Opinion
Argued June 23d 1869
Decided September 25th, 1869
George F. Comstock, for the appellant.
Daniel Pratt, for the respondent.
The Revised Statutes provided that bills for relief, on the ground of fraud, shall be filed within six years after the discovery, by the aggrieved party, of the facts constituting such fraud, and not after that time (2 R.S., 301, § 51); and this statute was held to give six years after the discovery of the fraud, on a bill filed, in cases where there was a concurrent remedy at law. ( Mayne v. Griswold, 3 Sandf. S.C.R., 463; 1 Edw. Ch. R., 343.) The Code seems to have changed this rule, and limits the action for relief on the ground of fraud, in such cases, to that class of actions, which were solely cognizable by a Court of Chancery.
The language of the sixth subdivision of section ninety-one of the Code, reads as follows: "An action for relief on the ground of fraud, in cases which heretofore were solely cognizable by the Court of Chancery, the cause of action in such case not to be deemed to have accrued, until the discovery by the aggrieved party, of the facts constituting the fraud." (Code, § 91, sub. 6.)
This action was not solely cognizable by a Court of Chancery. The jurisdiction in Chancery was concurrent. The plaintiff could obtain complete relief in a court of law, upon the facts appearing in this case. The case does not fall under the ninety-seventh section of the Code, which provides that an action for relief not heretofore provided for, must be commenced within ten years after the cause shall have accrued.
The case is provided for by the fifth subdivision of section ninety-one of the Code.
In an action at law, the plaintiff was limited to six years, and could not help his case out by alleging a discovery of the fraud within six years. (20 J.R., 48; 17 W.R., 202.)
The judgment of the Supreme Court must be affirmed.
The fraud, which the defendant perpetrated upon his copartner on the 6th day of May, 1854, was the legal basis on which the plaintiff's right to maintain this action depended; and that consisted of such misrepresentations and concealments as related to the account contained on an unindexed page of the ledger, the existence of which was unknown to the other partner. No other fraud was alleged in the case or admitted on the trial, and no proof, beyond the admissions made, was given by either party. It was by means of those concealments and representations, and they were affirmative and positive in their character, that the copartner, who was deceived by them, was induced to pay a larger amount for the defendant's interest in the business and property of the firm than he was legally bound to pay, upon the understanding under which the sale was made. In consequence of the deception, which he successfully practiced upon his copartner, the defendant received, for his interest in the firm, the sum of $1,376.73 more than he was entitled to have according to the spirit and intent of the agreement. As no other fraud was alleged in the complaint or disclosed by the admissions made, nothing was shown that would support the demand for a general accounting. The right of the plaintiff to redress was, consequently, confined to the concealments and misrepresentations already mentioned, relating to the state of the defendant's own accounts with the firm.
The existence of the fraud, which the defendant had perpetrated, was discovered in December, 1855, after the defrauded partner had made a general assignment for the benefit of his creditors, and had, consequently, put it out of his power to restore what he had received under the contract of sale, for the purpose of rescinding it. But if that had not been the case, and it had been designed to rescind the sale on account of the fraud, no reason was alleged or shown that would have justified the delay intervening between that time and the commencement of the action or the time of the trial, which took place in July, 1868, when the first indication of the existence of that design was given by an amendment of the complaint. This was too long a period of indecision to be consistent with the continued existence of a right depending upon the obligation of the injured party to act promptly upon the discovery of the fact entitling him to it. The right to rescind a contract, imposed upon a party by fraud, must be exercised within a reasonable time after the discovery of the fraud, otherwise it will be altogether lost. That was neither done nor attempted in this case until the party, by his inability and neglect, had deprived himself of the power of doing it.
When this action was commenced, which was more than five years after the discovery of the fraud, it was in the form of an action at law for the recovery of the damages occasioned by the fraud. And that was the only form in which it could at that time have been maintained, even if the statute of limitations had not then stood in its way. For the delay, after the discovery of the fraud, had been too great to allow the contract then to be rescinded, even if the power of returning what had been received under it had not ceased to exist. The right to bring the suit in the form which was given to it, accrued when the fraud was perpetrated, for the damages resulting from it were all sustained at that time. And for that reason, the statute, prescribing the time within which the action for that purpose should be brought, then became applicable to the cause of action that had then accrued, within the plain meaning of the law, even though it was not known to the person entitled to enforce it against the defendant. And it arose out of a liability, express or implied, within the meaning of those terms, as they were made use of in subdivision 1, § 91 of the Code. This term, "liability," is broad and comprehensive in its signification; sufficiently so, to include causes of action of this description. And as used in this section, it was intended to be distinguished from the liability of parties arising out of their voluntary contracts and obligations. For they were provided for by the other terms made use of, which included contracts and obligations, both express and implied. The term liability must, therefore, be held to include demands of the nature of that involved in the present case; for it can perform no other office in the connection in which it stands, and it is well adapted to that purpose.
That was the use made of it in the previously existing law, from which the present one clearly appears to have been drawn. Under that, actions of this description were included in the designation of actions on the case, founded on a liability express or implied. (2 R.S., 224, § 18, sub. 4.) And no further change seems to have been made in that provision than was actually required to adapt it to the change in the practice, and in the legal designation of actions made by the Code, which, by a well settled rule of law, should produce no change in the actual construction of the statute. (Sedgwick on Statutory and Constitutional Law, 428, 9; Douglass v. Howland, 24 Wend., 35, 47.)
By including the action within the legal signification of that term, it was one which, under the present, as well as the previous law, should have been commenced within six years from the time when the cause of it actually arose. That is the plain meaning of both these statutes (2 R.S., 224, § 18; Code, §§ 74, 91); and the former was so construed by the courts. ( Leonard v. Pitney, 5 Wend., 30; Harker v. Mayor, c., 17 Wend., 201.) And that exposition is equally as applicable to the latter, on account of the substantial identity of its provisions. No reason existed rendering a change desirable in the law upon this subject, and none can be supposed to have been intended from the language used in the codification. As this action was not commenced within the period prescribed for bringing suits of this description, it was plainly barred within the direct terms of the statute.
In no view that can be taken of the case, was it one that, under the former practice, was solely cognizable in equity, and for that reason, within subdivision 6, § 91 of the Code. And, as it was included within the fair import of subdivision 1, of that section, it was as clearly not an action for relief within the meaning of section ninety-seven, which, by its express terms, was only applicable to such cases of that nature as had not been previously provided for. As the decision made by the referee was in no view of the case erroneous, the judgment should be affirmed.
All the judges concurring in the result.
Judgment affirmed.