Opinion
04-28-1886
ARNETT, EX'R, ETC v. FINNEY and others.
C. A. Skillman, for John Finney. R. S. Kuhl, for complainant.
Bill for an account, etc. On plea of statute of limitations by defendant Finney.
C. A. Skillman, for John Finney.
R. S. Kuhl, for complainant.
RUNYON, Ch. The bill was filed by Cornelius Arnett, now deceased, against John Finney and William V. Case for the dissolution of a partnership entered into by Finney and Case and William Thatcher, March 31, 1868, under the firm of W. V. Case & Co., and for an account of the transactions, etc., of the firm, and to recover the value of Thatcher's interest in certain property of the firm, etc. The bill states that the firm were the owners of land on which they built a factory, in which they put certain personal property consisting of an engine and boiler and machines and machinery; that on or about June 1, 1869, Thatcher was adjudged a bankrupt, and his interest (one-third) in the property was sold by his assignee in bankruptcy on or about July 7, 1869, to Cornelius Arnett; that the land was incumbered by mortgage and mechanics' liens to an amount exceeding its value; that, at the time of the sale in bankruptcy, Finney took possession of the engine and boiler and machines and machinery under a claim that a mortgage which he pretended to hold upon the land covered that property also; and that in March, 1870, he bought the land at sheriff's sale under a decree of this court, and claims that by that purchase he became the owner of the engine, boiler, machines, and machinery, as well as the land. The bill also states that the complainant denies that that claim is valid, and avers that Arnett bought Thatcher's interest in the property in question clear of any lien or incumbrance, and that the claim thereto set up by Finney was made in order that he might thus, by means of a false pretense, deprive Arnett of his interest in the engine and boiler and machines and machinery, and get them himself. According to the bill, Finney has ever since the sale (1870) held the property in question, and has used it, against Arnett's protest, and frequent demand that he should pay him the fair value ofhis interest therein, with a reasonable compensation for the use thereof. The bill prays that the business relations of Arnett and Finney and Case as partners, trading as W. V. Case & Co., may be dissolved; that a receiver may be appointed to take charge of the property in question, and to adjust and settle the business affairs of the firm, and to sell and dispose of the property; and that Finney may be required to pay the complainant the amount of the value of Arnett's interest therein when he (Finney) took possession of the property, and to compensate him for the use of and the injury to it. Finney has pleaded the statute of limitations, and the question is as to the validity of the plea.
No objection is made to the form of the plea. The ground taken against it is that the statute of limitations is not a bar to the suit. The case made by the bill is that in July, 1869, more than 14 years before the bill was filed, Finney claimed the property in question as his own, under a mortgage which he held upon the land, and that since March, 1870, he has claimed it under a sheriff's sale of the land; that he has asserted those claims ever since, against the protest of Arnett; and that he took the property into his possession in 1869, and has kept it ever since, using it as his own. It seems from the statements of the bill that he has claimed, and still does, that the property constituted part of the real estate, and that it was therefore covered by his mortgage, and that, under the sheriff's sale of the real estate, it passed to him as part and parcel thereof. Were it not for the fact that a claim to an account of a partnership is involved, it would not be urged that this suit is not barred by the statute of limitations. According to the bill, Finney claims the property under a mortgage and sheriff's sale, and has so claimed it for about 15 years, and that, too, against the protest of Arnett; and yet in all that time Arnett took no proceedings against him to test the validity of the claim. No fraud or concealment is alleged. No reason whatever is given why Arnett did not bring suit earlier. But it is urged that whether the complainant has any interest in the property or not, if it be adjudged that the title thereto did not pass to Finney under the mortgage and sheriff's sale, will depend on the decision of the question whether the complainant has any interest in the property of the firm, and that that can only be ascertained by an account, and that this court is the proper one to require such account; and that, in view of the fact that the subject of inquiry is a partnership trust, the statute of limitations is no bar to this suit. But there is a limit to the time in which this court will entertain a bill for an account between partners. The firm of W. V. Case & Co. was dissolved by the bankruptcy of Thatcher, in 1869, about 15 years before the bill was filed. No reason whatever is either given or suggested why an account was not sought within six years from that time. It does not appear that there have been any partnership transactions since 1869. Nor does it appear that any account was ever sought at all before the bill was filed. According to the bill, the factory of the firm was sold away from them through legal proceedings in 1870, and with it went, as Finney insists, and always since then has insisted, the property in question in this suit, and there appearsto have been no other property of the firm. The bill states that, inasmuch as the factory was incumbered to an amount greater than its value, all that Arnett got by his purchase at the sale in bankruptcy was Thatcher's interest in the property in question. So that it seems that there was no reason why Arnett should have sought an account, except in connection with and to establish his interest in that property.
Now, although strictly the statute of limitations bars legal remedies only, courts of equity, by their own rules, independently of any statutes of limitation, give great effect to length of time, and frequently refer to the statutes of limitation as furnishing a convenient measure for the length of time that ought to operate as a bar in equity of any particular demand, (Lord Eldon in Beckford v. Wade, 17 Ves. 87, 97;) and they have adopted the period limited in the statute, in analogy thereto, (Sterndale v. Hankinson, 1 Sim. 393, 398.) Chancellor Vroom said in Wanmaker v. Van Buskirk, 1 N. J. Eq. 685, 691, that the statute of limitations does not apply in terms to courts of equity; but it is well known that they have always felt themselves bound by the principles of the statute, and, except in cases of strict trust, and matters purely equitable in their nature, have acted in conformity with them. It was long ago held that the statute is a good defense to a bill for an account between partners. Barber v. Barber, 18 Ves. 286. In that case the bill, which was filed in-1808, prayed an account against the representatives of a surviving partner, alleging that the partnership began in 1788, and continued to 1798, without any settlement of accounts. The answer denied the partnership, and insisted upon the statute of limitations. The master of the rolls (Sir William Grant) held that the case was within the statute, inasmuch as all accounts had ceased for six years. See, also, Ault v. Goodrich, 4 Russ. 434. On the other hand, it was held in Robinson v. Alexander, 2 Clark & P. 717, that the statute is not a bar. Since that decision, however, it has been held in England that long delay, without regard to the statute, operates as a bar in equity. See Tatam v. Williams, 3 Hare, 347.
In this court it has been distinctly held that the statute is a bar to a bill by a partner against his copartner for an account. Cowart v. Perrine, 18 N. J. Eq. 454. See, also, Todd v. Raffert v, 30 N. J. Eq. 255; S. C. on appeal, 34 N. J. Eq. 552. In this case the delay in calling for an account has been, as before stated, not only for six years, but for about fifteen, and is wholly unaccounted for. It would be inequitable, under the circumstances, to compel Finney to come to an account. It should be held that the complainant is barred by the lapse of time. The plea will therefore be held to be good.
NOTE.
In the consideration of purely equitable titles, courts of equity act in analogy to the statutes of limitation, but are not bound by them. Hickox v. Elliott, 22 Fed. Rep. 13. See German-American Seminary v. Kiefer, (Mich.) 4 N. W. Rep. 636, and Hall v. Russell, 3 Sawy. 515.
It has been held in Iowa that the statute of limitations applies to equitable actions. District Township of Spencer v. District Township of Riverton, 17 N. W. Rep. 105. See, also, Relf v. Eberly, 23 Iowa, 467.
Although courts of equity, as a general rule, follow the statute of limitations, they will not do so when manifest wrong and injustice would result. Fogg v. St. Louis, H. & K. R. Co., 17 Fed. Rep. 871.
A court of equity is only bound to apply the statute of limitations where its jurisdiction is concurrent with that of a court of law. Etting v. Marx's Ex'r, 4 Fed. Rep. 673.
When a court of equity does apply the statutes of limitation the lex fori governs the question of limitations. Walsh v. Mayer, 4 Sup. Ct. Rep. 260.
In equity, as well as at law, a statute of limitations is a bar when the conflicting titles are adverse in their origin, and one was equitable and the other legal. Fussell v. Gregg, 8 Fed. Rep. 384; Fussell v. Hughes, Id.
A court of equity, however, does not act in analogy to the statute of limitations where there has been gross laches in prosecuting claims, or long and unreasonable acquiescence in the assertion of adverse rights, Etting v. Marx's Ex'r, 4 Fed. Rep. 673; for in equity rights are forfeited by laches, Hough v. Coughlan. 41 Ill. 131; Mitchell v. Berry, 1 Mete. (Ky.) 619; Davison v. Jersey Co., 71 N. Y. 333; State v. West, 68 Mo. 229; Atkinson v. Robinson, 9 Leigh, 393; Robertson v. Read, 17 Grat. 544; Harrison v. Gibson, 23 Grat. 212; Hudson v. Hudson, 3 Rand. 117; or by acquiescence, Kent v. Jackson, 14 Beav. 384; Stiles v. Guy, 1 Hall & T. 523; Ex parte Morgan, Id. 328; 2 Perry, Trusts, I 870; and it is well settled that, where the facts alleged in the bill disclose laches on the part of the complainant, the court will refuse relief on its own motion, even where the defense of laches is not pleaded. Credit Co. v. Arkansas Cent. Ry. Co., 15 Fed. Rep. 40; Sullivan v. Portland, etc., Ry. Co., 94 U. S. 806; Board of Com'rs of Leavenworth Co. v. Chicago, R. I. & P. Ry. Co., 18 Fed. Rep. 209; Johnson v. Florida T. & P. R. Co., Id. 821.
Quaere, whether the doctrine of laches or lapse of time can be invoked in a suit to which a statute of limitations applies. Sheldon v. Keokuk Nothern Line Packet Co., 8 Fed. Rep. 769.
Lapse of time is one of the defenses peculiar to a court of equity. Hancock v. Plummer, (Cal.) 5 Pae. Rep. 514. See, also, Dominguez v. Dominguez, 7 Cal. 426; Brandt v. Wheaton, 52 Cal. 430.
After a lapse of 12 years from a settlement, a demand will be regarded as stale in equity. Clute v. Fraz"ier, (Iowa,) 12 N. W. Rep. 327.