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Opinion of the Court.

entitled to receive upon each settlement, with interest thereon from the time they were respectively payable.

Mr. John C. Fay and Mr. George Norris for appellant. Mr. Joseph E. McDonald was with them on the brief.

Mr. John E. Burrill for appellees.

MR. JUSTICE HARLAN, after stating the case reported, delivered the opinion of the court.

The case made by the plaintiff is clearly one of which a court of equity may take cognizance. The complicated nature of the accounts between the parties constitutes itself a sufficient ground for going into equity. It would have been difficult, if not impossible, for a jury to unravel the numerous transactions involved in the settlements between the parties, and reach a satisfactory conclusion as to the amount of drawbacks to which Alexander & Co. were entitled on each settlement. 1 Story Eq. Juris. § 451. Justice could not be done except by employing the methods of investigation peculiar to courts of equity. When to these considerations is added the charge against the defendants of actual concealed fraud, the right of the plaintiff to invoke the jurisdiction of equity cannot well be doubted.

Did the Circuit Court err in adjudging that the suit was barred by the statute of limitations?

as above

By the Code of Civil Procedure of New York in force prior to September 1, 1877, the period of six years was prescribed as the limitation for

"1. An action upon a contract, obligation, or liability, express or implied," except a judgment or sealed instru

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"6. An action of relief, on the ground of fraud, in cases which heretofore were solely cognizable by the court of chancery; the cause of action in such case not to be deemed to have accrued until the discovery by the aggrieved party of

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Opinion of the Court.

the facts constituting the fraud." Voorhees' Code, § 91; 4th ed. 86; 5th ed. 69–70.

The Code which went into operation September 1, 1877, prescribed the like limitation for actions upon contracts, obligations, or liabilities, express or implied, other than judgments or sealed instruments; but, in place of subdivision 6 of § 91 of the old Code, was substituted the following:

"5. An action to procure a judgment, other than for a sum of money, on the ground of fraud, in a case which, on the thirty-first day of December, 1846, was cognizable by the court of chancery. The cause of action in such a case is not deemed to have accrued until the discovery, by the plaintiff or the person under whom he claims, of the facts constituting the fraud." N. Y. Code, as amended in 1877, § 382.

The Circuit Court, deeming the jurisdiction in equity and at law to be concurrent in cases like this, was of opinion that the question of limitation is controlled by the local statute, and, upon the authority of Carr v. Thompson, 87 N. Y. 160, adjudged that this action was not, within the meaning of

382 of the Code, one "to procure a judgment, other than for a sum of money, on the ground of fraud;" and that, consequently, the cause of action accrued upon the commission of the alleged frauds (which was in 1871), and not at the date of their discovery, on the 16th of April, 1873. As this view is controverted by the appellant, and is the main ground upon which appellees rely for an affirmance of the judgment below, it must be examined.

It is not clear that the decision in Carr v. Thompson goes as far as the circuit judge supposed. That was an action against an agent to recover moneys obtained from his principals and converted to his own use, by means of false and fictitious accounts, rendered from time to time, and which he represented to be correct and just. Fraud, although charged, was not regarded by the state court as the basis of the action. It was not deemed a suit to recover damages for the fraud practised, but one merely to recover damages for the violation of the agent's contract or obligation to account justly and honestly to his principals. The sole question, the state court said,

Opinion of the Court.

presented by the complaint and answer, was whether the agent properly performed his duty. It also was careful to say: "It is to be observed that the complaint is not framed for the purpose of opening an account stated; it does not allege the existence of such an account as an obstacle to a recovery, which requires the aid of equity to remove; nor, indeed, does the answer set up any such defence." These remarks, in connection with the further declaration, that the words "an action to procure a judgment, other than for a sum of money, on the ground of fraud," sufficiently describe "a case in which judgment for an accounting is sought in addition to, and as a means of reaching, a judgment for money," lead us to doubt whether that court would hold, in a case like the present, that the time for commencing the action begins to run from the commission, not from the discovery, of the fraud.

Be that as it may, it is an established rule of equity, as administered in the courts of the United States, that, where relief is asked on the ground of actual fraud, especially if such fraud has been concealed, time will not run in favor of the defendant until the discovery of the fraud, or until, with reasonable diligence, it might have been discovered. Meader v. Norton, 11 Wall. 442, 458; Prevost v. Gratz, 6 Wheat. 481; Michoud v. Girod, 4 How. 503, 561; Veazie v. Williams, 8 How. 134, 149, 158; Brown v. Buena Vista, 95 U. S. 157; Rosenthal v. Walker, 111 U. S. 185, 190; 2 Story Eq. § 1521a; Angell on Limitations. In Bailey v. Glover, 21 Wall. 342, 347, it was said, that, "in suits in equity, where relief is sought on the ground of fraud, the authorities are without conflict in support of the doctrine that, where the ignorance of the fraud has been produced by affirmative acts of the guilty party in concealing the facts from the other, the statute will not bar relief, provided suit is brought within proper time after the discovery of the fraud. We also think that in suits in equity the decided weight of authority is in favor of the proposition that, where the party injured by the fraud remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered, though there be no special cir

[graphic]

Opinion of the Court.

cumstances or efforts on the part of the party committing the fraud to conceal it from the knowledge of the other party." In the same case it was said: "To hold that by concealing a fraud, or by committing a fraud in a manner that it concealed itself, until such time as the party committing the fraud could plead the statute of limitations to protect it, is to make the law, which was designed to prevent fraud, the means by which it is made successful and secure." See, also, Traer v. Clews, 115 U. S. 528, 538. These observations were made with reference to an act of Congress prescribing a fixed time within which a suit between an assignee in bankruptcy and persons asserting adverse rights in property conveyed to such assignee should be brought. They are peculiarly applicable to a local statute, which, if followed, would impair the power of the courts of the United States to enforce the settled principles of equity in suits of which they have, by the Constitution and the laws of the United States, full jurisdiction. While the courts of the Union are required by the statutes creating them to accept as rules of decision, in trials at common law, the laws of the several states, except where the Constitution, laws, treaties, and statutes of the United States otherwise provide, their jurisdiction in equity cannot be impaired by the local statutes of the different states in which they sit. In United States v. Howland, 4 Wheat. 108, 115, Chief Justice Marshall, speaking for the court, said, that, as the courts of the Union have a chancery jurisdiction in every state, and the judiciary act confers the same chancery powers on all, and gives the same rule of decision, its jurisdiction must be the same in all the states. The same view was expressed by Mr. Justice Curtis in his work on the jurisdiction of the courts in the United States (p. 13), when he observed that "the equity practice of the courts of the United States is the same everywhere in the United States, and they administer the same system of equity rules and equity jurisdiction throughout the whole of the United States without regard to state laws." So, in Payne v. Hook, 7 Wall. 425, 430, it was said: "We have repeatedly held that the jurisdiction of the courts of the United States over controversies between citizens of differ

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Opinion of the Court.

ent states cannot be impaired by the laws of the states, which prescribe the modes of redress in their courts, or which regulate the distribution of their judicial power.' If legal remedies are sometimes modified to suit the changes in the laws of the states, and the practice of their courts, it is not so with equitable. The equity jurisdiction of the courts of the United States is the same that the High Court of Chancery in England possesses, is subject to neither limitation or restraint by state legislation, and is uniform throughout the different states of the Union." See, also, Robinson v. Campbell, 3 Wheat. 212, 221, 222; Boyle v. Zacharie, 6 Pet. 632, 648, 658; Livingston v. Story, 9 Pet. 632, 656; Stearns v. Page, 7 How. 819; Russell v. Southard, 12 How. 139, 147; Neves v. Scott, 13 How. 267, 272; Barber v. Barber, 21 How. 582, 592; Green V. Creighton, 23 How. 90, 105. In view of these authorities, it is clear that the statute of New York upon the subject of limitation does not affect the power and duty of the court below-following the settled rules of equity to adjudge that time did not run in favor of defendants, charged with actual concealed fraud, until after such fraud was or should, with due diligence, have been discovered. Upon any other theory the equity jurisdiction of the courts of the United States could not be exercised according to rules and principles applicable alike in every state. It is undoubtedly true, as announced in adjudged cases, that courts of equity feel themselves bound, in cases of concurrent jurisdiction, by the statutes of limitation that govern courts of law in similar circumstances, and that sometimes they act upon the analogy of the like limitation at law. But these general rules must be taken subject to the qualification that the equity jurisdiction of the courts of the United States cannot be impaired by the laws of the respective states in which they sit. It is an inflexible rule in those courts, when applying the general limitation prescribed in cases like this, to regard the cause of action as having accrued at the time the fraud was or should have been discovered, and thus withhold from the defendant the benefit, in the computation of time, of the period during which he concealed the fraud.

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