Bremond v. McLean

• Decision Date: 01 January 1876
• Parties: PAUL BREMOND v. JAMES B. MCLEAN.
• Court: Texas Supreme Court

45 Tex. 10

PAUL BREMOND

v.JAMES B. MCLEAN.

Supreme Court of Texas.

1876.

APPEAL from Harris. Tried below before the Hon. James Masterson.

The petition with amendments in this cause presents a suit by James B. McLean against Paul Bremond for the sum of $1,417.23, and ten per cent. interest thereon from August 1, 1861, and, as ground of action, alleges substantially that during the years 1858 and 1859 the defendant, Paul Bremond, was engaged in carrying out a contract of construction with the Houston and Texas Central Railway Company, and gave employment to the plaintiff as a subcontractor.

That plaintiff McLean, in pursuance thereof, rendered service to defendant Bremond, and performed for him labor of great value, and that in payment of a portion of the indebtedness thus incurred the said Bremond delivered to plaintiff a promissory note, set forth in the petition, as follows:

+---------------------------------------+
                ¦“$1,417.23.¦WHEELOCK, August   1, 1858.¦
                +---------------------------------------+
                

Three years after date I promise to pay to the order of myself fourteen hundred and seventeen 23/100 dollars, value received, payable at the office of Houston and Texas Central Railroad, with ten per cent. interest after maturity.

I. C. SPENCE.”

Which said note is indorsed “I. C. Spence.”

That at the delivery of said note the plaintiff McLean requested defendant Bremond to indorse it; this the defendant refused to do, but did then and there falsely, fraudulently, and deceitfully, with intent to defraud, cheat, deceive, and injure plaintiff, represent and declare to plaintiff and assure him that the said promissory note was and is known as and called a railroad-stock note, and that said note had been given by said Spence to said Houston and Texas Central Railroad Company as and for subscription by said Spence to the capital stock of said company, upon the payment of which its equivalent in value in the stock of said railroad company would be issued, which rendered said note of great value, and that said defendant well knew at the time that all these representations, declarations, and assurances so made by him were false and untrue in fact.

That plaintiff relied upon the truth of these representations, and, trusting in defendant's honesty, integrity, and good faith, accepted and received said promissory note as a stock note for stock in the Houston and Texas Central Railway in perfect good faith in settlement of said portion of defendant's indebtedness to him, to wit, the sum of $1,417,23, and was influenced and induced thereto solely by said representations and assurances, and that the same were made by defendant to give value to said promissory note. The petition further discloses that it had but recently, to wit, on the _____ day of May, 1871, come to the knowledge of plaintiff that said note is not in fact and in truth a railroad-stock note, and is in no manner connected with the Houston and Texas Central Railroad, and that all of said defendant's representations in regard to the same are and were entirely false, and that plaintiff continued ignorant of the falsity of the same, and could not have discovered by reasonable diligence that the same were false and had been fraudulently made by defendant to deceive plaintiff, and that said note was not in fact and in truth a railroad-stock note, until the aforesaid _____ day of May, 1871; and further, by way of replication, alleged absence from the State of Texas; that suit was filed on said note against said Spence to the first term of District Court after maturity of same, and all diligence pursued by plaintiff, but that Spence, at that time and ever after, was insolvent, and that said note is worthless and uncollectable.

The petition was filed July 20, 1872.

The defendant filed general demurrer, general denial, and pleaded the statute of limitations, laches in the assertion of plaintiff's claim, and long acquiescence by plaintiff in the alleged misrepresentations of defendant, and further denied the charges of fraud and misrepresentation, and pleaded ““not guilty,” and denied his absence from the State sufficient length of time to save the bar of the statute of limitations.

Demurrer was overruled; verdict and judgment for the amount of the note. Motion for new trial was refused, and Bremond appealed.

Crosby & Hill, for appellant, cited McDonald v. McGuire, 8 Tex., 370;Ford v. Clements, 13 Tex., 597;Lewis v. Houston, 11 Tex., 647;Smith v. Talbot, 18 Tex., 774;Smith v. Fly, 24 Tex., 345;Munson v. Hallowell, 26 Tex., 480; Ang. on Lim., sec. 189; Austin v. Talk, 20 Tex., 164;Badger v. Badger, 2 Wall., 95.

Goldthwaite & Turner, for appellee.

An unbroken current of English authority, and a very large weight of authority in this country, fully sustains the doctrine as originally laid down in Bree v. Holbeck (2 Douglas's Reports, 655) in England, and in Jones v. Conway (4 Yeates's Penn. Reports, 109) in this country, that fraud can be successfully replied to the statute of limitations, and that the same only begins to run from the time of the discovery of the fraud.

Statutes of limitations are statutes of repose, and are mainly intended to suppress fraud, by preventing fraudulent and unjust claims from being presented at great distances of time, when the evidence might no longer be within the reach of the party by which they could be repelled.

They ought not, then, to be so construed as to become instruments to encourage fraud, if the law admits of any other interpretation; and cases of fraud, therefore, form an implied exception, to be acted upon by courts of law and equity according to their respective jurisdictions.

Our blended system of law and equity obviates the necessity of preserving these distinctions of law and equity in our practice.

The broad doctrine, as originally laid down by the courts, that fraud, coupled with the ignorance of its perpetration, forms an exception to the statute, and that the same does not begin to run until the fraud is discovered, has been somewhat modified by many of the courts of this country, and especially by the court of our State.

This modification of the rule, as thus broadly laid down, is, that in cases of fraud the statute of limitations begins to run from the discovery of the fraud, or from the time when the same was perpetrated, and might have been discovered by reasonable diligence.

We beg to refer the court to the following authorities in support of the rule as broadly laid down:

Hovenden v. Annesley, 2 Sch. & Lef. R., 634.

“The reason on which the doctrine rests,” says Lord Revesdale, is that “as fraud is a secret thing, and may remain undiscovered for a length of time, during such time the statute of limitation shall not operate, because until discovery the title to avoid it does not completely arise. Angell & Ames on Lim., 5th ed., p. 180, and cases cited; Kerr on Fraud and Mistakes, 309, et seq.; 2 Story's Eq. Jur., sec. 1521 a and note; Ormsby et al. v. Longworth et al., 11 Ohio, 667; Michaud v. Girod, 4 Howard U. S., 561; Stearns v. Page, 7 Howard U. S., 830; Veazie v. Williams, 8 Howard U. S., 158; Curry v. Allen, 34 Cal., 254; Harrel v. Kelly, 2 McCord, S. C., 425; Ferris v. Henderson and Wife, 12 Penn., 49.

This case goes very far, and the attention of the court is specially invited to it. (Bricker v. Lightner's Ex'rs, 40 Penn. R., 199; Biddle v. Murphy, 7 S. & R., 235;Gleson v. Cuttle, 2 Grant, 274;Harrisburg Bank v. Foster, 8 Watts, 16;Way v. Cutling, 20 N. H., 187.)

In this last case it is held that in a case where the plaintiff had a right to rely upon the representations of defendant, the fraudulent misrepresentations of the defendant amounted to a concealment, although the plaintiff has the means of testing the truth and detecting the fraud. See also Henry County v. Winnebago and Drainage Co., 52 Ill., 299. (U. S. Dig., vol. 2, p. 444, sec. 80, (1871.) We give the same as found in the Digest, because the volume containing the same is not accessible to us. (Ericcsin et al. v. Quinn, 47 N. Y., 410;Marshall v. Buchanan, 35 Cal., 264; Jones v. Reese's Ex'rs, 4 Yeates's Penn. R., 159.)

So also it has been held in Indiana. (4 Blackf. Ind. R., 84, 85.) In this case the court say:

“The general principle is well settled that the statute does not affect frauds; but still that rule has its limits. In cases of frauds the statute begins to run from the time the fraud is so fully developed and disclosed as to enable the injured party to see the nature and the extent of the fraud committed.

The statute in good conscience cannot run until the party has a right to commence his suit, and that right cannot accrue in the case of fraud until the injured party is informed of the injury done or fraud committed.”

The courts of this State, as already stated, have somewhat modified the principle, and hold that in case of fraud the statute begins to run from the time the fraud was committed, and might have been discovered by the use of reasonable diligence. (Smith v. Talbot, 18 Tex., 774;Smith v. Fly, 24 Tex., 345;Munson v. Hallowell, 26 Tex., 475.)

In this last case, in a very able opinion by Mr. Justice Moore, the court say, in regard to the statute of limitations, ??It was not intended to deprive a party of redress when ??y the act of the defendant himself he has been deprived of the opportunity of availing himself of it. To give it such a construction would make it a means of encouraging rather than preventing frauds. It is a general principle that no one will be permitted, in a court of justice, to claim protection by means alone of his own fraud. If the plaintiff has had knowledge of it, the statute of course was against him. But if he has been kept in ignorance of his rights by the fraudulent contrivance of the defendant, does not the fraud of the latter estop him from claiming that there has been a delay in prosecuting the suit which his own actions have prevented from being brought at an earlier day?...