CASE No. 858 | S.C. | Apr 20, 1880
The opinion of the court was delivered by
This action was brought by the plaintiff as administrator de bonis non of Amelia Hudson, deceased, a junior judgment creditor of the defendant John P. Pool, to set aside as fraudulent and void as to creditors a judgment confessed by the said defendant to his co-defendants and son, James H. Pool.
The complaint alleges want of consideration in the note on which the judgment was confessed — charges that the judgment was confessed for the purpose of hindering, delaying or defeating the other creditors of the defendant John P. Pool, and alleges want' of notice or knowledge of the fraud until within' six years before the commencement of this action.
The defendants’ answer denies the fraud, alleges the bonafides of both the note and the confessed judgment, and pleads the statute of limitations.
The Circuit judge, to whom the cause, after a mistrial upon certain issues of fact referred to a jury, was submitted by consent of parties, found as matters of fact — -first, that the judgment of John P. Pool to his son James H. Pool, was confessed for the purpose of defeating the bona fide creditors of John P. Pool; and, second, that there was no evidence that Esli W. Hudson, plaintiff’s predecessor as administrator, had any notice of facts which go to make up a case of fraud, but that he had a suspicion that something was wrong about the judgment; and upon these findings of fact he overruled the plea of the statute of limitations and set aside the judgment as to the bona fide creditors of John P. Pool.
The defendants appeal to this court upon the following grounds:
“1. It is respectfully submitted that his Honor erred in finding, as matter of law, that plaintiff’s action was not barred by the statute of limitations.
“ 2. That his Honor erred in finding, as matter of law, that
“ 3. That his Honor erred in his conclusions of the law, the same not being warranted by the facts as found by him.”
There is no exception to the findings of fact, and, therefore, they must be taken to be true. The only question submitted is, whether there is error of law in the Circuit decree, as to which it is insisted—
First. That the plea of the statute of limitations should have been sustained upon the proof that Esli ~W. Hudson, first administrator, “ had no notice of facts which go to make up a fraud, but nothing more than a suspicion that there was something wrong about the judgment of John P. Pool to James H. Pool.”
The code of procedure {Gen. Stat. 591, § 114,) provides as follows : “An action for relief on the ground of fraud, in cases 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.”
The terms of this provision would seem to exclude the idea that the proof in this case was sufficient to put into operation the statute of limitations against the first administrator, Esli W. Hudson, who “ had no notice of facts which go to make up a fraud.” Although frauds are generally committed in the dark, we have no doubt that in most cases of fraudulent confessions of judgment third persons have their suspicions., but -to hold that such suspicions alone amount to a discovery of the fraud, would be to give aid in protecting such frauds; and to exclude that very result seems to have been the purpose in using the terms of the code “ until the discovery of the facts constituting the fraud.”
This provision of the code is but the embodiment of an equitable principle which has long been recognized in the state. It has been placed upon the ground “ that it would be against conscience for a party to avail himself of the statute where, by his own fraud, he has prevented the other party from knowing or asserting his rights within the period prescribed by the statute.” This principle is so well settled that it is not necessary to do more than make a general reference to some of the decided cases.
We are satisfied with the statement of the doctrine made by Chancellor Dargan in the case of Shannon v. White: “The ground upon which the court of equity applies the statute of limitations is the laches of the plaintiff, but how can laches be imputed to him. who is ignorant of the fraud ? * * * On the trial it was incumbent upon the defendants to prove that the plaintiff had notice of the fraud more than four years prior to the filing of the bill. And here it is to be remarked that it would not be sufficient to prove that the plaintiff had a. suspicion of the fraud. But it is necessary to bring home to him a knowledge of the facts constituting the fraud. Suppose some one were to tell him that a fraud had been committed ? It would not be sufficient unless he were informed of the facts constituting the fraud, or put in possession of a clue by which, with proper diligence, he might come to a knowledge of the facts.”
As to the second exception, we see no error in the decree. It is admitted that the judgment was confessed by the father to the son with intent to defeat, delay and hinder other creditors, but it is insisted that it was not fraudulent, because it was based upon what purported to be a val uable consideration. Upon the question of fact, whether a judgment or conveyance was made to defeat and hinder other creditors, many nice distinctions are made as to what is and what is not a badge, and what is and what is not conclusive, of such purpose. • But when such intention is proved or admitted, we agree with the Circuit judge, that “even admitting the note was based on a sufficient consideration, the intent to use it to defeat other creditors makes the confession of judgment fraudulent and void as to them.” 13 Eliz.; Gen. Stat. 425; Hipp v. Sawyer, Rich. Eq. Cas. 417; Smith v. Henry, 1 Hill 16; Thomas & Ashby v. Jeter & Abney, 1 Hill 380; Lowry v. Pinson, 2 Bail. 324; Brown v. McDonald, 1 Hill’s Ch. 297; Smith v. Culbertson, 9 Rich. 106; Guignard v. Harley, 10 Rich. Eq. 256.
The Circuit decree is affirmed and the appeal dismissed.