Case Title: Scollard v. Scollard

Citation: 

Docket Number: 

State: arkansas

Court: Arkansas Supreme Court

Date: 1997-06-16T00:00:00Z

Document:
Stephen G. SCOLLARD v. Garrett S. SCOLLARD

96-953                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered June 16, 1997


1.   Limitation of actions -- limitation for constructive fraud --
     statute of limitations began to run when appellee discovered
     or should have discovered that appellant had no intention of
     recognizing appellee's claim to property. -- Assuming
     constructive fraud occurred, it happened on August 31, 1991,
     when appellant allegedly agreed to accept the property on
     condition that it be returned to appellee but intended all the
     while not to return it; while the action accrued on that date,
     the running of the statute of limitations was suspended until
     the fraud was discovered or should have been discovered
     through the exercise of reasonable diligence; appellant's
     November 1991 refusal to dispose of the property as instructed
     provided notice of his claim to appellee; it was at that time
     that appellee discovered, or certainly should have discovered,
     that appellant had no intention of recognizing appellant's
     claim to the property; the statute of limitations began to run
     no later than November 30, 1991; the action was barred after
     November 30, 1994, unless the running of the statute was
     tolled.

2.   Limitation of actions -- tolling of statute will avoid
     dismissal -- party resisting limitations defense has burden of
     showing statute tolled. -- Once it has been shown that the
     statute-of-limitations period has expired, to avoid dismissal
     the party resisting the limitations defense has the burden of
     showing that some of the period is tolled. 

3.   Fraud -- elements of -- even constructive fraud requires
     material misrepresentation of fact. -- To establish fraud, a
     plaintiff must show:  (1) a false representation of material
     fact; (2) knowledge that the representation is false or that
     there is insufficient evidence upon which to make the
     representation; (3) intent to induce action or inaction in
     reliance upon the representation; (4) justifiable reliance on
     the representation; and (5) damage suffered as a result of the
     reliance; constructive fraud can exist in cases of rescission
     of contracts or deeds and breaches of fiduciary duties, but a
     plaintiff must show a material misrepresentation of fact. 

4.   Trusts -- constructive trust -- when imposed. -- A
     constructive trust is imposed where a person holding title to
     property is subject to an equitable duty to convey it to
     another on the ground that he would be unjustly enriched if he
     were permitted to retain it; the duty to convey the property
     may arise because it was acquired through fraud, duress, undue
     influence or mistake, breach of a fiduciary duty, or wrongful
     disposition of another's property; ordinarily a constructive
     trust arises without regard to the intention of the person who
     transferred the property. 

5.   Limitation of actions -- appellant's argument that previous
     chancery action tolled limitations period for filing circuit
     court action without merit -- two actions were not identical -
     - tolling of statute did not occur. -- Where the chancery
     court action alleged the occurrence of fraudulent conduct and
     requested the imposition of a constructive trust, and the
     circuit court action sought to impose liability for the tort
     of constructive fraud and requested damages, the two
     complaints stated different causes of action requiring
     establishment of different elements; even if the actions had
     been the same, the tolling doctrine was inapplicable where the
     first action was nonsuited within the period of time allowed
     by the applicable statute of limitations; when the chancery
     court action was nonsuited on June 9, 1992, appellee had until
     November 30, 1994, to file his constructive fraud action, a
     period of almost two and one-half years; even after appellant
     sold the last of the property on April 4, 1994, appellee had
     well over seven months to file an action in circuit court; the
     limitations period ran prior to the filing of the action; the
     case was reversed and dismissed.


     Appeal from Pulaski Circuit Court; Morris Thompson, Judge;
reversed and dismissed.
     Edward L. Wright, for appellant.
     Gill Law Firm, by:  Joe D. Calhoun, for appellee.

     David Newbern, Justice.
     In 1991, Garrett Scollard, the appellant, was negotiating
property rights in the course of being divorced from Mary Scollard. 
He was also fearful that a judgment of a Florida court in favor of
his former wife, Jeanette Scollard, would be registered in
Arkansas.  Admittedly in order to frustrate the collection of any
such judgment, Garrett Scollard, on August 31, 1991, conveyed a
tract of land to his son, Stephen Scollard, the appellee, allegedly
with the understanding that Stephen would reconvey it to Garrett at
a later time.  In November 1991, Garrett asked Stephen to deed the
property to Mary Scollard, Garrett's estranged wife.  Stephen
refused to transfer the property and later sold it.  
     On January 25, 1995, Garrett sued Stephen in a circuit court
action alleging constructive fraud.  The Trial Court rendered a
judgment for Garrett.  Stephen has appealed contending that the
action was barred by the statute of limitations and the evidence
was insufficient to show constructive fraud.  We need not address
the sufficiency issue as we reverse and dismiss the case because
the statute of limitations clearly barred Garrett's claim.  We also
decline, due to lack of citation to authority or convincing
argument, to address an argument that Stephen waived his statute-
of-limitations defense by not asserting it in a timely manner after
stating it in his answer to the complaint.
     It is undisputed that Garrett and Mary Scollard separated in
October 1991, and in November of that year Garrett told Stephen to
convey the property to Mary Scollard.  Stephen refused.  In
February 1992, Garrett asked Stephen to return the land to him. 
Stephen refused.  
     On February 14, 1992, Garrett sued Stephen in a chancery court
action to establish a constructive trust with respect to the land
in his favor.  On June 9, 1992, Garrett took a voluntary nonsuit in
that action.  
     Stephen's sale of the land occurred in two transactions, one
in 1993 and the other in 1994.  Garrett brought his circuit court
action on January 25, 1995.  The complaint alleged that Stephen's
refusal to return the property amounted to constructive fraud and
breach of contract.  It prayed for damages based on the amount
Stephen received for the property.  Stephen's answer asserted the
property had been the subject of a gift.  He moved to dismiss on
the ground that the action was barred by the three-year statute of
limitations.  See Ark. Code Ann.  16-56-105.
     Garrett, in response to the motion, did not dispute the fact
that his action was controlled by the three-year period of
limitations.  He argued that his cause did not accrue until
February 1992, because that was when Stephen refused to return the
property to him.  Alternatively, he submitted that the statute of
limitations was tolled for 116 days because that was the amount of
time that his 1992 action was pending in Chancery Court.
     The Trial Court dismissed the action on November 30, 1995. 
The Trial Court granted Garrett's motion to vacate in an order
filed on January 11, 1996.  The Trial Court found specifically that
Garrett's cause of action accrued on the last day of November 1991
but was not barred because the pendency of the chancery court
action tolled the statute of limitations for 116 days.  The Trial
Court stated in the order that "the commencement of an action tolls
the running of the applicable statute of limitations.  The present
[breach of contract and constructive fraud] action is essentially
the same cause of action as was [the constructive trust suit] filed
in 1992."
     
                    1. Statute of limitations
     Assuming constructive fraud occurred, it happened on August
31, 1991, when Stephen allegedly agreed to accept the property on
condition that it be returned to Garrett but intended all the while
not to return it.  While any action Garrett may have had accrued on
that date, the running of the statute of limitations would be
suspended until the fraud was discovered or should have been
discovered through the exercise of reasonable diligence.  Chalmers
v. Toyota Motor Sales, 326 Ark. 895, 935 S.W.2d 258 (1996);
Cherepski v. Walker, 323 Ark. 43, 913 S.W.2d 761 (1996).  Thus, the
statute of limitations did not began to run until Garrett received
notice that Stephen viewed the property as his own.  Stephen
submits that the statute began to run in November 1991 because that
was when he refused to transfer the property to Mary Scollard in
response to Garrett's request.  Garrett does not dispute that he
made that request, but he contends that the statute did not begin
to run until February 1992, when he told Stephen to return the
property.
     We hold that Stephen's refusal to dispose of the property as
instructed provided notice of Stephen's claim to Garrett.  It was
at that time that Garrett discovered, or certainly should have
discovered, that Stephen had no intention of recognizing Garrett's
claim to the property.  Thus, we agree with the Trial Court that
the statute of limitations began to run no later than November 30,
1991.  The action was barred after November 30, 1994, unless the
running of the statute was tolled.

                           2. Tolling
     Stephen contends that the Trial Court erred by finding that
the prior chancery court action tolled the statute of limitations
during the 116-day pendency of that action.  
     Once it has been shown that the statute of limitations period
has expired, to avoid dismissal the party resisting the limitations
defense has the burden of showing that some of the period is
tolled.  Milam v. Bank of Cabot, 327 Ark. 256, 937 S.W.2d 653
(1997);  Cherepski v. Walker, supra.
     Garrett argues that the statute of limitations was tolled by
the filing of the earlier action in chancery court.  The Trial
Court found support for Garrett's position in two of our cases,
Erwin, Inc. v. Arkansas Louisiana Gas Co., 261 Ark. 537, 550 S.W.2d 174 (1977), and Linder v. Howard, 296 Ark. 414,