Rogers v. Van Nortwick

Pinney, J. Without considering whether the evidence supports the contention that Smith acted unfaithfully as the plaintiff’s agent, so that John Van Hortwick, by his interference, fraudulently persuaded Smith to deliver to him the stock in question assigned in blank, with the accompanying power of attorney, when he ought to have held it for or delivered it to the plaintiff, whereby Yan Hort-wick acquired the legal title to it, but became a trustee of it, ex maleficio, for the plaintiff, we are of the opinion that the appellants are precluded by their laches from obtaining the relief which they seek. It is said in Hammond v. Hopkins, 143 U. S. 224, 250: “Ho rule of law is better settled than that a court of equity will not aid a party whose application is destitute of conscience, good faith, and reasonable diligence, and will discourage stale demands, for the peace of society, by refusing to interfere where there have been gross laches in prosecuting rights, or where long acquiescence in the assertion of adverse rights has occurred. . . . Each case must necessarily be governed by its own circumstances, since, though the lapse of a few years may be sufficient to defeat the action in one case, a longer period may be held requisite in another, dependent upon the situation of the parties, the extent of their knowledge or means of information, great changes in values, the want of proba — 429 — ble grounds for the imputation of intentional fraud, the destruction of specific testimony, the absence of any reasonable impediment or hindrance to the assertion of the alleged rights, and the like. Marsh v. Whitmore, 21 Wall. 178; Landsdale v. Smith, 106 U. S. 391; Norris v. Haggin, 136 U. S. 386; Mackall v. Casilear, 137 U. S. 556; Hanner v. Moulton, 138 U. S. 486.” The party in such case “must state in his bill distinctly the particular act of fraud, misrepresentation, or concealment; must specify how, when, and in what manner it was perpetrated; . . . and especially must there be distinct averments as to the time when the fraud, mistake, concealment, or misrepresentation was discovered, and what the discovery is, so that the court may clearly see whether, by the exercise of ordinary diligence, the discovery might not ‘have been made before ” (Stearns v. Page, 7 How. 819, 829); “ otherwise [as was held in Badger v. Badger, 2 Wall. 87, 95] the chancellor may justly refuse to consider the case, on his own showing, without inquiring whether there is a demurrer or formal plea of the statute of limitations contained in the answer.” Hardt v. Heidweyer, 152 U. S. 547, 558. Upon the subject of laches and acquiescence, see, also, 1 Beach, Mod. Eq. Jur. §§ 18, 19, and cases there cited. A court of equity applies the rule of laches according to its own ideas of right and justice, and the courts have never prescribed any specific period applicable to every case, like the statute of limitations; and what constitutes a reasonable time within which the suit must be brought depends upon the facts and circumstances of each particular case. Brown v. Buena Vista Co. 95 U. S. 157, 160; Wood v. Carpenter, 101 U. S. 140, 141; Twin-Lick Oil Co. v. Marbury, 91 U. S. 587. The rule is peculiarly applicable where the property, the subject of litigation, is subject to rapid or frequent changes in value, as stocks, oil wells, mining property, and the like. Twin-Lick Oil Co. v. Marbury, — 430 — supra; Johnston v. Standard Mining Co. 148 U. S. 360, 370. Many considerations applicable to actions for specific performance have a strong bearing upon a case like the present, where the appellants seek to obtain the benefit of a purchase of property which another fraudulently has taken to himself. The cases in respect to laches and change in value in actions for specific performance are fully collated and considered in Combs v. Scott, 76 Wis. 662. In very many cases a much less delay than occurred in this case has been held to bar relief, on the ground of laches or acquiescence. It is argued that laches or acquiescence, in order to operate as bar, must be such as will amount to an estoppel, and such, no doubt, is the rule in cases where the cause of action is a legal one. Where it is purely of an equitable character (and not founded on any strictly legal right), there the rule in equity as to what will constitute a bar as stated in the cases already cited applies, and unreasonable and unexplained delay is sufficient to bar relief. The distinction between the rule in actions founded on a strictly legal title and purely equitable actions is pointed out in Galway v. Metropolitan El. R. Co. 128 N. Y. 132, 153, 157. See Menendez v. Holt, 128 U. S. 523. It was further contended that actual knowledge of the fraud, mistake, or concealment is essential to make diligence in the prosecution of one’s right a duty in order to lay a foundation for the claim of laches or unreasonable delay, and it is said in cases cited that it is sufficient “ if the suit is commenced within a reasonable time after the evidence of the fraud was discovered,” and that “reasonable diligence is, of course, essential to invoking the action of the court; but what is. reasonable diligence depends upon the facts of the particular case;” and that, “where a party injured by fraud is in ignorance of its existence, the duty to commence proceedings arises only upon dis — 431 — covery.” Maeder v. Norton, 11 Wall. 458; Kilbourn v. Sunderland, 130 U. S. 518. The question, however, remains : What will be considered a discovery of the fraud, and what is reasonable diligence in that behalf? This is answered by the well-settled rule of pleading already noticed, requiring the plaintiff to distinctly state in his complaint, and prove at the hearing, the time of the discovery and what the discovery was, “ so that the court may really see whether, by the exercise of ordinary diligence, the discovery might not have been made before.” Stearns v. Page, 7 How. 819, 829, and Badger v. Badger, 2 Wall. 87, 95. In Johnston v. Standard Mining Co. 148 U. S. 370, it was held that “ the law is well settled that, where the question of laches is in issue, the plaintiff is chai-geable with such knowledge as he might have obtained upon inquiry, provided the facts already known by him were such as to put upon a man of ordinary intelligence the duty of inquiry.” Wood v. Carpenter, 101 U. S. 141; Kennedy v. Green, 3 Mylne & K. 699, 722; Erlanger v. Sombrero Phosphate Co. L. R. 3 App. Cas. 1231, 1280; Carr v. Hilton, 1 Curt. 390, 394; Buckner v. Calcote, 28 Miss. 432. And the duty is all the more peremptory where the property itself is of uncertain value, and considerable expenditures are being made, and it is liable to greatly increase in value. In such cases the courts look with disfavor upon the claims of those who have waited to decide, when the danger is over, which has been at the risk of another, to come in and claim the profit of the event. Cox v. Montgomery, 36 Ill. 396. Poverty or pecuniary embarrassment is not a sufficient excuse for postponing the assertion of one’s rights. Hayward v. Nat. Bank, 96 U. S. 618. In view of these well-settled principles governing the question of laches and acquiescence, we feel compelled to say, under the facts and circumstances- of this case, that the appellants have not shown proper diligence in ascertaining — 432 — their rights or in bringing them before the court. They knew, or at least the plaintiff did, and, as they were jointly interested, each is probably affected by what the other knew, that as early as the middle of October, 1886, John Van Nortwick had induced Smith to let him have the 1,197 shares of Corning stock, which, as they claim, he agreed to purchase for the plaintiff, and really for the benefit of both of them. Rogers knew before Smith had sent the stock to Yan Nortwick that the latter had sent the money for it to Smith and expected to get it, and he knew that Smith had not informed him of what Yan Nortwick was attempting or expecting to accomplish about it. In a few days after he learned that Yan Nortwick had succeeded in getting the stock, and though both Smith and plaintiff lived in Appleton, and met almost daily, Smith did not report to him or say a word to him on the subject. This was enough to indicate that, if the plaintiff’s version of his arrangement with Smith is true, Smith had been unfaithful to and had betrayed his interests and the confidence he had placed in him. Seeking an explanation of Smith, the latter insisted that it was all the result of mistake; that the stock had been sent to Yan Nortwick and that he had supposed that the plaintiff was purchasing for Yan Nortwick. If mistake it was, it had all the effect of a fraud as against the plaintiff and Mariner. It was evidently well understood that the entire matter had been managed by correspondence, and it does not appear that the plaintiff ever called on Smith to show him either what he had been doing as his agent, or the correspondence in question, until about three years afterwards, when, as Smith testifies, he showed all the the correspondence he had on the subject to Mr. Felker, the plaintiff’s attorney, who was about to bring this action. Subsequently, Smith placed the correspondence in the hands of Mr. Quarles, who showed it to Mr. Mariner in the summer of 1891, and this is the discovery then made, relied on to re — 433 — but the claim of laches. When the plaintiff brought the action, in January, 1890, after a lapse of three years and three months, in his verified complaint he charged Yan Nortwick with having deprived him of this stock by fraudulently availing himself of Smith’s alleged mistake. There is nothing to show that the plaintiff, when he brought the action, had found out or discovered any fact that he did not know perfectly well fully three years before; and the correspondence had been recently shown to his attorney by Smith, who would probably have shown it earlier had he been called on for that purpose. Had he refused, the plaintiff could have brought his action, as he finally did, and compelled the production of the correspondence, and ascertained all the facts on the subject by an examination of the parties that now appear in the record. He could have obtained jurisdiction of the parties in the same manner as in the pending action by publication of summons and mailing the complaint. The appellants had knowledge of facts and circumstances which, if they had acted upon them, would doubtless have brought out very directly the real facts as they now appear. The plaintiff supposed, he says, that Smith had acted innocently in making the transfer to Yan Nortwick, but Mr. Mariner took, it seems, a different view of the matter, and on the 15th of December, 1886, he applied by letter for the correspondence, but on the next day Smith wrote him, promising to “talk with him about this matter some time.” It does not appear that he sent the correspondence, and it wo,uld seem that nothing further, in any form, came of the matter. No reason which the law can approve is shown why the action was not brought as early as December, 1886. It would seem that Mr. Mariner did nothing in his own right about the matter, although there was no real obstacle to an investigation, until December, 1891, over five years after the transaction in dispute, when he filed his answer and cross — 434 — complaint, claiming that in the previous summer he had discovered from this same correspondence, as it is claimed,, what he might have ascertained, with reasonable effort, years before,— that the Yan Nortwicks .had an agreement with Smith not to deliver the Corning stock to the plaintiff, but to John Yan Nort wick. In the meantime the condition of the company and of its stock had greatly changed. An important decision on doubtful questions relating to its franchises and riparian rights had been made by the court of last resort, by which they had become more valuable large investments had been made in improvements, and the Corning stock, bought in 1886 for $10,600, was worth, as the evidence shows, when this action was brought, nearly ten times that amount. The appellants had not, in the meantime, advanced any money; they had taken no risk, and seemed to have acquiesced in the transaction by which Yan Nortwick got the stock for the price named; at least no earnest effort had been made to question his right to the stock until it had so greatly increased in value. The financial embarrassments of the plaintiff, and the complication of his affairs with Yan Nort wick’s interests, to whom he owed large sums of money, and which induced him, it is said, and Mr. Mariner at his request, to forbear suing for their rights, were no excuse for their neglect to act with reasonable diligence upon the facts and circumstances brought to their attention at the time, and which, if acted upon, would have brought to their knowledge, with but little delay, all they claim to have since discovered. Besides, the letter of the plaintiff of February 20, 1888, to John Yan Nortwick, is very strong evidence, in connection with his delay, to show acquiescence, on his part at least, in the transaction which, more than two years afterwards, he sought to question by this action. In view of the delay and want of diligence on the part of the appellants, and the character and great change in the value of the property — 435 — in dispute, we must hold that they are precluded by their laches and acquiescence from obtaining the relief they seek. •Eor these reasons we think the judgment of the superior court should be affirmed. By the Court.— The judgment of the superior court is affirmed.