Jackson v. Speer ( 1992 )

United States Court of Appeals,
Fifth Circuit.
No. 92–1419
Summary Calendar.
Richard JACKSON, Plaintiff–Appellant,
v.
David SPEER, Defendant–Appellee.
Oct. 14, 1992.
Appeal from the United States District Court for the Northern District of Texas.
Before HIGGINBOTHAM, SMITH, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
BACKGROUND
Jackson sued Speer on May 1, 1991 alleging, among other things, that Speer fraudulently
induced him into investing in a piece of propert y in Montana. Speer filed a motion for summary
judgment alleging Jackson's actions were barred by the applicable four year statute of limitations. In
response, Jackson asserted that section 16.063 of the Texas Civil Practice and Remedies Code, (the
"Tolling Statute") applies to this case and suspended the running of the statute of limitations while
Speer was absent from Texas. The testimony presented at the hearing on motion for summary
judgment showed the following facts:
1. In the fall of 1982, Speer, who was then a resident of Montana and has remained a resident of
Montana ever since, came to Dallas, Texas, to discuss with Jackson and other individuals the
possible purchase of a tract of land which Speer owned in Montana and/or the investment in
a corporation which Speer proposed to form to purchase such land. During the course of a
single meeting in the fall of 1982, Speer made certain representations which Jackson contends
were false.
2. After the meeting in Dallas, Speer returned to Montana and remained there at all times pertinent
to this law suit.
3. Jackson moved to Montana in the early part of 1983 and lived there for more than two years.
During the time Jackson was in Montana, he and Speer formed "Powderhorn Development
Corporation" ("Powderhorn"), a Montana corporation; and in September 1983, Powderhorn
entered into a contract to purchase from Speer the tract of land in Montana which had been
the subject of the discussions in Dallas in the fall of 1982. At the time of the formation of
Powderhorn, Jackson invested $3,000 in the corporation; at the time of the Contract for
Deed, Jackson invested $39,000 in the corporation; and in early April, 1984, Jackson
invested another $7,000 in the corporation.
4. In August, 1985, Jackson, who was then living in Montana, sent a letter to Speer which included
the following paragraph referring to the Powderhorn property:
"David, as you know, you told us a number of things about this property before we
bought it that simply were not true. As a result we have had trouble generating any
revenue from it, and thus the default. I have said nothing until now, but if you follow
through with this default, we are going to court to rescind the sale and to sue for
damages."
5. In May, 1986, Jackson, who was then living back in Dallas, Texas, wrote a letter to Speer which
included the following paragraph referring to the Powderhorn property:
"If I don't receive a satisfactory response within the time stated, I will file a suit to
have all of the questions and problems between us resolved by the court, along with
the questions of the initial statements made by you to all shareholders to induce us to
buy this stock, as we have discussed before."
The District Court declined to apply the Tolling Statute and granted Speer's motion for summary
judgment. Jackson filed a motion for new trial which the District Court overruled. Jackson appealed
the District Court's granting of summary judgment and denial of new trial solely on the ground of
error in refusing to apply the Tolling Statute.
OPINION
The Tolling Statute reads as follows:
"The absence from this state of a person against whom a cause of action may be maintained
suspends the running of the applicable statute of limitations for the period of the person's
absence."
Tex.Civ.Prac. & Rem.Code Ann. § 16.063 (Vernon 1986)1. The general rule regarding the
1
Formerly Texas Revised Civil Statutes Annotated article 5537 (Vernon 1986), which read as
follows:
Art. 5537. Temporary absence
If any person against whom there shall be cause of action shall be without the
limits of this State at the time of the accruing of such action, or at any time during
which the same might have been maintained, the person entitled to such action
shall be at liberty to bring the same against such person after his return to the State
applicability of the Tolling Statute is that it does not apply to nonresident defendants. Wise v.
Anderson, 163 Tex. 608, 359 S.W.2d 876, 879 (1962); Snoddy v. Cage, 5 Tex. 106 (1849). This
rule is subject to two exceptions. First, the tolling provision applies to nonresident defendants who
were present in the state when they executed a promissory note or otherwise contracted a debt.
Ayres v. Henderson, 9 Tex. 539 (1853). The court in Ayres announced this exception based on the
legislative purpose behind the provision of protecting domestic creditors from individuals who entered
Texas, contracted a debt, and departed the state only to subsequently default on the debt. Ayres, 9
Tex. at 541–2. Courts have continued to recognize the existence of this exception throughout the
life of the Tolling Statute. Wilson & Co. v. Daggett, 88 Tex. 375, 31 S.W. 618 (1895) (exception
expressed in terms of a nonresident's presence when the debt was created, citing Ayres ); Stone v.
Phillips, 142 Tex. 216, 176 S.W.2d 932, 933 (1944) (exception expressed in terms of a nonresident's
presence when the debt was incurred, citing Wilson ); Gibson v. Nadel, 164 F.2d 970, 971 (5th
Cir.1947) (exception expressed in terms of a nonresident's presence when the obligation forming the
basis of the suit was incurred, citing Stone ); Wise v. Anderson, 163 Tex. 608, 359 S.W.2d 876, 879
(1962) (exception expressed in terms of a nonresident's presence when the cause of action had its
inception, citing Nadel ).
Secondly, the tolling provision applies to nonresident defendants who were present in the
state when the cause of action accrued. Huff v. Crawford, 88 Tex. 368, 31 S.W. 614 (1895). As in
the case of the first exception, courts have continued to recognize the existence of the second
exception. Wilson, 31 S.W. 618; Alley v. Bessemer Gas Co., 262 F. 94 (5th Cir.1919); Stone, 176
S.W.2d at 933; Wise, 359 S.W.2d at 879. It is this second exception which could be applicable to
and the time of such person's absence shall not be accounted or taken as a part of
the time limit by any provision of this title.
Act Feb. 5, 1841; G.L. vol. 2, p. 627.
The adoption of the Texas Civil Practice and Remedies Code in 1985, which uses the
current language, was expressly not intended to effect any substantive change in the
interpretation of the Tolling Statute.
the facts of this case.
Generally a cause of action accrues when facts come into existence which authorize a
claimant to seek a judicial remedy. Linkenhoger v. American Fidelity & Casualty Co. Inc., 152 Tex.
534, 260 S.W.2d 884, 886 (1953); Rose v. Baker & Botts, 816 S.W.2d 805, 810
(Tex.App.—Houston [1st Dist.] 1991, writ denied). " "It involves both the existence of the right and
facts sufficient to constitute a cause of action.' " Linkenhoger, 260 S.W.2d at 886. The elements of
a fraud cause of action are: 1) a material misrepresentation was made; 2) it was false; 3) the speaker
knew it was false when made; 4) the representation was made that it should be acted upon by the
other party; 5) the other party acted in reliance on it; and 6) the other party suffered injury.
Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex.1983). No fraud has been perpetrated until the
claimant has acted in reliance upon false representations. Linkenhoger, 260 S.W.2d at 886.
Actions for fraud must be commenced within four years after the fraud is perpetrated.
Williams v. Khalaf, 802 S.W.2d 651, 658 (Tex.1990). If, however, the injured party is not aware
of the fraud or the fraud is concealed, the statute of limitations begins to run from the time the fraud
is discovered or could have been discovered by the defrauded party's exercise of reasonable diligence.
Quinn v. Press, 135 Tex. 60, 140 S.W.2d 438, 440 (1940). Knowledge of facts that would lead a
reasonably prudent person to make inquiry which would lead to a discovery of the fraud is knowledge
of the fraud itself. Wise, 359 S.W.2d at 879.
Assuming Jackson's allegations of misrepresentations in 1982 are true, Jackson's cause of
action for fraud accrued in 1983 or 1984 when he relied upon Speer's misrepresentations and became
an investor in the corporation which purchased the Montana property . In either event, Jackson's
reliance took place well in excess of four years before Jackson filed suit.
Furthermore, the summary judgment evidence clearly shows that Jackson knew or had
knowledge of facts that would lead a reasonably prudent person to make inquiry which would have
lead to his discovery of the fraud more than four years before Jackson filed suit. Indeed, Jackson's
correspondence to Speer shows that Jackson was aware of Speer's alleged misrepresentations as early
as August 23, 1985.
Finally, the tolling provision of section 16.063 does not apply in this instance because Speer
is not a resident of Texas and was not present within Texas when Jackson's alleged fraud cause of
action accrued. Jackson's cause of action accrued when Jackson relied on Speer's alleged
misrepresentations and invested in the Montana property. When this reliance occurred, Speer was
not present in Texas; and it is his whereabouts at the time Jackson relied on the alleged
misrepresentation that is material. Since Speer had already returned to Montana and was no longer
present in Texas at this time, the Tolling Statute is inapplicable.
We affirm the judgment of the District Court.