Schuldes v. National Sur. Corp.

• Court: Arizona Court of Appeals
• Writing for the Court: EUBANK; HAIRE
• Citation: Schuldes v. National Sur. Corp., 557 P.2d 543, 27 Ariz.App. 611 (Ariz. App. 1976)
• Decision Date: 19 October 1976
• Docket Number: CA-CIV,No. 1,1
• Parties: Jack R. SCHULDES and Marilyn Schuldes, his wife and each of them, Appellants and Cross-Appellees, v. NATIONAL SURETY CORPORATION, Appellee, and American Credit Bureau, Inc., Appellee and Cross-Appellant. 2560.

Page 543

557 P.2d 543

27 Ariz.App. 611

Jack R. SCHULDES and Marilyn Schuldes, his wife and each of them, Appellants and Cross-Appellees, v. NATIONAL SURETY CORPORATION, Appellee and American Credit Bureau, Inc., Appellee and Cross-Appellant.

No. 1 CA-CIV 2560.

Court of Appeals of Arizona, Division 1, Department B.

Oct. 19, 1976.

Rawlins, Ellis, Burrus & Kiewit by Chester J. Peterson, Phoenix, for appellants and cross-appellees.

Kunz & Stinson, Ltd. by Donald R. Kunz, Phoenix, for appellee National Surety Corp.

Lewis & Roca by Walter Cheifetz, Paul G. Ulrich, Peter D. Baird, Phoenix, for appellee and cross-appellant.

OPINION

EUBANK, Judge.

In addition to other questions, this appeal presents the question of the particular statute of limitations applicable to an action for wrongful attachment and of the damages recoverable in such an action.

The underlying transaction consisted of the execution in May 1967 of a preliminary sales agreement between the appellants, Schuldeses, and a Mr. and Mrs. Thomason, by which the appellants purchased a restaurant to be known as The Steak House (Red Dog) in Scottsdale, and agreed to assume the payment of a promissory note payable to the Arizona Bank. Appellants defaulted on the note, and the Thomasons were called upon to pay it, which they did. The Thomasons then assigned their claim against the appellants to the appellee American Credit Bureau for collection.

On April 15, 1968, American Credit Bureau filed suit against appellants on the note and attached the Red Dog. Appellants moved for summary judgment, and on October 8, 1971, summary judgment was entered for appellants on their motion. No appeal was taken from this judgment.

On March 1, 1972, American Credit Bureau filed a new complaint against appellants based on the same transaction, but sounding in contract. Appellants answered on June 20, 1972, denying liability and counterclaimed against American Credit Bureau and National Surety Corporation for damages for wrongful attachment--alleged to have arisen out of the April 15, 1968 attachment.

Appellants moved for summary judgment against American Credit Bureau's complaint, claiming the matter was barred by res judicata. This motion was granted by minute entry order on February 9, 1973.

Appellees also moved for summary judgment against the appellants on the counterclaim, on the theories that (a) there were no damages; (b) there was no loss to appellants; (c) the damages sought were too speculative; and (d) statute of limitations. Summary judgment was entered in favor of the appellees on the counterclaim on August 9, 1973. This judgment adjudicated against appellants all damages sought in their counterclaim 'except for those pertaining to attorneys' fees, travel expenses, and costs of this case.'

Appellants filed their notice of appeal and bond on October 1, 1973. Meanwhile, on October 15, 1973, appellees obtained a Rule 54(b), Rules of Civil Procedure, 16 A.R.S., determination, which amended the February 9, 1973, order, and then filed their notice of cross-appeal and bond.

THE STATUTE OF LIMITATIONS

The first questions which we must consider are (a) which statute of limitation applies to an action for wrongful attachment, and (b) when does the cause of action accrue in order to start the statute running?

All parties to this appeal recognize that neither A.R.S. § 12--541 (one-year limitation), A.R.S. § 12--542 (two-year limitation), nor A.R.S. § 12--550 (four-year limitation) specifically refer to a wrongful attachment claim. All parties agree, however, that the longest limitations applicable are four years. We are not directed to any precedent established by our Supreme Court settling the specific question. It is, however, clearly established that we adopted our statutes of limitation from Texas, Western Coal & Mining Co. v. Hilvert, 63 Ariz. 171, 160 P.2d 331 (1945), and that when a statute is adopted from another state, such as Texas, it is presumed that it is taken with the construction placed on it by courts of Texas prior to its adoption. England v. Ally Ong Hing, 105 Ariz. 65, 459 P.2d 498 (1969); State ex rel. Swift v. Tullar, 11 Ariz.App. 112, 462 P.2d 409 (1969).

The Texas statutes of limitation were adopted for the first time in 1887. Prior to 1887, the Texas Supreme Court had construed its statutes of limitation to provide a two-year limitation--that governing actions of trespass for injury done to the estate or the property of another--for actions for wrongful attachment. Bear Bros. & Hirsch v. Marx & Kempner, 63 Tex. 298 (1885); Woods v. Huffman, 64 Tex. 98 (1885). Therefore, applying the principles of statutory construction enunciated above, we hold that actions for wrongful attachment in Arizona are governed by the two-year statute of limitation of A.R.S. § 12--542. ¹

Appellees rely on the decision in Jordan v. Meyer, 90 Tex. 544, 39 S.W. 1081 (1897), to create a four-year limitation for these actions. We are not convinced that this case alters the previously established rule in Texas. The opinion in Jordan was a response to a question certified from the court of civil appeals regarding the time when the cause of action accrued, not the limitation period. It appears to us that the parties and the court mistakenly assumed that a four-year limitation applied, since none of the early cases, formulating the two-year rule, were cited, either as being followed or overruled. The commentary in 6 Tex.Jur.2d 'attachment' § 140 suggests that the Jordan decision creates a four-year limitation for actions against sureties on attachment bonds. However, we do not think this is correct for two reasons. First, the opinion in Jordan differentiates between the principal and the surety only because the two were sued at different times, and the suit against the surety was held to have been barred by the statute of limitations. Second, we can discern no reason why principals and sureties in a wrongful attachment action should receive different limitations treatment on the same bond.

Turning to the accrual question, the appellees argue that the statute of limitations began to run on April 25, 1968, when the writ of attachment was levied. Since appellants' counterclaim was not filed until June 20, 1972, National Surety contends that appellants' action is barred. For this proposition, appellee points to Jordan v. Meyer, supra, which holds that in an action for wrongful attachment, the cause of action arises at the instant of seizure. Appellants naturally argue that the cause of action arose only after the attachment suit was terminated.

There are three types of wrongful attachment actions recognized by our Supreme Court in American Credit Bureau, Inc. v. Bel-Aire Interiors, Inc., 105 Ariz. 590 at 591, 469 P.2d 75 at 76 (1970):

(1) Maliciously swearing out a writ of attachment in a properly instituted action;

(2) Maliciously attaching property which possesses a value greatly in excess of the legitimate claim;

(3) Attaching property in a properly instituted action where no debt in fact exists.

Therefore, the first question which we must consider with regard to the accrual of the cause of action, is whether the cause of action for wrongful attachment accrues at different times for claims brought under these different theories. We hold that the cause of action accrues at the same time for each type of wrongful attachment.

The courts in Texas have held that the cause of action for wrongful attachment against the principal and surety on the bond arises at the very instant the attachment is levied. Torrey, Davison & Grosscup v. Schneider & Davis, 74 Tex. 116, 11 S.W. 1068 (1889); Jordan v. Meyer, supra. Since this construction was placed on the statute after it appeared in our 1887 Code we cannot say that the Territorial Legislature intended this interpretation to be the law in Arizona. Cf. State ex rel. Swift v. Tullar, supra. However, this construction is persuasive in view of the absence of Arizona cases on point, Western Coal & Mining Co. v. Hilvert, supra, and A.R.S. § 12--542, Supra.

Additionally, A.R.S. § 12--542, Supra, footnote 1, specifically states that the period of limitation runs from the time when the cause of action Accrues, and our cases which have construed the meaning of 'accrual' of a cause of action, indicate that a cause of action accrues whenever one person may sue another. Norton v. Steinfeld, 36 Ariz. 536, 288 P. 3 (1930); Rogers v. Smith Cline & French Laboratories, 5 Ariz.App. 553, 429 P.2d 4 (1967). The essence of a wrongful attachment action is the improper levy. As the Texas Supreme Court said in Torrey, Davison & Grosscup v. Schneider & Davis, 74 Tex. at 120--121, 11 S.W. at 1069:

If the attachment sued out and caused to be levied by appellees was wrongfully sued out a cause of action in behalf of appellants arose at the very instant the seizure was made. The wrong was then complete though the measure of damages might be augmented by the lapse of time. (Emphasis added).

Therefore, it is our opinion that the attachment defendant can sue the attachment plaintiff after the levy has been made since the cause of action, if any, accrues at that time. This is exactly what happened in American Credit Bureau v. Bel-Aire Interiors, Inc., supra, where wrongful attachment was successfully raised by counterclaim.

Moreover, the Texas court has characterized the action as in the nature of a trespass to property or an injury done to an estate, which is, of course, the language of our A.R.S. § 12--542. A cause of action for trespass arises at the time the alleged trespass occurs. Cf. Garcia v. Sumrall, 58 Ariz. 526, 121 P.2d 640 (1942).

Finally, we believe that sound policy results from our holding, since we are emphasizing the diligent filing of claims for wrongful attachment. If the original levy is wrongful, the passage of time will not make the attachment any more or any less wrongful; only the amount of damages will be affected, ...