was without knowledge of the falsity and fraudulent character of the financial statement and the deceit of which it was the victim. If this contention is correct, the action is not barred, since suit was filed a few days before expiration of the year following receipt of the counsel's letter to plaintiff.

An exception of no cause and no right of action was filed by defendant, A. J. Courreges. It was overruled below and is not urged here. Presumably, it has been abandoned. We think it without merit.

There is no dispute about this action being one in tort or ex delicto. Many decisions could be cited that sustain this fact. Actions to recover damages resulting from torts are, as a rule, barred by the prescription of one year. Civil Code, arts. 2315, 3536. The latter article declares that

"The following actions are also prescribed by one year:

"That for injurious words, whether verbal or written, and that for damages caused by animals, or resulting from offenses or quasi offenses."

And article 3537 of the Civil Code reads:

"The prescription mentioned in the preceding article runs:

"With respect to the merchandise injured or not delivered, from the day of the arrival of the vessel, or that on which she ought to have arrived.

"And in the other cases from that on which the injurious words, disturbance or damage were sustained.

"And where land, timber or property has been injured, cut, damaged or destroyed from the date knowledge of such damage is received by the owner thereof. (As amended, Acts 1902, No. 33.)"

It is also the general rule that prescription runs against all persons and against all causes of action, save those specifically excepted or excluded by law; and it is urged by defendants that since the damage, if any was sustained by plaintiff, arose when it shipped goods on the faith of the financial statement, that article 3537 is fittingly applicable. While it is true that this article says that prescription thereunder, in all cases excepting those specifically excluded, shall begin to run when the "damage is sustained," yet, we think, under the most recent and best-considered decisions of the Supreme Court, where a cause of action, sounding in damages, is based upon fraud and deception practiced by the defendant, that the current of prescription is suspended until the injured person is impressed with knowledge of such fraud and deception. Fraud should never be allowed to triumph if such result may be reasonably and equitably avoided. The case of Reardon v. Dickinson et al., 156 La. 556, 100 So. 715, 717 reviews some of the jurisprudence anent this question. The opinion in that case discloses that plaintiffs, by fraudulent misrepresentations on part of defendants' agent, were induced to subscribe and pay for capital stock in the North Louisiana Drilling Company, which was represented to be worth its par value, but which, in fact, at the time of issuance, was worthless. Defendants were the promoters and organizers of the corporation. The date the stock was paid for does not appear from the opinion. Its worthless character and the...