A., pursuant to his contract, surrendered to a railroad company
coupons attached to some of its bonds, whereof he was the holder,
and took in exchange therefor certificates of preferred stock. The
road, with its franchises, was subsequently sold by the trustees of
the Internal Improvement Fund of Florida, to pay the bonds, whereof
those, which he held, constituted a part. Eight years after the
sale, he brought this suit to rescind the contract upon the ground
of fraud, all the particulars of which were as well known to him
when the sale was made as at any subsequent time.
Held
that his right to relief was barred by his laches and by the
statute of limitations.
The facts are stated in the opinion of the Court.
MR. JUSTICE MILLER delivered the opinion of the Court.
The allegations of the complainant's bill, which was dismissed
on demurrer, show that prior to 1866, he was the owner of two
hundred and fifty-two first mortgage bonds of the defendant, the
Pensacola and Georgia Railroad Company, with several overdue
coupons of interest attached; that in 1866, the president of the
company induced him to exchange these coupons for certificates of
its preferred stock; that he afterwards bought of other persons
similar certificates, which had in like manner
Page 103 U. S. 410
been received in exchange for unpaid coupons, so that in 1869 he
was the owner of $64,085 of these certificates; and that the
surrender of the coupons in exchange for the certificates was a
fraud practiced upon him by the president, on whose representations
he relied.
In what this fraud consisted is nowhere stated except that the
company had no authority under its charter to issue such stock, and
that if it had, the certificates were invalid for want of the
common seal of the company to them.
We do not think it necessary to decide either of these
questions. They depend upon either the general statutory law of
Florida, or the charter of the company, of both of which the
complainant must be presumed to have had notice. He was certainly
bound to know that the certificates which he received were without
the seal of the company.
There is no allegation of any other fraud, nor of the time of
the discovery of any fraud.
The statute of limitations of Florida enacts that all actions,
except those for recovery of real estate, must be commenced within
three years after the right accrues, but in an action for relief on
the ground of fraud, the cause of action is not deemed to have
accrued until the discovery by the aggrieved party of the facts
constituting the fraud.
All the facts now alleged to constitute the fraud in this case
were as well known to the complainant at the time of the
transaction as they now are.
The trustees of the internal improvement fund, under the
authority vested in them by law, sold out the railroad company, its
property and franchises, by way of foreclosure of the mortgage
which secured the bonds and coupons of the complainant and others,
in 1869, for the sum of $1,220,000. The bill alleges that this was
without authority of law, but no sufficient reason for the latter
allegation is given.
It does not appear that the complainant ever made any demand
upon these trustees for the share of this money due him on account
of these coupons, or notified them or the railroad company of his
intention to rescind the contract. As far as this bill shows, his
first action or notice of intention to rescind the contract or to
assert rights to or under the coupons is this
Page 103 U. S. 411
suit, brought in 1877, eight years after the railroad and the
franchises of the company had passed to purchasers under that
sale.
An attempt to evade the statute of limitations and the doctrine
of laches is made by the following allegations:
"Your orator further alleges and charges that by the said act of
the said trustees he has been unable to follow said property,
except without setting aside said sale and title to the said
property. That the president of said company shortly afterwards
moved out of the State of Florida and has since died; that the
secretary of the company turned over all the books and papers to
some parties to your orator unknown, and that the said secretary,
F. H. Flagg, has since died; that your orator has not been able to
find any board of directors of said company since A.D. 1869."
"That your orator is informed and believes that there has been
no president or secretary elected by the stockholders or others,
and no board of directors, since 1869; that he has failed to get
any relief, nor can he find any board of directors to whom to apply
for relief since 1869."
The act of the trustees here referred to was the sale of the
road for the foreclosure of the mortgage. All the practicable
relief which the complainant can obtain by this bill is against the
fund arising from the sale in the hands of the trustees of the
improvement fund. This relief could better have been had
immediately after the sale than now. There has been during all this
time no obstruction to a suit against them. The railroad company
became of no consequence, had no property and no interest in this
litigation after the sale.
It is by no means evident that if they were liable to a suit,
that some one could not have been found on whom service could have
been made. There was during all this time the same means of serving
process on the company that existed when the present suit was
brought.
The marshal in this suit returns a service on D. W. George, one
of the directors of the company in Florida, and he was probably a
resident director during all that time. Upon this service the
railroad company appeared by counsel demurred.
Page 103 U. S. 412
We are of opinion that both by reason of the statute of
limitations and the general doctrine of laches, in failing to
tender his certificates in due time and assert a rescission of the
contract, the demurrer was well taken.
Decree affirmed.