Steele v. Glenn

• Decision Date: 13 January 1933
• Docket Number: No. 1034.,1034.
• Citation: 57 S.W.2d 908
• Parties: STEELE et al. v. GLENN.
• Court: Texas Court of Appeals

57 S.W.2d 908

STEELE et al. v. GLENN.

No. 1034.

Court of Civil Appeals of Texas. Eastland.

January 13, 1933.

Rehearing Denied March 10, 1933.

Error from District Court, Taylor County; M. S. Long, Judge.

Suit by Dr. R. P. Glenn against Wallace Steele and another. Judgment for plaintiff, and defendants bring error.

Reversed and rendered.

J. B. Lewright, of San Antonio, and Cunningham & Oliver, of Abilene, for plaintiffs in error.

Kirby, King & Overshiner and Frank Smith, all of Abilene, for defendant in error.

FUNDERBURK, Justice.

Dr. R. P. Glenn commenced this suit June 23, 1930, against the Delaware Punch Company of America and Wallace Steele as its agent to recover damages for alleged fraudulent representations claimed to have induced the sale to plaintiff of certain stock in said company. The sales involved four separate transactions: The first on June 26, 1926; the second on June 9, 1927; the third on September 8, 1927; and the fourth on November 20, 1927. Each transaction is construed to be a separate cause of action.

With reference to these several transactions, the jury to whom the case was submitted upon special issues made findings as follows:

First. As to the sale of June 26, 1926:

(a) That on June 26, 1926, Glenn bought 10 shares of preferred stock of said company for $1,000, its par value, and that he did so on these representations on that date made to him by Steele as agent of said company, to wit: (1) That said company was going to build bottling works in most every city in Texas, including Dallas and Abilene; (2) that said 10 shares of preferred stock were then worth $100 per share; (3) that said company then had plans of which only the details remained to be worked out, whereby said company would place its stock for sale upon the New York curb market; (4) that said company on that date had as a part of its assets $350,000 cash in bank.

(b) That each of said representations was false, and that each was made as a material inducement to Glenn to buy such stock on June 26, 1926, and that Glenn would not have bought said stock if said representations had not been made to him by Steele at that time.

(c) That said company did not then intend to build bottling works in most every city in Texas, including Dallas and Abilene. That the actual value of said 10 shares of stock on June 26, 1926, was only $45 per share. That said company did not then intend to place its stock for sale upon the New York curb market and did not have $350,000 cash in bank on that date.

Second. As to the sale of June 9, 1927:

(a) That on February 3, 1927, Steele as agent for said company made to Glenn precisely the same four alleged representations that were made June 26, 1926, on the strength of which Glenn bought 45 shares of said preferred stock of said company on June 9, 1927.

(b) That said company did not on February 3, 1927, intend to build bottling works in most every city in Texas, including Dallas and Abilene.

(c) That each of said four representations was made as a material inducement to Glenn to buy said additional 45 shares of stock by him on June 9, 1927.

(d) That Glenn would not have thus bought said 45 shares of stock on June 9, 1927, if each of said representations had not been made to him by Steele on February 3, 1927.

(e) And that said 45 shares of preferred stock were worth only $30 per share when so bought.

Third. As to the sale of September 8, 1927:

(a) That said representations made by Steele to Glenn on February 3, 1927, that said company was going to build bottling works in most every city in Texas, including Dallas and Abilene, were made as a material inducement to Glenn to buy 100 shares of the common stock of said company, which Glenn bought on September 8, 1927.

(b) That Glenn would not have bought said 100 shares of common stock if said representations had not been made to him by Steele on February 3, 1927.

(c) That Steele acted as an agent of said company in the sale of said 100 shares of common stock to Glenn on September 8, 1927.

Fourth. As to the sale of November 20, 1927:

(a) That the representation made by Steele to Glenn on February 3, 1927, that said company was going to build bottling works in most every city in Texas, including Dallas and Abilene, was made by Steele as agent of said company as

(b) A material inducement to Glenn to buy 200 additional shares of the common stock of said company which Glenn bought on November 20, 1927.

(c) That Glenn would not have bought said 200 shares of stock but for said representation of February 3, 1927.

(d) That Steele acted as agent of said company in the sale of said 200 shares of common stock to Glenn on November 20, 1927.

The jury found in favor of Glenn all issues submitted with reference to falsity, materiality, reliance, etc., upon each and all of the representations above mentioned, and as to the promissory representations that same were made without intention of the company to perform.

In answer to other special issues, the jury found that Glenn discovered the falsity of said representations about August 28, 1929, and that he exercised reasonable diligence to discover such falsity. It was also found that in all the transactions Steele was the agent of said company. From the judgment for plaintiff below the defendants have prosecuted writ of error.

The Delaware Punch Company of America, which for convenience will be referred to as "defendant company," duly filed its brief herein. Wallace Steele tendered his briefs for filing on submission day, together with a motion for permission to file same, which, being contested, we overruled. An inspection of the brief tendered shows that for a part of same it adopted the assignments of error, propositions, and arguments of defendant company, and we are now of the opinion that we should have permitted the filing of the brief, but have limited consideration thereof to such of defendant company's brief as was adopted and applicable to defendant Steele. Our former order should be modified to such extent, and it is accordingly so ordered.

The first assignment of error (urged by both of the defendants) presents the question of the right of defendants to an instructed verdict on the ground that, as shown by the undisputed evidence, the plaintiff's causes of action were, at the commencement of the suit, barred by limitation. Revised Statutes, art. 5526, in part reads: "There shall be commenced and prosecuted within two years after the cause of action shall have accrued, and not afterward, all actions or suits in court of the following description: * * * 4. Actions for debt where the indebtedness is not evidenced by a contract in writing." This suit being an action for damages for deceit, the above is the applicable provision of the statutes of limitation. Gordon v. Rhodes & Daniel, 102 Tex. 300, 116 S. W. 40.

In view of the many decisions cited and relied upon by the parties to sustain their several contentions and their wide divergence of views, we deem it necessary to a proper understanding of our conclusions, and as conducive to brevity, to devote some space to a general consideration of the law of limitation as applied to cases involving causes of action based upon fraud. One material inquiry is: When did the several causes of action involved herein "accrue?" It will not be questioned, we take it, that they—four in number—accrued respectively on June 26, 1926, June 9, 1927, September 8, 1927, and November 20, 1927, unless, because of the fact that the causes of action are based upon fraud and plaintiff's ignorance of the fraud, the time of such accrual was thereby postponed. "The general rule is that a right of action accrues whenever facts come into existence which give rise to a cause of action." 1 Tex. Jur. 632; Western Wool Commission Co. v. Hart (Tex. Sup.) 20 S. W. 131. A cause of action based upon a consummated legal wrong accrues immediately, regardless of whether or not the injured party has knowledge of the wrong. Houston Water-Works v. Kennedy, 70 Tex. 233, 8 S. W. 36. Is a cause of action based upon fraud subject to any different rule? More concretely stated, the question is: When a cause of action is based upon fraud, does it accrue when the fraud is committed, or does it accrue when the fraud is discovered or the plaintiff acquires knowledge of such facts, as in the exercise of reasonable diligence would lead to a discovery of the fraud?

Numerous decisions declare, in substance and in effect, that, in cases of fraud, limitation does not begin to run until the fraud is discovered, or, in the exercise of reasonable diligence, would (or could or should) have been discovered. Bass v. James, 83 Tex. 110, 18 S. W. 336; Smith v. Fly, 24 Tex. 345, 76 Am. Dec. 109; Bremond v. McLean, 45 Tex. 10; Hudson v. Wheeler, 34 Tex. 356; Alston v. Richardson, 51 Tex. 1; Chicago, T. & M. C. Ry. Co. v. Titterington, 84 Tex. 218, 19 S. W. 472, 31 Am. St. Rep. 39; Emerson v. Navarro, 31 Tex. 335, 98 Am. Dec. 534; Mason v. Peterson (Tex. Com. App.) 250 S. W. 142; Martinez v. Gutierrez (Tex. Civ. App.) 172 S. W. 766; Sowell v. Huffman (Tex. Civ. App.) 182 S. W. 1152; Gulf Production Co. v. Palmer (Tex. Civ. App.) 230 S. W. 1017; Bain v. Lovejoy (Tex. Civ. App.) 215 S. W. 984; Gillispie v. Gray (Tex. Civ. App.) 214 S. W. 730; Howell v. Bank of Snyder (Tex. Civ. App.) 158 S. W. 574; Coleman v. Ebeling (Tex. Civ. App.) 138 S. W. 199. A few cases refer to the time of discovery as being the time when the cause of action accrued.

Other decisions declare, in effect, that fraud will only prevent the running of limitation until discovery or until, by the exercise of reasonable diligence, same would (or could or should) have been discovered. Port Arthur Rice Milling Co. v. Beaumont Rice Mills, 105 Tex. 514, 143 S. W. 926, 148 S. W. 283, 150 S. W. 884, 152 S. W. 629; Cooper v. Lee, 75 Tex. 114, 12 S. W. 483; Brown v. Brown, 61 Tex. 45; Kennedy v. Baker, 59 Tex. 150; Martinez v. Gutierrez (...