Court Opinion

ID: 7917379
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:12:52.576829+00
Date Added: 2024-06-11T16:32:52.879375
License: Public Domain

Wedell, J.
(concurring in part and dissenting in part): O. J. Connell, decedent, was president of the defendant corporation, the principal office of which was located in El Dorado, the city of decedent’s residence. As president of the corporation decedent, of course, had the right of access to the stock books of the corporation at all times. The petition alleged decedent became ill and incapacitated on February 13, 1947. It also alleged decedent remained president of the corporation until the date of his death, August 3, 1947. It is alleged the fraudulent acts were performed without decedent’s knowledge or consent and that he had no reason to believe those charged with the fraud were untrustworthy.
The mere fact the transfers were not made with decedent’s knowledge and consent is not an allegation he did not later acquire such knowledge or that, in the exercise of reasonable diligence, he could not have obtained notice of the fraud thereafter. I fail to find an allegation he did not acquire such knowledge.
*102As previously stated, however, the petition did allege decedent became ill and incapacitated on February 13, 1947. There is, of course, both physical and mental incapacity and many degrees of each. What the nature or extent of decedent’s incapacity may have been is not indicated. However, I find no motion to have the allegation of the petition made more definite and certain by stating the nature or extent of decedent’s incapacity. Absent such a motion I shall assume decedent was incapable of exercising reasonably diligent investigation to discover the fraud. On that basis I concur in the order overruling the demurrer to the petition.
I do not, however, concur in various statements of law and intimations in the opinion with respect to what a petition based on the fraud statute (G. S. 1935, 60-306, Third) must contain in order to disclose plaintiff’s right to maintain an action thereunder. Touching that subject I adhere to the views expressed and based on the authorities cited from this and other jurisdictions in the dissenting opinion in Dalton v. Hill, 169 Kan. 388, 396-400, 219 P. 2d 710. For the importance of allegations disclosing exercise of reasonable diligence in the discovery of alleged fraud, see, also, emphasis placed on such allegations in Dalton v. Lawrence National Bank, 169 Kan. 401, 412-414, 219 P. 2d 719, decided on the same date as Dalton v. Hill, supra.
The rule laid down in the decisions referred to is not a technical one in any sense. It is based on sound doctrine and tends to promote justice and fair dealings between men where belated actions based on fraud are filed long after material evidence may be lost and important witnesses no longer may be available. The rule merely requires that a person relying upon a belated discovery of fraud can no longer allege only ignorance of the fraud but must allege facts disclosing such fraud, in the exercise of reasonable diligence, could not have been discovered earlier than two years before the action was instituted.
The fraud statute was early recognized by this and most other courts as an exception to the general rule that a cause of action accrues on the date a wrongful act, or acts, are committed. Persons relying on the exception provided by the statute are required to bring themselves within it in order to maintain the action. Although the early decisions of this and some other courts were that it was sufficient merely to plead earlier ignorance of the fraud than the date alleged the majority of the courts are now committed to *103the sounder doctrine that in order to maintain such an action facts must be pleaded to show the fraud, in the exercise of reasonable diligence, could not have been discovered earlier than two years before the action was filed. (Schulte v. Westborough, Inc., 163 Kan. 111, 180 P. 2d 278, 172 A. L. R. 259.) See exhaustive annotation following the Schulte case in 172 A. L. R. 265.
If a good cause of action can be stated without alleging facts disclosing such diligence then obviously proof of such diligence by a plaintiff is likewise unnecessary to support a judgment. Such an interpretation, in my opinion, violates the true intent and purpose of the statute.