Parker v. Kuhn

• Decision Date: 16 March 1887
• Citation: 32 N.W. 74,21 Neb. 413
• Parties: PARKER v. KUHN AND OTHERS.
• Court: Nebraska Supreme Court

21 Neb. 413

32 N.W. 74

PARKER

v.KUHN AND OTHERS.

Supreme Court of Nebraska.

March 16, 1887.

Syllabus by the Court.

An action for relief, on the ground of fraud, may be commenced at any time within four years after a discovery of the facts constituting the fraud, or of facts sufficient to put a person of ordinary intelligence and prudence on an inquiry which, if pursued, would lead to such discovery.¹

An action by a junior incumbrancer, to redeem land sold at execution or judicial sale, being an action for relief other than those specifically mentioned, must be brought within four years after the cause of action shall have accrued.

Appeal from district court, Douglas county.H. D. Estabrook, ( E. W. Simeral and Howard B. Smith, of counsel,) for appellant.

The defendants are fully barred by the statute of limitations. Ang. Lim. §§ 187, 188, and cases cited; Wood, Lim. § 382; Badger v. Badger, 2 Wall. 87;Martin v. Smith, 1 Dill. 85:Carr v. Hilton, 1 Curt. 390;Nudd v. Hamblin, 8 Allen, 130;Farnam v. Brooks, 9 Pick. 212;Way v. Cutting, 20 N. H. 187;Ferris v. Henderson, 12 Pa. St. 49; Stearns v. Page, 7 How. 819;Smith v. Talbot, 18 Tex. 774;Welton v. Merrick Co., 16 Neb. 83, 20 N. W. Rep. 111.

George W. Doane, for appellees.

When would an action for relief on the ground of fraud outlaw? This depends a great deal upon the forum in which relief is sought. In a court of law the cause of action accrues, perhaps, upon the perpetration of the fraud, whether known to the injured party or not, and the statute of limitations runs from that time. In a court of equity the cause of action is never deemed to have accrued until the discovery of the fraud, and even then the statute of limitations does not always bar the action. From courts of chancery we have such exclamations as these: “No length of time can prevent the unkenneling of a fraud.” Per Lord ERSKINE. “The next question in effect is whether delay will purge a fraud? Never, while I sit here. Every delay arising from it adds to the injustice, and multiplies the oppression.” Per NORTHINGTON, J., in Alden v. Gregory, 2 Eden, 285. And Justice STORY has said, in Prevost v. Gratz, 6 Wheat. 497:“When fraud is imputed and proved, length of time ought not, upon principles of eternal justice, to be admitted to repel relief. On the contrary, it would seem that the length of time during which the fraud has been successfully concealed and practiced is rather an aggravation of the offense, and calls more loudly upon the court of equity to give ample and decided relief.” And in the case of Piatt v. Longworth, 27 Ohio St. 198, the court says that equity has been ready to grant relief after long lapses of time, and in case of fraud, in some cases, after thirty years from the discovery of the fraud. Section 12 of our Civil Code provides that an action for relief on the ground of fraud outlaws within four years after the cause of action shall have accrued; “but the cause of action in such case shall not be deemed to have accrued until the discovery of the fraud.”

The question then arises, what is “the discovery of the fraud?” It has been uniformly held that the discovery of the fraud means the discovery of all the facts and circumstances which by law have been denominated “badges of fraud.” Thus, in Bailey v. Glover, 21 Wall. 348, MILLER, J., observes: “The weight of authority is in favor of the proposition that, when a party injured by the fraud remains in ignorance of it, without any want of diligence on his part, the bar of the statute does not begin to run until the fraud is discovered, though there is no special circumstance or effort of the party committing the fraud to conceal it from the knowledge of the other party. In Shannon v. White, 6 Rich. Eq. 96, the court says: “Suppose some one were to tell him that a fraud had been committed: it would not be sufficient unless he was informed of the facts constituting it a fraud, or put into possession of a clue by which, with proper diligence, he might come to a knowledge of the facts. He would not be required to enter into a contest which would end in disappointment or defeat, or to court a shadowy and intangible phantom which was sure to elude his grasp. That the plaintiffs, or some of them, had a strong suspicion of the fraud at the very moment of its perpetration, is absolutely clear from the evidence; but we are not satisfied that the plaintiffs had such a knowledge of the facts constituting the fraud as would have authorized them to proceed with any reasonable prospect of success.” In Way v. Cutting, 20 N. H. 194, (a leading case,) the court says: “When the judge intimated in that case that the means of detecting the fraud were the same thing as the actual knowledge of it, he must have intended such means as the parties in that case possessed, where all the sources of information which the defendant possessed had been examined, in fact, by competent persons to the satisfaction of all concerned; in short, ‘the means of knowledge’ intended by the judge are the same means possessed by the parties charged with the fraud,--means which place the two parties on equal ground, which is not the case when the seller has quieted the vigilance of the buyer by false assertions, and directed his attention from inquiries upon which he might otherwise have been put.”

The rule, as formulated by these decisions, is substantially as follows: A cause of action for relief on the ground of fraud is barred four years after the action accrued; but the cause of action shall not be deemed to have accrued until the discovery of the fraud, (meaning a full, complete, and absolute knowledge of the facts constituting the fraud,) provided the person defrauded shall be reasonably diligent in detecting the fraud. Reasonable diligence, it has been so often said, depends upon the particular circumstances of a particular case. The proposition raised by the facts in the case at bar is as follows: Is a party living 1,000 miles or more from the place where the fraud was perpetrated and the property involved is located, at a period when traveling facilities are primitive and traveling expensive, where vague rumors have reached him that the courts had decreed the foreclosure of a mortgage, and that all the lands had passed into other hands under the guardianship and security of the court,--is a party, under such circumstances, required to come from so great a distance, at so great an expense, with no assurance, indeed with no apparent prospect, of learning anything or obtaining his rights, simply because somebody told him that the mortgage was, in that party's opinion, fraudulent? All that the law calls for is reasonable diligence. In other words, that a man cannot close his eyes supinely to facts thrust upon his notice, and which, without any expense or inconvenience to himself, he might follow to their conclusion. In Marshall v. Buchanan, 35 Cal. 268, the court says: “The allegation that a defrauded creditor has been tardy in his efforts to unravel the fraud come with bad grace from those who secretly concocted it.” And in Hallett v. Collins, 10 How. 174, the court says: “The absence of the complainant from the state, and the late discovery of the fraud, sufficiently account for the delay and apparent laches in prosecuting his claim.” In the case of Linington v. Strong, reported in the December, 1883, number of the American Law Register, p. 812, (and appearing in 107 Ill. 295,) the following principle is enunciated: “While the law requires of all persons the exercise of reasonable prudence in the business of life, and does not permit one to rest indifferent in reliance upon the interested representations of an adverse party, still there is a certain limit to this rule, and, as between the original parties, when it appears that one has been guilty of an intentional and deliberate fraud, by which, to his knowledge, the other has been misled and influenced in his action, he cannot escape the legal consequence of his fraudulent conduct by saying that the fraud might have been discovered by the party whom he deceived exercising reasonable care and diligence.” In the recent case of Kansas Pac. R. Co. v. McCormick, 20 Kan. 111, BREWER, J., in interpreting a statute identical with ours, used the following language: “The question is, when did the plaintiff discover the wrong? and not, was he diligent in its investigation? The question is one of time, and not of conduct. The time of discovery is a matter affecting solely the statute of limitations, and that statute has regard to the time, not to the manner, of discovery.” In the case of Piatt v. Longworth, supra, it is said: “Until notice of all the facts, the time does not begin to run. The burden of proving notice rests upon the party alleging it.” And again, in the case of Shannon v. White, already cited, it is said: “On the trial of this question of notice, it was incumbent upon the defendant to prove that the plaintiff had notice of the fraud more than four years prior to the filing of the bill.” And such has been the ruling in Harlin v. Stevenson, 30 Iowa, 371;Baldwin v. Tuttle, 23 Iowa, 66;Relf v. Eberly,Id. 467; Sears v. Shafer, 6 N. Y. 268;Godbold v. Lambert, 8 Rich. Eq. 155;Long v. Mulford, 17 Ohio St. 484. And this rule, aside from the weight of precedent, is on principle correct. The reason for the rule is that it is not necessary for a party to allege want of notice, as it is a negative fact, not possible to prove; while to allege notice is an affirmative fact, easy of proof. “Ignorance cannot be proved.” Per JOHNSON, J., in Hopkins v. Mazyck, Hill, Ch. 251.

The following authorities have held that time does not begin to run to bar a bill for relief against fraud until the fraud is discovered; and where the bill was filed to set aside a fraudulent conveyance, and it did not appear when the fraud was discovered, there was no bar. Baker v. Dobyns, 4 Dana, 226;Raymond v. Simonson, 4 Blackf. 77. The...