Baldwin v. Martin — 35 N.Y. Super. Ct. 85

Majority

p. 85

WILLIAM H. BALDWIN, as Receiver, etc., Plaintiff and Respondent, v. JOHN T. MARTIN, Impleaded, etc., Defendant and Appellant.

Headnote

Section 91 of the Code in its limitation as to the commencement of an action for fraud (six years) provides as follows : “ The cause of action not to be deemed, to have accrued, until the discovery by the aggrieved pan'ty of the facts constituting the fraud.

In actions of this nature before the Code, it was required of a plaintiff to allege and prove the discovery of the fraud, within six years before suit. In other words, the onus was upon him of repelling the presumption, arising from the lapse of time after the commission of the fraud, as appeared in his pleading.

The complaint in this action alleged a cause of action as having accrued more than six years previously, and the answer avers that the right of action did not accrue within six years.

Held, that the plaintiff must prove that the discovery of the fraud was within six yea/rs, and therefore the running of the statute was suspended.

The Code, and the practice under the same, in this respect has not materially changed the former rules of evidence (see opinion of Fbbbdmajst, J., dissenting).

Before Monell, Freedman, and Curtis, JJ.

Decided November 2, 1872.

Cross-appeals from judgment at Special Term.

This action is brought by the plaintiff as receiver of the defendants, Arnold Woodward and Fletcher Woodward, for the benefit of David Barker, a judgment creditor of said Woodwards, to set aside an assignment of property executed by them to the defendant Martin, September 5th, 1853, on the ground of fraud, and to have certain assets which came into the hands of said assignee through such assignment applied upon the judgment in which the plaintiff was appointed receiver. The complaint alleges: The recovery of a judgment

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"by Richard S. Crook and David Barker, in the Supreme Court, for $1,110.04, June 21st, 1854, against said Arnold Woodward and Fletcher Woodward—said judgment was docketed in the county where said defendants resided, and an execution against their property issued to that county, and returned nulla bona, August 21st, 1854. That said judgment was recovered on a cause of action which had existed before the execution of said assignment, and belonged to said Crook and Barker as copartners in trade. That supplementary proceedings had been regularly instituted upon said judgment against said Arnold Woodward, and the plaintiff had been therein regularly appointed receiver by order of a justice of the Supreme Court, and had filed the required bond; that no part of said judgment had been paid ; that said Arnold Woodward was insolvent at the commencement of this action, and had been so a long time prior thereto.

The alleged principal ground relied on to avoid the assignment is that, at the time of the execution of the assignment, it was agreed, in consideration thereof, that the assignee would immediately thereafter deliver to Arnold Woodward all the money on hand, and that $1,800 was so delivered in pursuance of the agreement.

The complaint further alleged that this agreement and payment were first discovered by Crook & Barker within six years before the commencement of the action.

It is also alleged that at the date of the assignment Fletcher Woodward was an infant. The fact was proved that he would have been of age October 26, 1853.

The relief asked is that the assignment be adjudged void, and that the defendant, Martin, account for and pay the same sum of $1,800 and interest on plaintiff’s debt and for general relief.

Arnold and Fletcher Woodward were not served, and died before the trial.

The answer of Martin is in substance : Denial of all

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the alleged frauds and fraudulent intents, and the alleged secret agreement and payment to Woodward of the $1,800, as to which it is alleged that it never came to his possession, or under his control, "but was retained by Woodward. That he had executed the trusts of said assignment till stayed by injunction at suit of creditors of the assignors ; that those suits resulted in judgments setting aside the assignment, and in them he had fully accounted and paid over all the remaining assets to a receiver, and been discharged, and had no assets in his hands. That if he is liable to account for any of the moneys mentioned in the complaint, the judgment creditors in the former suit, and not the plaintiff, are entitled to it.

The answer also set up the statute of limitations, and denied the discovery by Crook & Barker within six years.

The action was. tried by the court without a jury.

The findings of fact and conclusions of law are as follows:

BINDINGS OB BACT.

1st. That on or about June 21st, 1854, Richard S. Crook and David Barker, as plaintiffs, recovered a judgment in the Supreme Court in and for the city and county of New York, against the above-named Arnold Woodward and Fletcher Woodward, as defendants, for the sum of one thousand one hundred and ten dollars and four cents damages and costs. That the judgment roll was filed and the judgment docketed on the same ¡ day in the office of the clerk of the said city and county of New York; on the 22d day of June, 1854, a transcript of said judgment was tiled and docketed, in the office of the clerk of the county of Onondaga.

2d. That said judgment was recovered upon a cause of action which had accrued and existed before.the 5th day of September, 1858.

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3d. That on the 22d day of June, 1854, an execution on said judgment, against the property of said Arnold Woodward and Fletcher Woodward, was issued in due form to the sheriff of the county of Onondaga, where said Arnold Woodward and Fletcher Woodward then resided, and was by him duly returned August 21st, 1854, to the clerk of the city and county of New York, wholly unsatisfied.

4th. That on the 15th day of February, 1866, in proceedings supplementary to execution regularly instituted against the said Arnold Woodward upon the said judgment before a justice of the said Supreme Court and properly continued, the plaintiff William H. Baldwin was at the said city, and by an order of Justice D. P. Ingraham, of said court, duly and regularly appointed receiver of all the property, debts, equitable interests, rights and things in action which belonged to said Arnold Woodward, individually, and to,him jointly with said Fletcher Woodward; said order was filed and recorded according to law, the plaintiff gave and filed the bond required by said order, and entered upon the execution of his said trust.

5th. That no part of said judgment has been paid, and the said Arnold Woodward was insolvent at the time of the commencement of this action, and had been so a long time prior thereto, and died insolvent, pending this action, and that said Fletcher Woodward died in August, 1862, insolvent.

6th. That on the 5th day of September, 1853, said Arnold Woodward and Fletcher Woodward, who were then, and had been prior thereto, engaged as partners in the dry-goods business in the city of New York and elsewhere, were largely indebted to various persons and pressed by them for payment, executed and delivered to the defendant John T. Martin, under their hands and seals, a general assignment, purporting to assign and transfer to him, for the benefit of their creditors with

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preferences, all their then joint and individual property and effects, of every name and kind and wherever situated, except such as was exempt from execution by the laws of the State of New York, a copy of which is annexed to the complaint. Schedule A therein referred to was never annexed thereto.

7th. That the defendant, John T. Martin, thereupon accepted the said assignment, and took possession of said assigned property thereunder, or so much thereof as came to his knowledge.

8th. That said assignment was made by said Arnold Woodward and Fletcher Woodward, with the intent to hinder, delay, and defraud their joint and individual creditors, among whom were the said Richard S. Crook and David Barker, of their lawful suits, damages, forfeitures, debts and demands.

9th. That said defendant, John T. Martin, was privy to said fraudulent intent, and consented thereto, and immediately after the execution and delivery to him of the said assignment, delivered over to said Arnold Woodward the sum of eighteen hundred and seventeen T1<y°ij dollars of the said assigned assets, under an agreement previously made by and between these defendants, that on condition that said Arnold Woodward and Fletcher Woodward would execute the said assignment to the defendant John T. Martin, preferring him therein to a large amount, he would so deliver over to them the sum of money aforesaid, and upon this condition they did so execute the said assignment without the knowledge or consent of their creditors.

10th. That the defendant, John T. Martin, has not accounted in any action or otherwise to any of the creditors of said Arnold Woodward and Fletcher Woodward, or either of them, for the said eighteen hundred and seventeen TVV dollars, or any part thereof, nor paid any portion thereof to a receiver, for or on account of any such creditors, nor has he applied or credited any por

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tion thereof upon his own debt against said Arnold Woodward and Fletcher Woodward, or either of them.

11th. That of the said assets so assigned and transferred, the defendant, John T. Martin, has retained in his hands a large sum of money in order to apply the same, as he claims, in payment of the balance of the debt due him as a preferred creditor under said assignment by said Arnold Woodward and Fletcher Woodward, at the date of said assignment, above the proceeds of the collateral security held by him therefor.

12th. That the said judgment in favor of Richard S. Crook and David Barker belonged to them jointly; and said Crook, in 1854, assigned and transferred all his interest therein to said David Barker, who first discovered the facts which constituted the fraud in the execution of said assignment, within six years prior to the commencement of this action.

13th. That it is not shown or proven that plaintiff's cause of action accrued more than six years prior to the commencement of this action.

14th. That in an action commenced on or about the 28th day of December, 1858, by one Robert Taylor, plaintiff, as against the said Arnold Woodward and Fletcher Woodward, John T. Martin and others, defendants, in the Supreme Court in and for the City and County of New York, the said plaintiff, Robert Taylor, as assignee of one Wright, a judgment creditor of said Arnold Woodward and Fletcher Woodward, recovered a judgment against the said defendants, whereby the said assignment of September 5th, 1853, was set aside, annulled, and declared and held to be void and fraudulent as against the plaintiff in said action, a creditor of said assignors ; and the said John T. Martin was decreed and ordered to render an account of his receipts and disbursements under said assignment, and a referee was appointed, before whom said John T. Martin was required to present and pass his account, and he did

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present and pass an account, and upon the report of the referee therein, a final judgment in said action was rendered, determining the amount for which said John T. Martin, upon the said accounting, was chargeable in said action, as assignee, under said assignment, and ordering the payment thereof to a receiver in said action, appointed by the said Supreme Court therein, and the said sum was by the said John T. Martin paid to said receiver, and said final judgment also decreed the distribution of the said amount by the receiver, after paying certain costs and charges to the said Robert Taylor, and to certain other judgment creditors of said assignors who had before such final judgment obtained judgment in like actions instituted in said court, setting aside as fraudulent against them the said assignment, and had been decreed to have successively, after said Robert Taylor, liens on the said amount for payment of their said judgment, namely, Samuel Graydon and others, William Grieves and Lewis B. Loder ; that the said amount was not sufficient to pay and satisfy in full the said judgment of said Lewis B. Loder, and a part thereof still remains unpaid, all of said other judgments having been paid in full, that final judgment had been entered in said actions brought by Taylor and by others, including said Loder’s action, and the receiver appointed therein as aforesaid had been discharged before the commencement of this action ; that said Lewis B. Loder has taken no proceedings whatever since the 30th day of January, 1861, to reach and apply to the payment of his judgment any of the assets sought to be obtained in this action.

15th. That on said accounting mentioned in above 14th finding, had in said action, brought by said Taylor, as mentioned in said 14th finding, said defendant, Martin, was not charged with, nor did he account for, either the eighteen hundred and seventeen dollars . ($1,817.19), mentioned in above 9th finding, or for the

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assets and money retained by him, as mentioned in above 11th finding.

16th. That said Loder, in the 14th finding, mentioned at the time of said accounting in said 14th finding mentioned, of the payment to him mentioned in said 14th finding, and of the discharge of the assignee and receiver in said 14th finding mentioned, had knowledge and notice of the delivery by the said assignee to the as- ■ signor of said sum of eighteen hundred and seventeen dollars ($1,817.19) mentioned in said 9th finding, and of the circumstances which led to and which were attendant on said delivery.

AND AS CONCLUSIONS OR LAW.

1st. I find, that the plaintiff was vested with the individual property of Arnold Woodward, and the joint property of said Arnold Woodward and Fletcher Woodward at the time of the commencement of this action, and entitled to bring the same, as receiver, for the benefit of Richard S. Crook and David Barker, and to be paid the amount of the said judgment, principal and interest, together with the costs of the said supplementary proceedings.

2d. That the aforesaid assignment is fraudulent and void as against the plaintiff herein, and he is entitled to a judgment declaring the same void as against him and setting it aside as to him.

3d. That the defendant, John T. Martin, is chargeable with the eighteen hundred and seventeen ($1,817.19) dollars mentioned in the foregoing findings of fact, and interest thereon from the date of the said assignment, and also chargeable with such assets and proceeds of the assets as he "has retained for the balance of his own debt, and which he had not actually appropriated to the payment thereof before the service of the summons on him in this action.

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4th. That the said defendant, Martin, is not chargeable with such assets and proceeds of assets retained by him for his own debt, which he had actually appropriated to the payment thereof before the service on him of the summons in this action.

5th. That the plaintiff is entitled, as against the defendant herein, to have the said eighteen hundred and seventeen ($1,817.19) dollars and interest thereon as aforesaid, and such assets and proceeds of assets as the defendant, John T. Martin, retained for the balance of his own debt, but did not actually appropriate to the payment thereof before the service of the summons herein on him, applied upon and toward the satisfaction of the judgment mentioned in the 1st finding of fact, with the interest thereon, and the costs of the said supplementary proceeding mentioned in the 4th finding of fact.

5£. That plaintiff is entitled to recover his costs and disbursements of this action, and an extra allowance under section 309 of the Code of Procedure, to be paid with interest thereon, from the date of the judgment to be entered herein, out of the aforesaid sum of eighteen hundred and seventeen yW ($1,817.19) dollars and the interest thereon, and out of the other money, assets and proceeds of assets, which shall be transferred and paid by defendant, Martin, to the receiver, to be appointed by the judgment herein, if the same shall be sufficient to pay the aforesaid sum of two thousand four hundred and ninety-five ($2,495.72) dollars with interest from date of the judgment to be entered herein, and said costs, disbursements and allowances, with interest thereon from the date of the judgment, to be entered herein in full; if, however, the sum of eighteen hundred and seventeen y1^ ($1,817.19) dollars and the interest thereon, and the other money assets and proceeds of assets to be transferred and paid to said receiver, shall be insufficient to pay said sum of two

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thousand four hundred and ninety-five T1I^r ($2,495.73) dollars with interest from the date of the judgment to be entered herein, and said costs, disbursements, and allowances with interest, from the date of said judgment, then plaintiff is entitled to have such deficiency (if the amount of it does not exceed the amount of said costs, disbursements and allowances, with interest thereon from the date of said judgment) paid, personally, by defendant, Martin, and to have a personal judgment therefor against defendant, Martin ; but if the amount of said deficiency does not exceed the amount of said costs, disbursements and allowances, with interest thereon from the date of said judgment, then the plaintiff is entitled to have so much of such deficiency as equals the amount of said costs, disbursements and allowances, with interest thereon from the date of said judgment, paid personally by defendant, Martin, and to have a personal judgment therefor against defendant Martin.

6th. That plaintiff is not entitled to have such of the assets and proceeds of assets retained by defendant, Martin, for his own debt, which he, before the service on him of the summons, in this action, had actually appropriated to the payment of his own debt applied upon and towards the judgment mentioned in the 1st finding of facts or of the interest thereon or of the costs of the supplementary proceedings mentioned in the 4th finding of fact, or of the costs and -disbursements of this action.

7th. That a reference should be ordered, and a referee appointed to inquire and report whether any prior receivership has been appointed over the assigned estate which now remains in force, and if so, whether such receivership was ordered through fraud or collusion, and whether such prior receiver was appointed by fraud or collusion, or is an improper person, and also whether any other actions, similar to this, are pend

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ing, notice to "be given "by such referee to the plaintiffs in such pending similar actions of the proceedings "before him.

8th. That a reference should be ordered, and a referee appointed to take such proof as either party may offer, as to the actual appropriation, by said Martin, to the payment of his own debt of the assets and proceeds of assets retained by him, and the time and times of such actual appropriations, and to take and pass the accou'nts of said Martin, assignee, as between him and the plaintiff herein.

9th. That said Martin do pass his account, as such assignee as aforesaid, before a referee to be appointed as above 8th directed.

10th. That on such accounting as above Sthly and 9tbly directed, said assignee be charged with said eighteen hundred and seventeen ($1,817.19) dollars mentioned in the 9th finding of fact, with interest thereon, from the date of the said assignment, and with such assets and proceeds of assets as said assignee retained for his own debt, but had not actually appropriated to its payment before service of summons in this action on him, and with all other assets and proceeds of assets actually in his hands at the time of the commencement of this action, and be credited with such expenses, allowances, and payments with which he is legally entitled to be credited, and for which he has not heretofore been credited, but said Martin shall not on such accounting be charged with such of the assets and proceeds of assets retained by him for his own debt, which he, before the service on him of the summons in this action, had actually appropriated to the payment thereof.

11th. That a receiver be appointed, and that the assignee (defendant Martin), after the confirmation of the referee’s report, taking and stating his account, transfer, and pay over to the receiver, under the direction of the

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referee, such sums as by said report shall be found due the estate, and such assets as by said report shall be found in his hands, or so much thereof as shall be sufficient to pay the plaintiff’s claim and the costs and expenses of this action.

13th. That the distribution of the assets and proceeds of assets, transferred and paid to the receiver, be subject to the further order of this court, if the receiver be appointed by this court, or of the court by which he shall have been appointed.

13th. That if the assets and proceeds of assets, which shall come to the receiver’s hands, upon a proper application thereof, to the judgment mentioned in the 1st finding of fact and the interest thereon, the costs of the supplementary proceedings mentioned in the 4th finding of fact, and the interest thereon, and the costs, disbursements and extra allowances of the action and the interest thereon, shall be insufficient to pay the same in full, then the plaintiff is entitled to a personal judgment against the defendant Martin for the amount of such deficiency, if it is not in excess of the costs, disbursements and extra' allowances of this action, and the interest thereon, if it is in excess thereof, so much of such deficiency as shall equal such costs, disbursements and extra allowances, and the interest thereon.

14th. Rufus F. Andrews is appointed referee, for the purpose of the references directed by these findings.

15th. James M. Sweeny is appointed receiver, unless there is now existing in full force a prior receiver, in which case, such prior receiver (unless he was appointed by fraud, or collusion, or is an improper person) is appointed receiver for the purposes of this action.

16th. Either party to be at liberty to apply to this court for further directions on the foot of the judgment.

S. JONES, Judge.

Dated November 13, 1871. . .

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The plaintiff excepted to the 11th finding of fact, and the 3d and 4th conclusions of law.

The defendant excepted to the 6th, 7th, 9th, 12th, 13th, and 15th finding of fact, and all the conclusions of law, except the 4th and 6th ; also to various refusals to find.

Judgment was entered in conformity with the decision, and both parties appealed. Plaintiff s appeal is from so much of the judgment as adjudges that said defendant Martin is not chargeable with such assets and proceeds of assets retained by him for his own debt which he had actually appropriated to the payment thereof, before the service on him of the summons in this action, and that the plaintiff is not entitled to have such assets and proceeds of assets applied upon or toward the judgment mentioned in the first finding of fact, or the interest thereon, or of the costs of the supplementary proceedings mentioned in the 4th finding of fact, or of the costs and disbursements of this action, and that the defendant Martin shall not be chargeable with such assets in the accounting ordered in said judgment.

The defendant appealed from every part of the order or judgment entered herein on the 22d day of 11 ovember, 1871, except those parts thereof whereby it is ordered and adjudged that the said defendant is not chargeable with such assets and proceeds of assets retained by him for his own debt, as he had actually appropriated to the payment thereof, before the service on him of the summons in this action, and that the plaintiff is not entitled to have said assets or proceeds of assets applied upon the judgment mentioned in the first finding of fact or the interest thereon, or of the costs of supplementary proceedings mentioned in the 4th finding of fact, or of the costs and disbursements of this action, and that the said defendant shall not be chargeable therewith in the

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accounting, if any shall be had in pursuance of said order or judgment.

William G. Choate, for appellant.

D. S. Riddle, for respondent.

The assignment, which has been found to have been fraudulent and void as to creditors, was made in September, 1853, and this action was commenced about fourteen years thereafter. One of the defences is, that the right of action did not accrue within six years next preceding the commencement of the action, and the question arising thereupon, as to which party the onus is upon of removing the statute bar, depends upon the construction of the sixth subdivision of section 91 of the Code, which is as follows :

. . . “the cause of action not to be deemed to have accrued until the discovery by the aggrieved, party of the facts constituting the fraud.” The rule which, previous to the adoption of the Revised Statutes, prevailed in equity, that a party was not to be affected by lapse of time, unless he had discovered the fraud, was substantially enacted in the 51st section, which provided that bills for relief on that ground should be filed within six years after the discovery of the facts constituting the fraud ( 2 R. 8 . 301, § 51).

Under the rule as it had previously prevailed, as well as under the statute after its passage, it was necessary to allege in the bill such facts as were required to repel the presumption arising from the lapse of time; and where the fraud was committed more than six years before suit brought, it was necessary to allege and prove that the discovery of it was within six years (Miller’s Heirs v. McIntyre, 61 Pet. 6 ; Moore v. Greene, 19 How. 69 ; Bertine v. Varian, 1 Edw. Ch. R. 343).

In the application of this rule, there was no difference

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"between courts of equity and of law, where the remedies were concurrent; the former courts adopting the statute as to the time of limitation, but fixing the period where it should be deemed to commence to run, upon principles applicable solely to courts of equity.

It is not doubted that under the Revised Statutes in actions of this nature, it was required of a plaintiff to allege and prove the discovery of the fraud within six years before suit. In other words, the onus was upon him of repelling the presumption arising from the lapse of time; and it only remains to be seen whether any provisions of the Code have changed the rule, and thereupon shifted the burthen of proof.

One of the essential changes effected by the Code was in assimilating the forms of pleading to the rules which had previously prevailed in courts of equity. Hence it is required that pleadings shall contain a statement of facts constituting the cause of action or defence. All fiction and mere form allowed in common law actions, was disallowed by the Code, and a single system adopted, applicable to all pleading. But it was not, as I think, intended to effect any change in actions or defences, except in the mode of stating them; nor any change in the rules or nature of evidence.

Since, as well as before the Code, the complaint may be upon the original demand (Esselstyn v. Weeks, 12 N. Y. R. 635); and under both systems the statute bar must be specially pleaded (Young v. Rummell, 2 Hill, 478 ; Code, § 74), in one case the rules of pleading requiring it, and in the other the rule is made a part of the statute law. After pleading the statute bar, the plaintiff can give evidence in avoidance, it seems, without specially replying the new matter (Esselstyn v. Weeks, sup.).

In pleading the statute, it is sufficient to allege in the answer, that the cause of action did not accrue within the prescribed limit, when, ordinarily, the plaintiff must show an avoidance. But it is said that this applies only

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to cases where it appears, "by the complaint, that the statute has attached, and not to a case where the statute "begins to run, not from the time the fraud was committed, "but from the time of its discovery. One answer to this, is, that the fraud is the cause of action, and the action relates to the time the fraud was committed. The non-discovery suspends the running of-the statute, and avoids or repels the presumption, which arises from the lapse of time, and revives or restores the original cause of action, which otherwise would be barred by the statute. So that a fraud, committed more than six years before suit, would, actually and not merely presumptively, be barred, unless a suspension of the statute time was shown. Another answer is, that the Code has changed so much of the previous rule of equity pleading as required the plaintiff, by his bill, to allege matters in avoidance, where the statute bar had presumptively attached. As has been seen, the section of the Revised Statute, and of the Code, are essentially similar, and the former was prepared, as the reporters say (Reporter’s Note, § 51, 5 Edm. Ed. Gen. Stati. 437), “adopting the principle and language of the case in 20 I. R. 585, in the Court of Errors.” If, therefore, we were to follow the rule of equity pleading, it would be incumbent upon a plaintiff'to repel the presumption arising from the lapse of time, by averring that the discovery of the fraud was within six years before suit. But I think the legislature, in uniting the equity and common-law systems, intended to make applicable the same rules, whether the action was of an equitable or legal nature, and thus make a uniform system. Hence, the rule, which at law required the statute of limitations to be specially pleaded, was enacted in the Code, and made applicable equally and alike to both kinds of relief, and changed the rule of equity pleading, by allowing the complaint to be upon the original demand, and requiring the statute bar to be specially set up as a defence.

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This adaptation or blending of the rules of law and equity, relates only to the manner of forming the issues, and does not affect the rules of evidence as they had previously existed; and it is therefore conceded, that where the complaint shows the cause of action accrued more than the prescribed number of years before suit, and the statute bar is pleaded, the plaintiff must show matter in avoidance ; but it is claimed that where such fact does not appear by the complaint, the rule is otherwise.

It nowhere appears that the legislature designed to distinguish an action for fraud, from any other action: or that it was intended to except such actions from rules applicable to all other actions. Hence, matter to show a suspension of the time, which otherwise would raise a bar, need not be averred in the complaint; but, as in other actions, must be specially pleaded, and then leaving, as I think,'the burthen of proof precisely where, they are left in all other cases (Sands v. St. John, 23 How. Pr. R. 140; Clinton v. Eddy, 37 Id. 23). As in the case of an absent debtor, the cause of action accrues at the maturity of the debt, but the statute is suspended during the absence; and to a plea of the statute, it lies with the plaintiff to show the absence. So in case of a fraud, the action accrues when the fraud was committed, but the statute is suspended until discovery, and it must follow that the plaintiff holds the affirmation of showing the matter on which the suspension rests.

Even if the cause of action accrued upon the discovery of the fraud, and not upon its perpetration, no allegation in respect to time would be necessary in the complaint; and even if it appeared to have been discovered more than six years previously, the complaint would not be demurrable. Judge Grover says, in Gates v. Andrews (37 N. Y. R. 657), that the provision is to prevent the running of the statute until discovery, and is not to be deemed as creating a cause of action from

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that time.” The cause of action in the case at bar was a fraud .committed more than thirteen years before suit. jSTo other or different cause is alleged in the complaint. The Code declares that civil actions can only be commenced within the prescribed periods (for fraud within six years from its discovery), but the time of the discovery need not be stated, and the statute bar, if it exists, must be set up by the answer. The cause of action is perfect, notwithstanding more than six years have passed since the fraud was committed ; and if the statute is not set up as a defence, the action will prevail. Therefore, as Judge Grover says (Gates v. Andrews, sup.), the statute has merely provided “for a class of cases where the right of action was perfect, but became barred by the statute before the discovery of the facts upon which such right depended.”

It cannot, it seems to me, make any difference whether the complaint shows the cause of action outlawed or otherwise. In either case the objection must be taken by answer.

Take the ordinary case of a cause of action appearing by the complaint to be barred by the statute. The defendant cannot demur, but must set up the statute by answer. The burthen, then, rests upon the plaintiff to show matter which arrested the running of the statute. This is conceded. But wherein does it differ from the case at bar ?

The complaint alleges a cause of action as having accrued more than six years previously; and the dedefendant by answer avers that the right of action did not accrue to the plaintiff within six years. Must not the plaintiff, then, show that the discovery of the fraud was within six years, and, therefore, that the running of the statute was suspended % In analogy to previous rules in equity, it appears to me, it is so ; for it will be seen that the 6th sub. of § 91 limits the relief to the class of actions which were solely cognizable in the

Dissent

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Court of Chancery (Fort v. Farrington, 41 N. Y. R. 164), from which it may be fairly inferred, that the legislature did not intend to essentially change the burthen of proof as it existed in that court, nor do anything more than to require the objection to be taken by answer, and have left the previous rules of evidence undisturbed. I am of opinion, therefore, that it was incumbent upon the plaintiff to show that six years had not elapsed since he discovered the facts constituting the fraud, and having failed to do so, the judgment is erroneous. To cast the burthen on the other side, would be to require the defendant to prove knowledge in the plaintiff, a duty which is, in most cases, impossible of performance ; while placing the burthen on the plaintiff" is putting it where the proof can easily be fnrnished, and is more consistent with the reason of the rule, which, as I think, puts it there.

The case of Errickson v. Quinn, 3 Lansing, 399, accords fully with the views I entertain and have here expressed.

The judgment should be reversed and a new trial granted, with costs to the appellant to abide the event.

The appellants having consented, on the argument, to turn their respective appeals into motions for a new trial, under section 368 of the Code, for the reason that the judgment is interlocutory merely, and the General Term having thereupon entertained the said motions, I have arrived, after a most critical examination of the questions of fact and of law, at the conclusion that the motions should be denied and the judgment affirmed upon the grounds assigned by the learned judge below. His findings of fact are fully supported by the evidence, the conclusions of law at which he arrived justified by the facts, and his exposition of the law applicable to the peculiar features of this case is well defined.

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I will add, that on the argument I felt strongly inclined to differ with him upon the question relating to the burden of proof under the statute of limitations. It then appeared to me highly improbable that the Code, which assimilated legal and equitable remedies and abolished the forms of former actions, had worked a change upon that point. But, upon investigation, I have satisfied myself that the rule laid down and applied to this case is the correct and proper one, and as such should be followed in preference to the rule to the contrary laid down by the Supreme Court in Errickson v. Quinn, 3 Lansing Rep. 299. The action is one which, before the Code, was solely cognizable by a Court of Chancery. There was no remedy at law for such a fraud. By the Revised Statutes, by which the first attempt was made to regulate limitations in equity by express enactments, it was 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 (3 Rev. St. 301, § 51); and this statute was held to give six years aftér the discovery of the fraud, on a bill filed, in cases where there was a concurrent remedy at law. But the Code has changed the rule and limited 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 (Foot v. Farrington, 41 N. Y. 170 ).

The language of the sixth subdivision of section 91 of the Code is as follows :

“ An action for relief on the ground of fraud, in cases ‘1 which heretofore were solely cognizable by the Court “ of Chancery; the cause of action in such cases not to • ‘ be deemed to have accrued, until the discovery by the, “ aggrieved party of the facts constituting the fraud.”

As pointed out by Grover, J., in Gates v. Andrews, 37 N. Y. 658 , the provision is, not that the cause shall

p. 105

accrue upon such discovery, hut, to prevent the running of the statute, it shall not he deemed to have accrued before such discovery, thereby providing for a class of cases where the right of action is perfect, but might become barred by the statute, before the discovery of tlie facts.

The case at bar belongs to this class. The defendant insists that plaintiff5 s cause of action accrued more than six years before the commencement of the action, and consequently is barred. To make this defence available, he set it up as a distinct and separate defence in the answer. This he had to do in order to be in a position to claim the benefit of the statute, for section 74 of the Code expressly provides that the objection, that the action was not commenced within the time limited, can only be taken by answer, and an omission to plead the statute, and going to trial without doing so, notwithstanding the claim is clearly barred on its face, has repeatedly been held to preclude the defendant from invoking the statute. In such case the defendant was held to have made his election to stand upon the other defences actually pleaded.

How in order to give full effect to the statutory requirement, that the objection can be taken by answer only, and to maintain the principle of the numerous decisions made under it, that a defendant who has not thus pleaded cannot invoke the aid of the statute in any manner, although the claim is barred on its face, it seems to me to be necessary to hold, that under the sixth subdivision of section 91, as it now stands, plaintiffs cause of action is not to be deemed to have accrued more than six years prior to the commencement of the action, unless it is made to appear by way of defence, that the discovery of the facts constituting the fraud occurred more than six years before suit brought. In other words, the cause is not to be deemed outlawed in the absence of evidence fixing the time of the discovery.

p. 106

The legislature probably intended, as suggested below, that he who commits a fraud, against which equity alone can give relief, and who necessarily strives to conceal it, shall not be permitted to escape the consequences of his acts through a plea of the statute of limitations, unless he is able to establish that plea by evidence adduced on his behalf. ' But whether such was or was not the true reason which led to the legislative enactment, is not very important. The bare suggestion of the proposition is of sufficient importance to authorize the construction above referred to, in the absence of statutory provisions calling for a different rule.

If I am correct in these views, it follows that the court below had no right to determine, without proof, the particular time from which the running of the statute is to be computed, and as the defendant had wholly failed to give evidence in support of his plea, and the plaintiff on the other hand had given some evidence, which, although insufficient to establish the precise time of the discovery, yet tended to show that it was within six years, it was properly held that the action is not barred.

The motions for a new trial should be denied, and the judgment affirmed with costs.

Cases cited

Moore v. Greene 19 How. 69 SCOTUS p. 98