Chase Securities Corporation v. Donaldson, No. 110

CourtUnited States Supreme Court
Writing for the CourtJACKSON
Citation89 L.Ed. 1628,325 U.S. 304,65 S.Ct. 1137
Docket NumberNo. 110
Decision Date21 May 1945
PartiesCHASE SECURITIES CORPORATION v. DONALDSON et al

325 U.S. 304
65 S.Ct. 1137
89 L.Ed. 1628
CHASE SECURITIES CORPORATION

v.

DONALDSON et al.

No. 110.
Argued Feb. 27, 1945.
Decided May 21, 1945.
Rehearing Denied June 18, 1945.

See 325 U.S. 896, 65 S.Ct. 1561.

Appeal from the Supreme Court of the State of Minnesota.

Page 305

Mr. Henry Root Stern, of New York City, for appellant.

Mr. Benedict S. Deinard, of Minneapolis, Minn., for appellee.

Mr. Justice JACKSON delivered the opinion of the Court.

This appeal from a judgment of the Supreme Court of Minnesota attacks as violative of the Fourteenth Amendment a provision of the Minnesota statutes enacted as part of a general revision of the Minnesota Securities or Blue Sky Law. Its effect upon appellant was to lift the bar of the statute of limitations in a pending litigation, which appellant contends amounts to taking its property without due process of law.

This action was brought in state court in November, 1937, to recover the purchase price of 'Chase units,' sold by appellant in Minnesota to the appellee's testate August

Page 306

10, 1929. The 'units' had not been registered as required by the laws of that state. The action was based in part on illegality of the sale, but it also was grounded on common-law fraud and deceit. Defendant relied among other defenses on the statute of limitations. Plaintiff countered that the running of the statute had been suspended because defendant had withdrawn from the state and the statute did not run during its absence. The case was tried by the court without a jury. It found that there was a sale in violation of the Blue Sky Law, that the Minnesota 6-year statute of limitations, Mason's Minn.St. 1927, § 9191, applying to actions 'upon a liability created by statute' governed the case but had been tolled b withdrawal of the appellant from the state in 1931. Judgment was therefore rendered for the purchase price adjusted for interest and dividends and the Court found it unnecessary to pass on the fraud issues.

The Supreme Court of Minnesota reversed.1 It held by reference to a companion case2 that the statute of limitations had not been tolled by the appellant's absence from the state because it had designated agents to receive service of process after its departure as required by statute. The case was remanded on January 10, 1941 without prejudice to further proceedings on 'issues other than that of the tolling of the statute of limitations.'

While proceedings were pending in the lower court, the legislature enacted a statute, effective July 1, 1941, which amended the Blue Sky Law in many particulars not pertinent here. The section in question added a specific statute of limitations applicable to actions based on violations of the Blue Sky Law3 as to which there had been no provi-

Page 307

sion except a general statute of limitations. Under the former law the limitation on actions for fraud did not commence to run until its discovery. Under the new law, actions for failure to disclose non-registration or for misrepresentations concerning registration, or for falsity of representations implied from the fact of sale, all of which grounds were set up in this action, must be brought within six years of delivery of the securities. Aggrieved pur-

Page 308

chasers were therefore denied future benefit of suspension of the period of limitation during the time such frauds or grounds of action remained undiscovered. But it also was provided that where delivery had occurred more than five years prior to the effective date of the Act, which was the fact in this case, the action might be brought within one year after the law's enactment. The effect of this was to abolish any defense that appellant might otherwise have made under the Minnesota statutes of limitation.

Both appellant and appellee moved in the trial court, shortly after the Act became effective, for supplemental findings. Appellant asked findings in its favor on the theory that the action was barred, that the new Act was inapplicable, and that there was no proof of actual fraud. Appellee contended that the 1941 law applied and that by reason of it recovery was not barred. The trial court determined that the plaintiff was entitled to recover in tort both on the ground of an illegal sale and on the ground of common-law fraud and deceit; that plaintiff had not discovered the deception until shortly before the action was begun; that the provisions of the 1941 Act applied to the plaintiff's 'cause of action, or any of the separate grounds of relief asserted by plaintiff,' and operated to extend the time for the commencement of action thereon to July 1, 1942 and that plaintiff's action was therefore commenced within the time limited by the statutes of Minnesota. The appellant moved for amended findings and then for the first time raised the federal constitutional question that the statute, if applied so to lift the bar, deprived appellant of property without due process of law, in violation of the Fourteenth Amendment. Its motion was denied.

Appealing again to the Supreme Court of Minnesota, appellant among other things urged this federal constitutional question. The Supreme Court again did not reach decision of the fraud aspects of the case. It held that the

Page 309

Blue Sky Law required the securities to be registered and was violated by the sale; that the action was one in tort to recover as damages the purchase price of unregistered securities sold in Minnesota; that the new limitations statute was applicable and had the effect of lifting any pre-existing bar of the general limitation statute and that in so doing it did not violate the due process clause of the Fourteenth Amendment. The court relied on Campbell v. Holt, 115 U.S. 620, 6 S.Ct. 209, 29 L.Ed. 483, saying: 'We do not find that Campbell v. Holt has been reversed or reconsidered and we regard it as sound law; and, certainly, so far as the Federal Constitution is concerned, it is binding on this court until reversed by the Supreme Court.'4 The judgment was therefore affirmed, rehearing was sought and denied,5 and the case brought here by appeal.

Page 310

As the case stood in the state courts it is not one where a defendant's statutory immunity from suit had been fully adjudged so that legislative action deprived it of a final judgment in its favor. The lower court had decided against appellant. The Supreme Court had confined its reversal to one question—whether the defendant's withdrawal from the state tolled the running of the statute of limitations. The case was returned to the lower court without prejudice to any other question.

Appellant, however, insists that it was sued upon two separate and independent causes of action, one being 'upon a liability created by statute,' and that its immunity from suit on that cause of action had been finally adjudicated. The argument is not consistent with the holdings of the state court. The Blue Sky Law imposes duties upon a seller of certain securities, but it does not expressly define a liability for their omission or create a cause of action in favor of a buyer of unregistered securities. The state courts, nevertheless, held that such an illegal sale will support a common-law action in tort. Drees v. Minnesota Petroleum Co., 189 Minn. 608, 250 N.W. 563. And on the second appeal of this case the court said: 'The action was brought in tort to recover as damages the purchase price of unregistered securities * * *. It also sought recovery on the ground of deceit based on misrepresentation, but, in view of our disposition of the case we need not con-

Page 311

sider that phase of the case.'6 It is not uncommon that a single cause of action in tort will rest both on omission of a statutory duty and on common-law negligence; the two bases do not necessarily multiply the causes of action. Cf. Baltimore Steamship Co. v. Phillips, 274 U.S. 316, 321, 47 S.Ct. 600, 602, 71 L.Ed. 1069; New York Central & H.R.R. Co. v. Kinney, 260 U.S. 340, 346, 43 S.Ct. 122, 123, 67 L.Ed. 294; Seaboard Air Line Ry v. Koennecke, 239 U.S. 352, 354, 36 S.Ct. 126, 127, 60 L.Ed. 324. This appears to be permitted by the law of Minnesota. Tuder v. Oregon Short Line R. Co., 131 Minn. 317, 318, 319, 155 N.W. 200. It is true that the Supreme Court in disposing of the first appeal relied on a companion case in which it was said that 'plaintiff must be considered to have sued 'upon a liability created by statute'.'7 The pleadings in the companion case are not before us. No separate statement of a statutory cause of action is set out in the complaint in this case. The state court did not dispose of the liability for statutory violation as a separate cause of action by dismissal or otherwise. We cannot say that it was finally or separately adjudicated. The state courts seem to have treated the complaint as setting up several bases for a single common-law cause of action in tort which had been remanded for retrial at the tim the new statute was enacted. We must regard it in that same light.

The substantial federal questions which survive the state court decision are whether this case is governed by Campbell v. Holt and if so, whether that case should be reconsidered and overruled.

In Campbell v. Holt, supra, this Court held that where lapse of time has not invested a party with title to real or personal property, a state legislature, consistently with the Fourteenth Amendment, may repeal or extend a statute of limitations, even after right of action is barred thereby, restore to the plaintiff his remedy, and divest the defend-

Page 312

ant of the statutory bar. This has long stood as a statement of the law of the Fourteenth Amendment, and we agree with the court below that its holding is applicable here and fatal to the contentions of appellant.8

Appellant asks that in case we find Campbell v. Holt controlling it be reconsidered and overruled. We are reminded that some state courts have not followed it in...

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601 practice notes
  • SEC v. Lorin, No. 90 Civ. 7461 (HB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • November 21, 1994
    ...begin a "proceeding in court for the collection of such tax ... at any time" (emphasis added)); see also Chase Secs. Corp. v. Donaldson, 325 U.S. 304, 314, 65 S.Ct. 1137, 1142, 89 L.Ed. 1628 (1945) (stating that because the "shelter" of limitation periods is not a fundamental right, they ar......
  • Cahn v. Berryman, NO. S-1-SC-35302
    • United States
    • New Mexico Supreme Court of New Mexico
    • November 20, 2017
    ...v. X-Ray Associates of New Mexico, P.C. , 1996-NMSC-035, ¶ 37, 121 N.M. 821, 918 P.2d 1321 (quoting Chase Securities Corp. v. Donaldson , 325 U.S. 304, 314, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945) ) (alterations in original) (footnote omitted):There is no statute of limitations that does not pr......
  • Plaut v. Spendthrift Farm Inc., 931121
    • United States
    • United States Supreme Court
    • April 18, 1995
    ...Clause, after the cause of the action arose and even after the statute itself has expired. See, e.g., Chase Securities Corp. v. Donaldson, 325 U.S. 304, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945). But that also does not set statutes of limitations apart. To mention only one other broad category of......
  • Banco Nacional de Cuba v. Farr
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 30, 1965
    ...after remand from a state appellate court to do exactly what Congress has directed this court to do. Chase Securities Corp. v. Donaldson, 325 U.S. 304, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945). In the fact of a constitutional assertion of power by Congress, the courts have no choice but to accom......
  • Request a trial to view additional results
599 cases
  • SEC v. Lorin, No. 90 Civ. 7461 (HB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • November 21, 1994
    ...begin a "proceeding in court for the collection of such tax ... at any time" (emphasis added)); see also Chase Secs. Corp. v. Donaldson, 325 U.S. 304, 314, 65 S.Ct. 1137, 1142, 89 L.Ed. 1628 (1945) (stating that because the "shelter" of limitation periods is not a fundamental right, they ar......
  • Cahn v. Berryman, NO. S-1-SC-35302
    • United States
    • New Mexico Supreme Court of New Mexico
    • November 20, 2017
    ...v. X-Ray Associates of New Mexico, P.C. , 1996-NMSC-035, ¶ 37, 121 N.M. 821, 918 P.2d 1321 (quoting Chase Securities Corp. v. Donaldson , 325 U.S. 304, 314, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945) ) (alterations in original) (footnote omitted):There is no statute of limitations that does not pr......
  • Plaut v. Spendthrift Farm Inc., 931121
    • United States
    • United States Supreme Court
    • April 18, 1995
    ...Clause, after the cause of the action arose and even after the statute itself has expired. See, e.g., Chase Securities Corp. v. Donaldson, 325 U.S. 304, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945). But that also does not set statutes of limitations apart. To mention only one other broad category of......
  • Banco Nacional de Cuba v. Farr
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 30, 1965
    ...after remand from a state appellate court to do exactly what Congress has directed this court to do. Chase Securities Corp. v. Donaldson, 325 U.S. 304, 65 S.Ct. 1137, 89 L.Ed. 1628 (1945). In the fact of a constitutional assertion of power by Congress, the courts have no choice but to accom......
  • Request a trial to view additional results
2 books & journal articles
  • McDonald v. Sun Oil: The Ninth Circuit's Constitutionally Questionable Expansion of CERCLA's Toxic Tort Discovery Rule
    • United States
    • Environmental Law Reporter Nbr. 39-3, March 2009
    • March 1, 2009
    ...U.S. 620 (1885). 34. Id . at 623. 35. Id . at 624. 36. 194 U.S. 451 (1904). 37. Id . at 457. 38. 268 U.S. 633 (1925). 39. Id . at 637. 40. 325 U.S. 304 (1945). 41. Id . at 316. 42. 428 U.S. 1 (1976). 43. 467 U.S. 717 (1984). 44. 503 U.S. 181 (1992). process rights insofar as it applied to m......
  • THE DUTY NOT TO CONTINUE DISTRIBUTING YOUR OWN LIBELS.
    • United States
    • Notre Dame Law Review Vol. 97 Nbr. 1, November 2021
    • November 1, 2021
    ...Torts, 50 State Statutory Surveys, 50 STATE SURVEYS (2021), Westlaw 0020 SURVEYS 115. (64) See, e.g., Chase Sec. Corp. v. Donaldson, 325 U.S. 304, 314 (65) See Eugene Volokh, Libel by Omission of Exculpatory Legal Decisions, 97 NOTRE DAME L. REV. 351, 354 (2021). (66) Harte-Hanks Commc'ns, ......

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