Plaintiff, having been defrauded in an exchange of lands, sued
in the district court to annul his contract and deed and for
incidental damages. The court finding that, by acts of ownership,
he had affirmed the contract, by its order, under Equity Rule 22,
transferred the case to the law side as an action for damages for
the deceit, and the bill was amended accordingly, but with no
substantial change in the allegations of fraud. Meanwhile, the
period of the statute of limitations had expired.
Held:
(1) That the amendment did not change the cause of action and
did not constitute the beginning of a new case.
(2) That, since the money relief prayed in the amended petition
could properly have been sought as alternative relief in the
original bill in equity, and since the transfer to the law side was
made upon order of the court in the exercise of its discretion,
plaintiff could not be held
Page 247 U. S. 208
to have made such an election of inconsistent remedies as would
let in the defense of limitations against the amended demand.
231 F. 882 reversed.
The case is stated in the opinion.
MR. JUSTICE CLARKE delivered the opinion of the Court.
On March 12, 1908, the petitioner, Friederichsen, contracted in
writing to exchange land which he owned in Nebraska for land in
Virginia owned by the respondent, Mary C. Gilmore, who in the
transaction acted through her agent, Edward Renard, the decedent of
the respondent G. H. Renard. We shall refer to the parties as they
were in the courts below, Friederichsen as plaintiff and Gilmore
and Renard as defendants.
On September 22, 1908, Friederichsen filed a bill in equity in
the United States District Court for the District of Nebraska
praying for a decree cancelling the contract and the deed made
pursuant thereto and for damages sustained, on the ground of fraud
practiced upon him.
Defendants answered denying the fraud charged, and on August 20,
1912, a master, theretofore appointed in the case, reported that
Friederichsen, at the time of the exchange, "was below the average
in mental ability;" that he had been induced to enter into the
contract by the fraudulent representations of Renard, as alleged,
and that he had sustained damage in the sum of $5,880. But the
master also reported that Friederichsen, after taking possession of
the Virginia lands, after filing his bill in the case, and after
having had time to discover the condition
Page 247 U. S. 209
and value of the land, had cut down a considerable amount of
timber growing thereon.
On the coming in of this report, the court, on September 19,
1913, found that the plaintiff was not entitled to equitable relief
because he had ratified the contract of exchange by cutting timber
on the Virginia lands, thereby preventing the defendants from being
placed
in statu quo, but that his remedy was at law for
damages, and thereupon it was ordered that the master's report be
vacated, that, pursuant to Equity Rule 22, the cause be transferred
to the law side of the court, and "that the parties file amended
pleadings to conform with an action at law."
Complying with this order, on September 25, 1913, the plaintiff
filed an "amended petition" on the law side of the court, and, upon
the same facts stated in the original bill in equity, prayed for a
judgment for damages. The defendants filed answers the same in
substance as those filed in the equity suit, but adding the defense
that the cause of action stated in the amended petition was barred
by the Nebraska four-year statute of limitations.
When the case came on for trial, and after it was stipulated by
counsel for the defendants that the plaintiff had introduced
sufficient evidence to entitle him to recover a verdict unless
barred by the statute of limitations, it was ruled
"that the cause of action stated in the plaintiff's amended
petition was barred by the statute of limitations of the State of
Nebraska, and that the filing of the amended petition did not
relate back to the commencement of the action in such a way as to
prevent the bar of the statute,"
and a verdict was directed for the defendants. The judgment
entered on this verdict, affirmed by the Circuit Court of Appeals
for the Eighth Circuit, is now before us for review on writ of
certiorari.
Thus, the case presents for decision the single question whether
the filing of the "amended petition" on the law
Page 247 U. S. 210
side of the court on September 25, 1913, was the commencement of
a new action more than four years after the fraud was discovered
(which must have been prior to the filing of the bill in equity on
September 22, 1908), which was therefore barred, or whether the
proceeding at law was but pursuing toward a conclusion, in another
form, the same cause of action stated in the original bill, so that
the suspension of the statute of limitations continued, which began
with the date of the service of the subpoena in chancery.
It is argued by the respondents that, in the bill in equity, the
petitioner disaffirmed, while in the amended petition he affirmed,
the contract of exchange; that the latter, for this reason, states
a new and different cause of action from the former, and that,
against this new cause of action, the running of the statute of
limitations was not arrested until the amended petition was filed,
and that then it had become barred.
But the allegations of fraud in the two papers are the same in
substance, and practically the same in form, the only substantial
difference between them being that the prayer for relief in the
bill is for mutual return of lands, with incidental damages, while
in the amended petition, it is for damages alone. The cause of
action is the wrong done, not the measure of compensation for it or
the character of the relief sought, and, considered as a matter of
substance, the change in the statement of that wrong in the amended
petition cannot in any just sense be considered a new or different
cause of action.
It is settled upon reason and authority that the conversion of a
suit in equity into an action at law or vice versa is not alone
sufficient to constitute the beginning of a new action, and that,
with respect to the statute of limitations, it is a mere incident
in the progress of the original case.
It was so held by the Supreme Court of Nebraska long
Page 247 U. S. 211
prior to the origin of the controversy we have here, when an
action in ejectment was converted into a suit to redeem,
McKeighan v. Hopkins, 19 Neb. 33, and again in
Butler
v. Smith, 84 Neb. 78, in a similar case in 1909, the question
was held not to be an open one.
In
Smith v. Butler, 176 Mass. 38, followed with
approval in 1917 in
Reynolds v. Missouri, Kansas & Texas
Ry. Co., 228 Mass. 584, the Supreme Judicial Court of
Massachusetts declared that it had been the settled practice in
that commonwealth for a period of over fifty years to allow actions
at law to be amended into suits in equity in place of putting the
plaintiff to a new suit, and to "allow those amendments on the
ground that, if a new suit were brought, it would be barred by the
statute." It will suffice to add that, in
Schurmeier v.
Connecticut Mutual Life Ins. Co., 171 F. 1, the circuit court
of appeals, a judgment of which we are here reviewing, held that
the amendment of a law action into one in equity for the express
purpose of meeting an anticipated defense of the statute of
limitations did not change the cause of action, and that the
amendment related to the time of the commencement of the
action.
There remains to be considered the ground on which the lower
courts chiefly rested their judgment,
viz., that, in
disaffirming the contract by his suit in equity, the petitioner
elected to pursue one of two inconsistent remedies open to him
until the period of the statute of limitations had expired, and
that he therefore cannot escape that bar when afterwards, by
amendment of his pleadings, he seeks to affirm the contract and
recover damages.
No matter what may be thought of the merit of the doctrine of
election of remedies, it is a long observed and deeply entrenched
rule of procedure. But, for obvious reasons, it has never been a
favorite of equity, and it has been specifically decided by this
Court that the two forms of relief pursued, before and after the
amendment of the
Page 247 U. S. 212
pleadings in this case, are not so inconsistent but that both
may be prayed for in one bill in equity and either granted, as the
evidence and the equities of the case may require. Thus, in
Hardin v. Boyd, 113 U. S. 756, in
a suit to annul a land contract for fraud, the trial court
permitted an amendment to the bill adding a prayer in the
alternative for a decree affirming the contract, granting a lien
for the unpaid purchase money, and for foreclosure. The decree in
the case was entered on the alternative prayer.
This Court affirmed that decree on principle and authority
holding that:
"Under the liberal rules of chancery practice which now obtain,
there is no sound reason why the original bill in this case might
not have been framed with a prayer for the cancellation of the
contract upon the ground of fraud, and an accounting between the
parties, and, in the alternative, for a decree which, without
disturbing the contract, would give a lien on the lands for unpaid
purchase money. . . . The amendment had no other effect than to
make the bill read just as it might have been originally prepared
consistently with the established rules of equity practice. It
suggested no change or modification of its allegations, and in no
just sense made a new case."
In view of the New Equity Rules of 1912, especially Rule 22, and
of the Act of Congress of March 3, 1915, 38 Stats. 956, it cannot
be said that the power of courts of equity to amend pleadings or to
permit them to be amended to accomplish the ends of justice has
been curtailed since the
Hardin case was decided in
1884.
Thus, in express terms was it decided that a properly framed
prayer would have allowed the petitioner the relief in equity which
he sought before the amendment, or, in the alternative, that for
which he now prays, and to this it must be added that the order
which converted his suit in equity into an action at law was made
in the exercise
Page 247 U. S. 213
of a chancellor's discretion under warrant of an equity
rule.
At best, this doctrine of election of remedies is a harsh, and
now largely obsolete, rule, the scope of which should not be
extended, as it must be in order to reach the case at bar, for
here, the "amended petition" was not filed by petitioner's counsel
of their own motion, but on the order of the court, entered in its
discretion, to promote the ends of justice.
Thus, we are brought to the conclusion that, since the two
remedies asserted by the petitioner were alternative remedies, and
since the order made, requiring the conversion of the suit in
equity into one at law, was entered by the court sitting in
chancery, for us to affirm the judgment of the circuit court of
appeals that the petitioner, in obeying the order of the trial
court, made a fatal choice of an inconsistent remedy, would be to
subordinate substance to form of procedure, with the result of
defeating a claim which the respondents stipulated had been
sufficiently established to justify a verdict against them. This we
cannot consent to do.
The questions of procedure being thus cleared away, there is
little further difficulty with the case. As we have seen, the
"amended petition" was not filed in a new case, but was simply a
step forward in progress toward settlement of the original
controversy; the allegations of fact are precisely the same in
substance, and almost the same in form, as they were in the
original bill, and therefore, looking to substance and realities,
they cannot be regarded as stating a new cause of action. The case
falls clearly within the scope of the principle of the decisions of
this Court in
Texas & Pacific Ry. Co. v. Cox,
145 U. S. 593-604;
Atlantic & Pacific R. Co. v. Laird, 164 U.
S. 393,
164 U. S. 401;
Missouri, Kansas & Texas Ry. Co. v. Wulf, 226 U.
S. 570;
Seaboard Air Line Ry. v. Renn,
241 U. S. 290;
Washington Ry. & Elec. Co. v. Scala, 244 U.
S. 630,
244 U. S.
640.
Page 247 U. S. 214
The decision in
Union Pacific Ry. Co. v. Wyler,
158 U. S. 285, is
so clearly distinguished in the
Wulf case,
supra,
from the principle of these decisions that additional comment would
be superfluous.
It results that the judgments of the circuit court of appeals
and of the district court must be reversed, and the cause remanded
to the latter for further proceedings in conformity with this
opinion.