Court Opinion

ID: 5447466
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:13:19.275126+00
Date Added: 2024-06-11T08:32:14.834046
License: Public Domain

Beatty, C. J.
I concur in the judgment of affirmance.
The substance of the complaint is that between November, 1877, and October, 1878, the corporation defendant declared large dividends, of which two hundred and twenty-five thousand dollars in round numbers were payable to Reagan or his trustee, Anderson, in whose name Reagan’s stock stood; that no part of these dividends has been paid, and that the plaintiff, Bills, has succeeded to the right to demand and sue for the *21same. Much of the voluminous matter contained in the complaint consists of a deraignment of plaintiff’s title, and another large portion consists of excuses for the long delay in making demand and commencing the action. Excluding these matters, the cause of action is merely the refusal of the corporation to pay to its stockholder his share of declared dividends.
This is a simple action at law to which the defense of the statute of limitations is as clearly applicable as to any other, and it is barred in two years after it accrues. (Code Civ. Proc., sec. 339.) I concede that a preliminary demand of payment is necessary to perfect the right of action, and that if such demand is made within a reasonable time the statute does not begin to run until after demand and refusal to pay. But the stockholder cannot defeat the policy of the statute by unreasonable delay in making his demand. The policy of the statute is to prevent suits upon stale claims, and to exempt the debtor from the necessity of proving payment after the means of proof have been lost or impaired. If a creditor in cases like this could sue ten or twenty or any number of years after his claim accrued, and maintain his action upon the simple allegation that he had never demanded pay until at a date within the period of limitations, the debtor would never be secure, because the issue of payment could always be litigated by simply adding the other issue failure to demand. Eor this reason it has been held in a great number of instances, and is undoubtedly the law, that the creditor in cases of this character must make his demand within a reasonable time after the money is received to his use. As to what is a reasonable time, that is ordinarily determined by the analogy of the statutory periods of limitation. If the cause of action is barred by the lapse of two years after it becomes complete, then the demand must be made within two years after the right to make it accrues, or a valid excuse must be shown for the failure to make it within that time. Now, in this case, Mrs. Bills, then Mrs. Reagan and administratrix of Reagan’s estate, *22knew of these dividends as early as September, 1879, and inquired of the corporation through some of its trustees if they had been paid. She was informed that they had been paid to Anderson, the trustee. In other words, she was informed that Anderson had in his hands two hundred and twenty-five thousand dollars belonging to the heirs of the estate of which she was administratrix, but she never made any inquiry of Anderson if he had the money or the slightest effort to collect any part of it for the benefit of the heirs of Reagan whose trustee she continued to be for three years after that date. Such a thing seems incredible, but, assuming the fact to be as it is stated, the neglect to make inquiry of Anderson was gross and inexcusable lanhes. It is not only contrary to every dictate of ordinary business prudence, but was a grave violation of her duties to the heirs and distributees of Reagan’s estate. She had the means of knowledge in her possession, and the next step in the inquiry was plainly and unmistakably indicated. She had only to apply to Anderson in order to obtain certain and exact information as to what dividends he had received on account of her intestate, and her failure to make this inquiry is fatal to her claim that she was excused from making a demand for payment by her belief that the dividends had already been paid.
It ought not to be necessary to notice again the old argument or appeal so often advanced when the defense of the statute of limitations is interposed by demurrer, that it is a shame and an outrage to allow a defendant who admits his indebtedness to defeat a recovery by this technical defense. The bar of the statute is not a technical defense. The purpose of the law is not to prevent the recovery of money which is justly due, but to prevent the recovery of money that according to all reasonable presumptions has been paid in an action commenced after the means of proving payment have been lost. It is a statute of repose and security which can never operate unjustly against persons of ordinary prudence, and which undoubtedly prevents innumer*23able frauds. Its policy is sound and beneficent; but, even if it were not, it is the law, and is binding alike upon litigants and courts. And it is not true in any substantial sense that a demurrer on the ground of the statute of limitations admits an existing indebtedness as matter of fact. What the defendant really says by his plea is: I admit I was indebted to you as you allege, but your pretense that I have not paid you is conclusively refuted by the other facts which you allege. In this case it appears that Anderson had express authority to collect these dividends—that all other dividends were actually paid, and that the corporation claims to have paid these also to Anderson. This is its real and meritorious defense according to the allegations of the complaint, and it only demands, as every one may demand under the law, to be exempted from the necessity of proving after the lapse of years a fact which the law conclusively presumes.
I have not in this brief statement of the grounds of my concurrence attempted, and I cannot undertake, to review the authorities cited in the briefs, but I will notice one case upon which appellant especially relies— the case of Schroeder v. Jahns, 27 Cal. 274. In that case money was deposited by the plaintiff with defendant’s intestate for safekeeping, upon an express agreement that it should be kept by the depositary in trust for the depositor. As to the necessity of making a prompt demand of payment there is a clear and manifest distinction between such cases, in which the very object of the transaction is the transfer of the custody of the money for the convenience of the parties during an indefinite period, and a case where the money is received for the mere purpose of paying it over to the person entitled upon his demand. This distinction is recognized in the carefully considered case of Palmer v. Palmer, 36 Mich. 487; 24 Am. Rep. 605.
These are in brief the grounds upon which I concur in the judgment of affirmance.