Brueck v. Krings

• Decision Date: 15 January 1982
• Docket Number: No. 51945,51945
• Citation: 638 P.2d 904,230 Kan. 466
• Parties: Bernard J. BRUECK, et al., Plaintiffs-Appellants, and Kansas Savings and Loan Association, Plaintiff-Appellant, and James and Margaret Currens, et al., Intervening Plaintiffs, v. T. R. KRINGS, et al., Defendants, and Peat, Marwick, Mitchell & Co., Defendant-Appellee.
• Court: Kansas Supreme Court

Page 904

638 P.2d 904

230 Kan. 466

Bernard J. BRUECK, et al., Plaintiffs-Appellants and Kansas Savings and Loan Association, Plaintiff-Appellant and James and Margaret Currens, et al., Intervening Plaintiffs, v. T. R. KRINGS, et al., Defendants and Peat, Marwick, Mitchell & Co., Defendant-Appellee.

No. 51945.

Supreme Court of Kansas.

Jan. 15, 1982.

Syllabus by the Court

1. In an appeal from a decision on the merits in a class action, without a prior class determination, the reviewing court will treat the appeal as one by the named plaintiffs only.

2. In an action by depositors and a savings and loan association against a firm previously employed to audit the association's books and records, the pleadings are examined and it is held : That all of the claims sound in tort and are therefore barred by the applicable statute of limitations, K.S.A. 60-513.

Thomas E. Ruzicka and Randolph G. Willis of Gardner, Davis, Kreamer, Norton, Hubbard & Ruzicka, Olathe, argued the cause and were on the brief for plaintiffs-appellants.

George E. Feldmiller of Stinson, Mag & Fizzell, of Kansas City, Mo., argued the cause and Charles W. German, Kansas City, Mo. of the same firm, and Edward M. Boddington, Jr., and Kenneth Holm of Boddington & Brown, Kansas City, were with him on the brief for defendant-appellee.

MILLER, Justice:

This appeal was taken from an order of the Johnson district court sustaining a motion of defendant Peat, Marwick, Mitchell & Co. to dismiss, and directing the entry of a final judgment in its favor. In the Court of Appeals, Peat, Marwick moved to dismiss the appeal; the Court of Appeals granted the motion; and we granted a timely petition for review. Many of the background facts are set forth in the opinion of the Court of Appeals, Brueck v. Krings, 6 Kan.App.2d 622, 631 P.2d 1233 (1981), and need not be fully repeated here.

We turn first to Peat, Marwick's motion to dismiss the appeal. While the Court of Appeals' determination of that matter is backed by substantial authority, we disagree with the court's conclusion. The caption of the notice of appeal designates certain individuals-and others not named-as plaintiffs. The first amended unified petition, filed many months before appeal was taken, names and designates some twenty-four individuals and Century Savings Association-formerly Kansas Savings and Loan Association-as plaintiffs. The body of the notice of appeal states that "the plaintiff class" and plaintiff Kansas Savings and Loan Association appeal. It is undisputed that no class had been certified as to the claims against Peat, Marwick. A class, however, consisting of certain depositors in Kansas Savings and Loan Association, had previously been certified for other purposes, and the named individual plaintiffs are all members of that class.

Notice of appeal is governed by K.S.A. 60-2103, which section provides in part:

"(b ) The notice of appeal shall specify the parties taking the appeal...."

That section must be read in the light of K.S.A. 60-102, which provides:

"The provisions of this act shall be liberally construed to secure the just, speedy and inexpensive determination of every action or proceeding."

The latter section was intended to be applied to the entire code of civil procedure, including K.S.A. 60-2103. Alliance Mutual Casualty Co. v. Boston Insurance Co., 196 Kan. 323, 327, 411 P.2d 616 (1966); Benson v. City of De Soto, 212 Kan. 415, 422, 510 P.2d 1281 (1973). It has been held in many cases, including three cited in the Court of Appeals' opinion, Pharo v. Smith, 621 F.2d 656 (5th Cir. 1980); Shirley v. Chestnut, 603 F.2d 805 (10th Cir. 1979); and Roberts v. American Airlines, Inc., 526 F.2d 757, 762 (7th Cir. 1975), cert. denied 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976), that in an appeal from a decision on the merits in a class action, without a prior class determination, the reviewing court will treat the appeal as one by the named plaintiffs only. Viewing the notice of appeal in this light, and under the peculiar circumstances of this case, we think the notice of appeal must be read and considered as an appeal by the named plaintiffs. This construction comports with the obvious intention of the named plaintiffs to appeal the district court's judgment. Further, defendant Peat, Marwick is not prejudiced by this construction which limits the number of appellants to those plaintiffs whose names are known to the parties, and eliminates as appellants the hundreds of other possible members of the proposed plaintiff class. We hold that the notice was sufficient to confer jurisdiction upon the appellate courts, and we conclude that the appeal should not be dismissed. This determination makes academic the question of whether one plaintiff, Century Savings (Kansas Savings and Loan) authorized the taking of appeal on its behalf.

We look next to the merits of the appeal. Many separate issues have been raised and amply briefed by industrious counsel, but as we view the case the determinative issue is whether all claims against Peat, Marwick are barred by the applicable statute of limitations, as the trial court concluded. Consideration of this issue necessitates a further statement of the facts.

Kansas Savings first engaged Peat, Marwick to perform an audit of Kansas Savings' books for the fiscal year ending June 30, 1971. That engagement was the result of a letter dated May 11, 1971, written by one of the Peat, Marwick partners to Kansas Savings, spelling out the details of the proposed audit; the proposal was accepted in writing by Kansas Savings. The 1971 audit, therefore, was based upon written contract. Two subsequent audits were performed under oral agreements for the fiscal years 1972 and 1973; the last of these was completed and the final audit report was delivered on March 1, 1974. Peat, Marwick commenced work on an audit for the year 1974, but encountered various problems. Peat, Marwick wrote to the State Savings and Loan Commissioner on May 5, 1975, advising him that in the process of conducting the present audit, it found that the delinquency status of Kansas Savings' loan portfolio had deteriorated and that the "magnitude of the ... loan delinquencies indicates that the operations and financial condition of the Association could be seriously impaired." By letter of September 4, 1975, Peat, Marwick advised the Commissioner that it had been terminated on August 14, 1975 as the auditor for Kansas Savings, and that the Commissioner would not receive an audit report from Peat, Marwick.

This action was commenced by the filing of a petition by Bernard J. Brueck, and others, on August 2, 1977; Peat, Marwick, however, was not designated as a defendant at that time. It was not made a defendant herein until the filing of plaintiffs' first amended unified petition on February 16, 1979. It was served with summons seven days later. Therefore, insofar as Peat, Marwick is concerned, this action was commenced on February 16, 1979. See K.S.A. 60-203. Counts 5 through 9 of the first amended unified petition state the...