Valleytown Tp. v. Women's Catholic Order of Foresters

• Decision Date: 12 November 1940
• Docket Number: No. 4675.,4675.
• Citation: 115 F.2d 459
• Parties: VALLEYTOWN TP. et al. v. WOMEN'S CATHOLIC ORDER OF FORESTERS.
• Court: U.S. Court of Appeals — Fourth Circuit

115 F.2d 459 (1940)

VALLEYTOWN TP. et al. v. WOMEN'S CATHOLIC ORDER OF FORESTERS.

No. 4675.

Circuit Court of Appeals, Fourth Circuit.

November 12, 1940.

Silas G. Bernard, of Asheville, N. C., for appellants.

David H. Henderson and D. E. Henderson, both of Charlotte, N. C., for appellee.

Before SOPER, DOBIE, and NORTHCOTT, Circuit Judges.

SOPER, Circuit Judge.

The holder of certain unpaid coupons upon bonds issued by the Board of County Commissioners of Cherokee County, North Carolina, in behalf of Valley Township, brought suit to recover the face value of the coupons with interest. The defendants set up the defense that all of the claim that became due on or before January 1, 1935, was barred by § 442 of the North Carolina Code of 1919 which provides that all claims against counties, cities and towns of the state shall be presented to the Board of County Commissioners or to the chief officer of the cities and towns, within two years after maturity, or the holders shall be forever barred from a recovery thereon. The District Judge overruled this defense and rendered judgment for $8,800 and interest, the full amount of the claim. He was of the opinion that the case was ruled by Chapter 359 of the Act of March 22, 1937, which amended § 442 of the Code so as to provide that it shall not "apply to claims based upon bonds, notes and interest coupons". See § 442 of the North Carolina Code of 1939. Renewing their contention in this court, the defendants complain that the judgment was excessive in that it included the sum of $3,850 represented by interest coupons which became due and payable more than two years prior to March 22, 1937, when the Act of 1937 was ratified; and, therefore, the question involved in this appeal is whether under the North Carolina decisions the Act of 1937 should be given a retroactive effect so as to revive the right of action on coupons that were barred when the act was ratified.

The rule is firmly established in this country that a vested right, such as the title to property, acquired through the operation of a state statute of limitation, cannot be disturbed by later legislative action without violation of the due process clause of the Fourteenth Amendment of the Federal Constitution. Campbell v. Holt, 115 U.S. 620, 624, 6 S.Ct. 209, 29 L.Ed. 483; Stewart v. Keyes, 295 U.S. 403, 417, 55 S.Ct. 807, 79 L.Ed. 1507; Peiser v. Griffin, 125 Cal. 9, 57 P. 690; Dolenty v. Broadwater County, 45 Mont. 261, 122 P. 919; Breckenridge Cannel Coal Co. v. Scott, 121 Tenn. 88, 114 S.W. 930; Tennessee Coal, Iron & R. Co. v. McDowell, 100 Tenn. 565, 47 S.W. 153. There is division of authority, however, on the question whether the fall of the bar against an action vests a right of immunity, that is protected by the same clause in the Federal Constitution, when the demand is on contract and the title to property is not involved. See the discussion in the majority and minority opinions of the Supreme Court in Campbell v. Holt, supra. Some state decisions follow the rule, approved in the minority opinion in Campbell v. Holt, supra, that a defense acquired under a statute of limitation is a vested right which is beyond the power of the legislature to disturb whether or not a right of property is involved in the claim. Board of Education v. Blodgett, 155 Ill. 441, 40 N.E. 1025, 1027, 31 L.R.A. 70, 46 Am.St.Rep. 348; Lawrence v. City of Louisville. 96 Ky. 595, 29 S.W. 450, 451, 27 L.R.A. 560, 49 Am.St.Rep. 309; Eingartner v. Illinois Steel Co., 103 Wis. 373, 79 N.W. 433, 74 Am.St.Rep. 871; Rockport v. Walden, 54 N.H. 167, 173, 20 Am. Rep. 131. Other cases reach the same result by interpreting the amendment to apply prospectively only, either on the ground that a retroactive interpretation would be unconstitutional under the State Constition, or under the rule of construction that a statute will not be given retroactive effect unless the legislature clearly so provides. Bussey v. Bishop, 169 Ga. 251, 150 S.E. 78, 80, 67 A.L.R. 287; Fullerton-Krueger Lumber Co. v. Northern Pacific R. Co. 266 U.S. 435, 45 S.Ct. 143, 69 L.Ed. 367; Hopkins v. Lincoln Trust Co., 233 N.Y. 213, 135 N.E. 267; Rhodes v. Cannon, 112 Ark., 6, 164 S.W. 752. On the other hand, there are decisions which hold with the majority opinion in Campbell v. Holt, supra 115 U.S. 620, 6 S.Ct. 213, 29 L.Ed. 483, that no one has a vested right to rely on a statute of limitation to defeat a debt or other personal obligation, and therefore no vested right is violated in such a case "when the legislature says time shall be no bar, though such was the law when the contract was made." Jackson Hill Coal & Coke Co. v. Board of Commissioners of Sullivan County, 181 Ind. 335, 104 N.E. 497; Sleeth v. Murphy, Morris, Iowa, 321, 41 Am.Dec. 232; Orman v. Van Arsdell, 12 N.Mex. 344, 78 P. 48, 67 L.R. A. 438; McEldowney v. Wyatt, 44 W.Va. 711, 30 S.E. 239, 45 L.R.A. 609, and note.

The instant case must be decided in accordance with the law of North Carolina. It is conceded that under this law a state statute which seeks to revive a claim, barred by a statute of limitation, against a vested right of property, violates Article 1 § 17 of the State Constitution which provides that "no person ought to be * * * deprived of his life, liberty or property, but by the law of the land". It violates also, in the view of the Supreme Court of North Carolina, the due process clause of the Fourteenth Amendment of the Federal Constitution. In Booth v. Hairston, 193 N.C. 278, 136 S.E. 879, 57 A.L.R. 1186, where a right of property was involved, the court quoted with approval from Campbell v. Holt, 115 U.S. 620, 623, 6 S.Ct. 209, 29 L.Ed. 483, the following passage which relates to the disturbance of vested rights by the suspension or repeal of a limitation statute, and in Wilkes County v. Forester, 204 N.C. 163, 168, 167 S.E. 691, 694, which involved the very same question, the same passage was quoted in the following terms: "In Campbell v. Holt, 115 U.S. 620 at page 623, 6 S.Ct. 209, 211, 29 L.Ed. 483, it is said: `It may, therefore, very well be held that, in an action to recover real or personal property, where the question is as to the removal of the bar of the statute of limitations by a legislative act passed after the bar has become perfect, such act deprives the party of his property without due process of law. The reason is, that, by the law in existence before the repealing act, the property had become the defendants'. Both the legal title and the real ownership had become vested in him, and to give the act the effect of transferring this title to plaintiff, would be to deprive him of his property without due process of law.' See Dunn v. Beaman, 126 N.C. 766 at page 770, 36 S.E. 172.' Booth v. Hairston, 193 N.C. 278 at page 286, 136 S.E. 879, 883, 57 A.L.R. 1186. Although the Campbell Case, supra, is not applicable to the facts in this action, it has been frequently cited to sustain them."

Following this statement the court quoted from its own decision in Dunn v. Beaman, 126 N.C. 766, 770, 36 S.E. 172, 173, as follows: "The ruling that, though a debt is barred by the statute of limitation, the legislature may remove the bar by repealing the limitation after it has accrued, is within the reasoning of Pearson, C. J., in Hinton v. Hinton, 61 N.C. 410, and is sustained by Justice Miller in Campbell v. Holt, 115 U.S. 620, 6 S.Ct. 209, 29 L.Ed. 483, decided in 1885; the court in the latter case holding that this is true as to a debt, though not as to the title to property which has ripened, because time does not pay the debt, but time may vest the right of property. On the other hand, it has been held by the supreme court of this state (1884) in Whitehurst v. Dey, 90 N.C. 542, that the legislature cannot revive a right of action as to a debt when it has become barred by the lapse of time; though it is true the decision was not necessary to the disposition of that case. The point is an interesting and important one, but it is not necessary that we pass upon it, for there is no state of facts to which it is applicable."

From these references to Campbell v. Holt, supra, in the North Carolina cases, the plaintiff in the pending case infers that the state court has adopted the distinction drawn in that case between claims hostile to vested rights and claims based on contract, and also the conclusion drawn therefrom that claims of the sort first mentioned cannot be revived by legislative act, but the latter may be, even when barred by limitations.

This inference, we think, is not tenable when the trend of the North Carolina decisions as a whole is considered. It was distinctly held in Whitehurst v. Dey, 90 N. C. 542, that an action on open account barred by limitations was not revived by a statute enacted after the bar had fallen. The court held that a reasonable interpretation of the act would confine it to claims that had not already become barred, and that such must be assumed to have been the intention of the legislature under the rule that where two reasonable constructions can be made, one constitutional and the other unconstitutional, the former will be applied. The court said (90 N.C. pages 545, 546):

"If, however, we are compelled by the general words used to extend the enactment so as to embrace claims which had become remediless by action at the time of its passage, and impart new life and activity to the obligation, we should be disposed to hold its operation in these cases to be an impairment of vested rights and as falling within the inhibition of the federal constitution, notwithstanding the doubt expressed by Mr. Justice Reade in Pearsall v. Kenan, 79 N.C. 472 28 Am.Rep. 336, based upon the ruling in Hinton v. Hinton, Phil., 410 61 N.C. 410.

"The adjudications in the states are numerous to the point that while the legislature may extend the time or shorten it, leaving a reasonable interval, in which the plaintiff may and must pursue his remedy against his...