Reynolds v. Hennessy , 17 R.I. 169 ( 1890 )

To each count of the declaration the defendant pleads in bar that a prior action at law was brought by the plaintiff's intestate, and also a bill in equity, both of which suits involved the same cause of action which is the subject of this suit; that, upon the defendant's motion in the equity suit, the present plaintiff, having undertaken the prosecution of said suits as administrator, was required by order of the court to make an election whether he would proceed in his action at law or in his suit in equity, and thereupon, electing to proceed in equity, he discontinued his said action at law, and judgment was entered in favor of said defendant, Hennessy, for his costs; that, upon a hearing of the bill in equity, a decree was entered dismissing said bill, without prejudice to the right of the complainant, or those claiming under him, to prosecute the present action at law, which had then been commenced; that the judgment in the suit at law and the decree in equity are in full force and effect, and not reversed nor annulled.

The plaintiff demurs to the pleas, and the question is whether he is estopped, by the record of the election and judgments recited, from prosecuting the present suit.

This action is for damage to an interest in property caused by loss of the vendor's lien for the unpaid purchase-money, by reason of a fraudulent concealment on the part of Hennessy, the mortgagee, of the fact that the whole sum had not been paid. The previous action was to recover such unpaid balance, supposed to be in the hands of the defendant, as a sum due. These facts appear upon the record under the demurrer, and, although they show that the suits have arisen out of the same transaction, they also show that the causes of action are not identical. The defendant contends, however, that where one, having different remedies founded on the same transaction, makes an election, he is to choose one or the other, and is not entitled to choose them successively; hence, as the answer to the bill in equity disclosed the facts upon which this action is based, an election, after such disclosure, to proceed in equity was final. We do not think this is so. Under the election, the remedy sought was in equity; but the result was not a determination of the merits of the controversy. Consequently the court dismissed the bill without prejudice to the right of the complainant to prosecute the present action at law, which had then been brought. The intention and effect of such a reservation in a decree are, by express terms, to prevent it from operating as a bar to another suit. A dismissal "without prejudice" leaves the parties as if no action had been instituted. Magill v. Mercantile Trust Co. 81 Ky. 129;Lang's Heirs v. Waring, 25 Ala. 625, 60 Amer. Decis. 533;Durant v. Essex Company, 7 Wall. 107, 109; Ballentine v.Ballentine, 15 Atlantic Reporter, 859. It has been held that such a reservation prevents the bar, even though it has been erroneously incorporated in the decree. Wanzer v. Self,30 Ohio St. 378; Gunn v. Peakes, 30 North Western Reporter, 466. The decree in the equity suit, therefore, is no bar to this action, even though the facts upon which this action is based were before the court.

The only other question raised by the plea is, whether the judgment remaining in the previous action at law is a bar. A discontinuance of an action before a trial upon its merits is not an adjudication in the sense of a settlement of the controversy. In Loeb v. Willis, 100 N.Y. 231, Earl, J., says, p. 235: "By the discontinuance of an action, the further proceedings in the action are not only arrested, but what has been done therein is also annulled, so that the action is as if it had never been. If a suit be discontinued at any stage, or if the judgment rendered therein be set aside, or vacated, or reversed, then the adjudication therein concludes no one, and it is not an estoppel or bar in any sense." See, also, Muse v. Farmers' Bank of Virginia, 27 Gratt. 252;Gibson v. Gibson, 20 Pa. St. 9. This is doubtless the reason for our statute, Pub. Stat. R.I. cap. 213, § 7, which debars the right of a plaintiff to discontinue a cause after it has been submitted to a jury, while in other cases the right to discontinue is not restricted. But if the voluntary discontinuance of an action does not operate as a bar to another suit, much less should an election required by a court, which is not the voluntary act of the plaintiff, operate as an estoppel. We think the proceedings recited in the special pleas are not a bar to this action, and the demurrers to the pleas must be sustained.

The defendant also pleads the statute of limitations, to which the plaintiff replies by alleging a fraudulent concealment of the cause of action, by false representations, until within six years next before the commencement of the action, and the defendant demurs to the replication.

The question, whether the fraudulent concealment of the existence of a cause of action will hinder the operation of the statute of limitations, is one which has been much discussed, and upon which there has been a radical difference of opinion.

On one side it is said that the statute, in plain terms, fixes the time when actions shall be brought, viz., within six years after the cause of action accrues; that the cause of action accrues when the act is done and the fraud is consummated, and from that time, and not from the time the plaintiff discovers it, the statute interposes as a protection; that while courts of equity may make an exception in cases of fraud, because of their peculiar jurisdiction, and because they are not strictly bound by the statute, yet for courts of law to do the same is to except from the law cases which are plainly within its terms.

On the other side it is said the statute must be expounded reasonably, so as to suppress and not to extend the mischiefs it was designed to cure; that it was intended to suppress fraud by preventing unjust claims from starting up after a great lapse of time, when evidence by which they might be repelled was forgotten, or had ceased to exist; that it should not, therefore, be so construed as to encourage fraud by enabling those who through falsehood or cheat have managed for six years to keep one in ignorance of the fact that he had a cause of action, to take advantage of their own wrong-doing under a plea of the statute.

We think the latter position is best sustained by reason and authority. It is certainly in the line of justice and morality, and the only objection to it is, that it introduces an exception into the statute. Even if this be admitted, it must be borne in mind that several such exceptions to the operation of the statute have already received a common consent, and have become established law; e.g. claims in favor of the government, on the ground that no time runs against the king; disabilities created by necessity or act of law; and the familiar case of a new promise.

The statute does not take away the debt, but simply affects the remedy, and these exceptions show how liberally the statute has always been treated as a remedial measure. But there is a wide distinction between engrafting an exception into a statute by construction, and construing it according to its obvious intent. The rule laid down by Blackstone of considering the old law, the mischief and the remedy, when applied to this statute shows that its purpose was to cut off those cases whose prosecution would or might result in fraud. It was clearly not intended to thwart the fundamental maxim that no one may take advantage of his own wrong.

Hence, if one by fraud conceals the fact of a right of action for six years, it is not engrafting an exception on the statute to say he is not protected thereby, but it is simply saying he never was within it, since the protection was never designed for such as he. But, whether this be taken as an exception or only as limitation of the statute, it rests upon sound reason and just policy. Such a construction also has been so frequently applied that it is now said to have the weight of authority in its favor, although it must be admitted there are strongly expressed opinions the other way. Buswell on Limitations, § 390; Angell on Limitations, 6th ed. cap. 18, § 186; 3 Parsons on Contracts, 99. The cases upon this subject have been so fully collated in text-books, and the decisions therein referred to, that it would be of little value now to recite them. In New York, Virginia, North Carolina, South Carolina, and New Jersey it is held that the replication of fraudulent concealment in an action at law does not affect the bar of the statute. In Massachusetts, Maine, New Hampshire, Pennsylvania, Illinois, Indiana, and Texas the replication is held to be good. There may be decisions in other States whose reports we have not examined. In England the leading case upon this point was Bree v.Holbech, Doug. 655, about which there has been much dispute whether the case contains a decision, or only a dictum of Lord Mansfield. Judge Story, in Sherwood v. Sutton, 5 Mason, 143, says, p. 149: "It is by no means a just representation of this case to consider this language as a mere dictum of Lord Mansfield. He must be understood to have spoken in the name of the court; and the leave granted to the plaintiff to amend, and reply fraud in the defendant, is proof that the court entertained no doubt upon the principal point. If they had entertained any doubt, as there was an ample argument, why should it not have been expressed? This case has been often cited, both at law and in equity, since its decision, and the doctrine of Lord Mansfield has never been denied in England." Since the opinion of Judge Story, there have been at least two decisions which have been regarded to be contrary to Bree v. Holbech, viz., Hunter v.Gibbons, 1 H. N. 459, and Imperial Gas Light Co. v. LondonGas Light Co. 10 Exch. Rep. 39. These cases, however, do not clearly show any fraudulent act of concealment, but only that the trespasses, being under ground, were concealed, and so not known to the plaintiff until within six years. But in the case ofGibbs v. Guild, L.R. 9 Q.B. Div. 59, in 1882, after the passage of the Judicature Act, by which the powers of courts of equity and law were blended, the replication of fraud was allowed by the court, Lord Coleridge remarking that the dicta of Mansfield, Holroyd, and Bailey at least made it questionable whether, if the cause had to be looked at as a pure common law action, the court might not have arrived at the same result. The rule in equity that in cases of fraud the statute of limitations begins to run, not at the time the fraud is perpetrated, but from the time of its discovery, has already been followed in this State in Peck v. The Bank of America, 16 R.I. 710. While the rule in actions at law cannot be maintained to this extent, there is no reason why equity and law should be so far apart as to forbid a court of law from taking the same starting-point when active additional fraud has prevented such discovery. In the words of Parsons, C.J., in the leading case of this country, First Massachusetts TurnpikeCorporation v. Field, 3 Mass. 201, 207: "If this knowledge is fraudulently concealed from the plaintiff by the defendant, we should violate a sound rule of law if we permitted the defendant to avail himself of his own fraud." We are therefore of opinion that the replications are good, and the demurrers must be overruled.

Plaintiff's demurrers to defendant's special pleas in barsustained. Defendant's demurrer to plaintiff's replication to theplea of the statute of limitations overruled.