Blake v. Miller

The following opinion was filed July 8, 1922; ,

Rosenberry, J.

Inspection of the complaint shows that the last stock purchased in the defendant company by the -plaintiff was on January 21, 1909. By sec. 4206, Stats., it is provided that civd actions can only be commenced within the period prescribed by ch. 177, Stats. Sec. 4222 of ch. 177 provides that an action to recover damages for an injury to property, real or personal, or for an injury to the person, character, or rights of another, not arising on contract, may be begun within six years, except an action for relief on the ground of fraud in a case which was, on and before the 28th day of February, A. D. 1857, cognizable solely by the court of chancery, in which case the cause of action is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud.

There is no claim in this case that the cause of action set out in the complaint is one cognizable solely by a court of chancery. It is conceded that the original cause of action which arose by reason of the false and fraudulent representations made, upon which the plaintiff relied and by virtue of which he was induced to purchase stock in the defendant company, is barred by the statute of limitations. The contention here is, however, that by reason of the repetition of the representations and the making of other representations between the years 1913 and 1919 the plaintiff refrained from commencing a'suit or taking any action within the period limited by statute upon the original fraud and thus a new cause of action was created, as to which new cause of action the statute of limitations has not yet run, this action being commenced July 3, 1920.

It is well established in this state that fraudulent concealment of a cause of action will not prevent the running of the statute of limitations. The question has been fully and exhaustively discussed. Pietsch v. Milbrath, 123 Wis. 647, 101 N. W. 388, 102 N. W. 342; Williams v. J. L. Gates L. Co. 146 Wis. 55, 130 N. W. 880; Ott v. Hood, 152 Wis. 97, 139 N. W. 762.

It is the contention of the plaintiff here that there existed between the plaintiff and the defendant Miller such a relation of trust and confidence as to make the principle laid down in Ott v. Hood, 152 Wis. 97, 139 N. W. 762, applicable. In that case an attorney had collected money belonging to his client. In response to repeated inquiries he represented to his client that the money had not been collected. The money was in fact collected July 28, 1892, and the client never learned anything to the contrary until November 15, 1910. The court held that the original cause of action was barred by the statute. After calling attention to the fact that the relationship between the parties was analogous to that of trustee and cestui que trust, the court said:

“When appellant asked respondent about the status of the matters placed in his hands, it was his duty to make a full disclosure. According to the complaint he breached that duty, by reason of which, if plaintiff reasonably relied thereon until the six-year statute of limitations had run upon her right of action to recover on contract, she lost it. In other words, she was pecuniarily damaged by such breach to the extent of the money respondent should have paid over to her and interest. The duty was not merely a moral obligation. It was a duty imposed by the common law and is grounded in common honesty. Why then is not violation of it, working damage without efficient fault of the one damnified, remediable? This court, emphatically, answered that question in Ludington v. Patton, supra [111 Wis. 208, 86 N. W. 571]. While rdndicating the law as we have before stated it, as regards the unconditional application of statutes of limitations, it was held that if a person holding relations of trust and confidence with another and charged with the duty to' guard such other’s pecuniary interests, induces such other to take such a course as to lose a right against such person, that of itself is a remediable wrong, starting the six-year statute of limitations running as to it.”

The rule thus stated was held applicable to the facts in the case of Ott v. Hood, supra. The facts in this case clearly distinguish it from the case of Ott v. Hood. Even if it be conceded — a point not here decided — that there existed between the defendant Miller, as president of the defendant company, and the plaintiff, a stockholder, a duty analogous to that existing between a trustee and cestui que trust, there is no allegation showing that the plaintiff ever intended to bring an action against Miller or the defendant company or to take action of any kind in respect thereto. The allegation is that he knew nothing of the fraud until the late spring of 1920. How then could the plaintiff have relied upon the representations made between 1913 and 1919? At most such representations amounted to active concealment of the true state of affairs. In Ott v. Hood the plaintiff knew that the money was due her. She demanded an accounting therefor from her attorney, in response to which the false representations complained of were made. Just how a person who is, so to speak, asleep, can without being awakened be induced by false representations to remain asleep, is a very subtle proposition to say the least. If the plaintiff had contemplated action of any sort and the defendant Miller had intervened and -by means of false representations had induced the plaintiff to refrain from acting, a different situation would be presented. No allegation of that character appears in the complaint. Sec. 4222, Stats., has been interpreted as being a legislative command that mere concealment of a prior fraud shall not operate to extend the running of the statute. It has been suggested in view of that fact that if a different rule is to be adopted it should be done by legislative action. Although it is now many years since the rule was announced and the suggestion made, the legislature has taken no action, and we must therefore assume that the interpretation placed upon the section by the court is in accordance with the legislative purpose and carries out the legislative intent. There are in other jurisdictions statutes and decisions to the contrary, but the question is no longer an open one in this state.

It is also argued on behalf of plaintiff that it appears from the allegations of the complaint that but for the false and fraudulent representations made by the defendant Miller during the interim between 1913 and 1919 the plaintiff might have disposed of his stock in the defendant company at par; that he did not dispose of it or attempt to dispose of it, relying upon the false representations made by the defendant Miller; that it is now worth not to exceed fifty cents on the dollar, and that the plaintiff has thereby sustained a loss accordingly.

It is urged in response to this suggestion, on behalf of the defendant Miller, that to admit that such a cause of action exists is to admit that plaintiff by perpetrating a fraud on someone else, there being no allegation that the stock was ever worth more than fifty cents on the dollar, might recoup his loss, and that he may recover in this action because he was induced to refrain from defrauding a third person. Without going into consideration of the difference between the sale value and the market value and the various claims set up in relation thereto' by the parties, it seems apparent that no cause of action is stated for the reason that it does not appear that the alleged false and fraudulent representations were made by the defendant Miller with die knowledge or expectation that they were to be acted upon by any one. Unless representations which are false and fraudulent are made with the expectation that they are fo be acted upon and unless they are .acted and relied upon, no remedial wrong is committed. Puffer v. Welch, 144 Wis. 506, 129 N. W. 525; 26 Corp. Jur. p. 1121, § 46, and cases cited; Louis F. Fromer & Co. v. Stanley, 95 Wis. 56, 69 N. W. 820; Francois v. Cady L. Co. 149 Wis. 115, 135 N. W. 484.

The allegations of the complaint do not show, and from the nature of the circumstances cannot be made to show, that the representations complained of were made by Miller with the knowledge or expectation that action on the part of the plaintiff of any sort would be induced or that they might be acted and relied upon for any purpose.

“This court has gone, perhaps, as far as any court in holding that false representations of facts, which have induced the making of a contract, may be actionable, although not shown to have been made wilfully or with fraudulent intent.” Louis F. Fromer & Co. v. Stanley, 95 Wis. 56, 63, 69 N. W. 820.

But we find no case where it has been held that a violation of the moral obligation to speak the truth is 'ground for a civil action unless it was intended thereby to induce action by the plaintiff which results in his damage. Hindman v. First Nat. Bank, 112 Fed. 931, 57 L. R. A. 108; Cheney v. Dickinson, 172 Fed. 109, 28 L. R. A. n. s. 359.

The representations here complained of were not made in connection with the sale of the stock, were not made with reference to any proposed action on the part of the plaintiff of any sort or description. If the plaintiff had proposed to sell his stock and Miller had knowledge of that fact and for the purpose of preventing the sale had made the representations complained of, a different situation would be presented. It is conceivable at least that there might be circumstances of that nature under which the defendant Miller would be liable. Here the plaintiff neither did nor refrained from doing anything that he would otherwise have done or refrained from doing if the representations had not been made. How can it be said, therefore, that the plaintiff relied upon and acted upon the representations made? We think the trial court was in error in holding that upon this aspect of the case a cause of action was stated. The demurrer as to the clefendant Miller should have been sustained upon both aspects of the complaint.

By the Court. — The order appealed from is reversed as to the defendant Miller, and the cause remanded with directions to sustain the demurrer as to the defendant Miller and for further proceedings according to law.

Owen, J., took no'part.

A motion for a rehearing was denied, with $25 costs, on October 10, 1922.