JAFFREY V. BEAR·.
wages, each having a personal accountability to the employer, ahd aseveral personal liability to a criminal prosecution, there is ever)r good lj:lll.son for disallowing, and no sufficient reason is apparent fOl indulging, a joint suit. In view of this conclusion, we omit any discussion of the right to relief sought in a proper form of action. It follows that the writ of injunction is disallowed.
(Oircuit Court, E. D. North Oarolina. May 14, 1890.)
EQUITY JURISDICTION-REMEDY AT LAW-SETTING ASIDE SETTLEMENT.
Where a.creditor has recleived a portion of his claim in full settlement. but has given no release under seal, a bill in to set aside the settlement will not. lie, since he still has the right to sue at'law for the residue of his claim.
SAME-STATUTE Oll' LIMITATIONS-FRAUD.
The fact that a creditor hali! been induced by the fraud of his debtor to defer bringing suit until his claim ill barred at law by the statute of limitations doeanot give a court of chancery jurisdiction of the cause of action.
In Equity. E. S. Martin, M. BeUamy and T. Strange, fOl plaintiffs. D. L. R'U88ell and George Davi8 « Son, for defendants. SEYMOUR, J. The plaintiffs allege that in October, 1881, defendants' firm became indebted to them in the sum of $3,206.53, and that in November of the same year it made an assignment giving preferences to creditors, or alleged creditors, other than, plaintiffs, to the amount of $75,OOOj that upon their own investigation and representations of defendants to the effect that the debts secured in the deed of tru'st were bonafide, they compromised at 25 cents on the dollarj that they have since discovered a considerable part of the amount so secured to have been wholly fraudulent, and made up of fictitious debts inserted in the <leed of trust for the purpose of inducing creditors, among them plaintiffs, to accept less than was due them. While more than three yearp, have elapsed since their cause of action accrued, they aver that less than that time has passed since they have discovered the fraud practiced up-on themselves and the other creditors of Sol Bear & Co. They claim that though' they may be barred by the state statute of limitations, both at law and in equity, in the courts of North Carolina, as has been decided in Jaff'/iXYv. Bear, 103 N. C. 165, 9 S. E. Rep. 382, they can yet maintain an equitable action in the United States courts. For this they cite several decision,s of the supreme court, and in particular Kirby v. Railroad Co., 120 U. S, 130, 7 Sup. Ct. Rep. 430. In that case Mr. Justice wb.athas lqng been the settIeg rule in the UnitedStatE.lfJ
courts, viz., that j "while the courts oftbe Union are required by the statutes' creating them to accept as rules of decision in trials at common, law the.·inws oithe several states, except. where the constitution,·laws/' etc., "of the United States otherwise provide, their jurisdiction in equity cannot be impaired by the local statutes of the different states in which they sit." He therefore holds that the New York statute oflimitations does not affect the power of the circuit court of the United States, following the settled rules of equity, to adjudge that time does not run in favor of defendants charged with actual concealed fraud until after such fraud either is, or with due diligence ought to be, discovered. The case at bar is not one·in which the plaintiffs are entitled to equitable relief, unless the fact that they have lost their remedy at law bynot Suing in apt time, by reason of defendants'fraud, gives them a right to equitable relief. This will appear from the following considerations: The prayer,?f the bill is-:-lilirst, that the compromise and settlement between plaintiffs and defendants be declared null and void; and, second, for a judgment for the balance due plaintiffs, with interest. This is Dot a creditors' bill. It is not founded on a judgment and unsatisfied lien on defendants' Property. It is not ali action to set aside the alleged fraud ulent assignment, forif such an action could be maintained by a <?!>:titract to judgment, issuing execution, and having . a 'retum made of ntdl.a bona, it would not lie in this case, because the bill avers a reconveyance to defendants of the property conveyed by the deed of trust; nor would it lie on this bill, because no such relief is demanded: It cannot be sustained as an action to set aside a release, because no release is averred or exists. Plaintiffs simply aver that defendants agreed to accept $842.87 in compromise and settlement, etc., and that the sam6was paid them. There is nothing in their receipt of such sum to pre\tent them from maintaining an action at law for the balance still unpaid. In Slcilbeck v. Hilton, L. R. 2 Eq. 587, in -Which a release was set aside, there was a release under seal, and jurisdiction. was taken on the ground of mistake in executing it. Here there is no release, and nothing but the act, said to have been induced by fraud, of accepting a portion of the amount due in lieu of the whole. Nor is this a case like that of Daniel v. Board of Commissioners, 74 N. C. 496,·where a court of equity would not allow defendant to plead the statute of limitations on account of his own agreement not to do so. In that class of decisions equity enforces a contract on the ground of no adequate relief at law for its breach. Having$hown that this case is not cognizable in equity on any of the ordinary grounds for eqUitable reliefj it will be well to state clearly what the action is, and why it iscontEmlded that a court of equity will tain it, It is a suit for money dUe for goods sold and delivered. At law it would be an actioilof a88umpsit. The plaintiff sues in equity because he is barred at law, and claims that as he is barred at law by reason of having failed to bring suit in time, and, as his failure to bring suit in time was caused by the fmudulent conduct of defendants, he is entitled to be relievedmequity., The fraud charged is collateral to the plaintiff's cause
JAFFREY V. BEAR.
of action, and not the foundation of the suit. The plaintiff's contention must be, then, that in every case of purely legal cognizance, in which &. party to a contract has been guilty of a fraud collateral to the contract, the result of which has been that the obligee has failed to sue, and has thereby allowed the statute of limitations to run against him, equity .apquires jurisdiction. .The principle asserted would extend'i>ery far beyond the facts of this case, and would effectually nullify the salutary policy of the legislatures of our various states and of the United Stiltes in their legislation against stale claims. It would cover every case of misrepresentation, whether oral or acted, by which a debtor might induce his creditor not to sue. It would extend. to an oral statement to a creditor that he would gain nothing by suing, to a concealment by a debtor of the amount or value of his property. In short, wherever a debtor has by word or act falsely asserted that his creditor could not obtain his debt by legal process, and has thereby prevented the creditor from suing until the lapse of the time fixed in the statute of limitations, the creditor who is barred at law may, upon the theory of this case, collect his debt in equity, if he can show that he has subsequently ascertained that the debtor's representations were false, and that he was, without laches of his own, deceived by them. I know of no adjudicated case taking this ground. The two sections cited by counsel from Story (Eq. Jur. §§ 1521, 1521a) evidently refer to cases where equity has jurisdiction independently of the collateral fraud, and intend to state that, in sucb cases, the court, in exercising its rent jurisdiction, will not allow such fraud to have the effect of barring relief. If it could be construed to go further, it would be unsupported by authority. If such a ground of equitable jurisdiction existed, it would doubtless be covered by a line of cases based upon it. The fact that this is, concededly, a case of first impression, shows that no such principle exists. I have not considered it necessary to discuss the question of whether or not plaintiffs have sufficiently shown want of laches in not sooner discovering the fraudulent char.acter of the fictitious claims alleged to exist in the assignment in trust. No reason is given why the inquiries made within the last three years, which resulted in the discovery that the Manning debt was fictitious, might not as well have been instituted earlier. I prefer, however, to rest my decision upon the grounds before stated, believing them abundantly sufficient. Judgment for defendants for costs.
GIBSON COUNTY'll. PULt.MAN SOUTH. CAR CO.
(Oircuit OOUrt, W. D. Tennessee. April 28, 1890.)
. ''Where Pullmlln sleeping-cars are run WhOlly within a state. the business may be taxed as a privilege. S·. BJJlB,-PROPBRTT OWNED OUTSIDE THE ST4TB. The only restriction upon this power must be fmmd in the state and federal constltutions, since every state may tax all property found within its borders, whether owned by its own citizens or foreigneJ;'s,although considerations of amity and comity usually secure the exep:1ption of property only temporarily situated within the state. while our federal constitution forbids discriminations against citizens of other states of this U n i o n . . .
SAMB-DISCRIMINATIOl'-ExEMPTIONS., LAW-TAXATION-INTERST,ATE COMMERCE-SLEEPING-CARS·
Where it does not appear whether sleeping-cars owned by the railroad company are exempt from taxation, an act of the legislature will not be held to make a discrimiJ;Jation. because they are not specifically taxed as a privilege, like·those run independently by others than the railroadc:iompany, because they may be otherwise equally taxed along with other property of the railroad company. or lawfully exempt under charter privileges.
.. SAME-CONSTRUCTION OIl' ACT-COUNTIES.
The act of the legislature of Tenness.ee of 1877 (chapter 16) does not impose, when properly construed, a tax for counties upon sleeping-cars run wholly within the state. but is confined to one 'privilege tax for the state.
There is in Tennessee no statute, either in the Code or elsewhere, which authorizes counties, generally. to levy always. if they choose, the same privilege tax which is provided for the state. It depends' upon each taxing statute and its amendments .wbether the county has this power. It is generally conferred, but not always, and .'Waulot in the several acts taxing sleeping-cars as a privilege.
BJJI.B;...rrITLE OIl' ACT.
The Tennessee constitution, (artiole 2" § 17,) which ,provides that no bill shall beC)()me a law which embraces more than one subject. that subjeot to be expressed in its title. does not require a taxing act to name in the title all the objects of taxation, nor confine the act to one general class of property, if the title be broad enough to : cover other classes. The tax on levied by Acts 1877,.c. 16, and Acts 1881, c. 149, is not void because of any defeot in the title, which expressed only the one subject of "taxation" with which the acts dealt. .
lnEquity. This bill was filed by Gibson county, Tenn., to recover of the Pullman Car Company a privilege tax of $50, .and$75 on each of its sleeping-cars ,rUll through Gibson county on the Louisville & Nashville and the Mobile &?;'Ohio Railroads, for the years 1877 to 1883, inclusive,amounting, with'jnterest and penalties, to $5,102.50., The tax was levied under 'authority of the Code of Tennessee, which it was claimed authorized all 'Counties in. the state to levy. thEi' privilege taxes as were levied by the state by the acts of March 9, 1877, c. 16, and of April 7, 1881,c. 149. Afterwards, the claim was abandoned as to all sleeping-cars run from another state into Tennessee, or from that state into another; and the bill was amended to demand it only for the two cars run daily between the cities of Memphis and Nashville, and wholly within the state, and through Gibson county, upon which the state had levied and collected the tax prescribed by the acts of the legislature. The agreed statement of factP. showed that the defendant's two cars passed daily through Gibson county, taking up and putting off at the stations within that county all such passengers as wished sleeping-car accommodations, issuing upon the train