Court Opinion

ID: 7275593
Source: CourtListenerOpinion
Date Created: 2022-07-25 19:59:02.427044+00
Date Added: 2024-06-11T16:18:50.680381
License: Public Domain

Mr. Justice Shepard
delivered the opinion of the Court:
That the bar of the statute of limitations will not commence to run in equity until the fraud has been discovered, or until such time as by the use of ordinary care it might reasonably have been discovered, is now universally conceded. There has, however, been great diversity of opinion with respect to the operation of this rule in actions at law. The question was thoroughly considered by Story, J., in the Circuit Court, at an early day, and after an exhaustive review of the authorities, and discussion of the principle, he considered that the rule should be made to apply at law as well as in equity. See Sherwood v. Sutton, 5 Mason, 143. The weight of authority at the present time supports the conclusion. Boswell on Lim. & Ad. Pos., Secs. 390 and 387. The only expression of opinion by the Supreme Court *392of this District which we have been able to find supports the same conclusion. Moses v. Taylor, 6 Mackey, 281.
In our opinion, the question may well be considered as settled in this jurisdiction by the case of Bailey v. Glover, 21 Wall., 342. The authority of that case is denied because the statute therein construed is the limitation clause of the National Bankrupt Act, which related to actions by assignees to recover property fraudulently conveyed or concealed by the bankrupt. This point was evidently considered in that case, however, as will be seen in the opinion, wherein Mr. Justice Miller said: “This is a statute of limitation. It is precisely like other statutes of limitation, and applies to all judicial contests between the assignee and other persons, touching the property or rights of property of the bankrupt, transferred to or Vested in the assignee, where the interests are adverse and have so existed for more than two years from the time when the cause of action accrued, for or against the assignee.”
The second objection to the authority of the case is that it was itself a suit in equity. This objection, we think, disappears upon consideration of the phrase of the statute, “ No suit at lazo or in equity shall in any case be maintainable.” Referring specially to those words of the statute, Miller, J., said: “ It is quite clear that this statute must be held to apply equally by its own force to courts of equity and to courts of law, and if there be an exception to the universality of its language, it must be one which applies under the same state of facts to suits at law as well as to suits in equity.”
After discussing the question further upon general principles, applicable alike to both cases, he said: “But wé are of opinion, as already stated, that the weight of judicial authority, both in- this country and in England, is in favor of the application of the rule to suits at law as well as in equity. And we are also of opinion that this is founded in a sound and philosophical view of the principles of the statutes of limitation. They were enacted to prevent frauds; to prevent parties from asserting rights, after the lapse of *393time had destroyed or impaired the evidence which would show that such rights never existed, or had been satisfied, transferred, or extinguished, if they ever did exist. To hold that by concealing a fraud, or by committing a fraud in a manner that it concealed itself until such time as the party committing the fraud could plead the statute of limitations to protect it, is to make the law which was designed to prevent fraud, the means by which it is made successful and secure. And we see no reason why this principle should not be as applicable to suits tried on the common law side of the court’s calendar as to those on the equity side.” Although there is, at first glance, some apparent conflict between Bailey v. Glover and the cases of Wood v. Carpenter, 101 U. S., 135, and National Bank v. Carpenter, Id., 567, it has since been distinguished from them, and followed in two cases, both of which were suits at law. Rosenthal v. Walker, 111 U. S., 185; Traer v. Clews, 115 U. S., 528.
In accordance with these views, .we must hold that the court erred in sustaining the demurrer to the replication. If it be made to appear on the trial that the defendant kept the fraud concealed, or that it was of such nature as to remain concealed after perpetration, and that therefore plaintiff did not discover it, nor discover any facts sufficient to put him upon inquiry, which if followed with ordinary diligence would have led to its discovery, until within three years before the time of filing his suit, the statute of limitations will be no bar to his recovery.
2. Though the demurrer to the replication is not well taken, it will reach back and apply to any defect that may be found in the declaration. This being the practice, it remains, for us to consider the soundness of defendant’s contention that the allegations of the declaration do not show a cause of action.
The contention is substantially, that plaintiff was not a stranger or a non-resident, and that he was not deceived as to the general value and salability of his lots; in the absence *394of allegation it must be presumed that he knew the market value of his lots, and with that knowledge priced them to defendant for sale; and that while Mrs. Battelle was defrauded by defendant, the plaintiff sustained no injury, because he received on one lot the very price for which he authorized its sale, and on the other a price which he assented to.
It is readily conceded that the mere perpetration of a fraud does not give the right of action unless the party defrauded has sustained some actual damage as a consequence thereof. But is that the situation presented by the facts as alleged in this case and admitted by the demurrer to be true?
It is the duty of an agent, empowered to sell property for another, to obtain the best price that he reasonably can. His duty to his principal is not thoroughly performed by finding a purchaser, and, if authorized thereto, by concluding a sale at the principal’s own price even, when he knows that a better price can readily be obtained. It may be conceded here, also, that the agent would not be liable in such case for negligence merely in not obtaining a better price. But this is not a case of negligence.
Plaintiff’s agent for the sale of the lots had induced an offer to be made of thirty cents per square foot. We will not stop now to consider the probably criminal, and certainly shameful, violation of duty and obligation to another client, by which this offer was secured. He did procure this offer and the deposit of the money to make it good, and then falsely reported it to plaintiff as a sale at twenty-two cents per foot for one lot and twenty-five cents for the other. He collected the full price of thirty cents and paid plaintiff at the rate of twenty-two and twenty-five cents, respectively, for the lots, less his regular commission upon the lesser sum. The difference between the sums received and the sums paid, amounted to something like $2,000.00, which defendant appropriated to .his own use.
■ As between plaintiff and defendant, to whom did this money rightfully belong? That is the question. As be*395tween them only, it was clearly part of the purchase money of plaintiff’s lots. By what right, then, did defendant convert it to his own use? If one place property in the hands of an agent, or broker, for sale at a fixed price, and he sells it for more, does the excess belong to the owner or to the broker? These questions can be answered in but one way.
No attempt is made to deny the proposition here presented, but it is sought to be avoided by the introduction of the third party, Mrs. Battelle. It is contended that the fraud of defendant, as it appears in the declaration, consisted in inducing his client, Mrs. Battelle, to pay more than the lots were offered to be sold for, or were actually worth, whereby the damage and injury of the transaction resulted exclusively to her, and therefore, to her, and not to plaintiff, the cause of action accrued. We may well presume, in aid of this contention, that the offer was above the market value at the time and was procured by fraud practiced upon the purchaser. The fatal objection to this answer is, that it involves the allegation of defendant’s ownn turpitude to avoid a legal action by one who is utterly untainted thereby. Defendant cannot be permitted to urge the commission of an even more shameful fraud in justification or excuse of the one charged by plaintiff.
For the punishment and prevention of frauds, and in the interest of morality, defendant should be held to be estopped to plead that he did not make a bona fide sale of plaintiff’s lots, and that he defrauded another instead of the plaintiff, in converting to his own use the difference between the money received and the money paid over. To this it may be answered, that defendant was the agent of both plaintiff and Battelle, and that this doctrine would subject him to a double recovery, because Mrs. Battelle might also recover the excess, which he fraudulently caused her to pay, over the price for which the property could have been purchased. If this be true, who is to blame for it? For offenses less-serious than this the courts have, in the proper forms of *396action, permitted parties to be punished with exemplary, in addition to actual, damages. The right to permit the recovery of such damages has been very generally upheld as necessary to punish, and thereby restrain, willful injuries.
The defendant had no right in law or morals to become the agent at the same time, of two persons, whose interests necessarily conflict as in the case of buyer and seller. It is a relation for which there is no toleration, much less recognition, in courts of either law or equity. And when one voluntarily places himself in such position and defrauds each principal, it would be a reproach to justice to allow him to set it up in defense to escape the consequences of the discovery of his fraud by either or both of them. He must have carefully concealed the double agency from each of his clients, and led each to believe that he was representing him or her alone in the transaction, with an eye single to the one interest. He has no right to complain if, in an action by each party, he should be left, as far as any advantage to himself is concerned, in the very situation which he held hirnself out to occupy.
It is proper to add that the question of the sufficiency of the declaration seems not to have been presented in the court below, and that the argument and decision there were confined to the legal effect of the replication to the plea of the statute of limitations.

For the error pointed out the judgment appealed from must he reversed with costs to the appellant, and the cause remanded for further proceedings, not inconsistent with this opinion ; and it is so ordered.