70 Minn. 113 | Minn. | 1897
This action as originally commenced was brought by the plaintiff, a judgment creditor of the defendant Willard Boice, to set aside as fraudulent and void as to creditors of the grantor a conveyance from Willard to the defendant Clayton S. Boice, and to subject the granted premises to the payment of the judgment. During the pendency of the suit the plaintiff issued execution, and sold the
This action was commenced in June, 1893, nearly twelve years after the alleged fraudulent conveyance, and nearly nine years after the rendition of the judgment. The allegation in the complaint as to the discovery of the fraud is that “the aforesaid William Oakley had no knowledge of the aforementioned fraudulent transfer prior to said assignment of said judgment” (October, 1891). The answer of the defendants admitted the conveyance, but denied the fraud, and pleaded the statute of limitations. Upon the trial, when the plaintiff rested, the defendants moved a dismissal of the action on the ground, among others, that “the plaintiff has shown that he is not entitled to equitable relief.” While this language is not very apt, we construe it as meaning that the plaintiff had failed to establish a cause of action. The court reserved its decision on this motion, to which ruling the defendants excepted, and then proceeded to introduce their evidence, as they were compelled to do unless they saw fit to rest on their motion, which they were not obliged tó do-.
When the evidence closed, the court made findings, among others, that the conveyance was made without consideration and with intent to defraud the creditors of the grantor, and that Oakley had no knowledge of the intent or of the fraudulent character of the conveyance. This last finding is silent as to time, but we shall assume, in favor of the plaintiff, that it was intended to be responsive to the allegations of the complaint and means prior to the assignment of the judgment to the plaintiff in 1891.
Inasmuch as the assignments of error are somewhat peculiar, and the brief does not always follow the assignments, we have been rather perplexed in determining just what questions are available to the defendants. It is sufficient to say that we are of opinion that the seventh assignment raises the question of the correctness of the
The only questions which we find it necessary to consider relate to the statute of limitations. The action, under both the original and the supplemental complaints, was one “for relief on the ground of fraud,” and therefore the limitation applicable is that prescribed by G. S. 1894, § 5136, subd. 6, to-wit, within six years after “the discovery by the aggrieved party of the facts constituting the fraud.” The facts constituting the fraud were the conveyance by the debtor with intent to defraud his creditors. When an action for relief on the ground of fraud is not commenced until more than six years after the commission of the acts constituting the fraud, the burden is on the plaintiff to allege and prove that he did not discover the facts constituting the fraud until within six years before the commencement of the action. Humphrey v. Carpenter, 39 Minn. 115, 39 N. W. 67; Morrill v. Little, 53 Minn, 371, 55 N. W. 547. This is analogous to the old equity rule, and is bottomed on common sense and sound principle. The question is, what constitutes a “discovery” within the meaning of the statute? Mere constructive notice of the deed by reason of its being filed for record is not notice of the facts constituting the fraud. Berkey v. Judd, 22 Minn. 287.
To ascertain what constitutes “a discovery of the facts constituting the fraud,” reference must be had to the principles of equity in which this provision had its origin, and which the legislature must be presumed to have had in mind when they enacted' the statute. In granting relief on the ground of fraud the foundation
The English statute of 3 & 4 Wm. IV. c. 27 (section 26), which was the first statute of limitations applicable to suits in equity, adopted in express terms this equitable principle in the following language, viz.:
The cause of action is “deemed to have first accrued at and not before the time at which such fraud shall or with reasonable diligence might have been first known or discovered.”
Some of our American statutes contain the same or similar language, while others like our own merely provide that the cause of action shall not be deemed to have accrued (for the purposes of this limitation) until the discovery of the facts constituting the fraud. But in every instance, so far as we are aware, the courts have construed such statutes in accordance with the equity rule, and hold, without reference to the particular language used, that the means of discovery are equivalent to actual-discovery, and that a party must be deemed to have discovered the fraud when, in the exercise of proper diligence, he could and ought to have discovered it. That was the construction put upon our own statute by this court in
There is a total absence of testimony tending to prove that Oakley, the original j udgment creditor, did not have actual knowledge of the fraudulent character of the conveyance before he assigned to plaintiff, and more than six years before the commencement of this action; or that, if he had not such knowledge, his ignorance was not the result of his own negligence. On the contrary, all the circumstances disclosed by the evidence tend to show that, if he had exercised any sort of diligence, he would and must have discovered the fraudulent character of this conveyance long before he assigned to plaintiff. He obtained the judgment as administrator, and hence his official duty required him to use reasonable diligence to collect it. The deed was on record, and he admits that he heard of its execution. He lived in the same neighborhood with the defendants, and within about two miles of the land in question. He was a brother-in-law of the grantor (as also is the plaintiff), and presumably was somewhat acquainted with his financial circumstances. He knew that the grantor and the grantee were brothers. He also admits that his judgment debtor was unable to pay him, and that he did not know then nor since whether he had any nonexempt property after making this conveyance. And there is not the faintest suggestion anywhere in the evidence that he made any investigation as to the character of, or the consideration for, the conveyance. We call special attention to his own testimony (which is the only direct evidence on the subject) to show that he does not even deny knowledge of the fraudulent character of the conveyance. He merely says that he does not know “whether the money passed in that transfer.”
The evidence was wholly insufficient to prove that the facts constituting the fraud were not discovered, or were not discoverable, until
Order reversed, and new trial granted.