O'Dell v. Burnham , 61 Wis. 562 ( 1884 )

Cassoday, J.

To hold, on demurrer to a complaint under subd. 7, sec. 2649, E. S., that the action was not commenced within the time limited by law, it must “appear upon the face” of the complaint when the cause of action accrued (sec. 4219), and also that it was not commenced within the time limited. This being so, the return of the officer as to the time of serving the summons cannot be resorted to on such demurrer for the purpose of fixing the time when the action was commenced. But where the complaint alleges that an act was done on a certain day, it must be presumed that the action was not commenced until after that day. Prentice v. Ashland Co. 56 Wis. 345. Here the complaint alleges the recording of the quitclaim deed from Newkirk and wife to the plaintiff, October 2, 1882. We must therefore assume that the action was commenced after that date.

This being so, the question recurs whether the action was commenced within the time limited by subd. 7, sec. 4222, E. S., which, with sec. 4219, E. S., is to the effect that an' action for relief on the ground of fraud, in a case which was, on and before February 28, 1857, solely cognizable by the court of chancery, must be commenced within six years after the cause of action accrued, but that the cause of action in such case shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud.

It stands confessed that this is a case which, prior to February 28, 1857, was solely cognizable by the court of chancery. The only remaining question under the statute is whether it appears upon the face of the complaint that the action was not commenced within six years after the plaintiff discovered the facts constituting the fraud. The facts alleged, if true, clearly show that the defendant Eogers, as attorney and legal adviser of the plaintiff, and after sundry deceits, false representations and pretenses, finally, and on April 9, 1874, consummated a very gross and cruel fraud upon the plaintiff, while she was sick in bed, suffering from nervous prostration to such an extent as to disqualify her from doing business understanding^, whereby he secured to himself, or rather to himself and his co-defendant, Burnham, the land in question, then worth $30,000, and now worth $150,000, for $18,000. From the complaint it appears that the title was obtained in the name of one Newkirk whom Rogers falsely represented to be a wealthy capitalist in the east, but who was, in fact, his insolvent brother-in-law, having no knowledge or information of the transaction, and never obtaining any until in September, 1882. It also appears that April 14,' 1874, Rogers, by means of a power of attorney from Newkirk, conveyed the land to the defendant Burnham for a consideration as expressed in the deed of $18,000, and on the nex't day Burnham reconveyed to Rogers an undivided one-half of the land for a consideration as expressed, in the deed of $10,000, neither of which deeds were recorded until in May, 1875; and that these deeds were made and received'by Rogers and Burnham for the purpose of defrauding the plaintiff out of her lands, and with full knowledgé on the part of Burnham of all the facts constituting the fraud. This being so, there can be no doubt but what Burnham was chargeable with all the consequences of the fraud. O'Dell v. Rogers, 44 Wis. 136.

It is alleged that the plaintiff first learned of these deeds in July, 1876, and then suspected that Rogers had practiced some deceit upon her, and notified her attorney accordingly; but it does not appear that she or her attorney knew of any other fact tending to disclose the fraud until in September, 1882, notwithstanding her attorney inquired for Newkirk and endeavored diligently to ascertain the facts in relation to the pretended purchase by him. It is strenuously urged by counsel for the defendants that the discovery by the plaintiff of the Burnham ¡mA Rogers deeds in July, 1876, was a discovery of the fraud, or at least the discovery of a fact sufficient to put her upon inquiry, and to set the statute of limitations running against her. It is to be remembered, however,-that “the facts constituting the’fraud” had all fully transpired four' days prior to the execution of either of those deeds. Those facts embraced the artifices, deceits, and false pretenses brought to bear upon the plaintiff, and which finally induced her. to give the deed running to New-kirk. But these deeds were apparently given by way of dividing the spoil obtained by virtue of the fraud. True, the fact that one of the deeds .ran to Eogers, and that they were executed so soon after'the deed to Newkirk, and both kept from the records for more than a year, naturally induced her to suspect that some deceit had been practiced upon her. But that was a mere suspicion, putting her upon, inquiry, to be sure, but not of a nature to necessarily lead to the discovery that the pretended purchase by Newkirk was a sham, and that the several offers which she had previously received for her property had been made in good, faith, and not the contrary, as falsely represented by her legal adviser.

Of course, “ the facts constituting the fraud ” which, within the meaning of the statute, are thus to be discovered, have no reference to open, visible facts, known, to the aggrieved party at the time, for - then there would be nothing ■to be discovered. On the contrary, they are such facts as are unknown to such aggrieved party, but known, concealed,-and kept secret by the party committing the fraud. While such facts are concealed .from and unknown to the aggrieved party, fihe statute will not run against her unless she, is chargeable with notice of such facts. When the information brought home to the aggrieved party is such as to indicate where the facts constituting the fraud can be effectually discovered upon diligent inquiry, it is the duty of such party to make the inquiry, and if he fails to do so within a reasonable time he is, nevertheless, chargeable with notice of all facts to which such inquiry might have led. But here the discovery of the two deeds, standing by themselves and unconnected with the other facts, gave no indication of any of the facts constituting the fraud; nor did they point out where any of those facts could, upon inquiry, be ascertained. In the language of the court in Kuhn’s Appeal, 87 Pa. St. 100: “The foulness was not on paper; it was in the assurances and concealments of him who was bound to disclose everything to his ward [here, client] which she ought to know.” We may well conceive how it might have been regarded as an honest transaction. “ The discovery by the aggrieved party of the facts constituting the fraud ” is an actual discovery, and not a mere constructive discovery. McMahon v. McGraw, 26 Wis. 622. The fact that the plaintiff knew of the deeds in July, 1876, simply charged her with notice of the contents of the deeds, but did not charge her with notice of any facts transpiring prior to the deeds, and to which no reference was made in either of the deeds. Godbold v. Lambert, 8 Rich. Eq. 155.

In a case like this the statute of limitations will not begin to run against the aggrieved party until such party has discovered the facts constituting the fraud, or has information of such a nature as would, upon diligent inquiry, lead to the discovery of such facts. Of course, no person is bound to commence an action on mere suspicion or rumor. The discovery, or the information which, upon diligent inquiry, would lead to the discovery, of facts sufficient to set the statute of limitations in motion, must be such facts as would impress a reasonable person with the belief that the transaction was, in fact, fraudulent. The views above expressed are not in conflict, but in harmony, with the opinion of the learned judge in Carr v. Hilton, 1 Curt. 390, cited and relied upon by counsel for the defendants, .and, moreover, they seem to be supported by abundance of authority. Kennedy v. Green, 3 Mylne & K. 699; Hovenden v. Lord Annesley, 2 Schoales & L. 607; Martin v. Smith, 1 Dill. C. C. 85; Bailey v. Glover, 21 Wall. 342; First Mass. Turnpike Co. v. Field, 3 Am. Dec. 124; Homer v. Fish, 1 Pick. 435; Rice v. Burt, 4 Cush. 208; Kane v. Bloodgood, 7 Johns. Ch. 90; S. C. 11 Am. Dec. 417; App v. Dreisbach, 2 Rawle, 287; S. C. 21 Am. Dec. 447; Reeves v. Dougherty, 27 Am. Dec. 496; Haynie v. Hall’s Ex’r, 42 Am. Dec. 427; Kuhn’s Appeal, 87 Pa. St. 100.

We have no controversy here with the class of cases in which it is held that the rules above indicated do not apply in actions at law, for this is purely an equitable action, and in such case all the courts agree that it does apply. The distinction is pointed out in some of the above cases, notably in Bailey v. Glover, in which the opinion was written by Mr. Justice Milleb, of the supreme court of the United States. “ In determining when the statute of limitation begins to run, in case of fraud, regard may be had to the condition and circumstances of the person on whom the knowledge of the facts is to operate.” Ferris v. Henderson, 12 Pa. St. 49; S. C. 51 Am. Dec. 580. Here, the person was a woman peculiarly circumstanced, who had been thrown off her guard by the treachery and fraud of one whom, the law and custom had given her reasonable ground to trust. We must hold, both upon reason and authority, that the discovery of the Burnham-l&ogevs deeds, in July, 1876, was not a discovery of the facts constituting the fraud, nor did they indicate where such facts could have been effectually discovered upon diligent inquiry.

It appears from the allegations of the bill that the facts constituting the fraud were not discovered until September, 1882. Counsel for- the defendants invoke the doctrine of laches to defeat this action. But in the language of Baron AldeksoN in Brooksbank v. Smith, 2 Younge & C. 60: “The statute does not absolutely bind courts of equity, but they adopt it as a rule to assist their discretion. In cases of fraud, however, they hold that the statute runs from the discovery, because the laches of the plaintiff commences from that date, on his acquaintance with all the circumstances. In this, courts of equity differ from courts of law, which are absolutely bound by the words of the statute.” The same rule has been sanctioned by the .courts of this country. Martin v. Smith, 1 Dill. C. C. 85; Ferris v. Henderson, 12 Pa. St. 49. Our statute in question fully recognizes and adopts the old equitable rule. Besides, mere delay in consequence of the deception, concealment, and false pretenses of the party committing the fraud, is not available to such party to enable him to retain the fruits of the fraud. Richardson v. Jones, 3 Grill & J. 163; S. C. 22 Am. Dec. 294; Haynie v. Hall's Ex'r, 42 Am. Dec. 427. The respondents stand in the shoes of Rogers.

The objection that the plaintiff did not, prior to bringing the action, tender back the money, is not available in an equitable action like this, where the court can protect the rights of all the parties. The plaintiff offers to return it. It could, at most, only affect the question of costs.

By the Court.— The order of the circuit court is reversed, and the cause is remanded for further proceedings according to law.