Andriessen's Appeal
| Decision Date | 07 January 1889 |
| Parties | APPEAL OF FRED. ANDRIESSEN, ET AL. [FRED. ANDRIESSEN ET AL. v. JOHN AIKENS.] |
| Court | Pennsylvania Supreme Court |
Before GORDON, C. J., PAXSON, STERRETT, GREEN, CLARK, WILLIAMS and HAND, JJ.
FROM THE DECREE OF THE COURT OF COMMON PLEAS No. 2 OF ALLEGHENY COUNTY, IN EQUITY.
No. 187 October Term 1888, Sup. Ct.; court below, No. 339 January Term 1881, C. P. No. 2 in Equity.
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Mr. George Shiras, Jr., and Mr. John B. Herron, for the appellants:
1. The learned judge was of opinion that complainants had beyond question supported the merits of their cause, and that the doctrine of Rawlins v. Wickham, 3 DeGex & J. 304, and of cognate cases, was applicable. The doctrine of the case cited is also declared in Strang v. Bradner, 114 U. S. 555: "If in the conduct of partnership business and with reference thereto, one partner makes false and fraudulent representations of fact to the injury of innocent persons dealing with him as representing the firm, and without notice of any limitations upon his general authority as agent for the partnership, his partners cannot escape pecuniary responsibility therefor, upon the ground that the misrepresentations were made without their knowledge, especially where the firm appropriates the fruits of the fraudulent conduct of such partner." The court was likewise of the opinion that the claim for relief was not barred by the statute of limitations, for the reason that the statute did not begin to run until the discovery of the fraud which was the basis of the action: Harrisburgh Bank v. Forster, 8 W. 12; Morgan v. Tener, 83 Pa. 305; Mitchell v. Buffington, 10 W. N. 361. Why then were the plaintiffs turned out of court, and their bill dismissed?
2. The modern doctrine of courts of equity in reference to the lapse of time, we understand to be as follows: (1) Where the cause of action is barred by the statute of limitations, courts of equity give the same effect to the statute as do courts of law, except in cases of technical trust. (2) But when the statutory time has not elapsed, or when for any reason the statute does not apply, yet where a complainant has so long refrained from filing his bill that injustice or loss would be inflicted upon innocent third parties who have become involved in the subject matter, or, where the defendant has been misled to his injury by the inactivity of the complainant, there courts of equity will refuse relief. This latter doctrine is the doctrine of laches, as applicable to the present case: Overt v. Overt, 12 N. J. Eq. 423, 429; Ashhurst's App., 60 Pa. 290; Evans's App., 81 Pa. 278. In the light of these principles and authorities, was not the decree dismissing our bill on the ground of laches clearly wrong? No facts or circumstances are pointed out, which would make it inequitable to grant that relief to complainants which the merits of the case show they were entitled to. The master, whose reasoning is adopted by the court, treats the case as one of election. The plaintiffs were compelled to pay the partnership debts; they surely had no election as to that. The only part of their conduct that savors of choice, was that they chose not to file their bill until by their aid and their money the debts were paid. The very opposite effect ought to be given to their choice.
Mr. A. M. Brown and Mr. D. T. Watson (with them Mr. D. W. Bell), for the appellees:
1. The bill is not, upon the plaintiffs' theory, nor indeed in fact, filed by partners against their copartners, to adjust the partnership interests or accounts, but purely a bill to collect divers sums of money alleged to be due and owing by the defendants to several individuals, joined as plaintiffs, no one of whom has any interest in the claim of any other co-plaintiffs. It is therefore, not a partnership bill, and is multifarious: Clarke's App., 107 Pa. 436; Clark's App., 62 Pa. 447; Turquand v. Marshall, L. R. 4 Ch. App. 376; Winters's App., 61 Pa. 307. Moreover, the statute of limitations bars the plaintiffs' claims. It is the cause of action, not the form, which determines the applicability of the statute: Downey v. Garard, 24 Pa. 52; Wickersham v. Lee, 83 Pa. 422, 425; Finney v. Cochran, 1 W. & S. 112. With reference to the statute, there is no distinction between torts arising from contract and those which arise from official misfeasance: Owen v. Western S. Fund, 97 Pa. 47, 54.
2. To delay the running of the statute until the discovery of the cause of action, three things are requisite: (1) The fraud must be clearly proved: Free v. Holbeck, 2 Doug. K. B. 655; Bishop v. Little, 3 Greenl. 405; Stearns v. Page, 7 How. 819, 828. (2) The fraud must be actual; that is, the representation must be known to be false, or not reasonably believed to be true, by the defendant; and it must have been reasonably relied upon by the plaintiff, and the direct cause of the injury: Huber v. Wilson, 23 Pa. 178; Musselman v. Eshleman, 10 Pa. 394; Cox v. Highley, 100 Pa. 249; Morrell v. Trotter, 12 W. N. 143; McAleer v. McMurray, 58 Pa. 126; Cole v. McGlathery, 9 Greenl. 131; Rouse v. Southard, 39 Me. 404. It follows, that in cases of constructive fraud, the statute runs from the date of the constructively fraudulent act: Waterman v. Brown, 31 Pa. 161; Downey v. Garard, 24 Pa. 52; Fleming v. Culbert, 46 Pa. 498; Campbell v. Boggs, 48 Pa. 524; Ashhurst's App., 60 Pa. 290, 315; Angell on Limitations, § 187; Bump's Kerr on Fraud, 309 n. (3) There must also have been fraudulent concealment: Owen v. Western S. Fund, 97 Pa. 47; and it must have been impossible for the plaintiff, by the exercise of reasonable diligence, to discover the fraud sooner: Angell on Limitations, § 183 et seq.; Bump's Kerr on Fraud, 309, 311; Bigelow on Fraud, 442 et seq.; Gordon v. Parmelee, 2 Allen 212. The statute will be applied with the same effect in equity as at law: Hamilton v. Hamilton, 18 Pa 20; Brightly's Eq. J., § 611; McKelvy's App., 72 Pa. 409; and a court of equity is as strict as a court of law in requiring the proof of intent as an element of fraud: Martyn v. Westbrook, 7 L. T., N. S., 449; Peck v. Gurney, L. R. 6 Eng. & I. App. 377; In re Vandeveer, 5 Green, C. E., 463; Bryan v. Hitchcock, 43 Mo. 527; Marks v. Taylor, 10 Bush 519.
3. The defendants were undoubtedly mistaken as to the value and condition of their banking business, as well after as before the organization of the new company, but their mistake was not a fraud upon the plaintiffs. Actual fraud is not made out by proof of mistake: Binney's App., 116 Pa. 169; Mercer v. Lewis, 39 Cal. 532; Leighton v. Grant, 20 Minn. 345; Ayers v. Scribner, 17 Wend. 407; Bank of Rome v. Mott, 17 Wend. 554. And without proof of fraudulent intent, the law does not give to legal fraud the full consequences of actual fraud: Duff v. Williams, 85 Pa. 490; Erie City I. Works v. Barber, 106 Pa. 125; Benj. on Sales, § 429; Bokee v. Walker, 14 Pa. 139; Cox v. Highley, 100 Pa. 249; Smallcomb's Case, L. R. 5 Eq. 769. Moreover, if the defendants were deceived and defrauded they were bound to assert their claims promptly and without unreasonable delay; but, having slept upon their alleged right, and by their course of conduct led the defendants to believe that no suit would be brought or claim made on account of the original stock subscriptions, they cannot now be heard in a court of equity, nor indeed in a court of law. Laches and neglect are always discountenanced. Nothing can call a court of equity into activity but conscience, good faith and reasonable diligence: Pearsoll v. Chapin, 44 Pa. 9; Angell on Limitations, § 25, 190; Farnam v. Brooks, 9 Pick. 212; Upton v. Tribilcock, 91 U. S. 45; Bigelow on Fraud, 443-4; Craig v. Bradley, 26 Mich. 353; Beckford v. Wade, 17 Ves. 89, 97; Jones v. Turberville, 2 Ves. Jr., 11; Smith's Case, L. R. 2 Ch. App. 613; Denton v. Macneill, L. R. 2 Eq. 355.
Mr. Shiras and Mr. Herron, in reply:
1. The case comes clearly within the statutes conferring equity jurisdiction, both on the ground of fraud and partnership. That there may be a partial remedy at law, is not enough to oust jurisdiction in equity; it must be a full, complete and adequate remedy, and if it fall short of this, equity is the proper forum: Christy's App., 92 Pa. 157; Koch's App., 93 Pa. 434, 442; Socher's App., 104 Pa. 609; McGowin v. Remington, 12 Pa. 56; Skilton v. Webster, Bright. 203.
2. It is true the claims of the complainants are not joint, but several; yet they arose out of the same subject matter, are identical in origin and character, are against the same defendants, the old stockholders, jointly, and are established almost wholly by the very same evidence; the same relief is asked in behalf of each complainant, and finally, the litigation could not be brought to a final decree or adequate relief be obtained, except in a single suit in which all the parties are joined, either as complainants or defendants. In view of these facts, we submit the bill is not objectionable on the ground of misjoinder of parties, or multifarious: Adams' Eq., 312-14; Story's Eq. Pl., §§ 284, 531, 532, 533, 535, 539; 1 Daniell's Ch. Pr. & Pl., 334 n., 335 n., 341; Cumberland V. R. Co.'s App., 62 Pa. 218, 227.
3. That the statute of limitations does not begin to run in cases of fraud until the discovery of the fraud, the additional cases are cited: Jones v. Conoway, 4 Y. 109; Hughes v. First N. Bank, 110 Pa. 428; Longworth v. Hunt, 11 Ohio St. 199, 200; Bailey v....
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