Court Opinion

ID: 9765106
Source: CourtListenerOpinion
Date Created: 2023-08-29 03:50:55.121422+00
Date Added: 2024-06-11T12:54:00.123171
License: Public Domain

BISSETT, Justice
(dissenting).
I respectfully dissent. It affirmatively appears from the face of the petition which was filed by Martin Dies Bush, plaintiff, against Don Stone, defendant, that the cause of action asserted by plaintiff is barred by the two-year statute of limitations. Therefore, when plaintiff did not amend his pleadings, though given an opportunity to do so, the trial court properly dismissed the case.
As I read plaintiff’s petition, there are no allegations therein that will support a finding, inference or conclusion that the business relationship occasioned by the oral agreement that was made on or about September 1, 1956 continued “from 1956 until 1965”, as said by the majority on page 3 of its opinion. Plaintiff alleged that he and defendant became “close personal friends during the years 1939 through 1965”, that “pursuant to said agreement” he delivered his harvests to defendant for the years “1956 through 1961”, and that defendant “maintained complete control and possession of the bookkeeping from September 1, 1956 through September 30, 1961”. I conclude from those averments that the relationship between plaintiff and defendant which resulted from the agreement did not extend beyond September 30, 1961, and that their friendship ceased at the end of the year 1965. In my opinion, the relationship between plaintiff, according to the pleadings, was an arm’s-length relationship, not a relationship of trust and confidence.
The alleged frauds occurred during the period that commenced on September 1, 1956 and terminated on September 30, 1961. Suit was filed on December 14, 1970, more than nine years after the last fraud was committed, and almost five years after the friendship between plaintiff and defendant had ceased. Therefore, without more, plaintiff’s asserted cause of action was clearly barred by limitations., Plaintiff alleged that he did not discover the frauds until the fall of 1969, when his wife inspected defendant’s books and *893records insofar as they related to plaintiff’s farming operations for the years 1956 through 1961. But, as will hereafter be noted in some detail, only in the most general terms does plaintiff allege the diligence exercised by him to discover the fraud charged to have been practiced on him by defendant. Such allegations are, in my opinion, insufficient to meet the requirements of the rules of pleading in a case where the action is grounded upon fraud because of misrepresentation. As I view the petition, plaintiff’s cause of action accrued and limitations began to run, not from the time the frauds were actually discovered, buc from the time the frauds might have been discovered by the use of reasonable diligence. Sherman v. Sipper, 137 Tex. 85, 152 S.W.2d 319 (1941); Kuhlman v. Baker, 50 Tex. 630 (1879); Carver v. Moore, 288 S.W. 156 (Tex.Comm’n App. 1926).
An analysis of the allegations contained in plaintiff’s petition respecting the alleged shortages of cotton for each of the years in question reveals:

Grain was planted and harvested in only two of the years, 1960 and 1961. Plaintiff did not allege the production figures nor the alleged shortages in pounds or any other unit of measure for the acreage planted in grain. Instead, he simply stated that for the year 1960, defendant did not credit him for the grain produced from 114 acres, to his damage in the sum of $4,206.60, and that for the year 1961, defendant did not credit him for the grain produced from 185 acres, to his damage in the sum of $10,027.72.
Our Supreme Court, in Courseview, Inc. v. Phillips Petroleum Co., 158 Tex. 397, 312 S.W.2d 197 (1957), speaking through Mr. Justice Walker, has clearly stated the rules applicable to the beginning of the running of the statute of limitations in an arm’s-length relationship, as follows:
“The rule is well settled that the statute of limitations begins to run at such time as the fraud is discovered, or by the exercise of reasonable diligence might have been discovered. In an arm’s-length transaction the defrauded party must exercise ordinary care for the protection of his own interests and is charged with knowledge of all facts which would have been discovered by a reasonably prudent person similarly situated. And a failure to exercise reasonable diligence is not excused by mere confidence in the honesty and integrity of the other party.
It was also noted that a different rule applied in a fiduciary relationship, to-wit:
“On the other hand, limitation does not begin to run in favor of a trustee and against the cestui until the latter has notice of a repudiation of the trust, and there is no duty to investigate at least until the cestui has knowledge of facts sufficient to excite inquiry. . . .”
The allegations contained in plaintiff’s petition show that plaintiff was an experienced, large-scale farmer, who trusted defendant implicitly and had the utmost confidence in defendant’s honesty and integrity. I recognize the rule that a relationship of trust and confidence can, and often does, arise from a purely personal relationship, when, over a long period of time, the parties have worked together for the joint acquisition and development of property previous to the particular agreement sought to be enforced. Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256 (1951). That, however, is not the case presented by this appeal. There is no pleading of any personal relationship which reveals any prior business dealings between the parties that could possibly constitute a fiduciary relationship before and apart from the relationship that was created by the 1956 agree*894ment. See Consolidated Gas and Equipment Company of America v. Thompson, 405 S.W.2d 333 (Tex.Sup.1966). The allegation that plaintiff and defendant “through repeated social and business contacts” became “very close personal friends” does not establish a relationship of trust and confidence because of such past association. There is no indication that plaintiff and defendant were related by either affinity or consanguinity; there were no family ties that could be used as a springboard for the establishment of a relationship of trust and confidence. The fact that defendant guaranteed loans made by plaintiff did not make defendant a “banker” for plaintiff. There is nothing in the pleadings that supports an inference that the parties were “partners”. The fact that defendant may have paid plaintiff’s debts during the years 1956 through 1961 does not establish a relationship of trust and confidence with respect to any issue in this case. This suit is not based upon the failure of defendant, as plaintiff’s agent, to pay money due plaintiff’s creditors. There are no allegations that establish a joint venture between plaintiff and defendant, or that they were associated together in any business. Plaintiff does not allege that the 1956 agreement was induced by fraud on the part of defendant. There is nothing in plaintiff’s petition to indicate that plaintiff was under any disability, that the parties were not capable of dealing with each other on equal terms, or that plaintiff made the agreement and performed thereunder because of an overmastering dominance by defendant. Nothing more than friendly relations between the parties and confidence in defendant on plaintiff’s part are shown by the pleadings. This is not enough to allege or establish a relationship of trust and confidence as a matter of law, or to raise a fact issue with respect thereto. In order to create a relationship of trust and confidence, there must be allegations of facts which approximate a business agency of some kind, a professional relationship, or a family tie; there must be something besides friendship and unilateral trust which itself impels or induces the trusting party to relax the care and vigilance which he otherwise should, and ordinarily would, exercise.
Friendship alone does not establish a fiduciary relationship, nor do prior business and social contacts, of themselves, create a confidential relationship. Subjective trust is not enough to transform an oral agreement such as the one present in this case into a fiduciary relationship; businessmen generally do trust one another. Thigpen v. Locke, 363 S.W.2d 247 (Tex.Sup.1962). Plaintiff does not allege any facts, business transactions or other incidents which show that any confidential relationship existed between him and defendant. Conclusions to that effect are not sufficient.
All of plaintiff’s allegations, including his subjective feelings and his conclusions set forth in his petition, show that his relationship with defendant was at arm’s length. In particular, there are no allegations of fact that show a relationship of trust and confidence in this case because of a long-time purely personal relationship. The mere failure to perform an agreement or to carry out a promise cannot in itself give rise to a trust and confidence relationship that creates a fiduciary relationship between the promisor and the prom-isee, since such a breach does not in itself constitute an abuse of confidence or duty requisite to the existence of a constructive trust. See 54 Am.Jur. Trusts, § 221, p. 171.
Moreover, if the existence of confidence in the integrity and veracity that plaintiff had in defendant is a sufficient excuse to relieve plaintiff from the use of reasonable diligence to discover so important a matter as the true quantity of cotton and grain produced from his farms, then this excuse would be effective only so long as the relationship of trust and confidence continued, and limitations would then commence to run, not from the time that the quantity of production of cotton and grain could have been discovered by the use of ordinary dili*895gence, but from the time that the relationship of trust and confidence ceased to exist. Bass v. James, 83 Tex. 110, 18 S.W. 336 (1892). Here, assuming, arguendo, that such a relationship did exist, according to the only inferences that can be drawn from plaintiff’s own allegations, the relationship ceased on September 30, 1961, and there was no longer any friendship between the parties from and after the end of the year 1965. In either event, more than two years elapsed before suit was filed.
It has long been the rule in this State that vague allegations of fraud are not sufficient to take the case out of the bar of the statute of limitations. The mere allegation that the plaintiff did not discover nor could have discovered the fraud by the use of reasonable diligence does not, of itself, afford a basis that prevents the running of the statute. Plaintiff should have gone further; he should have alleged facts that showed he could not have discovered the fraud by the use of reasonable diligence. Kuhlman v. Baker, supra; Bremond v. McLean, 45 Tex. 10 (1876); Logan v. Taylor, 118 S.W.2d 1094 (Tex.Civ.App. — Austin 1938, n. w. h.); Cohen v. Shwarts, 32 S.W. 820 (Tex.Civ.App.1895, n. w. h.).
When a person seeks to avoid the bar of the statute of limitation on the ground of fraud, it is incumbent upon him to allege the_ facts upon which he relies, so the court may determine from the facts alleged whether he is entitled to the relief sought. If it appears from the petition that the means were at hand to readily discover the fraud complained of, and such means of information would have been used by a person of ordinary care and prudence in the conduct of his own business, then he will be held to have had notice of everything which a proper use of such means would disclose. White v. Bond, 362 S.W. 2d 295 (Tex.Sup.1962); Sherman v. Sipper, supra; Powell v. March, 169 S.W. 936 (Tex.Civ.App. — Dallas 1914, writ ref’d); McBurney v. Daugherty, 19 S.W.2d 113 (Tex.Civ.App. — Austin 1929, writ dism’d).
The party claiming fraud has a duty to use reasonable diligence in protecting his own business affairs. Thigpen v. Locke, supra. The fact that a person trusts and has placed confidence in another is not sufficient to excuse lack of diligence in investigating all aspects relating to his business. Lindsey v. Dougherty, 60 S.W.2d 300 (Tex.Civ.App. — Amarillo 1933, writ ref’d) ; Boren v. Boren, 38 Tex.Civ.App. 139, 85 S.W. 48 (1905, writ ref’d).
Plaintiff’s allegations that a comparison of the cost of picking the cotton to the number of bales of cotton sold appeared reasonable to him, and that in years past he had experienced a comparable yield in the grain so reported, are insufficient factual allegations of diligence when tested by the rules announced in the foregoing cases. A mere examination of the accountings themselves and nothing else would not show diligence on the part of plaintiff, because it would hardly be expected that a diligent person seeking to find out whether the entries contained therein were true and correct would make such a determination solely on the basis of the information contained in the reports that were furnished him by the very person who was in a position to perpetrate a fraud upon him. See Carr v. McGinley Corporation, 105 S.W.2d 410 (Tex.Civ.App. — Texarkana 1937, n. w. h.).
Plaintiff’s petition shows that while defendant did misrepresent the true yields in the several accountings, nevertheless, there were in existence (in defendant’s possession) at all times true and accurate records of the actual production from plaintiff’s farming operations. Plaintiff was bound to have had notice of the existence of those records, and it would have been an easy matter for plaintiff to have actually inspected such records within a reasonable time after the close of each crop year. The shortages were discovered in 1969 from an examination of those same books *896and records. If, more than nine years after the last fraud was perpetrated, plaintiff, by methods then used, readily and successfully detected the fraud, there is no reason why a resort to such methods before then could not have accomplished the same purpose. Bass v. James, supra. Thus, it appears from plaintiff’s own allegations that the means of detecting the fraud were at hand during all of the years in question. Such means of information would, in my judgment, have been used by a farmer in plaintiff’s position in the transaction of business pertaining to his farming operations. Therefore, plaintiff should be held to have had notice of everything which an inspection of the records in defendant’s possession would have disclosed; and the failure of plaintiff to seasonably avail himself of such means or avenues of information that were available to him presents an issue of law for the decision of the court, and not a question of fact for the determination by the jury. Boren v. Boren, supra.
Plaintiff’s allegations show that he accepted the annual accountings without question, and made no attempt to verify the entries therein contained. He kept no records of his own relating to the production of cotton and grain from his farms, or of the expenses incurred. There are no allegations that access to defendant’s record concerning the production figures from plaintiff’s farm were denied plaintiff, that such records were concealed by defendant, or that defendant, after request by plaintiff, refused to supply plaintiff with information concerning plaintiff’s farming operations. Plaintiff does not allege that defendant overcharged him, or that he was not paid the market price for the cotton and grain reportedly produced from his farms.
The formula used by plaintiff in computing the alleged shortages was available to plaintiff during each of the years in question. The alleged cotton shortages for the years 1956 to 1961, when averaged out, amount to about 17% of each year’s production. For the year 1956, plaintiff alleged that his farm actually produced 553 bales of cotton, but defendant reported and paid for only 358 bales. The alleged shortage (195 bales) for that year comprised 35% of the production for the year, and had an alleged value of $32,943.30. Such a shortage, which occurred during the very first year following the making of the agreement, should have alerted plaintiff to the fact that something was wrong with defendant’s accounting. It is difficult to understand how a farmer with plaintiff’s skill, ability and previous experience in farming large tracts of land, could have allowed a 35% shortage of his cotton crop in a single year, or an average shortage of 17% over the years in question, to go unnoticed. The quantity of the cotton grown by plaintiff and delivered to defendant was so basic to plaintiff’s business, that plaintiff’s failure to investigate and determine for himself the true production figures on such a vital and important business matter can only be attributable to his own neglect, which under the circumstances, constituted want of ordinary diligence.
It so conclusively appears from the allegations of plaintiff’s petition that he had the means of discovering the fraud alleged, and failed to exercise the diligence required of him by law to discover it, that ordinary minds could not differ in regard to it, and that defendant’s special exception that plaintiff’s cause of action was barred by the two-year statute of limitations was correctly sustained. I would affirm the judgment of the trial court.