152 N.Y. 529 | NY | 1897
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *531
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *532 The reversal of the judgment by the General Term was upon the ground that the action was barred by the Statute of Limitations, which was in operation at the time of its commencement, and upon this appeal the only question, argued or presented, is the correctness of that proposition.
As the action was commenced in April, 1879, it came under subdivision 3 of section 414 of chapter 4 of the Code of Civil Procedure, which excepts from its provisions the case of an action commenced before the expiration of two years after the act took effect; which was on September 1st, 1877. Section 91 of the former Code is alone applicable to this case. That section prescribed a limitation of six years for "an action upon a contract, obligation, or liability, express or implied, etc." (Subdiv. 1); or for "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" (Subdiv. 6). The larger limitation of ten years, prescribed by section 97 of the former Code, does not apply; inasmuch as that was for the case of "an action for relief, not hereinbefore provided for." The claim, which the receiver has sought to enforce in the present action, is comprehended within the provisions of subdivision 1 of section 91; for it rests upon the liability of the defendant Henry to make good the loss occasioned to the "Widows and Orphans'" company by the wrongful and illegal doings of himself and his associates while in the direction of its affairs. Upon the facts stated in the complaint the receiver, as the representative of the corporation, might have sued the defendant in the form of an action at law for the damages resulting from his misconduct; or in the present form, which he has adopted, of an equitable action to compel an accounting as to the property wasted and lost. It was said, in the case of O'Brien v. Fitzgerald (
The jurisdiction of the courts of law and of chancery having *536
been concurrent, with respect to this plaintiff's cause of action, the lapse of six years, between the time when the misappropriation of the funds and the acts complained of took place and the commencement of the action, was a complete bar to its maintenance. The plaintiff's case cannot be helped out by the provision in subdivision 6 of section 91 of the former Code, that the cause of action should not be deemed to have accrued until the discovery of the fraud; inasmuch as that provision had reference to cases "solely cognizable by the court of chancery." The case of Foot v. Farrington, (
It is argued, however, by the appellant that the policyholders, to the extent of the reserve, were the equitable owners *537
of all the assets of the "Widows and Orphans'" company and that, upon the dissolution of the company, they had the right to enforce their equitable interests in the reserve and that right the receiver represented. The cause of action, it is said, is purely equitable in its character and the receiver represents the policyholders and their interests in prosecuting it. That proposition, however, is not altogether correct. The receiver of an insolvent corporation represents the corporation, which was the custodian of the property and assets for the benefit of the stockholders and creditors, and he, also, represents those creditors and stockholders. In the case of an insolvent life insurance company, he is the trustee of, and represents, the creditors and all interested in the fund, including policyholders. (People ex rel. Atty.-Gen. v. Security LifeIns. Co.,
The only other point, which it is necessary to notice upon this appeal, is that which is made by the appellant, that there is no finding of fact, or of law, upon which the claim that this *539 action is barred by the six years' Statute of Limitations can be supported. The appellant argues that the burden was upon the defendants, who interposed the defense of the statute, to show that the action was not commenced within six years after the cause of action accrued and, as it would not accrue until the discovery of the fraud, a finding was necessary, to help out the defense that such a discovery was made prior to the appointment of the receiver in March, 1877. The provision of the former Code, that the cause of action should not be deemed to have accrued until the discovery of the fraud, was, however, only applicable to cases theretofore solely cognizable in Chancery. But the answer to the point made by the appellant is that, as the answer sets up the Statute of Limitations, the burden was thereby cast upon the plaintiff of proving that the fraud was not discovered, until within six years of the commencement of the action. If this were not so, the defendant would have to prove a knowledge in the plaintiff, which, in most cases, would be impossible. The burden of showing that the running of the statute had been arrested ought to be upon the plaintiff; as was the rule in equity. A carefully considered opinion in Baldwin v. Martin, (14 Abb. [N.S.] 9), discusses this question quite thoroughly. In the complaint in the present case, it appears upon its face that more than six years had elapsed since the misapplication of the funds of the "Widows and Orphans" reserve occurred. When the answer made the special plea of the Statute of Limitations, it became incumbent upon the plaintiff to repel the presumption of the action being barred, by showing matter in avoidance. The burden was upon the plaintiff to show in what way the running of the statute had been suspended.
The views expressed lead to the conclusion that the order appealed from should be affirmed and that judgment absolute should be ordered against the plaintiff pursuant to his stipulation.
All concur.
Order affirmed and judgment accordingly. *540