Wear v. Skinner

Robinson, J.,

delivered the opinion of the Court.

This is an action for deceit brought by the appellant against the appellee, to recover damages for an alleged fraud, by which the former was induced to assign to the latter, his interest in the firm of Skinner, Neale & Co., of which they had both been members

The defendant pleaded non cul, and the Statute of Limitations.. Issue was joined on the plea of not guilty, and to the plea of the Statute, the plaintiff replied:

*264 “That he was kept in ignorance by the fraud of the defendant for a long time of the cause of action, which he bad against the defendant, and that he brought his action within three years from the time at which he could, with usual and ordinary diligence, have discovered the fraud.”

Issue was joined on the replication, and the Court below rejected the several prayers offered by the plaintiff, and instructed the jury that he had offered no evidence legally sufficient to maintain the replication, and their verdict must be for the defendant.

We understood the appellee to contend, that although the plaintiff was injured by fraud practiced on the part of the defendant, and such fraud was not discovered by him within three years before the institution of this suit, yet in order to support the replication, it was necessary to prove some other distinct fraud on the part of the defendant, whereby the plaintiff was kept in ignorance of his cause of action; and that the mere concealment of the original fraud from the Plaintiff will not he sufficient.

The replication was filed under the Act of 1868, cb. 351, which provides that—

“In all actions to be hereafter brought where a party has a cause of action, of which he has been kept in ignorance by the fraud of the adverse party, the right to bring the suit shall be deemed to have first accrued, at the time at which such fraud shall or with usual and ordinary diligence might have been known or discovered.” Here' then is a remedial Act, passed for the purpose of enabling parties in actions at law, to set up the fraud of the defendant, in order to avoid a plea of limitations, and if there be any difficulty in its construction, an examination of the law on the subject, as recognized by Courts of equity and Courts of law at the time the Act was passed, may aid us in determining what the Legislature meant.

And to this end, we deem it unnecessary to review the many cases in which the subject has been considered by *265 Courts of equity, for we think one may safely say, it is well settled by such Courts, that where a party has been injured by the fraud of another, and such fraud is concealed, or is of such character as to conceal itself, whereby the injured party remains in ignorance of it without any fault or want of diligence on his part, the bar of the statute does not begin to run, until the fraud is discovered, though there be no special circumstances or efforts on the part of the party committing the fraud to conceal it from the knowledge of the other party. Booth vs. Lord Warrington, 4 Brown's Parlimentary Cases, 163; South Sea Company vs. Wymondsell, 3 Peere Williams, 143; Hovenden vs. Lord Annesley, 2 Schoales & Lefroy, 634; Sherwood vs. Sutton, 5 Mason, 143 ; 2 Swanst., 62; Petre vs. Petre, 1 Drewry, 393; Langley vs. Fisher, 9 Beav., 90; Lewis vs. Thomas, 3 Hare, 26; Bailey vs. Glover, 21 Wallace, U. S. Rep., 346. And this is the rule too, when such Courts are dealing with legal demands, in regard to which they obey strictly the very terms of the Statute of Limitations.

Whether a party can rely upon the fraud of the defendant, in an action at law, to avoid the operation of the statute, is a question in regard to which there is some conflict of decision in this country. Some Courts hold, that the equitable principles upon which fraud is allowed in equity in such cases, are not applicable in actions at law. Others, on the other hand, maintain that the Statute of Limitations was intended to suppress, and not to be used as a shield for fraud, and that whenever a party is injured by the fraud of another, and such fraud is concealed from him, the statute does not begin to run until he has, or might with ordinary diligence have discovered the fraud. Such cages, they hold are not within the meaning and operation of the statute, and the injured party may rely upon fraud in a Court of law as well as in a Court of equity. Turnpike Co. vs. Field, 3 Mass., 201 ; Welles vs. *266 Fish, 3 Pick., 74 ; Jones vs. Conoway, 4 Yeates, 109 ; Keesh vs. Barr, 1 Watts, 110 ; Pennock vs. Freeman, Id., 401; Mitchell vs. Thompson, 1 McLean, 96 ; Carr vs. Hilton, 1 Curtis, 390; Bowman vs. Sanborn, 18 New Hamp., 208; Cole vs. McGlarthy, 9 Greenleaf, 131; Morton vs. Chandler, 8 Greenleaf, 9; McDowell vs. Young, 12 Serg. & Rawle, 128 ; Keesh vs. Barr, 1 Watts, 110 ; Harrisburgh Bank vs. Foster, 8 Watts, 12 .

It has been questioned whether the English cases go to the extent of deciding, that a party may reply fraud to a plea of limitations in an action at law, and although the question was not directly raised by the pleadings in Bree vs. Holbach, Doug., 655; Clarke vs. Hougham, 3 Dowing & Ryland, 322, and Granger vs. Granger, 5 Barnwall & Creswell, 149, yet it is clear from what was said by the several Judges in these cases, that a replication of fraud would have been sufficient.

Lord Mansfield said: “ There may be cases too, which fraud will take out of the Statute of Limitations.” Doug., 654.

Baxley, J., “The question how far fraud may prevent the operation of the Statute of Limitations, does not properly arise in this case. In order to take advantage of fraud, there should have been a special replication.”

Best, J., “To the next question, it has been answered that fraud prevents the operation of the Statute of Limitations. It is not necessary to decide that now, but I think that I would have done' so, had the replication raised the point.!’ Clarke vs. Hougham, 2 B. & C., 149.

In this State, it was held in the case of the Negro Franklin, 8 Gill, 331 ; that fraud could not be replied to a plea of limitations in an action at lavi, and it is obvious we think, that the Act of 1868, was passed for the purpose of enabling, parties to set up the fraud of the defendant in a Court of law as well as in a Court of equity.

Unless then the terms of the Act plainly, show a contrary intention, it is but fair to presume, the Legislature *267 meant that the nature and character of the fraud which a party was thus allowed to plead, should he governed by the well settled rules of law on the subject, as recognized by Courts of equity and Courts of law, at the time when the Act was passed. The inquiry then is, whether the language of the Act, requires or justifies a contrary construction?

It says, it is true, “cause of action of which” a party “has been kept in ignorance by the fraud of the adverse party.” Does this mean, however, that in all cases, a party must commit a fraud distinct from, and independent of the original fraud, for the purpose of keeping the injured party in ignorance of his cause of action, and that the mere concealment of the fraud is insufficient? We think not. Where one practices fraud to the injury of another, the .subsequent concealment of it from the injured party is in itself a fraud, and if he is thereby kept in ignorance of his cause of action, he is kept in ignorance by the “fraud of the adverse party.”

The principle upon which it has been held that cases of this kind, are not within the Statute of Limitations, is that it would not only he subversive of good morals, hut contrary to the plainest principles of justice, to permit one practicing a fraud and then concealing it, to plead the statute, when in fact, the injured party did not know, and could not with reasonable diligence have discovered the fraud. And to require the plaintiff in all cases to prove a distinct and independent fraud in addition to the original fraud, whereby a party is injured, and that the subsequent concealment of the fraud is insufficient, would in a great measure defeat what we understand the Legislature meant. For if the narrow construction contended for he correct, and a party succeeds in getting the property of another, through fraudulent representations, and concealed .the fraud until limitations operates as a bar to the action, the injured party would he without remedy, although he did not *268 know of the fi’aud and could not by reasonable diligence, have discovered it. We cannot suppose the Legislature intended thus to restrict the operation of a remedial statute ', nor do we think the terms of it require such a construction.

And when it is said in 2 Greenleaf Evidence, sec. 448, that it “ must be alleged or proved not only that the plaintiff did not know of the existence of his cause of action, but the defendant had. practiced fraud in order to prevent the plaintiff from obtaining knowledge at an earlier period,” we do not understand the author as meaning that the subsequent concealment of the fraud, whereby the injured party was kept in ignorance of his cause of action, would not be sufficient.

On the contrary, the cases cited in support of the text, clearly show the author did not mean to be understood in the sense contended for by the appellee.

In the case of Sherwood vs. Sutton, 5 Mason, 143 , referred to by Greenleaf, Judge Story says:

“The point is not whether mere ignorance of the fact on the part of the plaintiff ought to remove the bar, but whether it is ignorance, resulting from the fraudulent concealment of the fact by the defendant, ought to have that effect.”

And so in Massachusetts Turnpike Co. vs. Field, 3 Mass. Rep., 201 , Parsons, C. J., says:

“The delay in bringing this suit, is owing to the fraud of the defendant, and the cause of action against him ought not to be considered as having accrued, until the plaintiff could obtain the knowledge that he had a cause of action. If this knowledge is fraudulently concealed from him by the defendant, we should violate a sound rule of law, if we permitted the defendant to avail himself of his own fraud.”

These and other cases cited in support of the text, show that is not liable to the construction now placed upon it by the appellee. Bree vs. Holbeck, 5 Doug., 654 ; Clark *269 vs. Hougham, 2 B. & C., 149 ; Welles vs. Fish, 3 Pick., 74 ; Jones vs. Conoway, 4 Yeates, 109 ; Troup vs. Smith, 20 John., 40 .

If then the plaintiff was induced to assign to the defendant, his interest in the firm of Skinner, Neale & Co., hy fraud practiced upon him hy the defendant, and such fraud was concealed from him hy the defendant, whereby he was kept in ignorance of his cause of action, then in the language of the Act of 1858, his right to bring the suit, shall he deemed to have first accrued at the time when- such fraud shall or with usual and ordinary diligence might have been discovered.

Such being our construction of the Act of 1868, the only remaining question is, whether the Court was right in taking the case from the jury. In so doing, the Court said, admitting all the evidence offered hy the plaintiff to he true, and adding thereto, every inference that might he fairly and legitimately deduced therefrom, it was insufficient to support the replication.

We have carefully examined the proof to he found in the record, and without intimating an opinion in regard to the weight of it, we think it was legally sufficient to warrant the Court in submitting the case to the finding of the jury.

We see no objection to the plaintiff’s first prayer, but the second does not, in our judgment, submit to the jury fully and distinctly, all the facts relied on to prove the alleged fraud. We do not understand the plaintiff as contending, that the manner in which the notes were obtained by the defendant, and the subsequent threat to have them protested, were in themselves sufficient, but that taken in connection with the alleged false representations that the notes had been sent by the holders thereof to the bank for collection, and that they would he protested in case of nonpayment, together with other facts offered in evidence, were sufficient to prove a plan deliberately and fraudulently *270 conceived by the defendant, and successfully carried into execution, whereby the plaintiff was induced to transfer his interest in the firm of Skinner, Neale & Oo. to the defendant.

(Decided 2nd March, 1877.)

Being of opinion that the Court erred in refusing the plaintiff’s first prayer, and granting the first prayer of the defendant, the judgment will be reversed and a new trial awarded.

Judgment reversed, and new trial awarded.