216 N.W. 264 | Iowa | 1927
Articles of incorporation of the Lead Zinc Storage Company, which was organized under the laws of South Dakota, were duly filed in the office of the secretary of state of that state on August 11, 1919. The purpose of the organization, as stated in the articles, was to erect warehouses for the storage of ores, minerals, and metals, to do a general warehouse and storage business, to buy and sell ore, minerals, and metals of all descriptions, to erect smelters and engage in the smelting of ores of all descriptions, to build and operate railway lines for the purpose of the organization and for various other purposes therein detailed. The incorporators were the defendants James McNicholas, of Picher, Oklahoma, Daniel O'Donnell, of Des Moines, and one L.E. Gaffy, of Pierre, South Dakota. The articles provided for a business office in the city of Des Moines.
The board of directors, in addition to the promoters named, were R.T. McNicholas of Picher, Oklahoma, and Nathan C. Towne, of Des Moines. O'Donnell ceased to be a director in *918 1920, and Towne became vice president. The president and manager of the corporation was James McNicholas.
The defendants C.N. Kinney and A.C. Bailey were sales agents of the corporation in the city of Des Moines, and as we understand the record, stockholders. A business office was opened in Des Moines in 1919 or 1920, and maintained until the late summer of 1921. On September 13, 1920, appellant entered into a contract in writing for the purchase of stock at its par value, for which he paid $10,000. The petition alleged that all of the defendants conspired and confederated together for the purpose of cheating and defrauding appellant, and that he was induced by the false and fraudulent statements and representations of the stock salesmen and the officers of the company to purchase the stock, and asked judgment for damages. The testimony of appellant is somewhat voluminous, and, as we deem it unnecessary to consider the case on its merits, we refrain from an extended recital of the facts. Suffice it to say that the evidence shows that the stock was practically, if not wholly, worthless. At the close of plaintiff's testimony, the court sustained the motion of the defendants for a directed verdict. One of the grounds of the motion was that the cause of action was barred by the statute of limitations. This ground of the motion presents the decisive question in the case. The contract for the purchase of the stock, as stated, bears date September 13, 1920. The original notice of the commencement of this action was served October 21, 1925, more than five years after the contract was executed.
Three propositions are urged by appellant: (a) That the plea of the statute of limitations was not timely; (b) that it was insufficient in form to meet the requirements of the statute; and (c) that appellant was unable to earlier commence this action because of the fraudulent concealment by the defendants.
I. The statute of limitations was not set up as a defense until appellant had rested his case. If not taken 1. LIMITATION advantage of by demurrer or answer, it will be OF ACTIONS: deemed waived. Lawrence v. Melvin,
This court is reluctant to reverse on the ground of an abuse of discretion in permitting a pleading to be amended. The plea of the statute of limitations, if properly interposed and established by the evidence, necessarily terminated the litigation. In such circumstances, great liberality in permitting an amendment should be indulged by the trial court. Appellant was in no wise prejudiced or inconvenienced by the delay of appellees in setting up the statute as a defense in this case. He did not ask for a continuance, nor for permission to introduce further proof. The motion to strike the amendment was, we think, properly overruled.
II. It is an elementary rule of pleading that the facts constituting the bar of the statute must be pleaded. Lawrence v.Melvin, supra; Borghart v. City of Cedar Rapids,
III. Counsel for appellant, of course, concedes that the action was not commenced within five years after the contract for the purchase of stock was entered into. To avoid the 3. LIMITATION plea of the statute of limitations, it was OF ACTIONS: incumbent upon him to allege and prove that he fraud: was prevented by the fraudulent conduct or concealment: concealment of the cause of action from sooner effect. commencing same. The rule established in this state is that, if the defendant has, by fraud or actual fraudulent concealment, prevented the plaintiff from obtaining knowledge of his cause of action, the statute of limitations commences to run only from the time the same was or might, by the use of proper diligence, have been discovered. District Townshipof Boomer v. French,
Appellant testified that the first he became suspicious of the good faith of appellees in the transaction was in the spring or summer of 1921. McNicholas, who served as general manager of the corporation, had a prison record, and appears to have been a first-class crook. Appellant had little conversation with him after the contract for the purchase of the stock was executed. Most of the representations of which he complains, he charges were made to him by the appellees Bailey and Kinney. The fraudulent character of the scheme is well established by the evidence. The responsibility therefor doubtless rests largely upon the original promoters of the enterprise, particularly McNicholas. The only concealment of appellant's cause of action by appellees, so far as the record shows, was their failure, after they knew the facts, to frankly inform him thereof.
The annual meeting of the stockholders of the corporation for 1921 was held at the Chamberlain Hotel, in the city of Des *921 Moines. McNicholas was not present at the meeting. The fact was made known at that time that no reports could be obtained from him. Everyone connected with the enterprise, including appellant, must have then, or shortly thereafter, learned that the enterprise had failed, and that a gross fraud had been perpetrated in the name of the corporation. Appellant testified that he went to the office of the corporation in Des Moines, shortly after the annual meeting of the stockholders at the Chamberlain Hotel, and requested to be shown the books of the company. He was then informed that the books had been taken to Kansas, City. The last trace of the books disclosed by the evidence was at the hotel, on the date of the annual meeting of the stockholders. They were then in the possession of one of the officers or employees of the company, by the name of Edwards. No one connected with the case, so far as the evidence shows, knows what became of them. Appellant testified that he was later informed by the stenographer that the books were hidden in Des Moines. She did not so testify when called as a witness in his behalf. Each of the defendants, at the opening of the trial, declared that they were unable to produce the books. The inability of appellant to secure the books for examination no doubt caused him considerable inconvenience in ascertaining material facts concerning the transactions of the company. No other fact or circumstance tending to show concealment of appellant's cause of action is contained in the record. What diligence he exercised to ascertain the facts during the time intervening between the meeting of the stockholders in 1921 and the commencement of this action is not very fully disclosed. It is true that he made inquiry of Kinney and others, but it would have been an easy matter for him to have discovered that the corporation possessed no valuable assets, and that a gross fraud had been perpetrated upon him. The mere silence of appellees does not constitute fraudulent concealment of the cause of action, within the meaning of the authorities cited. So far as the record shows, the books of the corporation may have been in Kansas City at the time he made inquiry therefor.
It is our conclusion, after a thorough reading of the record, that appellant failed, as a matter of law, to show such fraudulent concealment on the part of appellees as to avoid the plea of the *922 statute of limitations. The judgment of the court is, therefore, affirmed. — Affirmed.
EVANS, C.J., and FAVILLE, KINDIG, and WAGNER, JJ., concur.
