In August, 1895, A. Jacobitz became surety for George T. Donaldson on a note to H. M. Thorp for $3000. This note was renewed at intervals of several months by new notes signed by Donaldson as principal and Jacobitz as surety until June 2,. 1899, when such a note was given for a balance of $1068.63. This note not being paid, Thorp sued Donaldson and Jacobitz, and on December 10,1900, obtained a judgment against both. On February 18, 1901, Jacobitz paid the judgment, and by proper notice under section 480 of the code (Gen. Stat. 1901, §4926) preserved the judgment for his benefit in enforcing repayment from Donaldson. On March 30, 1897, a tract of land was conveyed to Arminta E. Donaldson, the wife of George T. Donaldson, by a deed which was recorded on the same day. On October 22, 1901, Jacobitz brought an action to subject this land to the payment of his judgment, alleging that it had been bought and paid for by George T. Donaldson; that the title had been taken in his wife for the purpose of defrauding plaintiff and other creditors, and that plaintiff did not discover the fraud until the summer of 1900. Upon a trial, judgment was given for plaintiff, which defendants now seek to reverse.
The only serious question involved is whether the statute of limitations had barred the action. Plaintiff in error maintains that the recording of the deed was constructive notice to plaintiff, and that the statute of limitations began to run from the time it was recorded, citing Black v. Black,
The case of Laird v. Kilbourne et al.,
There is no conflict in principle between the decision in Black v. Black, supra, and that in' Duffitt v. Tuhan, supra. In the latter case it was said, the language being adopted almost literally from McMahon v. McGraw,
“In a case like this the statute does not begin to run until the fraud is discovered. For this purpose there is no constructive discovery. If'an'agent or tenant should fraudulently allow the lands of his*247 principal or landlord to be sold for taxes, and take the deed himself and put it on record, this would not be notice to the principal or landlord that would set running the statute that would bar him from an action for relief against the fraud.”
This statement that there is no constructive discovery must be construed with reference to the facts of the case in which it is used. It is as though the sentence read: ‘ ‘ There is no constructive discovery through the mere record of a tax deed fraudulently taken .by the agent of 'the owner.” • The fiduciary relation between the parties in such case would be sufficient to relieve the owner from any obligation to watch the records for a tax deed to his agent, if the record of such a deed would otherwise be notice to him. Constructive discovery resulting merely from a statute, under such circumstances that the aggrieved person, although actually diligent, has'no reasonable opportunity to learn of the facts constituting the fraud, may not be sufficient to set the statute in operation, but constructive discovery resulting from his failure to be diligent when diligence would have disclosed the fraud practiced upon him will always do so. In the present case we hold that Jacobitz is deemed to have discovered the fraud when the deed was recorded, not merely because of the statute making the record notice, but because he was dealing with Donaldson as one interested in his financial standing, becoming his surety month after month and year after year, while the record, being open at all times to his inspection, would upon examination have disclosed the fact that the deed in question was not made to Donaldson. (Teall v. Slaven, 40 Fed. [C. C.] 774.)
Defendant in error cites a number of cases holding that the record of a conveyance is not notice to the
“An action brought by creditors to set aside a deed as fraudulent’, more than five years after it was recorded, is barred by limitation, it appearing that plain'tiffs, who resided in the town where the deed was recorded, and who were from time to time becoming the sureties of the grantor, might, by reasonable diligence, have discovered the deed at any time after it was recorded.”
With regard to the second point raised by plaintiff in error, that the statute of limitations did not begin to run until the claim was placed in judgment, it is sufficient to say that while the present action could not have been begun until a judgment had been obtained (Taylor v. Lander,
The judgment is reversed, and the cause remanded for further proceedings in accordance with this opinion. .