This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Cases not infrequently arise where the cause of action was created by the fraud of the defendant, and fraud consists of such concealment of the truth that the plaintiff did not at the time of the transaction know of his injury or of the fact that a cause of action existed in his favor. The question has been presented, whether as long as such fraud could not be discovered by due diligence on the part of the injured person, the statute of limitations should run against him. A like question has been presented where the original cause of action was not based upon the fraud of the defendant, but where the defendant has been guilty of some active concealment whereby the injured party has been prevented from discovering the existence of the cause of action in his favor. Where equity is not bound by the statute of limitations, but acts only in analogy thereto, the courts of equity hold that fraud or concealment of the kinds herein named, prevents the statute of limitations from running.1 In courts of law the original rule was that in analogy to the rule concerning the personal disability of the plaintiff, they were unable to create by judicial legislation exceptions which had not been made by the legislature, and hence such facts could not prevent the statute of limitations from running.2 In some courts of law, however, it has been held that limitations should not begin to run until the cause of action, which has been fraudulently concealed by the defendant, has been discovered.3 In many jurisdictions, however, the question is put at rest by statutes which to a greater or less extent adopt the equity rule as applicable to cases at law.4 Under such statutes limitations runs at least when the cause of action is discovered and perfected.5 If diligence is used limitations does not run until the cause of action is discovered.6 This rule is of course modified in some states by specific statutory provisions fixing a time within which a cause of action is barred, whether the fraud is discovered or not. If due diligence is not used limitations runs from the time when the cause of action could have been discovered had such diligence been used.7 Concealment which will suspend the running of the statute must ordinarily be concealment by the defendant who is seeking to interpose the bar of the statute; or by some one authorized by him; or he must know of the deceit practised upon the plaintiff. If the plaintiff is deceived by the fraud of a third person, limitations is not suspended as in favor of the defendant unless he authorized such wrongful conduct.8 However, fraudulent concealment by a principal debtor which prevents the cause of action from running against him, prevents it from running against his surety.9
28 Blackburn v. Blackburn, 124 Mich. 190; 83 Am. St. Rep. 325; 82 N. W. 835.
1 Jones v. Van Doren, 130 U. S. 684; Kirby v. Ry., 120 U. S. 130; Bailey v. Glover, 21 Wall. (U. S.) 342; Veazie v. Williams, 8 How. (U. S.) 134, 158; Prevost v. Gratz, 6 Wheat. (U. S.) 481; Odell v. Moss,
130 Cal. 352; 62 Pac. 555; Lieber-man v. Bank, 2 Penne. (Del.) 416; 45 Atl. 901; Wilder v. Secor, 72 la. 161; 2 Am. St. Rep. 236; 33 N. W. 448; Longworth v. Hunt, 11 O. S. 194; Semple v. Gallery, 184 Pa. St. 95; 39 Atl. 6; Maldaner v. Beur-haus, 108 Wis. 25; 84 N. W. 25.
2 Ellis v. Kelso, 18 B. Mon. (Ky.) 296; Troup v. Smith, 20 Johns. (N. Y.) 33; Fee's Administrator v. Fee, 10 Ohio 469; 36 Am. Dec. 103; Miles v. Berry, 1 Hill (S. C.) 296; York v. Bright, 4 Humph. (Tenn.) 312; Cook v. Darby, 4 Munf. (Va.) 444.
3 Penobscot Ry. Co. v. Mayo, 67 Me. 470; 24 Am. Rep. 45; Farnam v. Brooks, 9 Pick. (Mass.) 212; Munson v. Hallowell, 26 Tex. 475; 84 Am. Dec. 582. See obiter in Bree v. Halbech, 2 Dougl. 654a, and Bailey v. Glover, 21 Wall. (U. S.) 342, on which many of the cases taking this view have been based.
4 Bromberg v. Sands, 127 Ala. 411; 30 So. 510; Faust v. Hosford, 119 la. 97; 93 N. W. 58; Bement v. Ohio Valley Banking & Trust Co., 99 Ky. 109; 59 Am. St. Rep. 445; 35 S. W. 139; Alpha Mills v. Engine Co., 116 N. C. 797; 21 S. E. 917; Larsen v. Trust Co., 23 Utah 449; 65 Pac. 208; Stearns v. Hoch-brunn, 24 Wash. 206; 64 Pac. 165.
5 Bromberg v. Sands, 127 Ala. 411; 30 So. 510.
6 Faust v. Hosford, 119 la. 97; 93 N. W. 58; Cole v. Bank, 114 la. 632; 87 N. W. 671; Forsyth v. Easterday, 63 Neb. 887; 89 N. W. 407; Larsen v. Trust Co., 23 Utah 449; 65 Pac. 208; Stearns v. Hoch-brunn, 24 Wash. 206; 64 Pac. 165.
7 Wood v. Carpenter, 101 U. S. 135; Nicholson v. Tarpey, 124 Cal. 442; 57 Pac. 457; Maxwell v. Walsh, 117 Ga. 467; 43 S. E. 704; Mather v. Rogers, 99 la. 292; 68 N. W. 700; Clarke v. Seay (Ky.), 51 S. W. 589; Whaley v. Catlett, 103 Tenn. 347; 53 S. W. 131; Lud-ington v. Patton, 111 Wis. 208; 86 N. W. 571.