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Kirby v. Lake Shore & Michigan Southern Railroad, 120 U.S. 130 (1887)

Kirby v. Lake Shore and Michigan Southern Railroad

Argued November 15-16, 1886

Decided January 10, 1887

120 U.S. 130


When relief is asked in equity in courts of the United States on the ground of fraud, time will not run in favor of defendant until discovery of the fraud, or until, with reasonable diligence, it might have been discovered, and this rule is not affected in the New York by the provisions of § 382 of the Code of that state as amended in 1871 insofar as they may be construed to modify it.

A statute of a state which provides that

"The time which shall have elapsed between the death of any person and the granting of letters testamentary or of administration on his estate, not exceeding six months, and the period of six months after the granting of such letters shall not be deemed any part of flue time limited by any law for the commencement of actions by executors or administrators"

does not give the party claiming the benefit of its provisions both periods of six months therein mentioned, but only such time, not exceeding six months, as elapsed after

Page 120 U. S. 131

the death of the testator or intestate, before the granting of letters and the additional time of six months after the granting of letters.

In a state where the statutes authorize ancillary letters to be issued on a will proved in another state, on depositing in the office of the probating court a certified copy of the will and its probate, the executor cannot prevent the statute of limitations of the state from running against him in a court of the United States sitting in the state by an unreasonable delay in taking out ancillary letters.

This case was heard in the court below upon demurrers to an amended bill, and to an amended bill in the nature of a supplemental bill. The demurrers were sustained, and the bill dismissed, upon the ground that the suit was barred by the statute of limitations of the State of New York.

The material facts admitted by the demurrer are as follows:

The appellant, the plaintiff below, is the executor of John T. Alexander, who died at his domicile in the State of Illinois, on the 21st of August, 1876. He received his letters testamentary from the proper court in that state on the 6th of September of the same year. On the 7th of April, 1880, ancillary letters were issued to him by the Surrogate of the County of New York, in the State of New York. 2 Rev.Stat. N.Y. (2d ed.) marginal page 67, § 68.

The suit was brought April 9, 1880. Its object is to obtain a decree setting aside sundry settlements of accounts had by the firm of J. T. & G. D. Alexander & Co. (composed of John T. Alexander, G. D. Alexander, and William Fitch, and to be hereafter called Alexander & Co.) with certain railroad corporations, defendants below, in reference to various business transactions between the parties. Those transactions arose under an agreement, partly written and partly verbal, entered into May 28, 1870, between those corporations and Alexander & Co., relating to the shipment of horned cattle and hogs by the latter over the roads of the former between designated points, and at specified rates of freight. The agreement took effect June 10, 1870 and was to continue in force one year, during which period Alexander & Co. were not to ship horned cattle or hogs over any rival road between the points named. In the event there was a reduction of rates, Alexander & Co. were to have the benefit of the lowest rates between those

Page 120 U. S. 132

points charged by either of the defendant corporations or by any other rival corporation. The agreement contemplated settlements between the parties from time to time and the payment by Alexander & Co., on each shipment, of the rates specified in the agreement. But the amounts so paid, when in excess of the lowest rates charged by the defendant corporations, or either of them, or by other rival corporations, were to be held by the defendants in trust for the shippers, and repaid to the latter by way of "drawbacks," on each occasion when the accounts between the parties were stated and settled.

These settlements were had monthly or oftener. At each of them, Vanderbilt, the testator of the individual defendants, in behalf of the railroad corporations, claimed to have peculiar facilities for obtaining information in reference to rates, and promised to keep Alexander & Co. (who had no means of obtaining such information) fully advised in the premises. In reply to specific inquiries addressed to him on the occasion of each of such settlements, he represented that the rates charged by his companies to that firm were not higher than those charged by rival corporations. Relying upon such representations, Alexander & Co. consummated the various settlements upon the basis suggested by Vanderbilt. They, however, subsequently ascertained that the rates charged by the defendant corporations, as well as by rival corporations, to shippers between the points named and during the same period were much lower than those charged Alexander & Co., and that the representations to the contrary by the defendant corporations were knowingly false, and made with the intent to cheat and defraud said firm. The bill alleges that the truth as to what were the current rates for the period covered by the settlements was fraudulently concealed by the defendant corporations from Alexander & Co., and that said frauds were not, and could not have been, discovered by the latter until on or about April 16, 1873.

The settlements between the parties, it may be stated, covered more than 200 shipments of cattle and hogs, the freights upon which aggregated nearly $350,000, or about $9,000 per week, from June 10, 1870, to March 14, 1871, when

Page 120 U. S. 133

the contract was cancelled by mutual consent. Immediately thereafter, the partnership of Alexander & Co. was dissolved, and its affairs adjusted.

G. D. Alexander was adjudged to be a lunatic by the proper court in Illinois on the 3d day of April, 1872, and is still of unsound mind. A conservator of his estate was shortly thereafter selected, but in reference to that appointment, the bill charges that it was a nullity, and that no valid appointment was made until July 3, 1880. As to Fitch, the remaining partner, he, on April 12, 1879, brought an action in one of the courts of New York for the purpose of enforcing the liability to him, individually, of the defendant corporations and Vanderbilt, on account of the matters in this suit set forth, but by proceedings had after the commencement of this litigation his interest in the claim preferred in his own suit was sold, one Taylor becoming the purchaser thereof, and subsequently Fitch's suit was dismissed, by the procurement of the defendants, for want of prosecution. The plaintiff states that at the time of Taylor's purchase, Fitch, by his laches, had lost any individual rights he might theretofore have had in said claim, and that Taylor had not succeeded to any substantial interest capable of being enforced herein. He also avers that both Fitch and the present conservator of the estate of G. D. Alexander have declined, upon request, to unite as co-plaintiffs in this suit.

It is further alleged by the plaintiff that, the receipted freight bills having been surrendered to the defendant corporations at the time of the settlements with them, he has no means of ascertaining the amount justly due to said firm by way of drawbacks except from the freight bills, checks, and vouchers in the possession or under the control of said corporations.

The prayer of the bill is that the before-mentioned settlements be opened and set aside; that a reaccounting be had in respect of all of said transactions, and that, upon final hearing, the plaintiff have a decree for the difference between the amount of "drawbacks" repaid to Alexander & Co. at the time of the settlements and the amounts which that firm were

Page 120 U. S. 134

entitled to receive upon each settlement, with interest thereon from the time they were respectively payable.

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