Kane v. Cook

8 Cal. 449

• Court: California Supreme Court
• Decided: July 1, 1857
• Status: Published

Opinion

Field. J., after stating the facts, delivered the opinion of the Court—Terry, C. J., and Burnett, J., concurring.

The judgment in Hew York, although recovered for the same cause, is not a bar; it was rendered without personal service on the defendant, or his appearance in the action. He was at the time in this State, and the Court, therefore, had no jurisdiction of his person. The clause of the Federal Constitution requiring full faith and credit to be given, in each State, to the records and judicial proceedings of every other State, applies to the records and proceedings of Courts, only so far as they have jurisdiction. But, in every particular in which they want jurisdiction, their judgments, when attempted to be enforced out of the State where rendered, are treated as mere nullities. In the present case, the judgment was sufficient to subject to’its Satisfaction, within Hew York, property .of the defendant in that State. To that extent it would be hold valid, as a proceeding in rem; but it has no binding force in personam, for want of jurisdiction of the person. To the extent in which jurisdiction existed, will faith and credit be given to the judgment in this State, and no further. Thus, if personal property of the defendant had been sold under this judgment, in Hew York, and the purchaser had brought the property into this- State, he would be protected against a claim of the defendant. The judgment, and sale thereunder, would sustain his title. But for all the purposes of establishing a personal claim against the defendant, it is a mere nullity, and it makes no difference whether valid, and in conformity with the course and practice of the Court where rendered, or otherwise.

In the leading case of Bissel v. Briggs, Chief Justice Parsons, in rendering the decision of the Supreme Court of Massachusetts, says:

“ And upon the same principle, if a Court of any State should render judgment against a man not within the State, nor bound by its laws, nor amenable to the jurisdiction of its Courts, if that judgment should be produced in any other State, against the defendant, the jurisdiction of the Court might be inquired into, and if a want of jurisdiction appeared, no credit would be given to the judgment.

In order to entitle the judgment rendered, in any Court of the United States, to the full faith and credit mentioned in the Federal Constitution, the Court must have had jurisdiction, not only of the cause, but of the parties.

“ To illustrate this position,it maybe remarked that a debtor, living in Massachusetts, may have goods, effects, or credits, in New Hampshire, where the creditor lives. The creditor there may lawfully attach these, pursuant to the laws of that State, in the hands of the bailiff, factor, trustee, or garnishee, of his debt- or; and, on recovering judgment, those goods, effects, and credits, may lawfully he applied to satisfy the judgment; and the bailiff, factor, trustee, or garnishee, if sued in this State for those goods, effects, or credits, shall in our Courts be protected by that judgment, the Court in New Hampshire having jurisdiction of the cause, for the purpose of rendering that judgment; and the bailiff, factor, trustee, or garnishee, producing it, not to obtain execution of it here, but for his own justification. If, however, those goods, effects, and credits, are insufficient to satisfy the judgment, and the creditor should sue an action on that judgment, in this State, to obtain satisfaction, he must fail, because the defendant was not personally, amenable to the jurisdiction of the Court rendering the judgment." 9 Mass., 468.

In the subsequent case of Hull v. Williams, 6 Pickering 240, which was a suit upon a judgment recovered in Georgia without personal service of the defendants, Chief Justice Parker, in delivering-the opinion of the Court, says :

“ If the States were merely foreign to each other, we have seen that a judgment in one would not be received in another as a record, but merely as evidence of debt, controvertible by the party sued upon it. By the Constitution, such a judgment is to have the same effect it would have in the State where it was rendered; that is, it is to conclude as to everything over which the Court which rendered it had jurisdiction. If the property of a citizen of- another State, within its lawful jurisdiction, is condemned by lawful process there, the decree is final and conclusive. If the citizen himself is there, and served with process, he is bound to appear and make his defence, or submit to the consequences; but if never there, there is no jurisdiction over his person, and a judgment cannot follow him beyond the territories of the State, and if it does, he may treat it as a nullity, and the Courts here will so treat it, when it is made to appear in a legal way, that he was never a proper subject of the adjudication.” See, also, Kelliwin v. Woodworth, 5 John., 37; Spencer v. Brockway, 1 Ohio, 259; Evans v. Tatem, 9 Searg. & Rawle, 252; Borden v. Fitch, 15 Johnson, 140; Thurber v. Blackbourne, 1 New Hamp., 242; Rangely v. Webster, 11 New Hamp., 304.

If the judgment would not support an action by the plaintiff against the defendants, it must be equally unavailing when offered in support of a plea of former recovery in an action upon the original demand. To hold otherwise, would be to hold, that the validity, or invalidity of the judgment, depends not upon the want of jurisdiction in -the Court, but from the mode in which the judgment is pleaded.

The Statute of Limitations relied upon, fixes two years from the accruing of the cause of action, as the period within which the action must be brought, and the defendant contends that the cause of action accrued when the proceeds of the sale were received by him in Jiine, 1853, and not when the demand • was made upon him to account and pay over in July, 1856. The rule in relation to factors or consignees, is well settled, that they are not liable to an action until a demand, or instructions to remit. They are not bound to take upon themselves the risk of remittance, but may await the orders of tlicir principals. Ferris v. Parris, 10 Johns., 285; Cookey v. Belts, 24 Wendell, 203; Bird v. Walker, 12 Barbour, 300.

The counsel of the defendant does not question the general rule, but denies its application to the present case. He contends, that as the agreement of the defendant was to sell the goods and “send the money to the plaintiffs,” no further instructions or demand were necessary, that it became the duty of the defendant, by this agreement, to remit immediately upon 'the sale, and for his failure a cause of action then- accrued. A demand, or instructions to remit, are necessary to render a consignee liable, because until such demand is made, or instructions are given, he cannot know what disposition his principal may wish to be made of the proceeds; whether remitted, or paid to third parties, or held subject to his orders.

It is the duty of a consignee to render an' account of his sales, but he is not bound to take upon himself the risk of remittance, nor can ho throw such risk upon his principal without orders. But where, as in the present case, the remittance of the proceeds upon sale, enters into the agreement upon which the consignment is made, there can be no occasion for any further instructions or any demand to put the consignee in default. The general rule cannot apply, for the reason that the rule fails. We hold then, that the cause of action accrued in the present case upon the neglect of the defendant to remit the proceeds immediately upon the sale; and that no demand was necessary. The remittance would have been at the risk of the plaintiffs, if made in the ordinary and customary mode by which funds were at the time transmitted to Mew York from California.

But the conseqriences do not folloAV which the counsel of the defendaaxt supposed. It does not necessarily follow that the Statute of Limitations runs against the plaintiffs, from the day the proceeds of the consignment came into the defendant’s hands. It appears from the evidence, and it is stated as a fact in the opinion of the Court below, that the defendant never rendered any account of sales to the plaintiffs, and there is nothing in the record which shows that they ever had any knowledge of the sales until shortly previous to the commencement of this suit. The complaint in the RFcav York suit, alleges a sale only upon information and belief; it contains no positive averment of the fact. It was the duty of the defendant not only to inform the plaintiffs of the sales, but to remit the proceeds. His neglect not only deprived them of their funds, but kept them in ignorance of their rights.

To hold that the Statute of Limitations ran against them under such circumstances, would be to permit the defendant to take advantage of his own wrong; and to sustain a defence Avhich, in conscience, he ought not to be permitted to avail himself of. ■

Statutes of Limitation are passed to prevent the production of stale claims, Avhen, from the lapse of time, it has become difficult or impossible to furnish the requisite proof to defeat them. They proceed upon the theory that the delay, for a fixed period, to assert one’s- claim, raises a presumption of settlement, and that a party ought not to be afterAvards harassed respecting it. They are not intended to protect a party Avho has by fraudulent concealment delayed the assertion of a right against him, until after the expiration of the period limited by the statute. All the exceptions specified in the statute which prevent its running, are cases where a party is not in a situation to assert fully his rights. The reason of those exceptions Avould seem to apply with equal force to a case of fraudulent concealment.

The question whether a fraudulent concealment of the fact, upon the existence of Avhich the cause of action accrues, would avoid the Statute of Limitations, has frequently arisen, and in its decision there is much conflict of opinion. In Courts of Equity it is the settled doctrine that such concealment will prevent the operation of the statute, and it is only in the application of the doctrine to suits at law that the diversity of opinion exists. Booth v. Lord Warrington, 4 Bro. Parl. Cas., 163; South Sea Co. v. Wymonsdell, 3 P. Will., 143.

In Bree v. Holbuck, Douglass R., 655, which was an action of assumpsit, fraud, and its discovery within six years, werte replied to the plea of the statute, but the case passed off upon the insufficiency of the facts as constituting fraud alleged in tho-replication; and Lord Mansfield said: “ There may be cases, too, which fraud will take out of the Statute of Limitations. But here everything alleged in the replication may be true without any fraud on the part of the defendant,” and the plaintiff had leave to amend, in case, upon inquiry, the facts Avould support a charge of fraud. In Short v. McCarthy, 3 Barn. & Aid., 626, which was an action of assumpsit, in which the breach alleged was negligence of the defendant, the attorney employed to make certain inquiries at the Bank of England, no replication was filed to the plea of the statute, and to the position taken by counsel that as a discovery of the negligence was not made until within the six years, the cause of action had not accrued, Mr. Justice Bayley said: “ If the want of knowledge could take the case out of the Statute of Limitations, it would be competent to the plaintiff to state this in his replication.” The decision in that case passed upon the insufficiency of the pleadings to sustain the action, on the ground of a new promise. There was no pretence of fraudulent concealment. In Brown v. Howard, 2 Brod. & Bing, 74, the plaintiff employed the defendant, in 1808, to invest money in the purchase of an annuity, and discovered in 1814, that the security was void within the defendant’s own knowledge at the time of the purchase. In 1820, the plaintiff sued the defendant for breach of the implied contract to provide good security. The defendant pleaded the general issue and Statute of Limitations, and the Court held that the action proceeding on the contract, and not on the fraud, the statute was a good bar. There was no replication to the plea, and the case of Short v. McCarthy, was cited as “the strong case” in point, and Mr. Justice Dallas said:

“ The plaintiff will not be without remedy, because he will be only nonsuited here, and may, if he deems it to his advantage, bring another action, the ground of which may be fraud, though on the propriety of such a step we give no opinion; but in Bree v. Holbuck, Dougl. 632, it is laid down that in cases of fraud the limitation only runs from the time when the fraud is discovered;” and Mr. Justice Park said, “I am of the same opinion, although this is a case of such hardship in the plaintiff that the Court would, if it were possible, get out of the course of decisions.”

In the Courts of Hew York, it is held that a fraudulent concealment is not a good answer to the plea of the statute. In the case of Troup v. The Executors of Smith, 20 Johns. 33, the question was directly raised, and deliberately considered, and it was held that the statute began to run from the time the fraud was perpetrated and not from its discovery, and that the Court was bound by the letter of the statute, and could not introduce exceptions to its operation not included in its provisions, and this decision was affirmed in the subsequent cases of Leonard v. Pitney, 5 Wendell, 30, and Allen v. Mille, 17 Wend., 202. In both of the Carolinas and in Virginia, a similar construction is given to the statute. Miles v. Barry, 1 Hill S. C., 296 ; Callis v. Waddy, 2 Munf., 511.

But in several of the States the doctrine js maintained that the statute does not operate in cases of fraud until a discovery is made by the party affected. In the case of Massachusetts Turnpike Co. v. Pi eld, 3 Mass., 201, the question was distinctly' raised, and it was'held by the Court that a fraudulent concealment by the defendant that a cause of action had accrued to the plaintiff was a good replication to the plea of the statute. That was an action of assumpsit upon a contract for the construction of a road. The declaration contained two counts, one on the contract, and the other for money had and received. To the pleas of the statute, the plaintiff replied fraud in the execution of the work, its discovery long after the payment of the money, and the commencement of the action within six years after the discovery.

In overruling the demurrer to the replications, Chief Justice Parsons says:

“ The delay in bringing the suit is owing to the fraud of the defendant, and the cause of action against him ought not to be considered as having accrued until the plaintiff could obtain the knowledge that he had a cause of action. If this knowledge is fraudulently concealed from him by the defendant, we should violate a sound rule of law, if we permitted the defendant to avail himself of his own fraud. * * * I am, therefore, satisfied, although the plaintiffs’ cause of action, mentioned in the first count, literally accrued at the time when the contract was to have been executed, and the one mentioned in the second count accrued from the payment of the money mentioned in their second replication, yet that these causes of action were fraudulently concealed by the defendants themselves, from the knowledge of the plaintiffs long after, and that the plaintiffs brought their action within six years after the fraud was discovered. The necessary inference is, that the fraud of the defendants, disclosed in the replications of the plaintiffs, is sufficient in law to avoid the Statute of Limitations pleaded in the defendants’ bars, and that the plaintiffs’ replications are good.”

A similar construction of the statute prevails in Maine, New Hampshire, Pennsylvania, and Indiana. Cole v. McGlathry, 9 Greenleaf, 131; Bush v. Barr, 1 Watts, 110; Mitchell v. Thompson, 1 McLean, 85; Jones v. Conway, 4 Yeates, 109.

In Sherwood v. Sutton, 5 Mason, 143, Mr. Justice Story, in sustaining, in an action on the case, the sufficiency of the replication of fraudulent concealment to the plea of the statute of Hew Hampshire, gave a lengthy opinion, holding that as the statute was mainly intended to suppress fraud, it should be so construed as not to encourage fraud, if it would admit of any other reasonable interpretation, and that eases of fraud, therefore, form an implied exception to be acted upon in Courts of Law and Equity, according to the nature of their respective jurisdictions.

In this diversity of opinion on the question, we are free to adopt that rule which will best tend to advance justice, and prevent the perpetration of fraud; and we' therefore hold, that in all cases a fraudulent concealment of the fact, upon the existence of which the cause of action accrues, is a good answer to the plea of the Statute of Limitations. By the system of practice adopted in this State, there is no replication to the answer. The fraudulent concealment cannot, therefore, be replied to by pleading, but it may be established by proof on the trial, and will then just as effectually avoid the plea of the statute. In the present case, the plaintiffs are residents of Few York; they looked to their consignee in California to acquaint them of the sale of their goods; his delay of three years to impart any information, cannot be reconciled with honest intentions, but necessarily leads to the conclusion, that the sale was concealed for a fraudulent purpose.

The judgment must be affirmed.