Strassburg v. Citizens State Bank

• Citation: 1998 SD 72,581 N.W.2d 510
• Decision Date: 08 July 1998
• Docket Number: No. 20038,20038
• Parties: Lyle STRASSBURG, Plaintiff and Appellant, v. CITIZENS STATE BANK, Defendant and Appellee.
• Court: Supreme Court of South Dakota

Page 510

581 N.W.2d 510

1998 SD 72

Lyle STRASSBURG, Plaintiff and Appellant, v. CITIZENS STATE BANK, Defendant and Appellee.

No. 20038.

Supreme Court of South Dakota.

Argued Dec. 2, 1997.

Decided July 8, 1998.

Rick Johnson of Johnson, Eklund, Nicholson, Peterson & Fox, Gregory, David R. Gienapp of Arneson, Issenhuth & Gienapp, Madison, for plaintiff and appellant.

Lee Magnuson, William F. Day, Daniel R. Fritz, of Lynn, Jackson, Shultz & Lebrun, Sioux Falls, for defendant and appellee.

KONENKAMP, Justice.

¶1 In this appeal, we examine whether an attorney's purported misrepresentation of fact to an adversary may toll the statute of limitations. When plaintiff accused Citizens State Bank of converting his money, the Bank's attorney admitted it had "setoff" funds, but only a fraction of the amount plaintiff claimed. Relying on this statement, plaintiff brought no action against the Bank for ten years, until after he received word it may have taken considerably more money. The circuit court granted summary judgment for the Bank, concluding plaintiff's claim was barred by the six-year statute of limitations. We reverse because whether plaintiff knew or should have known of his cause of action at the time the Bank's attorney admitted only a fractional setoff is a question of fact.

Facts

¶2 In March 1983, Lyle Strassburg delivered for sale 80,312 bushels of corn to Steffensen Grain Company, Inc. Thereafter, Steffensen owed Strassburg $151,331.80. Steffensen resold the grain to Continental Grain Company and it wired payment directly to Steffensen's account at Citizens State Bank of Arlington. The Bank held a security interest in Steffensen's existing and after-acquired grain inventory. To satisfy unpaid loans, the Bank setoff funds from Steffensen's account, ostensibly by right of its security agreement. Afterwards, Steffensen was unable to pay all its debts; so it chose to satisfy its smaller creditors thus leaving Strassburg wholly unpaid.

¶3 On November 15, 1983, Strassburg's attorney wrote to the Bank:

Your bank set off money that was held by Steffensen Grain in a constructive trust for the benefit of Mr. Strassburg. Your action constituted a conversion of funds due Mr. Strassburg in the amount of $151,331.80. This letter is to make demand on you for the payment to Mr. Strassburg of the amount of $151,331.80 plus interest....

At first, the Bank denied taking any setoff, but in response to another letter from Strassburg's new attorney dated June 11, 1985, again accusing conversion, the Bank's lawyer wrote, "I can certainly assure you, however, that your recitation of the facts is incomplete and inaccurate. The only pertinent setoff made is insignificant in comparison to the amount of your client's claim." ¹ In a follow-up letter dated June 28, 1985, the Bank's attorney again attested to the accuracy of the Bank's information:

I have received some additional information with regard to the claim made on behalf of the Strassburgs against Citizens State Bank of Arlington. I can now confirm for you that there was only one setoff, that being in the amount of $24,898.56. That setoff occurred on March 17, 1983. I have also been informed by the Citizens State Bank of Arlington that no check was ever presented by the Strassburgs. Frankly, based on these two specific pieces of information, I see no basis whatsoever for any claim by the Strassburgs against the Citizens State Bank of Arlington. After you have informed them that Mr. Steffensen apparently misled them when he indicated the bank had setoff his wire-transferred funds, and if they confirm to you that they never even presented a check to the Citizens State Bank of Arlington, you may be in a position to advise them that any claim against the Citizens State Bank of Arlington would be fruitless and improper.

(emphasis added.)

Strassburg testified that he and his attorney relied on these representations. ² Thus, he brought suit only against Steffensen in October 1986, but the company dissolved, and the case was dismissed.

¶4 In September 1992, Strassburg received a letter from the South Dakota Public Utilities Commission suggesting that, although the PUC had no documentation, he may have a cause of action against the Bank because it had "setoff the Steffensen Grain's checking account by approximately $485,000 to reduce the amount of Steffensen Grain's outstanding notes which were held by the bank." Strassburg sued the Bank on February 13, 1995. The circuit court granted the Bank's motion for summary judgment, concluding that under SDCL 15-2-13 the six year statute of limitations began to run from June 1985 when the Bank admitted the setoff. Strassburg appeals contending material issues of fact remain on whether the limitations period was tolled by misrepresentation and fraudulent concealment. ³

Analysis and Decision

¶5 On appeal from summary judgment, "we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law...." Walz v. Fireman's Fund Ins. Co., 1996 SD 135, p 6, 556 N.W.2d 68, 70 (quoting Lamp v. First Nat'l Bank of Garretson, 496 N.W.2d 581, 583 (S.D.1993)). "The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party." Fritz v. Howard Twp., 1997 SD 122, p 8, 570 N.W.2d 240, 241. If any legal reason justifies summary judgment "it must be affirmed" even if the circuit court "relied upon a wrong ground or gave a wrong reason." Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 158, 82 L.Ed. 224(1937) (citations omitted). In response to a summary judgment motion where the defendant asserts the statute of limitations as a bar to the action and presumptively establishes the defense by showing the case was brought beyond the statutory period, the burden then shifts to the plaintiff to establish the existence of material facts in avoidance of the statute of limitations, e.g., fraud or fraudulent concealment. Kurylas, Inc. v. Bradsky, 452 N.W.2d 111, 117 (S.D.1990); Glad v. Gunderson, Farrar, Aldrich & DeMersseman, 378 N.W.2d 680, 682 (S.D.1985).

¶6 As we are bound to review summary judgment in a light most favorable to the nonmoving party, Strassburg, we do not decide whether the Bank had the right to setoff money in the Steffensen account and whether it setoff more than it claimed. We note, however, that Strassburg's allegation of a larger setoff does not rest solely on the PUC letter. The record contains an affidavit from a CPA who after examining the Bank's records, concluded there was evidence to support the claim of additional setoffs. Whether any of this will be borne out are questions to be resolved at trial.

¶7 Because the point at which a period of limitations begins to run must be decided from the facts of each case, statute of limitations questions are normally left for a jury. Greene v. Morgan, Theeler, Cogley & Petersen, 1998 SD 16, p 6, 575 N.W.2d 457, 458 (citations omitted). Deciding what constitutes accrual of a cause of action, however, entailing statutory construction, presents an issue of law. Bosse v. Quam, 537 N.W.2d 8, 10 (S.D.1995)(citing Schoenrock v. Tappe, 419 N.W.2d 197, 201 (S.D.1988)). Questions about when a plaintiff should have discovered fraud are jury issues also, unless a plaintiff actually knew of facts putting a reasonable person on "actual or constructive notice to suspect" fraud. Anderson v. Production Credit Ass'n, 482 N.W.2d 642, 644 (S.D.1992). See also Kelly v. Connecticut Mut. Life Ins. Co., 628 So.2d 454, 455 (Ala.1993)(quoting Hickox v. Stover, 551 So.2d 259, 262 (Ala.1989), overruled on other grounds, Foremost Ins. Co. v. Parham, 693 So.2d 409 (Ala.1997))(fraud discoverable as matter of law for limitations period purposes when one receives documents putting one on notice that fraud reasonably should be discovered). Here, we must ascertain whether there is any genuine issue of material fact concerning the date the cause of action accrued; if not, and if the applicable limitations period has expired as a matter of law, then the Bank was entitled to summary judgment. Keegan v. First Bank of Sioux Falls, 519 N.W.2d 607, 611 (S.D.1994).

¶8 The philosophy subtending civil limitation periods, embraced in "all systems of enlightened jurisprudence," holds it unjust to leave open indefinitely exposure to outdated lawsuits. Wood v. Carpenter, 101 U.S. 135, 139, 25 L.Ed. 807 (1879).

[T]he right to be free of stale claims in time comes to prevail over the right to prosecute them. Order of Railroad Telegraphers v. Railway Express Agency, 321 U.S. 342, 349 [, 64 S.Ct. 582, 586, 88 L.Ed. 788] (1944). These enactments are statutes of repose; and although affording plaintiffs what the legislature deems a reasonable time to present their claims, they protect defendants and the courts from having to deal with cases in which the search for truth may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses, fading memories, disappearance of documents, or otherwise. United States v. Marion, 404 US 307, 322 n 14 [, 92 S.Ct. 455, 464, 30 L.Ed.2d 468] (1971); Burnett v. New York Cent. R. Co., 380 US 424, 428 [, 85 S.Ct. 1050, 1054, 13 L.Ed.2d 941] (1965); Chase Securities Corp. v. Donaldson, 325 US 304, 314 [, 65 S.Ct. 1137, 1142, 89 L.Ed. 1628] (1945); Missouri, K. & T.R. Co. v. Harriman Bros., 227 US 657, 672 [, 33 S.Ct. 397, 401, 57 L.Ed. 690] (1913); Bell v. Morrison, 1 Pet 351, 360 (1828).

United States v. Kubrick, 444 U.S. 111, 117, 100 S.Ct. 352, 357, 62 L.Ed.2d 259 (1979).

¶9 The Bank's setoff of Steffensen's account forms the basis for Strassburg's claim and both parties agree SDCL 15-2-13 provides the applicable statute of limitations:

Except where, in special cases, a different limitation is prescribed by statute, the following civil actions other than for the recovery of real property can be...