Long Island Trust Co. v. Dicker, 80-1711

• Decision Date: 19 October 1981
• Docket Number: No. 80-1711,80-1711
• Citation: 659 F.2d 641
• Parties: LONG ISLAND TRUST COMPANY, Plaintiff-Appellant, v. Edward T. DICKER, (Nanette S. Dicker, as executrix of the estate of Edward T. Dicker, substituted in place and stead of Edward T. Dicker, deceased), Defendant-Appellee. . Unit A *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 641

659 F.2d 641

LONG ISLAND TRUST COMPANY, Plaintiff-Appellant, v. Edward T. DICKER, (Nanette S. Dicker, as executrix of the estate of Edward T. Dicker, substituted in place and stead of Edward T. Dicker deceased), Defendant-Appellee.

No. 80-1711.

United States Court of Appeals, Fifth Circuit.

Unit A ^*

Oct. 19, 1981.

Coke & Coke, Lawrence L. Beason, Werner Powers, Dallas, Tex., for plaintiff-appellant.

Day & Elliott, Richard Elliott, Dallas, Tex., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before CHARLES CLARK and RANDALL, Circuit Judges, and SHARP ^**, District Judge.

RANDALL, Circuit Judge:

Plaintiff-Appellant Long Island Trust Company ("Long Island") brings this appeal from an adverse judgment in the court below in its suit against Defendant-Appellee Edward T. Dicker. ¹ Long Island seeks to enforce Dicker's obligations under the terms of a guaranty agreement (the "Guaranty") dated September 10, 1971, in which Dicker guaranteed all liabilities owed to Long Island by Gemstone Miners, Ltd. ("Gemstone"). Long Island's claim ² is premised in part upon Gemstone's default on one promissory note in the amount of $114,000, due May 14, 1973, and another promissory note in the amount of $10,000, due July 30, 1973. Long Island obtained judgment against Gemstone in the amount of $157,000 in a New York state court on June 29, 1976, but that judgment has never been satisfied; Long Island's claim against Dicker is also predicated in part upon this judgment. Dicker was named as a defendant in the New York litigation, but was dismissed for want of personal jurisdiction.

Dicker defended on grounds that the Guaranty was obtained through fraud, and that the statute of limitations had run. The court below submitted the fraud issue to the jury, but the jury was unable to reach a verdict and was dismissed. The court then denied Long Island's motion for a directed verdict, but granted Long Island's motion for a new trial with respect to Dicker's liability on the $10,000 note. However, the court further held that the four-year statute of limitations contained in Tex.Rev.Civ.Stat.Ann. art. 5527 (Vernon 1958) barred Long Island's claim with respect to the $114,000 note; in so doing, the court specifically refused to apply the Texas saving statute, Tex.Rev.Civ.Stat.Ann. art. 5539a (Vernon 1958). The court entered final judgment pursuant to Fed.R.Civ.P. 54(b) on that portion of Long Island's suit which was premised on the $114,000 note, and Long Island appeals.

Finding that the district court, 480 F.Supp. 656, erred in its interpretation of the Texas saving statute, and that the court erred in denying Long Island's motion for a directed verdict, we reverse and remand with instructions to enter judgment in favor of Long Island.

I. FACTUAL BACKGROUND TO THIS APPEAL

Gemstone, a New York corporation, was in the business of mining for precious gems in Africa. In need of additional capital, Gemstone planned in 1971 to conduct a public offering of its common stock in March 1972. To facilitate interim financing from Long Island, Gemstone sought Dicker as an outside guarantor. Dicker, a Texas investor, was a close friend of Gemstone's president, Aaron Knopf. In return for Dicker's signature on the continuous, unlimited Guaranty, Gemstone permitted Dicker to purchase 30,000 shares of its common stock at one cent per share; the anticipated price of the stock in the planned public offering was $3 per share.

In reliance on the Guaranty, Long Island made substantial loans to Gemstone. But because the Securities and Exchange Commission refused to permit Gemstone's registration statement to become effective, the proposed public offering fell through. By August of 1973, Gemstone had defaulted on its obligations to Long Island under the two notes totalling $124,000.

Long Island sued both Gemstone and Dicker in New York State court, and obtained judgment against Gemstone in the amount of $157,000. Dicker, however, was dismissed from the suit for want of personal jurisdiction. Long Island appealed, but the dismissal of Dicker was affirmed on May 16, 1977. Long Island Trust Co. v. Gemstone Miners, Ltd., 57 A.D.2d 889, 394 N.Y.S.2d 407 (2d Dep't 1977). The judgment against Gemstone was never satisfied.

Accordingly, Long Island filed this suit against Dicker in the court below on June 23, 1977 well within sixty days after the dismissal of Dicker from the New York suit became final. Long Island purported to base its claim against Dicker upon Gemstone's liability under the 1976 New York judgment, rather than upon Gemstone's liability under the underlying notes themselves. ³

Testimony at trial principally concerned Dicker's claim that his signature on the Guaranty was fraudulently induced by representations allegedly made by John Demato, a loan officer for Long Island. According to Dicker's testimony, Demato told him that the Guaranty, which was continuous and unlimited on its face, was in fact limited to $100,000 and for a period of 180 days. Dicker also testified that Demato represented to him that Long Island would fill in certain blanks in the Guaranty limiting it to $100,000 and 180 days, and that he only signed the Guaranty in reliance on these representations. It is undisputed that Dicker was a sophisticated businessman who had had extensive dealings with lending institutions prior to signing the Guaranty, and that he read and understood the Guaranty including the provisions therein making it continuous and unlimited prior to signing it. Demato denied having made any false statements to Dicker.

After several days of deliberation, the jury was unable to reach a verdict. ⁴ The court discharged the jury and requested renewed motions for a directed verdict pursuant to Fed.R.Civ.P. 50(b). ⁵ After both parties had done so, the court entered an interlocutory order on November 9, 1979, in which it concluded that Long Island's claim based on the 1976 New York judgment was, in fact, two claims one for each of the two notes upon which Gemstone had defaulted. The court determined that Dicker's liability under the Guaranty accrued with respect to the $100,000 note on May 14, 1973, when the $100,000 note came due, and that Dicker's claim under that note was barred by the four-year statute of limitations contained in Tex.Rev.Civ.Stat.Ann. art. 5527 (Vernon 1958). ⁶ The court granted a new trial with respect to the $10,000 note, since four years had not passed between the date it came due (July 30, 1973) and the date Long Island filed this action (June 23, 1977). In response to the parties' joint motion, the court entered final judgment on the November 9 order pursuant to Fed.R.Civ.P. 54(b). ⁷

II. THE PROPER OPERATION OF THE TEXAS SAVING STATUTE

In the court below and on appeal, Long Island has advanced a number of alternative arguments as to why its suit is not barred in whole or in part by the four-year statute of limitations contained in article 5527. Its chief argument has been that since Dicker agreed in the Guaranty to pay "all liabilities" of Gemstone, it could properly base its claim on the New York judgment rather than the underlying notes in which case its cause of action would have accrued in 1976 rather than when the notes came due in 1973. Long Island has also argued that the statute of limitations was tolled by the operation of Tex.Rev.Civ.Stat.Ann. art. 5537 (Vernon 1958), which tolls the running of the statute for periods during which Texas residents are absent from the state; Long Island contends that it must be granted a new trial because the court below impermissibly limited its ability to prove that Dicker was indeed absent from the state.

We reach neither of these arguments, however, for we hold that the court below erred in its conclusion that the Texas saving statute, article 5539a, did not toll the operation of article 5527's limitations period. Accordingly, we accept for purposes of this appeal the district court's characterization of Long Island's suit as stating multiple, independent claims.

The Texas saving statute reads in full as follows:

When an action shall be dismissed in any way, or a judgment therein shall be set aside or annulled in a direct proceeding, because of a want of jurisdiction of the Trial Court in which such action shall have been filed, and within sixty (60) days after such dismissal or other disposition becomes final, such action shall be commenced in a Court of Proper Jurisdiction, the period between the date of the first filing and that of commencement in the second Court shall not be counted as part of the period of limitation unless the opposite party shall in abatement show the first filing to have been in intentional disregard of jurisdiction.

Tex.Rev.Civ.Stat.Ann. art. 5539a (Vernon 1958). Dicker contends, in essence, that the proper operation of this statute is limited to cases that have been dismissed from either another Texas state court or a federal district court sitting in Texas. The parties concede that this is a question of first impression, in that it has never been addressed by either the Texas courts or the federal courts interpreting Texas law. ⁸ We believe, however, that the Texas courts would not agree with Dicker's argument.

First, and most important, the statute is not so limited by its terms. The statute does not refer to dismissal from "a Trial Court of this jurisdiction"; it simply says "Trial Court." The term "Trial Court" is nowhere defined by the Texas statutes; ⁹ accordingly, given its ordinary and most natural meaning, it must be taken to refer to any trial court. ¹⁰

Second, we note that while no Texas appellate court has ever been called upon to answer the question of whether article 5539a applies when the court from which the action has been dismissed is one of a sister state, the Texas courts have repeatedly applied article 5539a to toll the statute of limitations in cases that have been...