Court Opinion

ID: 9648327
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:13:59.421825+00
Date Added: 2024-06-11T18:11:58.411343
License: Public Domain

Robert Edwards, Special Chief Justice, dissenting. The doctrine of res judicata provides that a prior decree bars a subsequent suit when the subsequent cause involves the same subject matter as that determined in the former suit between the same parties, and the bar extends to those questions of law and fact which might have been but were not presented. Turner v. State, 248 Ark. 367, 452 S.W.2d 317 (1970); Martin v. Citizen’s Bank of Beebe, 283 Ark. 145, 671 S.W.2d 754 (1984). Exactly the same parties are not required in order to render issues adjudicated in a former suit res judicata, since it is sufficient if there is a substantial identity of parties. Wells v. Arkansas Public Service Commission, 272 Ark. 481, 616 S.W.2d 718 (1981); Estate of Knott v. Jones, 14 Ark. App. 271, 687 S.W.2d 529 (1985). Appellees argue that since appellant Madeline Talbot instituted a chancery court action resulting in a receiver being appointed for “That Little Restaurant,” and since the receiver instituted a circuit court action against appellees under an indemnification clause in the stock purchase contract, the present suit for fraud is barred by res judicata since it involves subject matter which could have been raised by the receiver, a party with substantial identity to the appellants. As the majority states, in considering the appellees’ motion for summary judgment, we view the allegations of the pleadings in the light most favorable to appellants. Also, in this case appellees have the burden of establishing the defense of res judicata. Southern Farmers Association v. Wyatt, 234 Ark. 649, 353 S.W.2d 531 (1962); Hurst v. Hurst, 255 Ark. 936, 504 S.W.2d 360 (1974). If the fraud was known at the time the prior suit was brought, I agree that a prior suit alleging breach of contract bars a subsequent suit between the same parties alleging fraud in the procurement of the contract. However, I do not agree that in this case the prior suit involved the same parties or parties with substantial identity to the appellants. The receiver was appointed for the business “That Little Restaurant.” The receiver was authorized to pursue actions available to the owner of “That Little Restaurant.” The owner of “That Little Restaurant” was the corporation. The present claim alleges personal damages to the appellants as a result of fraudulent misrepresentations made to appellant Ben Talbot, Jr., which were relied on by appellant Madeline Talbot when she loaned money to Ben Talbot, Jr., to purchase stock in the corporation. I cannot agree that the receiver in the circuit court case was a party with substantial identity to the appellants. The receiver was appointed to protect and preserve the assets of the restaurant, and in the performance of those duties he was given authority to pursue actions available to the corporation. While the question of whether or not the receiver was a proper party to bring the circuit court suit is not before us, it should be noted that the order of the chancery court approving the circuit court settlement reflects that the small settlement was being approved in part because of the possible merit of a defense raised in the circuit court case by appellees that the alleged loss was a personal loss of Ben Talbot, Jr., and not a corporate loss. The receiver’s selection of a cause of action in a suit for the corporation over which Ben Talbot, Jr., and Madeline Talbot had no control should not preclude this later cause of action wherein Ben Talbot, Jr., and Madeline Talbot seek to recover damages personal to them for fraudulent misrepresentations relating to the stock purchase. Accordingly, the motion for summary judgment should not have been granted on the issue of res judicata. Also, we have held that in order to prevail on a motion to dismiss the complaint on the basis of limitations, it must be barred on its face. Furthermore, we strictly construe the statute, and if there is any reasonable doubt, we will resolve the question in favor of the complaint standing against the challenge. Dunlap v. McCarty, 248 Ark. 5, 678 S.W.2d 361 (1984); McKim v. McLiney, 250 Ark. 423, 465 S.W.2d 911 (1971); Jefferson v. Nero, 225 Ark. 302, 280 S.W.2d 884 (1955). Under Ark. Code Ann. § 16-56-105 (1987), an action for fraud must be brought within three years from the date the cause of action accrues. Fraud does suspend the running of the statute of limitations, and the suspension remains in effect until the party having the cause of action discovers the fraud or should have discovered it by the exercise of reasonable diligence. Hughs v. McCann, 13 Ark. App. 28, 678 S.W.2d 784 (1984). In actions where the fraud is alleged to have been concealed, the cause of action accrues when the fraud is discovered or should be discovered, with the exercise of reasonable diligence. Wrinkles v. Brown, 217 Ark. 393, 230 S.W.2d 39 (1950); Wright v. Lake, 178 Ark. 184, 13 S.W.2d 826 (1929). Also, mere ignorance of one’s rights does not prevent the operation of the statute of limitations, but where the ignorance is produced by affirmative and fraudulent acts of concealment, the statute of limitations does not begin to run until the fraud is discovered. Williams v. Purdy, 223 Ark. 275, 265 S.W.2d 534 (1954); State of Tennessee v. Barton, 210 Ark. 816, 198 S.W.2d 512 (1926). As stated in 37 Am. Jur. 2d, Fraud and Deceit, § 406 (1968), Unless the fraud was of such a character as to necessarily imply concealment it is necessary, in order to postpone the running of the statute of limitations until the discovery of the fraud, that the ignorance thereof shall have been produced by affirmative acts of the guilty party. In other words, the fact that the complainant was ignorant of the fraud until after the right of recovery was barred is not per se sufficient to entitle him to the benefit of the exception under consideration, in the absence of any act or conduct on the part of his adversary calculated to mislead, deceive or lull inquiry. Further, as stated in 51 Am. Jur. 2d, Limitations of Actions, § 148(1970), “Although mere silence or failure to disclose may not in itself constitute fraudulent concealment, any statement, word or act which tends to the suppression of the truth renders the concealment fraudulent.” Appellants’ complaint alleges that during the purchase negotiations John C. Smithers on January 13, 1983, made fraudulent misrepresentations concerning the corporation’s liabilities and had the true financial condition of the corporation been known, the sale and loan would not have occurred. The complaint further alleges that the appellants did not discover the fraud until April 15, 1983. Appellants’ suit was filed April 14, 1986. Appellees’ motion to dismiss does not allege that appellants discovered the fraud prior to April 15, 1983. Neither does the motion allege that appellants did not use due diligence to discover the fraud. While questions of fact may arise in a trial of this matter as to whether April 15,1983, was the date of discovery or as to whether or not the appellants exercised due diligence to discover the fraud, based on the record, the question of whether or not the statute was tolled until April 15,1986, should be an issue of fact to be decided in a trial. Crossett Health Center v. Croswell, 221 Ark. 874, 256 S.W.2d 548 (1953); Crissman v. Carl-Lee, 173 Ark. 32, 200 S.W. 133 (1918). Therefore, appellees’ motion to dismiss on the basis of limitations should not have been granted. I would reverse and remand this cause to the trial court for further proceedings. Newbern, J., joins in the dissent.