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stood in his name he induced Dougherty and another to indorse his note by making an agreement with them that he would subsequently transfer the stock to them as collateral security for his liability to them upon their indorsement. At the time when the indorsement was made the indorsers had no notice of the right of the company to the stock, but they received notice of that right before Coburn assigned the stock to them. After this notice Coburn made the assignment. The court sustained the claim of the indorsers, and said:
“And here it will be observed that the claim of the company is not that of an innocent purchaser for value. Its claim is that of a mere equity for a reconveyance, prior in time, to the equity of the plaintiffs. The contest is simply between equities. In such cases the settled doctrine is stated by Pomeroy to be 'that, if a second or other subsequent holder, who would otherwise be postponed to the earlier ones, obtains the legal estate, or acquires the best right to call for the legal estate, he thereby secures an advantage which entitles him to priority. It is absolutely essential that he should have acquired his equitable interest without any notice of the prior claims.' Pomeroy, Eq. $ 727; also section 729; Adams, Eq. 161, 162.
The plaintiffs seem to be clearly within the rule here stated. They had no knowledge of the company's claim when they acquired their equity, and had a right to protect it by taking an assignment of the stock for that purpose, which they did on January 7, 1892, though at that time they had knowledge of the company's claim. This gives to them an unquestioned priority over the company, and the right to a sale of the stock for the satisfaction of their claim."
The case at bar falls far within the rule which these cases illustrate, and differs from them only in the fact that the Detroit Company not only received no notice of the alleged fraud before it purchased its equitable estate, but it received no notice of it until it had also acquired the legal title to the timber.
For the reasons which have now been stated, perhaps at too great length, the United States is not entitled to recover from the Detroit Company the timber which it purchased, to enjoin it from removing that timber from the laids, or to avoid the conveyances which vested the title to the timber in the company,
For the same reasons the government is not entitled to a decree avoiding the patents or the subsequent conveyances of the 27 tracts of land which th Detroit Company purchased and obtained deeds of from the entrymen and entrywomen before it had notice of any defects in the titles, and before this suit was commenced.
There reinain 17 tracts of land the title to which still stands in the original applicants and patentees. The Detroit Company owns the timber upon these lands, and has the right to remove it according to the terms of the timber contracts. The land without the timber is of little, perhaps of no, value. The evidence in this record has convinced, not that these applicants made any agreements by which the title which they might acquire should inure to the benefit of any person except themselves, but that each one of them applied to enter the lands he or she obtained on speculation for the use and benefit of the MartinAlexander Lumber Company and not in good faith to appropriate it to his or her own exclusive benefit. The salient facts which were proved in this case and which have forced our minds to this conclusion appear in the statement which precedes this opinion, and no good purpose would be subserved by restating them here.
The decree below is accordingly reversed, and the case is remanded to the Circuit Court, with instructions to enter a decree to the effect that the patents issued to the defendants John H. Scott, Thomas J. Clements, Jim P. Copeland, John H. Wilson, Robertson C. Gregory, Martha Gregory, Joseph O. Veans, Archibald G. Winslow, Caroline H. Means, Emma Winslow, James F. Patterson, Gus C. Copeland, George T. Colston, Henry Jones, Sherman Garrison, Barbara Garrison, and Bill D. Copeland be avoided, with costs in favor of the United States against them and the Martin-Alexander Lumber Company, and that the complainant is entitled to no relief against the Detroit Timber & Lumber Company, and the bill against it and the other defendants not named above be dismissed, with costs. It is so ordered.
PATILLO et al. v. ALLEN-WEST COMMISSION CO.
No. 1,920. 1. LIMITATION OF ACTIONS-AMENDMENT OF PLEADING-RELATION TO BEGIN
NING OF ACTION.
An amendment to a petition, which sets up no new cause of action or claim, and makes no new demand, but simply varies or expands the allegations in support of the cause of action already propounded, relates back to the commencement of the action, and the running of the statute against the claim so pleaded is arrested at that point. But an amendment which introduces a new or different cause of action, and makes a new or different demand, does not relate back to the beginning of the action, so as to stop the running of the statute, but is the equivalent of a fresh suit upon a new cause of action, and the statute continues to run until the amendment is filed ; and this rule applies although the two causes of action arise out of the same transaction, and, by the practice of the state, a plaintiff is only required in his pleading to state the facts which constitute his cause of
action. 2. SAME-RULE APPLIED.
A complaint stated facts from which the law raises the legal presumption of a promise to pay the balance of an account stated, and demanded judgment for that amount. An amendment was made to this complaint by adding to it an averment of a promise to pay the balance of the stated account. Held, this amendment presented no new cause of action, but simply expanded the allegations in support of the cause of action presented in the original complaint, and the amendment related back to the commencement of the action, where the running of the statute of limitations
against the cause of action upon the account stated ceased. 3. ACCOUNT STATED-ESTOPPEL TO DENY LIABILITY.
An account stated, conceded to disclose some just indebtedness received and retained by the debtor without objection for an unreasonable time, estops him, in the absence of fraud or mistake, from denying his liability for all the items it contains, and raises the legal presumption of his promise to pay the balance. A consideration and legal liability for each item outside of the stated account is not essential to sustain a cause of action to recover its balance. The balance is one debt, regardless of the items,
and a consideration for that debt is suificient. 4. TRIAL-COURT MAY WITHDRAW QUESTION OF FACT FROM JURY.
Where the evidence upon a question of fact is so clearly preponderant, or of such a conclusive character, that the court would be bound, in the
1 3. See Account Stated, vol. 1, Cent. Dig. $$ 31, 42.
exercise of a sound judicial discretion, to set aside a finding in opposition to it, it is its duty to withdraw the question from the jury and direct their
finding. (Syllabus by the Court.)
In Error to the Circuit Court of the United States for the Eastern District of Arkansas.
J. W. House (H. A. Tillett and M. House, on the brief), for plaintifis in error.
J. M. Moore (G. B. Rose, on the brief), for defendant in error.
Before SANBORN, VAN DEVANTER, and HOOK, Circuit Judges.
SANBORN, Circuit Judge. This is an action by the Allen-West Commission Company, the plaintiff below, a corporation, to recover of Smith, Patillo & Co., a partnership, a balance of an account current. This balance consists of three items--one of $1,025, due September 1, 1892; one of $1,198.75, due September 1, 1893; and one of $508, due September 1, 1894—for commissions on cotton not shipped, at the rate of $1.25 per bale. At the trial below the jury allowed the first two items upon the ground that they were parts of a stated account between the parties, and disallowed the third item, which is no longer in issue in this case.
The alleged error in the trial upon which the defendants place their chief reliance is that the cause of action upon the stated account arose in 1893, that it was barred by the statute of limitations in either three or five years thereafter, and that, although this action was commenced on April 25, 1895, the cause upon the stated account was first presented to the court below by an amendment to the complaint on July 15, 1903. This cause of action was undoubtedly barred by the statute of limitations if the effect of the amendment was not simply to vary or expand the allegations in support of the cause of action pleaded in the original complaint, but to introduce a new or different demand, not before presented in the pending suit. The rule of law upon this subject is that “an amendment to a petition which sets up no new cause of action or claim and makes no new demand, but simply varies or expands the allegations in support of the cause of action already propounded, relates back to the commencement of the action, and the running of the statute against the claim so pleaded is arrested at that point. But an amendment which introduces a new or different cause of action, and makes a new or different demand, not before introduced or made in the pending suit, does not relate back to the beginning of the action, so as to stop the running of the statute, but is the equivalent of a fresh suit upon a new cause of action, and the statute continues to run until the amendment is filed.” Whalen v. Gordon, 95 Fed. 305, 309, 37 C. C. A. 70, 74; Railway Co. v. Wyler, 158 U. S. 285, 289, 298, 15 Sup. Ct. 877, 39 L. Ed. 983; Railway Co. v. Cox, 145 U. S. 593, 601, 606, 12 Sup. Ct. 905, 36 L. Ed. 829; Sicard v. Davis, 6 Pet. 124, 8 L. Ed. 342; Van De Haar v. Van Domseler, 56 Iowa, 671, 676, 10 N. W. 227; Jacobs v. Insurance Co., 86 Iowa,
145, 53 N. W. 101; Buel v. Transfer Co., 45 Mo. 563; Scovill v. Glasner, 79 Mo. 449, 453; Crofford v. Cothran, 2 Sneed, 492; Railroad Co. v. Jones, 149 Ill. 361, 37 N. E. 247, 24 L. R. A. 141, 41 Am. St. Rep. 278; Eylenfeldt v. Steel Co., 165 111. 185, 46 N. E. 266; Railroad Co. v. Campbell, 170 I11. 163, 167, 49 N. E. 314; Christy v. Farlin, 49 Mich. 319, 13 N. W. 607; Flatley v. Railroad Co., 9 Heisk. 230, 237; Buntin v. Railway Co. (C. C.) 41 Fed. 744, 7-49; Newton v. Allis, 12 Wis. 378; Railroad Co. v. Smith, 81 Ala. 229, 1 South. 723. The only question here presented, therefore, is whether the amendment merely expanded the allegations in support of a cause of action upon a stated account which was propounded in the original complaint, or introduced a new and different cause and made a new demand which was not before presented in this action.
This is the third appearance of this case in this court, and its history is interesting. In the original complaint the plaintiff alleged that in the early part of the year 1891 the defendants applied to it to advance moneys to them to be used in their business of purchasing cotton, and agreed to ship to it 100 bales of cotton for every $1,000 advanced to them in the spring and summer of each year, and that, if they failed to ship that amount, they would pay to the plaintiff $1.25 for each bale of the deficiency each year as long as they retained the use of the plaintiff's money; that during the year 1891 and during subsequent years the plaintiff transacted business with the defendants, and advanced money to them; that "during the continuance of said business down to and including the year 1893 it furnished the defendants at stated periods, and at other times when requested, statements of the accounts between them, which were received without objection; that at the end of the year 1893 plaintiff furnished the defendants a statement of account showing a balance due it for advances made by the plaintiff to the defendants, and for commissions on cotton which defendants had theretofore failed to ship to plaintiff under and in accordance with the aforesaid agreement, whereupon shortly thereafter defendants, without objection, paid plaintiff on said account the sum of $2,996.27, leaving a balance due plaintiff of $2,504.75, which sum, with interest thereon, and the further sum of $508.53, due for commissions on 40 bales of cotton, which under the understanding and agreement between plaintiff and the defendants, as aforesaid, defendants should have shipped to plaintiff during the season of 1893 and 1894, and did not ship, is now due by the defendants to plaintiff.” The de. fendants, by their answer, denied the agreement, admitted the advances and the receipt of the statements of account, averred objections to them, and that the agreement was usurious. There was a trial, and a verdict for the defendants. Thereupon the plaintiff removed the case to this court, where the judgment was reversed because the court below refused to charge the jury that, in view of the plaintiff's letters and statements of account, and the silence of the defendants, they could not dispute the item of $1,025 charged in the statement rendered them for commissions on cotton not sold. Allen-West Com. Co. v. Patillo, 90 Fed. 628, 630, 631, 632, 33 C. C. A. 194, 196, 197, 198. In the statement preceding the opinion then rendered will be found a copy of the complaint, and in the opinion a review of the letters, statements of account, and acts of the parties which led to this decision. At all the trials there have been introduced in evidence a statement of account rendered to the defendants on July 1, 1892, which contained the item, “To Com. on 820 b/c at $1.25, 1025," and disclosed a balance of $15,388.14 due from the defendants to the plaintiff, and a statement of account rendered December 20, 1893, which contained the item, “To Commissions on 959 b/c, deficiency season 1892-93, should have shipped 1033 b/c, while you only shipped 74 b/c C 1.25 1198.75," and presented a balance due from the defendants to the plaintiff of $5,364.58. In the first opinion rendered in this case this court said:
"As we view it, this was a factor's charge for commission under his contract with his principal, and related to the same subject-matter as the interest and other commissions; that it could not have been omitted from the account stated without thereby waiving the right to it, and binding the plaintiff to a stated account which did not include it; and when the defendants received it, accepted it, and acted and permitted the plaintiff to act upon it, it became a stated account against them, which could only be set aside by proof of fraud or mistake. * * If the law will presume an agreement from silence in any case, we think it will in this case, and that the accounts which have been rendered by the plaintiff, and received by the defendants without objection, must be considered as stated or settled accounts, and as liquidated by the parties, as fully so as if they had been signed by both. The balance is a debt as a matter of contract implied by the law. It is to be considered as one debt, and a recovery may be had upon it without regard to the items which compose it. Atkinson v. Allen, 71 Fed. 58, 60, 17 C. C. A. 570, 572, 36 U. S. App. 255, 260; Porter v. Price, So Fed. 655, 657, 26 C. C. A. 70, 72, 49 U. S. App. 295, 300"; 90 Fed. 631, 632, 33 C. C. A. 196, 197, 198.
Upon the second trial the Circuit Court instructed the jury to return a verdict for the plaintiff for the amount of the three items in dispute, less a small amount of interest, upon the ground that no objection to the account rendered and no fraud or mistake in them had been proved. The defendants sued out a writ of error, and when it was presented to this court the record disclosed evidence that timely objection had been made to the third item of $508.75, which was due September 1, 1894, so that it was necessary to again reverse the judgment. The majority of the court expresser the view, in which the writer of this opinion has never been able to concur (Patillo v. Allen-West Com. Co., 108 Fed. 723, 730, 731, 47 C. C. A. 637, 644, 645), that, although the complaint stated the facts from which a legal presumption of a promise to pay the balance of a stated account necessarily arises, it failed to state a cause of action upon an account stated, because it did not contain an express averment of the legal conclusion, the promise to pay the bal
When the case returned to the court below for the third trial, and on January 15, 1903, the plaintiff amended its complaint by adding to the allegations which it originally contained the averment that at the various times when the defendants received the statements of account without objection they promised to pay the balances which appeared thereon to be due. This is the amendment which is challenged upon the ground that it introduced a new